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GETTING THE MOST FROM YOUR FLEET SYSTEM: Part 1 of 2

fleet system

Fleet management software is much like the human brain, and we only use a fraction of its potential. The most underused fleet systems tend to be those in which initial software setup, training, and use were designed to meet the operation’s basic business requirements (i.e., just enough effort and resources to get things back to business as usual).

This common scenario occurs when, during a system’s implementation, the organization focuses solely on getting the system up and running to meet core business needs, such as work orders, parts inventory management, and basic reporting. The system then tends to remain in a remedial state with little emphasis on rolling out features such as warranty management, shop scheduling, flat-rate labor times, part kits, part catalogs, inventory stocking levels, accident management, motor pool scheduling and administration, and management reporting.

IDENTIFY UNUSED FEATURES

To get the most from a fleet system, define a list of features in the system that are not fully implemented or used poorly. Select two to four features that can be implemented within a 12-month period, establish an implementation plan with timelines and resources defined, and create an implementation team(s) with the time and resources required for success. Be sure any one fleet operation area is not overburdened.

Commit to funding implementation services, such as training, to ensure the initiative’s success. If uncertain how to plan the next phase(s) of features to implement, contact the software provider or contract a third-party business advisory firm to develop a comprehensive strategy. Don’t be too proud to ask for assistance.

DEVELOP ROLLOUT PLANS

A complete system implementation can take years and multiple phases of new-feature rollout, revising work practices and system use processes. During this time, maintaining progress is imperative:

  • Don’t get bogged down on any one initiative.
  • Contract assistance when needed.
  • Make sure the fleet staff is involved with the project.

If implementing a feature becomes too onerous a task, the project will lose momentum and user support.

MODULES OFTEN OVERLOOKED

Several key modules in fleet systems are often overlooked, undervalued, and under implemented. However, they are often the most frequently cited as the justification for investing in a fleet system in the first place. The following are a few commonly overlooked modules in a fleet system.

Cost-of-Service Analysis:

Every fleet manager should know the fully-burdened cost for each and every service his or her organization provides. While this may sound obvious to many fleet managers, as industry consultants, we often see clients who do not have a good understanding of their costs.

One consequence of poor costing practices relating to fleet system use can be improperly priced work orders. For example, if the labor rate (as well as other rates and markups) used on work orders does not appropriately include indirect expenses and overheads, labor costs will necessarily be understated. This inaccuracy impacts a host of fleet management activities, including replacement planning, life cycle cost analysis, repair-versus-replace decisions, make/model selection, etc.

Any modern fleet system provides the information required to conduct a comprehensive cost-of-service analysis. To take advantage of this feature, configure the system properly during implementation to track costs by each discrete service the organization provides (sometimes referred to as line of business). Examples of services include a fully burdened labor rate, parts and fuel markups, surcharge for commercial repairs, environmental fees, fleet administration fees, and fleet replacement rates.

Rates and markups can be entered into the system to accurately price repairs on work orders as well as other services. This data entry provides accurate repair cost histories and the basis for comparing service costs to benchmarks, peers, and competitors.

Note that a system of accurate rates and markups within the fleet system is required even if the organization does not bill fleet users for owning and operating assigned equipment. While a cost charge-back system is a clear industry best management practice, knowing service costs is an absolute necessity.

Parts Inventory Management:

One area in which many fleet operations leak money is parts inventory. Some organizations carry excess inventory to meet an exceedingly high fill rate on technician parts requests. As a result, the parts rooms are bloated with dead stock (i.e., parts not used in the previous six months) resulting in a slow annual inventory turn rate (i.e., less than three times per year).

This inefficiency can add up to tens of thousands of dollars tied up in unneeded inventory. Conversely, other fleet operations don’t carry the right quantity of parts and/or don’t employ effective supply practices, resulting in workflow bottlenecks that slow production.

A fleet system should offer a management report providing last-used part histories, current stock inventory, and records of part issues for the previous six- and 12-month periods. This information helps identify potential candidates for return-to-vendor for a credit and adjustments to the minimum and maximum stocking levels at each warehouse.

Fleet operations should review stocking levels and current inventory twice per year. Fleet managers should also analyze frequently used non-stock parts. These parts may be candidates to become stock inventory and improve fill rate times without over stuffing the parts room.

Finally, a fleet system should provide other metrics to gauge supply operations effectiveness. One key metric is parts fill rates (the percentage of parts available within a specific amount of time, such as immediately on demand, within one hour, one day, etc.). Another important measure is downtime related to parts unavailability. The idea is to right-size the parts room by reviewing inventory activity (and lack of activity) to establish optimal inventory composition while minimizing the organization’s investment in parts and improving fill rate time.

Parts Cross-Referencing:

Parts cross-referencing is a feature every fleet wants, but many never realize or implement correctly. Although a parts cross-referencing feature takes some time to set up, it is invaluable for identifying supply sources, quickly filling part orders, and maintaining an active healthy inventory.

The key to setting up a parts cross-reference solution is creating an internal part number to which all vendor part numbers are linked. For example, SAE-rated 10W-30 oil is part number Oil-10W-30 in the fleet system. Dozens of manufacturers and their 10W-30 oil-equivalent can be linked to part number Oil-10W-30. Moreover, linked part numbers can be listed in a defined hierarchy and made inactive without affecting the primary part number.

More advanced fleet systems even allow linking Vehicle Maintenance Reporting Standards (VMRS) codes and equipment year, make, and model to a part number to provide a higher level of accuracy. In some newer systems, users can load spreadsheets with defined parts references to update and append the cross-reference index.

FOR MORE INFORMATION:

Bradley Kelley is vice president of Mercury Associates, Inc., a fleet management consulting firm. He can be reached at bkelley@mercury-assoc.com. Find out more, visit www.mercury-assoc.com.

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MODERN WORKTRUCK SOLUTIONS: JANUARY 2018 ISSUE

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