When it comes to right sizing a fleet, managers are focused on determining the right number of assets and drivers to meet customer time window and delivery expectations, all while minimizing costs. In some cases, fleets may find they need to increase their number of assets to support their mission. In other words, they are interested in the maximum optimization of their entire fleet. A key player in right sizing is having the right tools at your disposal with a continuous analysis and assessment model to inform your business decisions. What is needed today may be vastly different to the requirements of even a few months ago.
Right Sizing Methodology
The right mix of assets can minimize the overall cost to the operations and help drive profitability. On the flip side, the wrong mix of assets will result in service failures and ultimately, unhappy customers. So what are the steps to ensure you are sized optimally? Manual methods using spreadsheets and tribal knowledge are commonly used in today’s fleets, after all, who knows your business better than you do? However, optimizing fleet size while maintaining the capacity to manage seasonality changes can be extremely difficult. Understanding the required number of resources based on average or even forecasted volume is key to minimizing costs.
For example, dedicated carriers - who bid on business under a short time frame and may not have the knowledge necessary to accurately price their bid - utilize software applications that are specifically designed for bidding and fleet optimization.
Fleets in the final mile market have an extremely diverse network of trucks and equipment, so developing the most advantageous mix of assets required with lift gates, straight trucks, and tractor trailers can provide even more challenges. Many organizations rely heavily on software utilization to run extensive “what-if” analysis to evaluate all available options and guide their business to the most optimal operation.
An Ongoing Practice
The solution you use for your rightsizing process should be scalable, designed not only to give you the tools to grow but grow along with you as your fleet and company succeed. It is also important that your data is logged and managed efficiently. You can only make informed operational and rightsizing decisions when you have the entire picture of your fleet.
Setting “right sizing benchmarks” are a great way to gauge how your decisions are impacting your efficiencies and cost savings. Fleet managers are under the pressure of thin margins, so keeping well informed data is extremely important. Here are a few benchmarks to take into consideration -
- Utilization - Establishing mileage thresholds is a great way to start analyzing how often and to what extent each vehicle is being utilized. You can identify excessive spare vehicles by assessing monthly mileage, engine hours, and active days by continuously running analysis reports. It makes sense to keep backup vehicles in your fleet in case of emergencies, however, keeping too many spare vehicles can be very expensive in the long run.
- Fuel Economy - A key question in properly right sizing your fleet is, could the same job have been done with a smaller, more fuel-efficient vehicle? Analyzing vehicle weight, engine size, and load capacity are all factors in determining getting the right vehicle on the road and can lead to major savings over time.
- Repair costs - Finding the “sweet spot” for your average vehicle lifetime can be difficult, but the effort can pay off. By minimizing the amount of non-preventative maintenance expenses that are associated with older vehicles, you can better right-size your fleet and cycle your vehicles within an optimal time frame.
- Route Efficiency - Smarter routing and dispatching is a massive opportunity to improve fleet optimization. Completing more stops with fewer vehicles allows the opportunity to reduce the size of your fleet and put money back in your pocket. Implementing real-time dispatching, route visibility, and asset tracking are sure-fire ways to improve your numbers.
Driver First Mentality
When starting to take the necessary steps to right size your fleet, it is important to make it a priority to get your drivers onboard with the changes. Take time to explain the transition and take feedback from your front line. What looks good on a financial statement may not seem like an attractive idea to your drivers, so involve them early in the planning and decision-making process. Taking this approach can make your rightsizing efforts seamless and successful.
Right Size, Right ROI
Right sizing is a consistent mentality, not an afterthought. It means being observant of data trends within your day-to-day operations. By monitoring utilization, maintenance, and route efficiencies, you can be sure to have the right mix of assets arriving at the right place and right time - all while keeping your customers happy.
Having the right analyst toolkit is a catalyst for your fleets’ success. Leveraging a software solution to solve your complex delivery logistics puts you one step ahead of the competition. Make sure you are running the most profitable routes - click below for a complimentary routing analysis.