Can you answer these questions: Exactly how much do you spend on your lift truck fleet each year? How much do you spend on each truck? In an eight-hour shift, how much time does each truck actually spend moving product? Are trucks sitting idle in your facilities "just in case"?
If you can't come up with the answers, you're not alone. Specialists in lift truck fleet management report that a surprising number of DC managers are unable to provide a detailed accounting of their fleet costs and usage patterns. Yet knowing the answers to those questions is especially important these days, and for a very simple reason: Managers are under intense pressure to control their industrial truck fleet expenses. But in order to manage these costs, they first have to know what they're spending.
It comes as no surprise, then, that customers are turning to providers of fleet management services to help them make the most of their assets. Sales of new trucks may be down, but vendors say they're seeing an upswing in demand for systems and services that collect and analyze lift truck data.
"We know that buyers are not buying, but that doesn't mean purchasing [executives] and CFOs aren't looking at what they're spending," observes Michael McKean, manager of fleet marketing and sales for lift truck maker Toyota Material Handling USA. This pressure from the top has led companies that previously resisted investing in fleet management tools to reconsider, says Scot Aitcheson, director of fleet management for Yale Materials Handling, which manufactures a broad line of industrial trucks. "I can tell you that consistently, customers ... want to be engaged, and they want visibility. They need to have data. They are really making what they do more scientific."
These days, more and more DC and fleet managers are feeling the heat, vendors say. "With the economy the way it is, a lot of warehouses and DCs, especially in the home improvement and retail sectors, have felt a lot of pressure to cut down on overhead, reduce maintenance costs, and reduce fleet costs overall," says Joe LaFergola, manager of business and information solutions for lift truck manufacturer Raymond Corp.
Shock and audit
The first step in any cost-cutting initiative is to gather detailed data across all facets of the operation. There are two ways to approach this task. One option is to bring in fleet management specialists, either independent consultants or experts affiliated with industrial truck dealers. The other is for DCs to take on the task themselves, using vehicle management systems that collect and analyze operating data. These systems typically include a device installed on each truck that captures information and transmits it to fleet management software, which then produces a variety of reports. (For more on these systems, see "remote control," September 2008.)
Typically, data analysis begins with on-site audits that track truck operations over 30 to 90 days—long enough to provide an accurate picture of how individual trucks are being used and how the fleet as a whole is performing. The object is to create a baseline against which specific savings can be measured.
With accurate data in hand, managers can identify areas that are ripe for improvement. They can determine which trucks have the highest maintenance costs, figure out if the fleet is correctly sized and if the equipment is appropriate for the job, measure drivers' productivity, and track causes of avoidable maintenance and additional costs (like damage caused by operators to product, racks, and the trucks themselves).
The results of these audits sometimes come as a shock to managers, vendors say. In a white paper titled 5 Ways to Reduce Costs of Your Industrial Vehicle Fleet, I.D. Systems, a developer of vehicle management systems, cites data showing that in an eight-hour shift, a truck typically is in motion for just two hours and is moving a load for only one.
And that's just the tip of the iceberg. Aitcheson says—and other fleet specialists agree—that it's not uncommon for these audits to show that a given fleet is 20 percent (or more) larger than necessary. Nor is it unusual to find short-term rental vehicles on the floor for months at a time. Aitcheson even tells of one customer that spent $27,000 in a single year on maintenance for a seven-year-old truck.
Such ignorance is certainly not bliss. In fact, it's downright expensive, says Stan Garrison, manager of fleet sales for Hyster Co. "There's no point in hanging onto a truck past its useful economic life," he says. "That drives up ownership costs and productivity costs because of downtime."
One step at a time
Collecting the information needed to analyze fleet costs is one thing. Using the data to make changes in fleet operations and driver behavior is quite another. Despite the obvious benefits, it's not always easy to get everyone on board. McKean says that when it comes to "selling" a fleet downsizing program to operations managers, the key is having accurate performance data in hand. "If we can prove utilization is high and the fleet is up and running every day, then perhaps some trucks can go away," he says.
An effective cost-cutting program does not necessarily require jumping in with both feet. There's nothing wrong with taking it one step at a time, says Aitcheson. "For a company that wants to pursue [a fleet cost-reduction program] but does not want to commit to all the processes and procedures, it could be as simple as a national preventive maintenance program," he says. Garrison is of the same mind. He notes that getting rid of older trucks in stages can help overcome managers' fears that a downsizing program will disrupt day-to-day operations. "One of the most difficult things we [deal with] is to get a buy-in from operations," he says. "The floor managers' job is to get stuff out the door, and it takes a little bit of time to earn their trust and let them know we're not just going to leave them hanging out there."
Editor's note: For more information on conducting a lift truck fleet audit, see "lean fleets," February 2009.