Warehouse & DC Management: Decoding the mysteries of fleet management
January 01, 2012
4) Don’t change too quickly
Initial communications can brace an organization for change. But as fleet managers work to identify costs, it’s essential to collect data at a manageable pace and to react to the data with incremental steps, not sweeping change.
“In fact, some clients should not change anything in the first three months,” says Bratton. “It allows your fleet management partner to establish a baseline. Let’s not go in guns blazing, saying we need to change this, fire them, buy these trucks.”
Depending on how well-capitalized a customer is, rapid change might not be a problem, says McLeod. A customer might instead plan to evolve over five or more years if it doesn’t have the capital to swap an entire or partial fleet. “Take things in bites, with a methodical approach and frequent pauses to review goals and progress,” says DeSutter.
Once a customer has established a baseline it can then address things like avoidable damage caused by either the operator or the facility design. “These can be significant costs,” says DeSutter, “as high as 25 percent to 35 percent of the lift truck maintenance spend.”
5) Put a maintenance program in place
Toyota’s McKean says that he understands why lift truck retirements, replacements, and rotations often get shuffled to the bottom of the priority list. “For facility managers, their priority is not managing lift trucks…it’s moving product,” he says. “So, as long as the lift trucks are getting that done, that’s good enough for many people.”
However, this can lead to a reactive instead of proactive approach to things like maintenance costs. “The problem is that many people only recognize a downtime problem if they happen to have a half dozen lift trucks in the shop at one time,” says Jim Gaskell, director of Global Insite products for Crown. “All trucks need maintenance, all of which must be managed, not just when it becomes a big enough problem to be visible.”
By that time, the negative impact will become visible elsewhere as well, as productivity and throughput suffer. “Any improvement in maintenance efficiency will also improve the main goal of product movement,” says McKean. “Fleet management should be employed at all locations, but it’s not. More customers need to rely upon a fleet management tool to manage their fleet.”
6) Control costs
To budget effectively you need to look at maintenance costs and lock them in, says McLeod. “The worst situation any lift truck user can get into is a pay-as-you-go maintenance program. As soon as you do, you can be held hostage by the dealer.”
McLeod also recommends that customers negotiate fuel contracts and lock in those costs as well, either at a fixed rate or by tying costs to a commodity. “So many customers seem happy enough to get charged by the batch, and three or four out of five will say that they don’t even know what they pay per pound or liter of fuel,” says McLeod. “Get three or four propane suppliers bidding on your business and you’d be amazed at the savings.”
7) Take out the emotion
Emotion-based decision-making can take many forms, says BEB’s Bratton. When a customer buys a lift truck because that’s what their predecessors did in the past, he adds, that’s an emotional decision.
“An employee’s under-performance might be about data and it might have measurable solutions,” says Bratton. “But firing that person is an emotional decision. You might be able to use the data and fix, not fire.”
Making decisions with data rather than emotions can mitigate the apprehension many facility managers may feel at the idea of involving a third party, adds McLeod. “The people tasked with fleet management are usually the ones who least want to do it,” he adds. “They think a third party will prove they’ve been wasting resources, or that they had no real grasp on their costs to begin with.”
Facility managers often worry about an outside company finding something they should have found, says Bratton.
8) Lift trucks can’t be maintained forever
Whether by design or by accident, too many facilities maintain old lift trucks until they no longer provide any value. “Set realistic life cycle goals for your fleet, like seven years instead of 20,” says Gaskell. “Draw a line in the sand. Anything over 10 years will get replaced.”
Otherwise, says Gaskell, companies can get stuck pumping lots of money into aging equipment. “A 10-year-old truck might not have cost much up to that point, but if it should suddenly need $3,000 in repairs, then the customer says, ‘Well, I just put all this money into it. Maybe I should keep it.’”
Gaskell refers to a program Crown created for a specific customer called “No Truck Left Behind.” The program requires that when a delivery driver drops off a new lift truck at one of the customer’s facilities he must pick up the old truck before he can leave.
“Fleet managers used to say that they’ll keep it as a spare,” says Gaskell. “Then they’d have a change of heart when a report showed that they were paying maintenance costs for the new one on top of the old one.”
9) Not one-size-fits-all
On the small scale, this tip is best exemplified by what Adams calls a “captive application,” when a lift truck is required only for periodic tasks, but is absolutely essential when its time comes.
Utilization will be down by definition, and a fixed maintenance program would clearly be excessive for such a lift truck.
On the larger scale, decentralized companies can get into trouble when they assume that there are quick fixes to a fleet’s needs. One-size-fits-all might work for some centralized companies, says Adams. Lift truck usage in a retail chain store in Kansas, for instance, is going to look much the same as one in Minnesota. A similar business might bundle its locations and negotiate directly for an initial equipment purchase.
“The fallacy is that decentralized customers can round up volume and negotiate, so they must be able to do that on the aftermarket as well,” says Adams. “It’s understandable. They’ve got a lot to do and they want an easy win so they can move on.”
The problem is that maintenance program templates can be disastrous when forced onto facilities with vastly different usage and applications. But a fleet management partner can help a decentralized company get some leverage with local service providers. In fact, according to DeSutter, one of the most valuable things a fleet management partner can provide is a third party audit of service provider work orders.
10) Know when enough is enough
Avoid a hunt for efficiencies for its own sake. Every company can benefit from a better-run fleet, however, says McLeod, “There’s a point when it doesn’t make sense to go further down the path of fleet cost control.” That point will become clear to anyone paying attention, he says. “If you understand your entire business’s costs, then when you stop the bleeding in your fleet you might find that your postage costs, for instance, are where your attention can produce the best returns.”
By opening windows into the tiniest corners of a facility’s expenses, technology often encourages over-complication or excessive detail, says McLeod. “You don’t need to be comparing light bulbs to save a fraction of a kilowatt hour,” he says. “Nobody needs that kind of detail to run their business. You just need the lift truck’s cost per hour and to ask whether there are better options.”
The chances are good that there are alternatives to the status quo that can improve productivity, increase visibility, and save money now and later. With clearly defined objectives and a deliberate approach, any organization can tackle its fleet with confidence.
“At the end of the day,” adds Adams, “fleet management shouldn’t interfere with what a facility is trying to get done. But, if designed well, it can be a valuable tool in creating cost savings.”
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