Maintenance management Methods for reducing costs

Feb. 1, 2009
Maintaining A fleet in today's tough business environment means doing more with less. Accomplishing this by incorporating practices and methods to more

Maintaining A fleet in today's tough business environment means doing more with less. Accomplishing this by incorporating practices and methods to more efficiently and effectively manage a fleet was the focus of the Attacking Fleet Maintenance Costs workshop at the recent Foodservice Distribution Conference & Expo.

The first thing a fleet needs to do is take stock of its operation, identify the true fleet costs, and figure out what it does and doesn't do well, said workshop presenter Tony Vercillo, president of supply-chain, distribution, fleet management, and logistics consulting company IFMC.

This requires that a fleet understand the major fleet-cost drivers. Key among them are: miles; capacity (weight and cube); fixed costs (depreciation and resale); labor (drivers); fuel; and maintenance.

Furthermore, a fleet needs to take into consideration such cost activities as insurance allocations, administrative costs, licensing and registration — “things that aren't necessarily included in the total fleet costs.”

This done, a fleet can then begin to implement indicatives to reduce costs.

Lifecycle costing

Vercillo recommended fleets “regularly perform lifecycle costing to determine if it is better, from a cash-flow perspective, to sell off assets early and recapture funds.

“Every piece of equipment has a highly predictable economic life that is very different from its useful life. It may pay to shorten equipment life in order to get a higher resale value, rather than running it for 10 years, say, and getting nothing for it.”

He provided some general recommendations for foodservice distribution:

  • Tractors — 3 to 6 years (figuring 100,000 miles per year).

  • Refrigerated trailers — 6 to 8 years (assuming less than 20,000 hours on refrigeration units).

  • Straight trucks — 6 to 8 years.

  • Vans and pickup trucks — 4 to 5 years.

  • Cars — 3 to 4 years.

  • Forklifts — 6 to 8 years.

  • Pallet jacks — 8 to 10 years.

Productivity measures

Another suggestion was for fleets to get rid of spare vehicles. “You can't have assets sitting around doing nothing. It's just too expensive.”

Vercillo advised that fleets consider benchmarking their main maintenance costs against similar companies or industry benchmarks to see how they compare. These costs ought to include cost per mile, cost per unit, cost as a percent of sales, insurance cost per vehicle, depreciation percent of total cost, vehicles per mechanic, spare vehicle percentage, maintenance cost per mile, and tire cost per mile.

Another action area “is to route properly and track driver productivity to reduce every unnecessary mile. Get drivers rallied around this and use technology to help squeeze out costs.”

Cost cutting

Finally, he offered some additional ways for reducing fuel and maintenance costs:

  • Perform predictive maintenance to help prevent on-the-road breakdowns.

  • Maximize warranty collection.

  • Use a tire inflation program to keep tires properly inflated for improved fuel economy.

  • Consider using synthetic lubricants that help improve fuel economy, reduce wear, and provide extended drain intervals.

  • Use the Oil Price Information Service (OPIS), a comprehensive source for petroleum pricing, when buying fuel.

  • Monitor fuel card usage for abuse.

  • Check cetane rating and fuel quality.

  • Monitor engine idle time.

“Carefully scrutinizing the key elements that drive maintenance costs can help a fleet more effectively manage operations and find ways to reduce costs,” summarized Vercillo.

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