Fleet management has long been a complex job, but these days its complexities have begun to sprout their own sets of complications. With the Dodge Outlook Report predicting further construction deceleration through 2019, labor, fuel, materials and capital costs are all on the rise. Translation? Fleet managers, equipment managers and other HME and construction professionals face a Herculean task. They have to ensure gear health, increase productivity and improve efficiencies, all while reigning in costs.
The problems exist across the vehicle spectrum, but HME professionals — because the gear is so expensive — must especially mind their math and machinery. Keep your margins and your motor graders healthy. Here are five fleet management tricks every HME professional should employ that will improve fleet performance, while lowering costs and blood pressure.
- Fleet Software
As my dad always says, “Sometimes you gotta spend money to make money.” When it comes to fleet management software, the spend is definitely worth it. Telematics hardware comes standard on almost every piece of machinery you can buy these days, and that hardware makes it easy to track and geofence gear, cutting down on theft and unauthorized use, which has a direct effect on your bottom line. Beyond that, telematics hardware makes it possible to gather valuable data that, when analyzed properly, can reveal startling insights, saving you time and money and even improving driver and operator safety.
Fleet management apps can also streamline some of the more tedious aspects of the job. Forms tools reduce paperwork and make it easier for operators, mechanics, managers and executives to stay on top of what’s happening with what piece of equipment. Collaboration tools keep team members in close communication so issues and misunderstandings can be more quickly addressed. The time savings accrued by fleet management software makes it possible for fleet and equipment managers to turn their attention to more pressing issues, like under- and over-utilization of equipment and staying on top of preventive maintenance.
- Preventative Maintenance
Speaking of preventative maintenance, developing a PM schedule and sticking to it can work wonders for your bottom line. Not only do companies that follow a robust PM program save an average of 25% on maintenance costs over the life of their gear, but they also enjoy fewer safety violations and accidents. Well-maintained equipment is safer than poorly maintained equipment, plain and simple. Beyond the tragic loss of health or life to an individual, the costs of injuries are also much higher than simple medical bills show. When you figure in administrative time to deal with paperwork for billing, insurance, OSHA, workers’ comp and more, plus the costs of lowered morale, lost productivity, higher insurance premiums and negative PR, improving safety by implementing a solid preventive maintenance schedule and sticking to it is a no-brainer.
How does your company’s fleet measure up? Are you keeping up with the Joneses or falling behind? Better yet, are you the Joneses, and if not, can you become them? With benchmarking, you can.
According to AEMP, benchmarking is “ ... a tool that can be used by any company to measure where a company is compared to its competition in the industry.” As such, benchmarking can show you where you stand and where you stand to improve. Some examples of HME fleet-related benchmarks that should be measured and, if possible, improved upon, include:
- Fuel consumption
- Idle time
- Depreciation rates
- Accident rates
- Operating costs per mile or hour
- Insurance costs
The list is as long as the imagination. One thing is certain though. Measurement, i.e. knowing what a fleet is actually doing, is essential. As H. James Harrington, Lean and Six SIGMA expert, put it:
“Measurement is the first step that leads to control and eventually to improvement. If you can’t measure something, you can’t understand it. If you can’t understand it, you can’t control it. If you can’t control it, you can’t improve it.”
- Lease vs. Buy
Heavy machinery and equipment isn’t cheap, and with new construction starts projected to hold fast over the coming year, many fleet managers are leasing the equipment they need, rather than buying. While there are many advantages to buying equipment — owning a piece of gear allows for total control of its use, including whether or not to sell it or trade it in, plus all the costs associated with ownership (depreciation, repairs, taxes, insurance, etc.) are tax deductible — a new dozer that sets you back $500,000 is only a good investment if you can utilize it regularly. There’s also the question of technology’s rate of change. What if new tech pushes a large capital expenditure right off the cliff and into obsolescence?
Leasing provides an attractive alternative to firms that aren’t as liquid as they’d like to be, or to firms worried about a slow-down in jobs. Additionally, leasing allows firms to take advantage of the best new tech available without having to take out a loan to cover it or fret over the next best new tech-driven equipment that will be coming out in a year. That being said, many lease terms are long, so if a machine is no longer needed but still subject to a lease, that’s money down the drain. Also if something out of the ordinary happens to the gear, the lessee may be on the hook to repair or replace it.
Bottom line: Buy what you know you’ll need and what has high resale value, and take care of it. Lease everything else. Another idea? Buy used HME. That stuff is built to make it through the apocalypse, and if the previous owner stuck to a good PM program, that gear will out-earn the investment.
The United States has entered a time of environmental agnosticism: Yes, there’s a planet with air, land, water and critters all over it, but the current, official, government policy has transitioned from “No harm, No foul” to “There’s no such thing as fouls.” This approach is unlikely to last. Even as environmental regulations are unraveling in the U.S., they’re being strengthened across the globe. Many U.S.-based businesses, responding to customer demand and concern, remain committed to renewable energy, safer supply chains and reducing CO2 levels, even without government pressure. Why? It’s good business.
No heavy machinery and equipment fleet management strategy can truly cut costs without taking into consideration the quality of life of everyone and everything living now and in the future. Thankfully for HME professionals, sustainable practices directly impact savings and spend. The most important thing to do? Increase fuel efficiency. From reducing idling time to improving engine health and addressing crummy operator behavior, burning less fuel will save plenty of money and save a little of the planet at the same time.
Cutting costs as costs rise is anything but simple. For the HME fleet manager, however, it’s do or die. Follow these five tips to keep your fleet in prime operating condition, and if you’re in need of fleet management software, give GearJot a try.