Opinion: Addition by Subtraction

This Opinion piece appears in the Nov. 28 print edition of Transport Topics. Click here to subscribe today.

By Bernie Kavanagh

Senior Vice President

WEX Inc.

In a time of business growth, trucking companies may find themselves trying to keep up with increasing demands, including fleet management needs. Regardless of whether the business grows organically or through a merger or acquisition, you need to find a way to manage the needs of your business and customers. However, simply adding more vehicles to your fleet isn’t always the right answer. Sometimes, it comes down to “addition by subtraction.”

Kavanagh

There are many ways to optimize a fleet’s utilization and, in most cases, smart decisions can deliver greater productivity and lower expenses. First and foremost, fleet managers need the right tool for the job. In this case, the tool can be the vehicle and/or the driver.

For example, fleet managers should consider whether a smaller, more fuel-efficient vehicle could provide the same capacity as a larger vehicle but at a fraction of the expense in fuel and maintenance. Tracking vehicle routes also can unearth additional cost-saving opportunities. Often, relocating low-mileage vehicles to higher-mileage routes and keeping higher-mileage vehicles available for local runs can extend the life and health of your fleet.

A common misconception is that purchasing a vehicle and running it into the ground will get the most out of the asset. While that strategy may seem logical from a capital expenditure standpoint, it greatly increases the total cost of ownership. Older vehicles traditionally have much higher maintenance costs and will increase fuel usage considerably as engine functionality declines. As such, many fleets have begun exploring vehicle sharing, especially for specialty vehicles that many companies can utilize in a geographic region to keep costs low.

Additional savings can be realized in driver utilization. Some fleets have specialty drivers who might not be in the correct locations, which forces the companies to hire more drivers to meet business needs and increases costs. Relocation packages are one way to solve that dilemma and provide additional employee opportunities. The key point is that in times of growth, it’s prudent to take a step back and evaluate your current fleet and look for ways to match the tool (i.e., vehicle or driver) to the task.

Another hot topic within the fleet industry is data. Everyone seems to want all the data they can get their hands on. The question is, why? Simply providing raw data to fleets would likely overwhelm them, or worse, end up costing them in resources for data analysis.

The shift in mindset around data began several years ago when fleets realized they don’t necessarily want to see everything that’s going right all the time; instead, they want to focus on what’s falling outside the parameters they set based on their fueling needs.

Standard reporting has become fairly regular and is available to fleet managers through myriad methods. Exception reporting does just what it states: It alerts the fleet that something happened that they didn’t want to happen. Those are the data pieces fleets want to examine and utilize to take corrective action.

Tracking exceptional behavior is important because people tend to follow through on procedures that they know will be inspected, rather than doing what’s expected of them. Timely updates allow drivers to take immediate action on driver behavior.

Based on the fueling activity in the reports, fleet managers may decide on different frequencies and alternative delivery methods. For example, a driver buying the wrong fuel grade may be considered an exception, but the fleet may want that noted in a weekly report. The fleet may be more concerned about a driver who exceeds a gallon amount per fueling fill-up and may want a real-time update sent via text. The type and timing of reporting is critical for making sure the data from your fleets are actionable.

Another important element of the data is flexibility. People use data differently and need the ability to manipulate the data to meet their goals. Many fleets integrate data streams with other internal data sources, which requires customized formats and solutions. Fuel data tell one story, but layering on telematics data with maintenance data provides a whole new view of the fleet.

Overall, it’s not uncommon for fleet managers to experience operational redundancies, spiraling workloads and higher costs when trying to efficiently manage their business operations. However, utilizing actionable fleet management strategies, big data insights and customized solutions will help fleet managers handle business growth in the most cost-effective way.

Kavanagh is the general manager responsible for the North American fleet at South Portland, Maine-based WEX, a provider of payment processing and information management services to U.S. commercial and government vehicle fleets.