Dedicated Vehicle Model: What You Should Know
Dedicated Vehicle Model (DVM): What You Should Know
“People say, ‘Dream big!’ – but you have to think about the logistics. It’s not just coming up with a great idea; it’s how you can sell or market or promote that great idea”. Marley Dias
Regardless of where your business is situated, logistics is what helps you to convey your goods to your desired destination. With logistics, you get to cut down the cost and time you spend in moving your products and therefore choosing a suitable logistics model is important in running a successful business. Today, we will be discussing about the Dedicated Vehicle Model (DVM). Welcome to Logistics Monday
DVM is a finance/operating lease model on cost per kilometre basis whereby a fixed monthly guaranteed mileage is agreed for the contract period. The fixed monthly guaranteed mileage enables the transporter to cover its monthly repayment obligations such as bank repayment, insurance, driver costs and documentation.
From our recent survey, we noticed there has been challenges in the logistics business which includes insufficient trucks to meet daily delivery orders. FMCG companies that solely depends on spot hire transport service arrangement are usually faced with the following challenges:
- Insufficient trucks to meet daily demand.
- Delay in Turnaround Time.
- Poor handling of goods
- Poor representation of the FMCG company.
Sequel to the challenges mentioned above, Dedicated Vehicle Model give solutions to setback faced by some FMCG companies because of its significance which includes:
- Convenience services
- Flexible operations.
- Greater Control
- Lower transit time
- Reduced poor product handling.
- Deployment of technology for the use of the model.
Furthermore, the cost-benefit for the Dedicated Vehicle Model includes
- The Capital to finance the assets is secured by the Transporter alone.
- Assets are purchased based on client’s request on specification, type, and quantity.
- The assets are solely dedicated to the client for the contractual period.
- Monthly rental is based on agreed monthly mileage attainment and performance for the contractual period.
Various factors go into deciding the DVM. The primary factor is the fixed costs. Fixed costs are those costs that do not change. This incorporates the truck installment, insurance, license, and permits.
Be that as it may, owner-operators have expenses other than fixed expenses. Things like fuel, tires, upkeep, fix, suppers, cellphones, housing, wages and advantages, office lease and expert administrations like lawyers and accountants are called variable expenses, and those change from one month to another. Also, not all owner-operators has every one of these variable costs, yet on the off chance that you are using the DVM, you need to try to represent that cost.
In DVM, vehicle operating costs produced by changes to trip mileage or working conditions are normally a little piece of the total project costs, they can be huge in choosing elective plans, development situations, or task timing. Operation costs for individual vehicles (automobiles, pickups, SUVs, vans) are grown principally from customer guides, with the overall fleet costs dependent on vehicle deals.
At TGL, we understand the importance of providing swift, affordable and safe delivery of your goods and are readily available in assisting your business to achieve its business goals while maximising profit and reducing cost through our logistics solutions.
With a team of over 50 years combined experience in freight forwarding, out-country and in-country logistics, compliance/documentation, and core technology services, we bring to the table a firm promise to provide a reliable platform for end-to-end logistics solutions for B2B and B2C businesses.
Get in touch with our Experts to discuss your Logistics requirements
Email: info@tgl.ng
Phone Number: 0804 TGL DESK
WhatsApp: +234 – 804- 845 – 3375
Address: 68 Molade-Okoya Thomas Street, Off Ajose Adeogun Street, Victoria Island, Lagos