Charlie Guthro, VP of ARI Strategic Services North America, shares how through employing best practices, fleets can buy, repair, replace and drive right, while communicating the right story to the right people at the right time and in the right way. These four principles of asset management are fundamental for any cost saving mandate.
According to ARI, a fleet manager’s essential asks are cost savings, communicating the right story to their people, defining relativity and creating a sense of urgency. These necessities provide the fleet manager with organizational integrity as well as trust, and can be delivered on through the following Best Practices.
1. Buy Right This involves detailed management of the supply chain and accurate forecasting to ensure the customer receives the right vehicles for their fleets in the right time frame. Placing and tracking the order provides transparency for the customer. It is paramount that fleet managers have a sound understanding of what the fleet’s specific purpose is to ensure the right vehicles are selected for the job. Buying right involves continuously evaluating vehicle performance and revising vehicle specifications based on fleet analysis to save time and money. Finally, managers should focus on remarketing vehicles to maximize return on investment. For example, ARI helped an Energy Utility Fleet to implement an advanced system to completely automate requests and approvals. This created standardized specifications, which resulted in $378,000 in total savings from administration, fuel and maintenance costs.
2. Repair Right Preventive Maintenance (PM) saves millions when managed correctly. ARI’s analytics showed that when fleets have a PM variability greater than 30%, total repair costs increased by 144% and non-PM repair costs increased by 150%. Unscheduled repair costs increase by a staggering 250%. To reduce this variability, fleet managers should have robust reporting and milestones to track vehicle progress and ensure that PM reporting and notifications are distributed to all drivers. ARI uses fleet data tools such as predictive downtime tracking, geofencing and alerts to provide drivers with accurate, real-time PM reporting.
3. Replace Right Both hard and soft costs need to be considered so managers can make informed financial decisions. Costs include but are not limited to labour, supplies, fuel, depreciation and overhead attributable to fleet activity. This information should be readily accessible for managers as the proper replacement of vehicles minimizes costs and assures safety. Managers can use both internal and external benchmarking to determine the best timing for replacing fleet vehicles. ARI’s telematics and analytic tools use the power of data to identify which vehicles are costing a fleet too much. Their Fleet Health Card captures data from fleets in real-time to measure spend, utilization/reliability, preventive maintenance and fuel to track a vehicles relative and comparative performance.
4. Drive Right First and foremost, there needs to be a well communicated fleet policy in place. Second, thorough MVR and Abstract checks need to be conducted in order to place the right people into the right vehicles. ARI suggests a proactive driver evaluation be conducted which includes a road safety observation, distracted driving, safety and compliance programs. Driver feedback includes identifying risky driving behaviours to give fleet managers the opportunity to correct unsafe driving through driver training. This benefits both the employee and the company as it makes for a safer and more cost-efficient fleet environment. ARI and Red Hawk Fire and Security Company came up with a 2-pronged approach to ensure a successful fleet program. The first was mandatory safety training modules for drivers and the second involved administering driver training to correct bad driving behaviours. This approach cut liability costs for Red Hawk by $1 million with an additional 50% decrease in claims filed and settlements paid, as well as a 68% drop in the number of accidents reported. There are a lot of moving parts in an effectively managed fleet and allowing any one of the four guiding principles of asset management to fail significantly impacts the health of the fleet and the operator. Employing best practices for all aspects of vehicle acquisition, operation and disposal goes a long way in keeping a fleet on the right track.