Do you know what it costs a motor carrier on average where maintenance and repair are concerned? Fifteen cents per mile. That’s no small number. It comes out to around 10 percent to fleet operating costs.
By some estimates, almost two-thirds of fleets today are conducting their maintenance in-house. Yet, there are signs that the trends are changing. Fleets are becoming more open to outsourcing their service work. But, why?
For many fleets, it’s a turnaround time problem. When they can hand off problems related to repair work and vehicle upkeep, it takes the burden off their books, especially if there is a solid value/cost proposition.
Yet, headwinds remain. The biggest of which lies in turnaround time. Motor carriers might be more inclined to hire someone from the outside if they didn’t have to worry about getting the vehicle to and from the factory, plus any potential delays dealing with a “middle-man.”
According to a recent report, over a full third of the fleets surveyed reported that they had improved their in-house shop productivity over the reporting period. It mainly stems from the time saved not having to wait for a vendor to complete the work.
But could that paradigm be changing?
The latest tractors, complex commercial motor vehicles (CMV), are more complex than ever. Compound that with a continued truck driver and technician employment squeeze and you get both small- and mid-sized fleets unable to complete the work in-house. Even as they feel the pinch, vendors have been getting better at enticing trucking companies to give outsourcing a chance.
The fact is, there are many reasons why outsourcing the shop might be a good idea for fleet operations.
Number one, these vendors are here, in America. No loss of jobs. Fleets could essentially have a third-party operator manage the larger repairs and assessments, while their own shop still handles normal workload issues, mid-level to minor.
Outsourced operations could also be used to patch up holes in the operation when manpower is low. When partnerships become enhanced, different services can be offered or even closely integrated with the fleet’s operation.
The hard truth is that the advances in CMV technology are coming at a faster and faster pace. When you begin incorporating ELDs and advanced telematics into these heavy-duty trucks – indeed, even making them semi-autonomous – it may become difficult for your in-house shop to keep up with all the changes.
There are large investments that must be made in order to keep up with the numerous changes piling up and driving the marketplace. This is where the decision will become critical for the fleet. Should they keep their services in-house and meet the large warehousing and infrastructure demands needed to house the trucks of tomorrow or are those services best left outsourced?
If a fleet does choose to outsource, here’s how they should approach it.
Doing an Internal Analysis
Obviously, this is going to be a job for the fleet manager. He or she will need to sit down and figure out all the details regarding fleet operations. Only by knowing one’s fleet can one find the proper partner to address its needs.
A trucking company must fully understand their own underlying cost structure before they can set about partnering with someone who can coherently integrate with it.
Some things to look out for are:
- Truck utilization
- Out-of-service percentage (in time)
- Overall fleet downtime
- Maintenance budget
- Overall staffing
- Equipment levels
The key is discovering if you have any lost revenue seeping out as a result of an internal problem. That way, when you sit down with the outsourcer, you can give them a clear picture of what’s going on within your organization.
The point is, trucking companies need to do more to assess their own internal capabilities. Are they willing to invest in what they need to in order to house the trucks of tomorrow?
A key to this is assessing your own fleet technician’s overall aptitude. The last thing you want to do is push a green group of fleet technicians past their breaking point as you try to reach the pinnacle of maintenance brilliance.
What if there are very complex jobs that could be outsourced as your technicians focused on jobs required in a shorter timeframe. Highly complex jobs could even pose business interruption risks, which are the last things you need.
Is it really a matter of thinking your trucking company is doing more than it should be? It could be that you add unnecessary costs to the operation, especially as you scale up.
Setting a Clear Agenda
Still, you want to make sure you can find a vendor who can work with your fleet’s specific needs. Specific expectations will need to be made, up-front on how the work is expected to go, on everything from pricing to timing-to-delivery.
In fact, it is essential that both sides set expectations from the outset. Miscommunication can not only sour a relationship, but can lead to serious technical and logistical issues that may be difficult to work out.
The key is for the vendor to do their utmost to live up to the customer’s timeliness requests. If a vendor can get a truck into a bay within one hour and be able to give a comprehensive timeline on the diagnosis that day, that’s the standard.
In some cases, vendors may even hire separate technicians to check the work over another time before the vehicle is picked up by the client. Speaking of picking it up, other vendors have that covered with vehicle tow or delivery services. As these outsource companies ramp up, they are pulling out all the stops to convert even the most skeptical carrier out there.
They understand that a fleet needs the least amount of disruption. The ideal transition would be seamless. The fleet shouldn’t even know that it’s happened. That is the ideal vendor transition.
But how do you track the performance of the relationship. The best way is through a setting up of key performance indicators (KPIs) that you can use to evaluate your relationship with the vendor.
Some of these could include:
- Pickup or delivery time
- Turnaround time
- Service fees
- Additional fees
- Labor rates
- Total cost of service
It’s important that when you are making the evaluation you also make the distinction between lower price versus lowest total cost of service.
Here is an example: You could wind up paying a lower labor rate or even get less expensive parts, but will that equal out to more down time in the long run? If you must keep bringing the vehicle back into the shop, you aren’t receiving a long-term return.
In other words, it is important that a fleet manager consider more than just initial cost. Companies need to set out total cost of ownership over the long haul and set the rules of the relationship well in advance.
Setting Operating Parameters
Once you have picked a partner, it’s time to set a clear standard of operating practices that you both can follow. As we mentioned before, KPIs or metrics, however you call them, are good at helping both sides keep track of what is going on.
Remember, most relationships, whether personal or professional, fail because expectations were either unmet or misaligned. Both parties must ensure their expectations are clear.
One good way to do that is by laying out the rules of engagement. This document should have:
- Service request specifics
- Communication expectations
- Points of contact
- Inspection schedules and contacts
- Vendor labor operating standards
- Estimate approval processes
- Data exchange formats
- Interoperability concerns
The fact is, nothing sours a relationship faster than a lack of communication. You want to be able to share information with your provider in real-time, and expect that in return.
Still, never underestimate the power of the actual call. Nowadays, with Zoom Rooms and GoTo Meetings, it’s possible to even get that key face-to-face interaction, which is so important to the relationship.
It also doesn’t hurt to compare service providers, or even go with more than one service provider depending on the type of service. Some fleets split up services to ensure their needs are met on the top and the bottom.
The Final Word
In the end, remember this, it isn’t all about price. If you are going to go through with the contract, you want to make sure it is what’s right for your fleet. Going with a third-party is never an either/or idea. You want to ensure you are doing it for the right reasons.
How quickly can they get you back on the road? Where are they located? How has their communication been?
Once you answer these questions and get something solid in writing, you can begin work. Just ensure you approach it correctly and ask the right questions. From access to inventory to compensation for lost time, it’s all got to be fleshed out. Stick to those guidelines and you are sure to find a third-party maintenance vendor you can trust and work with.