In order to properly and effectively apply strategic sourcing to your fleet, you need to know and understand fleet pricing strategies, the selector process, and the total cost of ownership of the vehicles being considered. The best way to know and consider these factors is through a process called lifecycle cost analysis, or LCA.

An LCA will not only enable you to identify the most important selection criteria for your enterprise’s unique operations and situation but also help you calculate each vehicle’s impact on your bottom line.

For instance, your enterprise may be most concerned about obtaining vehicles at the lowest acquisition cost possible. However, a vehicle with a low initial acquisition cost may have high maintenance costs over its lifetime, thereby costing your business more money in the long run. Conversely, a vehicle with a higher initial acquisition cost may have a better warranty and, therefore, lower costs over its lifetime. In another example, your enterprise may wish to consider vehicles powered by electricity, compressed natural gas, or other alternative fuels. 

A well-conducted LCA will not only allow you to optimize your business’ bottom line, it will also allow you to meet important corporate objectives — like sustainability — while balancing costs and stakeholder opinions.

Some of the important criteria to consider when conducting an LCA:

The information provided in this article is not intended as advice. For complete information, including NAFA’s Lifecycle Cost Analysis Tool, visit www.nafa.org