5 Questions Every Fleet Management Program Must AnswerMonday, October 29, 2012
In today’s business world, most enterprise-level companies have some form of Fleet Management in place to track how they purchase and service rolling stock warehouse equipment such as lift trucks. Some companies rely on spreadsheets and manual data entry, while others have a modified ERP system in which fleet data tracking is tied into the company’s purchasing system. Most companies, however have signed up with one of many outsourced fleet management firms or a supply chain partner that offers the service in conjunction with equipment and maintenance services. Whether insourcing or outsourcing though, there are FIVE fundamental questions that an effective fleet management program must be able to answer to provide maximum results. Programs that do not answer these questions are not likely maximizing the fleet production potential and are probably leaving cost savings on the table.
How are maintenance dollars being spent, and what are the root operational causes?
While understanding how much is being spent on lift truck maintenance is important, it is only part of the story. The true power in tracking your maintenance spend comes in a breakdown analysis showing where the maintenance dollars are going. Only when repairs are categorized and detailed to help identify and eliminate root causes, will a true fleet management program succeed in affecting substantial changes in the total spend.
Is the fleet right-sized?
While it is common practice for most fleet management programs to produce hourly usage information, it is also an unfortunately common practice for the same programs to provide little more. Arguably the most potential for cost savings lies in the elimination of excess equipment. To achieve this, a fleet management program MUST provide specific recommendations as to which equipment can be stripped from the fleet without affecting operational uptime.
What is the return on investment?
Whether insourcing or outsourcing your fleet management, there are costs associated with dedicating resources to document and analyze fleet data. Just as companies expect a return on the investment they make in the fleet itself, a solid fleet management program should be able to readily show a similar return. While invoice auditing is one way to generate marginal savings, this approach to fleet management rarely pays for itself and often has adverse effects on supply chain relationships and invoicing. Most enterprise-level clients only realize an ROI when adopting programs that focus on fleet size optimization and root-cause analysis for maintenance spend.
Is there a baseline for fleet costs and is it accurate?
As painful as it may be for clients to hear, each application and often seemingly identical site locations can vary significantly in maintenance cost. This makes comparison across an entire organization somewhat difficult. While some fleet management approaches attempt to gloss over these differences, an ideal program will embrace them. A push for uniformity of rates and standardized repair times in order to make data analysis easier leaves potential cost savings on the table and masks site-specific issues. Look for a fleet management program that can handle difficult analyses of complex operational and market variations to come up with an accurate baseline against which your fleet can be reliably measured.
What are the hidden costs of the fleet management program?
Since the purpose of a fleet management program is to help companies uncover hidden costs, it may seem contradictory that implementing such a program can potentially have hidden costs of its own. One of the most common examples of this type of hidden costs comes from fleet management programs that use “invoice scrubbing” as a method for providing cost savings. When a third party holds up an invoice from a vendor for scrubbing in an effort to reduce the overall bill by a marginal amount, this can create major issues for the client. When an invoice is sent to a third party, it is immediately subject to the payment terms in the vendor/client contract. Invoice scrubbing is a very timely and contentious process that can add up to 2 MONTHS to the time an invoice actually gets paid. The net effect for many clients using a scrubbing service is missing the payment term window which often results in incurred late fees and can even affect the credit rating and viability of the third party, the client, or both! Additionally, the process of invoice scrubbing can transform an attractive service client into a financially risky relationship for top-tier service providers. The almost guaranteed significant delay in payment is enough to send the most qualified service providers with impeccable records for ensured uptime running for the hills!
10550 N. Stemmons Frwy
Dallas, TX 75220