Warehouse & DC Management: Decoding the mysteries of fleet management
January 01, 2012
“Visibility” is the buzzword these days among supply chain circles, while inside the four walls the concept of “lift truck fleet management” has quickly become the Holy Grail for savvy managers looking to get a better handle on costs. Amid the scramble for both, traditions are being challenged, business relationships are becoming more nuanced, and new products, services, and technologies are emerging at a rapid rate.
And while establishing a comprehensive lift truck fleet management program can seem like a surefire source of savings and transparency, fleet mangers have encountered a few misconceptions and miscommunications along the way. To help overcome the early missteps, industry experts and manufacturers are now working to ensure that fleet managers are aware of the opportunities and pitfalls associated with a more structured—or more flexible—approach to fleet management.
According to Scott McLeod, president of independent lift truck fleet management company Fleetman Consulting, the heart of fleet management is identifying and managing each lift truck’s operating cost per hour. McLeod says that there are more than 40 separate costs associated with a lift truck, including fuel, depreciation, operator costs, and even the impact of aisle design and warehouse layout on a lift truck’s operation.
“Once you figure out those costs you can determine if there are better options available,” says McLeod. “Customers might feel that there’s only so much time in a day, and lift trucks are at the bottom of their to-do list. But if they have to do it, they just might find that there are thousands—if not hundreds of thousands—of dollars to save.”
But where do you start? Who should be involved? How should it be implemented? “It’s about peeling back the onion,” says McLeod. “If you do the basics well then you’re ahead of 80 percent of the companies out there.”
To help Logistics Management readers gain some ground, we’ve created a set of guidelines for navigating the adoption of an effective fleet management program with the help of a panel of consultants, suppliers, and users. No off-the-shelf solution will work for everyone, but these practices will help fleet managers avoid wasting time and money as they reconnect to their fleet’s true costs.
1) Understand what it is
According to Nick Adams, business development manager for the MCFA fleet services group, fleet managers should not fixate on assuming fleet management has a single definition. “A lot of people will tell you that fleet management means a full maintenance contract. That’s not necessarily true. They also say fleet management will always produce cost savings. That’s also not true.
Michael McKean, fleet management sales and marketing manager for Toyota Material Handling, says it’s imperative that fleet management not be confused with other capital expenses. “The company might have five projects on the agenda, like a new roof or a new dock,” says McKean. “But those are just projects. Material handling equipment is not a project, it’s an essential part of a well-run business.”
2) Know your needs
A well-run businesses will pay attention both to its customers and to its status as a customer, according to Adams. “You have to understand your requirements relative to your assets,” he says. “Two people may order different things from the same menu based on budget and tastes, and both are good meals.”
Before pursuing a third-party maintenance agreement or new equipment, McLeod advises customers take stock of what they have and what it’s costing them. “I’ve seen operations with 15-year-old trucks so well maintained that it makes sense not to upgrade,” he says. “Other places have trucks that are three years old and are a disaster.”
Jason Bratton is vice president of business development for BEB Industrial Asset Management, a third party forklift fleet management company. Bratton says that each customer might have its own preferences for how to do business. “Third-party invoice consolidation works for some but not for others,” says Bratton. “End users either find they need that service or would rather keep control over it for other reasons.”
According to Patrick DeSutter, director of fleet management for NAACO Materials Handling Group, Inc., customers need to understand their asset mix, especially short-term rentals that have overstayed their welcome. “You need an enterprise-wide mindset,” said DeSutter. “A series of separate programs might not be working toward the common good.”
3) Communicate, communicate, communicate
Communication is often the single best way to ensure progress toward the common good. And it’s important to communicate not just with your fleet management partner, says Bratton, but also within your organization. “It’s critical for the success of a rollout,” he says. “If we’re calling a site to begin a preliminary fleet assessment and the first time they’ve heard about us is from us, that’s a problem.”
Effective communication is about more than memos. A discussion of motives and objectives with a fleet management partner will help a customer later evaluate the service. And communication within a company generates enterprise-wide buy-in that can be essential for the success of the program. A new fleet management program is unlikely to succeed if it’s as fractured and disconnected as the problem.
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