Fleets enjoy more more cost-cutting options as tire vendors compete for their outsourced business.
In today's highly competitive truck marketplace, fleets are looking to eliminate or reduce every expense that does not contribute to their primary business of hauling freight.
So it's little wonder that tires have rolled to center stage. After fuel, tires represent the fleet's second highest operating expense, accounting for roughly 11% of total operating costs.
There is no secret to building an effective tire management program; it's the execution that's the tricky part. Whether conducted in-house or out, an effective tire program directly affects a fleet's profitability, driver performance, equipment safety, and customer service.
Following the same logic that has led many managers to turn over much of their shop operations to third parties, fleets are beginning to explore outsourcing tire management to tire manufacturers, retreaders, and dealers as a more effective alternative to in-house programs.
"As manufacturers, we're all commodities," says one. "We all build a good product; fleets won't go wrong in choosing one or the other of us. The only thing that makes us different is the service. That's one thing nobody else can duplicate."
The expanded focus on service couldn't come at a better time. "Fleets don't want to bother with non-core elements," says Mike Tirona, vp of Tire Management Solutions (TMS), a newly formed subsidiary of Bandag Inc. "We can help relieve them of the nuisance factor."
Know your costs Developing a tire management program begins with an accurate accounting of tire costs. Specific tire reports will help track acquisition costs, original tread life, fuel efficiency, emergency road service, mounting expenses, casing life, maintenance, labor, equipment, and training.
The challenge is to figure out which measures are important to the fleet and to concentrate on them. "Each fleet has its own hot buttons," says Singh Ahluwalia, vp-truck tire sales for Bridgestone/Firestone.
The data must then be organized and reported to provide the information needed to control the tire program. "Fleets should benchmark every aspect of tire maintenance to drive improvement throughout their program," says Singh.
Without such information, it's tough to manage your existing program, let alone evaluate outside bids or monitor the effectiveness of an outside tire management service to ensure it's doing what it's supposed to. If you don't have the right reporting system in place, outside vendors can help you establish one.
The real question is whether you want to track every tire in your fleet or track a representative sample. Most fleets simply don't have the resources to track every tire from birth to death. Recording every event and branding every tire can be cumbersome. Instead, a good rule of thumb is to track 5-10% and extrapolate the results across the fleet.
"Fleets must take tire management very seriously in order to make the best decisions about their tires," says Al Cohn, marketing manager-commercial systems engineering for Goodyear Tire& Rubber. This means making sure you have the right tire on the right wheel position, for the right application and the right road condition.
Most programs begin with a complete analysis of scrap tires. By understanding how and why tires fail, service providers can make better recommendations on which tires run best in which applications and in which positions.
Most experts believe a solid tire management program is based on consistency in buying tires, retreads, and supplies because it allows for meaningful comparisons. At the same time, however, they caution that standardization should not come at the expense of evaluating new products from time to time. Many tire programs allocate up to 10% of their tire purchases for products they haven't tried before.
By monitoring tire performance, a fleet can determine which tire is best for its operation based on wheelbase and equipment configuration, as well as operating conditions.
That's a major benefit of outsourcing. Outside service providers have access to huge databases of information that can help determine the right tire selection based on the operating parameters of a particular fleet.
Maintenance Once the tire is mounted, the maintenance program kicks in. And most such programs are designed around maintaining the proper air pressure. "Air is what holds tires up," says Goodyear's Cohn. "Everything goes bad without air."
This means putting into practice the time-consuming task of checking air pressures - even on the inside duals. In reality, many drivers are still thumping. And although it's better than nothing, it isn't nearly as effective as using calibrated air pressure gauges.
Valve caps must be checked and tires visually inspected for cuts, holes, and irregular wear. Bad tires must be removed as quickly as possible and replaced with matching tires.
Even though everyone acknowledges the benefits of good tire maintenance, people don't always take the time to do a complete check of the product. "The responsibility is to get that truck out and moving," says one maintenance jockey.
Driver training Even the best tire management program depends on well-trained drivers. How they drive determines the amount of scrubbing, flat-spotting, and curbing that takes place - all of which can quickly sabotage any effort in the shop.
Sonnie Stevens, director of maintenance for Gulf Coast Transport, Sunnyvale, Tex., prefers running his own tire management program on his fleet of 150 power units and 300 trailers. Drivers are an important part of his program. "I issue everyone a tire gauge and tell them to run at 100 psi, except for steers, which should run at 110."
As part of his normal 20,000-mile service interval, Stevens rotates tires on power units. He also does only one recap per casing and doesn't cap anything that's more than three years old.
Migrating to outsourcing According to TMS' Tirona, most fleets can be placed along a continuum that is moving toward partnership agreements. The first phase is when they're willing to pay anything for a product as long as it meets their needs. As they become more savvy, however, they want to find what they need at the best price possible.
Once fleets stop obsessing over price, they begin to look at the cost of the total system. This phase typically includes centralized billing and more sophisticated analysis of tire performance.
Eventually fleets want to drive out process costs and concentrate on their core business. "The focus here is not just on the material side of the business," Tirona explains. "The objective is to help eliminate administrative and operational headaches."
Depending on how effective a fleet's in-house tire program is to begin with, an outside service provider can reduce costs by up to 20%, as well as return predictability to this line item over the long haul.
In general, pricing for outside tire management programs is based on total miles divided by total tire-system costs.
But outside tire management is not for everyone. Jacksonville, Fla.-based Benton Express has developed a strong in-house tire program under the leadership of tire technician David Justice. This year Justice changed the fleet's policy of running virgin rubber on the tractor and caps on the trailer to allow the use of up to three caps, the first of which goes into drive-tire service.
On the second Saturday of every month, each Benton unit is shut down and air pressures checked, tread depths measured, and tires subjected to a thorough inspection. Despite spending more for new tires, Justice's attention to detail and more generous use of recapping has trimmed tire expenses from 2.9 cents per revenue-generated dollar to 1.7 cents .
And while Justice has been approached a number of times to turn his tire management over to an outside vendor, "I haven't seen anything around that's comparable to what I can do."
What to look for Once the decision has been made to look outside, fleets need to: * Understand their tire costs * Evaluate the capability of the dealer or dealers that are going to be handling their service * Determine network coverage * Be comfortable with the tire product * Understand the emergency breakdown service capability * Understand the true cost of doing the deal * Make sure corporate will support the deal * Make sure there is adequate feedback, reporting, and measurement to evaluate the success of the program.