Leo D'Angelo Fisher Columnist

Leo covers management and leadership issues, business trends and corporate strategy. He is a former senior business writer at The Bulletin and a former host of The Business Hour on 3AW.

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Focus on fleet management: Tracking saves guesswork

Published 14 June 2012 04:05, Updated 14 June 2012 09:35

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When car dealer Bayford Group decided to outsource its delivery operations as part of a major restructure in 2001, the decision was made easier by the fact that this was a side of the business it did not want to be involved in.

With a fleet of 12 vehicles delivering parts across Melbourne, the general manager of Bayford’s parts division, Mick Hogan , had no doubts about the impetus for outsourcing: “We were good at selling parts but we weren’t so good at delivery.”

From a central warehouse in Campbellfield on Melbourne’s northern outskirts – which services Bayford’s Ford, Volkswagen, Peugeot and Kia dealerships – the outsourced fleet delivers parts three times a day to its dealerships as well as panel beaters, mechanical repairers, fleet managers and others in the metropolitan area.

The decision to outsource was not entirely without pangs. Hogan says there was a concern about whether drivers not on Bayford’s payroll could form the same relationships with customers as its own staff. The answer was yes.

“Our own drivers had their own following with customers and we were worried that [external drivers] wouldn’t have the same rapport with customers but some of the drivers have now been with us for six to 10 years and their rapport with our staff and customers is as good as it ever was with our own drivers,” Hogan says.

Since 2001, another six vehicles have joined the fleet. Hogan says savings from outsourcing deliveries remain substantial, at 15 to 20 per cent. Many of those savings come from areas that Hogan says were “hidden” when Bayford was running its own fleet – such as absenteeism, maintenance and repairs.

“When you’ve got your own fleet, some of the variables can be astronomical but they’re costs that you just don’t think of,” he says. “Now, at the start of the year, we know what our costs are going to be and the only variables are tolls and fuel charges.”

The general manager of fleet manager OnTime – the company that owns and operates Bayford’s delivery fleet – Walter Scremin says providing the vehicles and drivers “eliminates the headaches of doing it yourself”.

Most of OnTime’s clients are small to medium businesses – a hotel supplies company, an auto parts wholesaler and a laminate services provider – with fleet needs ranging from one vehicle to 23.

What most have in common, Scremin says, is that they “struggle to adequately explain what it costs them to run a single vehicle”.

“Once you are running a fleet of vehicles then the potential for cost leakage is compounded,” he says. “Most businesses grow gradually, so maybe they start out with a couple of vans or light trucks and over time keep adding to their vehicle fleet. Before you know it, they are running a full-blown fleet but doing so incredibly inefficiently.”

While OnTime offers clients its fleet-management smarts to control a range of hidden and unexpected costs, Trimble Navigation provides clients with smarts of a different kind: GPS, internet and wireless network technology. Trimble’s tracking devices are installed in vehicles to provide remote monitoring of driver and vehicle activity.

The managing director of Trimble, Tom Scahill , says providing fleet managers with the technology to monitor “mobile assets” in real time enables them to ensure that their vehicles are being operated safely and responsibly by drivers. This can pay off in lower insurance premiums, reduced running costs and savings on fuel consumption. Because even driving speeds can be monitored, the elimination of speeding fines is another advantage.

It also means that vehicles – whether tending to service calls or delivering products – are used more efficiently.

“The organisation knows where the vehicle is at any time as opposed to where it should be or where they think it is,” Scahill says.

Fleet managers are also able to manage unauthorised vehicle usage as well as detect idling and indirect travel routes.

“If a driver is going from point A to point B via point C, that’s something that can be identified,” Scahill says. “We provide the capability to track in real time how units are moving around relative to their job. Everything is much more transparent.”

He cites one client, an IT services company, that was able to increase the number of daily service calls by technicians by 25 per cent. Another company reduced same-day return visits by service technicians by 55 per cent.

In addition to managing the cost and operation of its fleet of 25,000 vehicles, the NSW government-owned StateFleet is concerned with maximising the resale value of vehicles.

StateFleet has teamed up with the US-based business intelligence software company SAS to collect and analyse data on a daily basis on vehicle utilisation, fuel consumption and maintenance costs across the NSW public sector. SAS also helps StateFleet manage the composition of the fleet.

Before StateFleet commits to buying new vehicles, SAS reporting systems are used to generate reports detailing the current balance of vehicle makes and models. The general manager of StateFleet, Michael Wright , says this ensures that there is an even spread of vehicle types that come back on to the market at the end of their lease periods.

“If we were to have too many of one make of vehicle coming back to the market at the one time then the resale value could drop by as much as $2000 per vehicle,” he says.

The information aggregated by StateFleet is not limited to internal operational data. To enable a full assessment of the resale value of vehicles, Wright says, it is important to monitor external sources of market information that provide insight into consumer demand for vehicle types and prevailing sale prices.

As well as commercially available industry data and StateFleet historical data, the daily assessment of information includes social media, which Wright says is an effective source of “sentiment analysis” for makes and models.

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