The right fit
From the October 2019 print edition
Having a right-sized fleet is key to fulfilling the mission of your organization. Whether you are a small landscaping business with 20 vehicles or a large municipality with 5,000, understanding and achieving fleet optimization should be at the core of right-sizing initiatives. The size of your fleet directly impacts the ability to complete your mission and has a significant impact on your organization’s financial bottom-line. Too few vehicles and you can’t get work done. Too many vehicles and you’re burning money needlessly. The key is to have the “right” utilization when it comes to your fleet.
What is a right-sized fleet? Ed Smith, president of Agile Fleet, has been involved with fleet right-sizing initiatives for almost 20 years and has worked with many types of fleets. While he acknowledges that every fleet has some unique characteristics that change the importance of each component of utilization, he has concluded that the quantity and use of vehicles is not the only variable to focus on. Smith believes there are four key components of a right-sized fleet, namely:
- The right quantity – Do you have the right quantity of vehicles, in other words not too many and not too few?
- The right location – Are the vehicles available where they are needed? If you have vehicles yet they are not affordably accessible at the location where the work or the drivers are located, then vehicles are effectively not available. Alternatively, if a seldom-used class of vehicle is accessible just a short distance away, perhaps that class of vehicle is not needed at each fleet location. This is also where we can take asset criticality into account. There are some pieces of equipment that are so critical to supporting an organization, that they are needed at several locations, regardless of use (think of a firetruck or other emergency response equipment).
- Right type/class – Do you have the right type or class of vehicle? If I have 10 box trucks available yet have a need for more small passenger vehicles, I really haven’t fulfilled the need for small passenger vehicles. NAFA Fleet Management Association agrees that not only the overall fleet, but every vehicle in it, must be right-sized for their primary task. When procuring a new asset, you should ask: Is the engine large enough to perform the recurring tasks but not oversized? Can the task be accomplished with a two-wheel drive vehicle instead of a four-wheel drive vehicle? Can we get by with four radio speakers instead of six? Can we use the treadplate platform on the liftgate instead of the extruded aluminum? A component of right sizing is choosing the right class of vehicle and upfitting just enough vehicles to do the job.
- The right time – Do drivers have access to vehicles when they are needed? Are vehicles available after hours or on weekends? If access to vehicles requires access to a motor pool office or an outside rental office that is closed, needs go unfulfilled. Your drivers need access to vehicles at the time the job needs to be done.
Knowing you want to optimize your fleet is one thing, actually doing it requires information and resources. Gathering baseline metrics is a good place to start and can be done in a variety of ways:
- Manual observations of parking lots, odometers, et cetera;
- Motor pool systems;
- GPS (odometer, trip data;
- Fuel records (odometer, fuel consumed)
- Work orders (odometer, maintenance costs); and
- Online expense and trip reporting records.
While the answer to how to best optimize your fleet will vary by organization, the following initiatives are proven optimization strategies:
- Implement vehicle sharing technology or services
- Disband unwarranted “sub-fleets”
- Implement GPS to provide better oversight of vehicle use
- Improve your understanding of utilization
- Analyze reimbursement for use of personal vehicles
- Identify options to fulfill peak demand for vehicles
- Enhance fleet policy
Vehicle sharing is generally a solution that results in savings that are greater than any other type of solution that can be introduced to a fleet. If you can create an environment where the number of vehicles in the fleet is aligned with the total number of vehicles actually needed in the fleet, you would need fewer vehicles. Vehicle sharing does just that. Assigned vehicles are effectively consumed by an individual or department whether or not they are being used. Motor pools offer the ability to provide vehicles on demand. In doing so, the ratio of drivers-to-vehicles can grow. And the size of a fleet can dramatically decrease while offering the following benefits to drivers:
Access to more vehicles – A misconception of motor pools is that vehicles may not be available when needed. In practice, the opposite is true. Pooling helps eliminate situations in which a sub-fleet may have peak demand (run out of vehicles) yet another sub-fleet has vehicles sitting idle. Motor pools help even out the average demand and provide the additional vehicles needed to meet peak demand.
Access to more vehicle classes – Another benefit of a pool is that the pool can contain a variety of vehicles. A vehicle such as a cargo van that is seldom used within a sub-fleet may be available via a motor pool for those occasions that one is needed.
Transitioning the administrative and maintenance functions from non-fleet staff – Typically non-fleet staff do not enjoy taking care of administrative (insurance, registration, et cetera) tasks related to a fleet. Administrative tasks, maintenance and other fleet-related tasks take time. When vehicles are transitioned to pools that are overseen by fleet staff, these tasks are shifted away from non-fleet staff. This is often a welcomed improvement.
Reducing costs to the end department or organization – “Pay as you need it” is generally a much cheaper option than “pay all the time.” Paying an hourly or daily charge for a motor pool vehicle only when it is needed can reduce costs significantly.
Operating small, geographically co-located sub-fleets in most environments can be one of the least efficient ways to operate a fleet. That’s because you generally plan for worst-case scenarios when it comes to the size of a department fleet. For example, if a university admissions department has peak demands that require eight passenger vehicles for a few months out of the year, that department would have a fleet of at least eight vehicles. At other times of the year, their peak demand may be closer to three vehicles. At the same time that the admissions department needs eight vehicles, another department sharing the same parking lot may have five idle vehicles. Yet another department may have three vehicles not in use. The peak and low demands for vehicles across departments most likely average out. By pooling, fewer vehicles are required to fulfill the mission for the organization as a whole.
Implementing GPS technology can be a great start to a vehicle right-sizing initiative. GPS technology, when used with vehicle sharing, is a great resource for understanding utilization. GPS tracking systems can tell when vehicles are in use and when they are away from their home location and therefore not available to other departments. This type of data is key to understanding utilization.
Use of personally owned vehicles (POVs) often impacts fleet utilization because it decreases demand on the fleet. Use of POVs makes sense in some circumstances. However, reimbursement for their use is often such a financial windfall for drivers that the privilege is abused. With just a few minor adjustments this problem can be overcome.
Plan to understand, and revise, your fleet policy. You will need policy in place to implement changes resulting from your utilization studies.
Fleet optimization through right sizing is one of the hottest topics in fleet. Why? We have the manual and automated tools to access data to confirm our intuition regarding fleet size. We can prove that a given fleet is too large, or not the right composition. We can then take the actions outlined here to make the necessary change to optimize our fleet, resulting in improved efficiency and ultimately, save money.
*Contains excerpts from Fleet Utilization & Achieving a Right-Sized Fleet