FLEET MANAGERS ARE UNDER constant pressure to control costs. A critical step in managing expenses is to properly specify a fleet's trucks. Specifications should be written to include as many components as possible, such as frames, suspensions, engines, transmissions, brakes, lights, power take-off equipment, tires and specialty equipment.
“Far too often, fleets purchase on a hunch,” says Robert Johnson, fleet management liaison for the Farmington Hills, Mich.-based National Truck Equipment Association (NTEA). “In today's cost-conscious, competitive environment, it's more important than ever that fleet managers take the time to understand their vehicle needs and evaluate components for the lowest overall life cycle costs.”
Johnson, a former fleet manager for Verizon Communications, New York, has five rules for specifying commercial vehicles to maximize a fleet's return on investment.
Develop written specifications for complete vehicle applications (including upfits). Written specifications ensure that the components painstakingly chosen by a fleet manager are installed on all of the company's vehicles. Without written specifications, fleets may receive different components, depending on which upfitter is assembling a particular vehicle. Putting specifications in writing also protects against ordering errors and makes it easier to order the next round of vehicles.
Standardize components. Standardizing components ensures continuity in vehicles, no matter which dealer or upfitter is used. Most upfitters have preferred brands, so if the fleet manager does not specify which brand to install, the brand used will vary depending on who is working on the truck. When fleet components are standardized, the number of parts the maintenance department has to keep in stock and the amount of training required for maintenance personnel is reduced. If a variety of lines are used, maintenance personnel have to learn how to work on all of them.
Don't automatically under-spec — or over-spec. Fleet managers who want to save every penny upfront tend to choose parts that result in the lowest possible initial cost. Those vehicles often perform poorly and have more downtime and higher maintenance costs. Other fleet managers try to avoid the “cheap” trap by buying the most heavy-duty components available, whether the application requires them or not. These over-designed vehicles generally cost more upfront and usually require the use of more expensive maintenance and repair components. Plus, the increased weight of those vehicles may reduce the payload they can carry, which can lead to a loss in productivity or the need to purchase a larger vehicle.
Identify vehicle requirements upfront, based on job requirements. The most important guideline to follow when spec'ing a vehicle is to optimize the components for the required application. Start by identifying the vehicle's basic functional requirements for the intended use. Then, consider additional features intended to increase productivity, reduce maintenance costs and improve operator comfort. Some of the parameters to consider include: net payload requirements; operating environment and conditions; operating and loading cycles; starting and reserve gradability; minimum desired road speed; towing requirements; special vocational requirements; maintenance environment; operator proficiency; and regulatory and contractual requirements. The requirements should be reviewed before each vehicle purchase to make sure they have not changed.
Consider life cycle costs. A vehicle that has been optimized for its intended application will provide the lowest overall lifetime cost of ownership when all factors are considered. The primary factors affecting life cycle costs are initial purchase price, long-term operating and maintenance costs, vehicle productivity, and resale or salvage value. When evaluating the cost-to-benefit value for any component, a business should consider the time value of money and the effect of taxes on cash flow. This can be accomplished by using a basic after-tax net present value analysis.
Johnson suggests fleet managers can learn more about components by attending trade shows. At the Work Truck Show, for example, exhibitors display all of the pieces and parts that go into and on the vehicles instead of only finished vehicles. This gives fleet managers and others an opportunity to look at all of the parts and to talk directly to component suppliers before making a purchasing decision.
Costs are too high to spec vehicles based on gut instincts or to accept components that are not optimized for the vehicle's application. By following these five specifying rules, fleet managers can keep long-term expenses under control.
Additional information about specifying commercial vehicles and other fleet management resources are available on the “Fleet Manager” section of NTEA.com. The Web site content includes a detailed eight-step vehicle specifying process.