Fleet Wellness ® – Measurement
This is part 2 of a 5 part series.
Fleet Wellness measures performance against benchmarks and industry best practices including cost savings, cash flow, operational efficiencies, driver safety, and reliability. The program builds on the holistic fleet management concept that many factors cultivate a great fleet. One or two are important but an optimal fleet addresses all facets.
Measuring all facets will lead to improved results. Your Key Performance Indicators (KPIs) help monitor whether you are on track to achieve your business objectives.
Fleet Management – look at your fleet structure and operations
A Fleet Wellness Program begins with an assessment of your overall fleet structure and operations.
The Fleet Wellness Index (FWI) is a numerical score benchmarking your fleet against peer groups in vehicle mix, age, type, condition, branding, financing, etc. The goal of the benchmarking is to determine how you perform relative to your industry or market niche and ensure you are aware of best practices and able to make the necessary changes.
- Financing Method – Does it suit your business goals? How does your peer group finance their vehicles? Do they pay cash, finance or lease?
- Vehicle Selection – Does your vehicle selection match your business needs? For example, if you are an electrical contractor, are your tools exposed? What do you and your staff wish you had or what do you admire in other firms that do it differently? What do you do that’s excessive or unnecessary today?
- Maintenance Operations – What are your direct costs and what are your administrative costs? Who is authorizing maintenances? Are drivers tasked with approving repairs? Are there checks and balances to ensure preventative maintenance is performed? How do they compare to your peers? How many FTEs are allocated to managing the fleet?
When determining which KPIs are right for your business, ensure that they help you understand how effectively you are achieving your key business objectives. While there are dozens of KPIs that can be tracked, here are 10 common KPIs related to your Fleet Wellness.
Fleet Costs – Dollars and Sense
Lifecycle costs analysis looks at three factors of cost: acquisition cost, disposition value, and cost to operate. To get the most representative evaluation of cost, it is best to look at all three.
- Acquisition Costs – Tracking acquisition cost over time can tell you many things. If a goal is brand consistency or option package consistency across your fleet, measuring acquisition costs over time can indicate if your goals are being met.
There are three ways to acquire a vehicle in terms of price: retail, fleet, and large fleet rebates. The vehicles can then be purchased out-of-stock or factory ordered. Lower prices are achieved by factory ordering vehicles.
A fleet of 15 vehicles qualifies for fleet rebate status with most OEM’s and much larger fleets qualify for large fleet rebates. Fleet rebates are based on the end user, not the fleet management company. Don’t be fooled by firms saying they are the largest, best, or cheapest. This is the work of a fleet management company but if your job involves acquiring fleet vehicles, maximizing rebates and minimizing vehicle cost is core to your success.
- Resale or Disposition Values – Maximize resale value by timing the sale for optimal sales price. Resale value is often the result of acquisition decisions, picking the right options and color to make the vehicle desirable used. Resale value can also increase if you’ve properly maintained your vehicles.
- Maintenance and Repair Cost per Vehicle – Increasing repair costs could be a sign you are holding onto vehicles too long. High maintenance costs could indicate you are over-maintaining your vehicles. Ensuring both preventative maintenance is performed and ongoing repairs are tracked is critical to Fleet Wellness.
- Fuel Consumption – Tracking fuel consumption helps to identify a myriad of problems from maintenance issues, to poor tires, to driver behavior or inefficient driver routes. It also helps identify which brands and models achieve the best fuel economy in real-world situations. Most commercial vehicles are not rated or required to be rated for fuel economy by the EPA.
Fleet Utilization – Utilization Drives Fleet Economics
- Annual Mileage – Tracking annual mileage can help you understand how your vehicles are being utilized.
- Identifies vehicles that are over utilized and those under utilized.
- Does your fleet policy allow weekend use or personal use of the vehicles? How does that impact total mileage and risk?
- What is the fleet average mileage and what are your outliers due to?
- Age – The optimal holding period varies by type of vehicle. Reviewing holding period and mileage allows you to maximize your resale value and minimize lifecycle costs.
- Evaluate the oldest 20% of your fleet. These are typically the ones that cost the most.
- Look to develop standards for age/mileage that guide future fleet management decisions.
- Availability – There are several metrics that can measure availability including vehicle downtime, idle time, time between repairs, to total hours available.
Driver behavior and safety can be measured and tracked allowing management to address risky behavior, wasted time/fuel, and reduce accidents. Risk management tools include a driving policy, driver testing, and telematics. Each can help reduce your fleet’s risk. There are several ways to measure the impact including the following:
- Total number of accidents per XX hours of driving.
- Insurance cost per vehicle
- Repair costs per vehicle
The initial and ongoing measurement of KPIs for a fleet is critical to accomplishing the goals established. It ensures the Fleet Wellness program milestones are reached and monitors the improvement of the Fleet Wellness Index over time.
Fleet Wellness is powering the healthy fleet of tomorrow.
To learn more about how you can use the Fleet Wellness program to assess, track, and measure the health of your fleet and your progress toward your strategic goals, download our eBook.