For Fleet Managers, they are age-old questions: How do I know if I have enough vehicles in my fleet? How do I know if I have too many? The stakes tied to these questions can be huge. With too few vehicles, our driver stakeholders may not be able to do their jobs. And, with too many vehicles, we may be driving up our costs not only today, but for all the years we need to carry those excess vehicles in our fleet. When it comes down to it, determining the size of your fleet requires a balance of effectiveness and efficiency.
Operating the Fleet Effectively and Efficiently
An “effective” fleet fulfills the work mission meant for those vehicles. Employees or students get to where they need to be. Materials and goods arrive as they should without complications. In short, your organization gets the job done.
In terms of efficiency, for every vehicle that your fleet carries, it costs you somewhere between $3,500 (for a light duty passenger vehicle) to $8,000 (for a specialized job truck) per year. While different vehicle types come with varying carrying costs and usage patterns, one thing is for sure - It behooves you to not have extra vehicles lying around.
From an effectiveness perspective, most fleet stakeholders will (sometimes loudly) let you know when a vehicle isn’t available. Shortage is obvious. From an efficiency perspective, the warning signs may be less clear. Flat tires and dead batteries may signal vehicles that have been idle for months or longer, but many underutilized vehicles won’t provide these obvious warning signs.
So, how do you know where you stand? If you’re leveraging a motor pool platform, the answers can be found in the data.
Peaks and Valleys
For your fleet stakeholders, demand can change alongside the seasons. At a university, parents’ weekend in the fall might create a spike in demand for passenger vans. Sedan use, while steady throughout the fall, winter, and spring, might take a nosedive in the summer. In government, spring may bring greater light passenger vehicle use among your tax collectors and summer might tie up your trucks among parks and recreation staff. When your fleet never runs out of vehicles, even during peak times of the year, this is a red flag. It may be that your fleet has more vehicles than you really need, which is fine from a customer service perspective, but peak demand isn’t sustained. Valleys may represent most of the year, when equipment just isn’t needed, and vehicles sit idle for long periods of time – that’s not efficient at all.
Finding a fleet size to accommodate both your usage peaks and valleys is tricky business, but the good news is that it can be accomplished. The process can be easier than you imagine, and the results can be greater savings and great service for your end-users.
A good way to gain a better understanding of your fleet’s peaks and valleys is through utilization reporting. Good utilization target rates depend upon knowing the requirements of each vehicle, the class of vehicle required, and the characteristics of your sub-fleets. Within an organizations’ fleet, there may be sub-fleets of light passenger vehicles, work trucks, vans, motor coaches, and even golf carts. By segmenting utilization reporting among sub-fleets, we can start to appreciate how seasonal demand patterns affect our different types of vehicles. The fidelity of your utilization data is important, not just capturing how many vehicles you have in your one fleet, but how vehicles are used among your sub-fleets.
When viewing utilization data among your sub-fleets over one or more years, you can start to spot problem areas. The period over which your use patterns repeat themselves is called a utilization cycle. By widening the aperture to consider a view of the lot, not only today, but throughout your utilization cycle[s] give us enough data to ensure that we’re not taking a snapshot assessment of our utilization in a peak or valley.
How to Fix Low Utilization Rates in Shared Fleets
Agile Fleet suggests three audit techniques to break down what your present utilization rate and develop strategies to improve it.
- Start with each site. First is the broad, big picture viewpoint of utilization by site. What’s the aggregate utilization number across the whole site, and how might it be restructured? Then look at utilization by class of vehicle, and the types of equipment you are carrying. Do you have too many of one type and not enough of another?
- Look at each vehicle. Are people rejecting using that 2014 passenger van because it’s too old? Whether it’s on the road or sitting in the lot, you’re still paying a carrying cost.
- Bust ghosts. Speaking of insecurity, it never fails. Once you start on the path of investigating which vehicles you have and how often they’re used, you’re bound to dig up some “ghosts.” These are the vehicles that probably should have been disposed of long ago but weren’t because an employee had a bad experience when they needed a vehicle, and none were available. This extra equipment is there as a security blanket.
You might get so used to seeing ghosts on the lot that you forget they’re there at all. Rest assured, there are other entities that know your ghost vehicles all too well: insurance companies, registration agencies, and maybe even the garage that must perform occasional preventive maintenance on it. The good news is that your ghosts make excellent first candidates for removal. If you need a concise definition of “low-hanging fruit,” there it is.
Want to gain a better understanding of how vehicle-sharing and fleet reductions might impact your bottom line? Download our 10-Year Fleet Savings Calculator.
We Know it’s a Lot…
Organizations throughout North America are winning the race to optimal utilization rates with FleetCommander. FleetCommander helps manage fleet vehicles and fleet drivers, capturing data to help your operations run effectively and efficiently, even in the usage peaks and valleys you face every year. Let the experts at Agile Fleet show you the savings. Give us a call or send us an email. We’re happy to take the time to unpack fleet management technology for you. You can contact us for information, arrange a consultation, request a demo of the FleetCommander FMIS, or even arrange a trial. We’re here for you!
Talk to us today. Request a consultation here.