Measuring fleet performance
In the current economy, municipal fleets are being asked to run their operations more like businesses, so it is more important than ever for fleet departments to track, understand and know their costs. Approximately two years ago, a team of fleet managers created a list of the “Top 10 Performance Measures for Fleet Managers” for the Kansas City, Mo.-based American Public Works Association (APWA). Of the hundreds of benchmarking standards used to manage fleet operations, the following were selected as the top 10.
- Develop fleet charge-back rates
Before developing charge-back rates, first know all the costs. Then separate costs into two categories: core/direct costs (the funds needed to run the business) and indirect/non-core costs (fuel, rental cars, accidents, etc.), which are the costs of providing value-added services. There are three methods used to recapture operating expenses: (1) a charge per hour/mile, (2) flat-rate fee per equipment class, and (3) hourly shop rate. For indirect/non-core costs, recapture expenses by marking up the services provided. In the end, if the budget is $1 million, then recapture $1 million. Rates should be competitive to the local market.
- Perform preventive maintenance (PM)
PM should be performed on all equipment to ensure safe operation, to reduce downtime and to prevent costly repairs. Fleets should be spending at least 50 percent of their available labor time on PM.
- Determine fleet availability for each equipment class
A piece of equipment is not available if it is not available for the customer/user during a normal shift. Therefore, a piece of equipment that is maintained at night while the user is not working is not considered unavailable. (That is the reason for having a swing or graveyard shift.) Equipment should be available 95 percent of the time.
- Improve technician productivity
Of the available 2,088 work hours in a year, at least 79 percent, or 1,650 hours, of the technician’s time should be billed out (that is based on hourly billing, not a flat rate). The difference between 1,650 hours and 2,088 hours is in vacation, holidays, sick leave, training, etc.
- Calculate cost per mile or hour (CPM/H)
Cost per mile, like miles per gallon, is an important tool in determining the efficiency of equipment within the same class or when comparing equipment in other fleets. Make sure operating costs (fuel, maintenance, tires, accidents, etc.) and ownership costs (depreciation, financing, insurance, etc.) are the same when comparing fleets. In addition, consider the equipment age. Reviewing CPM will identify problem vehicles within each equipment class.
- Calculate repair hours by repair type and cost of repair by equipment class
Repair time and costs by class can help determine the number of repair hours needed over 12 months for any new equipment. That information will help determine how additions will affect the fleet maintenance staff. One full-time maintenance technician can bill out on work orders (straight time) between 1,625 and 1,670 hours per year (more if less vacation/sick leave or other non-wrench-turning time is used). APWA publishes a method, using key volume indicators and equivalency units, to determine the number of fleet technicians needed. The Navy uses a maintenance labor-hour planning standard. Regardless of the method used, the productivity of technicians and the number of technicians needed to maintain the fleet are necessary to determine. If staffing is not sufficient to support the equipment, consider extending service intervals and adding a paid or unpaid intern from a community college with an auto/diesel repair program.
- Find the scheduled repair rate
Determine whether employees spend most of their time doing scheduled or unscheduled work. If most work is unscheduled, then find out why. Approximately 70 percent of employees’ time should be spent on scheduled maintenance (50 percent PM and 20 percent scheduled work).
- Calculate the parts inventory turn rate
Municipal fleets should know their parts turn ratios. Parts should be available within 24 hours. In municipalities, it may not be possible to have an average turn ratio of 2.4 turns per year on stocked parts (as recommended in wholesale parts warehouses) because of seasonal items (like snow chains) that may turn only every other year. However, the majority of inventory (70 to 80 percent) should turn at least annually. Review turn ratio annually and determine if the parts that are not turning are really needed.
- Determine the parts demand fill rate
The fill rate helps determine if the right parts are stocked. The minimum standard is 70 percent, which means that of the fast-moving parts stocked, the department can fill the parts request from stocked parts 70 percent of the time. In addition, if the parts needed can be filled within two to four hours of the request from local parts warehouses, the fill rate could be equal to or greater than 90 percent. The goal is to stock the right parts at a competitive price to minimize equipment downtime. The maintenance technicians’ productivity is tied to being able to have the parts needed.
- Maintain high customer satisfaction rates
Customer satisfaction can have a considerable impact on perceived efficiency and effectiveness in any organization. A great fleet department can fail because of poor customer service. To keep customers satisfied, build commitment and trust, be responsive, develop customer surveys, find out what the staff thinks, greet customers when they enter your work area, take time to brief customers on the services provided, listen to customer input, and develop service/maintenance agreements with customers as needed. Finally, remember to treat customers respectfully.
Bill DeRousse is the fleet manager for Everett, Wash.