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Material Handling Equipment

The 3 Most Used Maintenance Plans for MHE Fleets: Pros and Cons

Posted by Russell Wells

The impact that the right maintenance plan can have on an operation’s overall cost-effectiveness and productivity cannot be understated but is often overlooked. In our recent blog, we shared the top four ways to extend the life of a forklift, which if followed, can significantly improve the overall health of shippers’ MHE fleets. Implementing a maintenance plan was at the top of our list and is arguably the best strategy shippers can employ to manage costs and increase productivity through reduced downtime across their fleets.

But what are their options and how do they choose the best fit? Read on to explore the pros and cons of the three most commonly used maintenance plans by shippers.

 

1. Guaranteed

A guaranteed maintenance plan is the most comprehensive option available. It is designed to cover all scheduled and unscheduled maintenance across a fleet’s equipment – including labor and parts – at a fixed, monthly cost.

Pros:

      • The predictability of the fixed cost allows shippers to budget their maintenance spend more accurately
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      • Streamlined maintenance budgeting makes managing larger cost and planning strategies easier for shippers to execute

 

Cons:

      • The most expensive of the three plans as shippers pay a premium to the provider for assuming all the risk for the parts and labor that equipment will consume
      • Does not cover abuse or overtime, so if equipment needs servicing outside of normal business hours or if damage is caused by negligence or considered avoidable, shippers will be charged beyond their fixed costs
    •  
      • Built around utilization – If you go above it, you are charged substantially for overtime, but if you do not meet the quota, you are paying for unused capacity

 

2. Time and material

As the name states, shippers pay only for the labor hours and materials needed to maintain their equipment. This is similar to how most people care for their automobiles – when a breakdown occurs, they take the vehicle to a shop and pay separately for labor and materials.

Pros:

      • Favorable on newer equipment that requires infrequent maintenance, so shippers enjoy cost savings at the beginning of their MHE fleet’s life
      • Shippers are not locked into contracts with one service provider as with guaranteed plans, enabling flexibility in utilization, so they only pay for services as they are used
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      • Best suited for small fleets that can maximize cost savings with low utilization

 

Cons:

      • Makes planning and budgeting extremely difficult
      • Predicting what damage could happen and what level of repairs may be needed is almost impossible without a steady service provider
      • Spikes in budget can result from large breakdowns occurring at the same time or in close succession

 

3. Fixed labor/variable parts

This model, leveraged by Kenco, combines favorable aspects of the first two options. Shippers pay a fixed labor cost for an in-plant technician – a full-time, in-house mechanic that handles all maintenance – and are billed on top of that amount for parts on an as-needed basis. Many traditional service providers, who have typically only offered the first two plans, are beginning to catch on to the benefits of this model.

Pros:

      • Fleet managers can budget for the fixed labor cost while taking advantage of lower parts consumption cost savings in the early stages of their equipment’s life cycle
      • Overtime, abuse, avoidable damage, and negligence – which can be the source of mounting charges on top of an existing plan – are covered by the fixed cost assigned to the full-time, in-plant technician

Cons:

      • Finding skilled labor to house in customers’ facilities can be challenging, especially when labor markets are exhausted
      • It is difficult for smaller fleets to justify the cost of an in-plant technician because their equipment typically cannot satisfy the minimum labor

 

 

Every shipper requires unique solutions, and Kenco's job is to provide the optimal solution for your operation’s fleet. Your MHE fleet is vital to optimizing workflows across your operation, and working with a proven partner like Kenco, who can tailor solutions to your unique needs, will ensure the health of your fleet and your bottom line. Click here to learn more about our MHE fleet solutions and stay tuned for our next blog on how the right 3PL partner can help you implement the best plan for your fleet.


 

Russell Wells

Written by Russell Wells

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Kenco provides integrated logistics solutions that include distribution and fulfillment, comprehensive transportation management, material handling services, real estate management, and information technology—all engineered for Operational Excellence.