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Benchmarking fleet costs helps maximize efficiency

TORONTO, Ont. - With industry costs rising steadily, it was with welcome ears that four seasoned trucking industry veterans were met when they discussed benchmarking fleet costs at the Canadian Fleet...

TORONTO, Ont. – With industry costs rising steadily, it was with welcome ears that four seasoned trucking industry veterans were met when they discussed benchmarking fleet costs at the Canadian Fleet Maintenance Seminar in May.

The audience, seated in DoubleTree International Plaza Hotel, heard first from Charlie Clairoux, fleet supervisor with The Pepsi Bottling Group.

Clairoux opened by mentioning what a juggling act working with a budget can be.

“Balancing costs is much more difficult as it (has become) necessary to operate on a tighter budget due to increased costs and competition,” he said. “Fuel costs are highest and often fuel budget allowances are inadequate, so there is constant pressure and juggling going on.”

Warranties don’t factor much into Clairoux’s fleet since it’s one of the oldest in Canada and not much is still warrantied.

But he did stress the importance of parts warranties, which he said could save a fleet as much as 20 per cent on parts and labour costs.

Preventive maintenance plays a key role in Clairoux’s benchmarking plan.

“When I became fleet supervisor, some of my peers and I implemented a preventive maintenance plan,” he said. “Two of my night crew continuously work on preventive maintenance while the other two mechanics work on daily repairs and driver reports.”

Clairoux said an evening or night shift allows a fleet downtime at minimal cost and promotes a better distribution schedule. Repairs and maintenance are also scheduled which helps ensure fleet availability.

Clarioux’s suggestions on how to meet your budget included shopping around and not being afraid to ask for a better rate; developing and maintaining a relationship with outside vendor and service providers; developing and implementing a fleet maintenance program to help ensure all vehicles are in peak operating condition; keeping vehicles a few extra years and leasing trucks and trailers to help reduce your capital costs; and standardizing your fleet.

He also spoke about the importance of tracking costs.

“Fleets that don’t know their costs are asking for trouble. With the high costs of running a prosperous business you need to track this information. A company needs to know where it stands at all times.”

Gary Moulton, fleet maintenance manager for J.D. Smith and Sons Limited, said parts and labour come first and foremost when he looks at their annual budget.

“We have tried to base our labour costs on the number hours that are generated by our mechanics on a monthly basis,” he said. “By accumulating this information, we have tried to structure a budget that can be based on a percentage of sales within our cartage department. By keeping our parts and labour costs within this percentage, we have been able to meet our monthly goals and projections over the past year.”

For tracking and measuring his costs, Moulton said J.D. Smith has implemented the latest software version from Maddocks Truckmate, which has allowed them to develop their own method of tracking equipment costs.

“We have put together a system that will capture our month-to-date or life-to-date cost per kilometre,” he said.

“With this system we are able to break down all the components of a vehicle and separate the major ones for easier tracking and data collection. (With this software) you can effectively control fleet size for maximum efficiency.”

J.D. Smith also had Fleetmind onboards installed in 50 of its cartage units, which Moulton described as a “very easy driver interface.”

The Fleetmind system was described by Moulton as having many cost-saving applications including allowing for smarter, more efficient dispatches; having the ability to monitor fleet proactively with little effort; and the ability to easily compare productivity and driving skills between drivers.

Moulton concluded saying, “Although we will face some challenges as fleet maintenance managers, there has never been a better time to make some significant gains. Technology is often seen as the culprit when the issue may be the organization’s ability to adapt. We at J.D. Smith take pride in the fact the preventive maintenance program that has been implemented has allowed us to achieve an ‘Excellent’ CVOR rating. Like I always tell management, in a perfect world you can always create the perfect budget.”

Next up to share his wisdom was Harley Bickmore, fleet maintenance coordinator with Petro-Canada.

He stressed that before you put a budget together to help benchmark costs, you need management’s commitment to a realistic number.

“Do you want it cheap or do you want it safe?” is the question Bickmore first put forward. “Once you have management’s buy-in, you can build a budget that you think meets your needs – then be prepared to explain it.”

But an effective budget plan doesn’t happen overnight

“When I first became responsible for the Petro-Canada fleet, we had various tractor and trailer configurations,” he said.

“In 1997, the average tank trailer age was 18 and a half years old. You couldn’t really budget for that. You just kept throwing money at it and doing a lot of explaining.”

But by 1998, Bickmore was able to convince the team to get serious about a fleet replacement program.

“Between 1999 and 2004, we replaced five “B” trains a year, all identically spec’d and at the same time implemented a 10-year replacement program. The benefits became apparent the following year as the numbers started to drop and continued to do so as more new units were added. Also, we can now track any component failures and take corrective action before it happens on newer units.”

Tracking the numbers ranks high on Bickmore’s list.

“If you really want to know what your equipment is costing you, you need to know where that money is being spent. That means breaking out expenses as many ways as you can think of.”

Personally, he breaks down his budget into 10 categories including communications, delivery equipment, tires and maintenance contracts.

The end result, according to Bickmore, is a budget that makes sense, though he was quick to remind that budgeting is an all-year affair.

“Just because you’re ahead now doesn’t mean you’re going to be ahead forever.”

Ted Batchelor, regional fleet and TMT manager for Lafarge Canada Inc., spoke last, stressing the importance of establishing standards for the future. “(Without benchmarking costs) you have no way of planning a course of future action,” he said. “It’s a matter of getting out a pencil and paper and deciding there are things you need to keep track of.”

He suggested starting by measuring everything possible, including tire costs, fuel costs, repair costs, labour costs, warranty costs, distances travelled, hours worked and engine hours.

“There’s no limit on what to measure,” he said.

Batchelor further explained how benchmarking will help if you’re asked to present a long-term projection of costs with only a short time to do it.

“(Benchmarking) gives the fleet manager a tool to enable him or her to converse properly with upper management in terms they can understand. If you can’t communicate in terms people will understand, you won’t last very long where you are.”

When it comes right down to it, he says, “If you can’t measure it – you can’t manage it.”

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