Improving Fleet Utilization: Getting to 100%
By Joseph Evangelist
Executive Vice President, Transervice
As originally appeared in FleetOwner Magazine’s IdeaXchange
It may be a little overly ambitious to think a fleet can get to 100% asset utilization, but I know we can do better than the industry average of about 50%.
While it’s unlikely that a fleet will reach 100% utilization of any of its assets, there are some techniques that can be applied to your trucks to get utilization rates as high as possible. However, it is important to keep in mind that the overarching factor to implementing the techniques outlined below is having a quality maintenance program already in place. In order to maximize utilization, the equipment has to be serviceable.
The first step to measuring improvement is determining your current base and the basis by which you measure utilization. Whether it is on a daily, weekly or monthly basis, figure out how many hours, days or shifts an asset is in service…per day, days in a week, or weeks in a month.
Once you have your baseline, then you need to start looking at the various pieces of the asset utilization puzzle. There are three basic pieces:
- The volume of product your truck or trailer can carry
- The customer service requirements that you need to meet
- Your driver’s available hours of service
Other determining pieces could be:
- How often your trucks go on the road less than full
- How many stops each truck is scheduled to make on the routes as planned
- The duration of each stop
- The time of day the trucks travel to meet customer delivery requirements
- The number of drivers you employ to meet the delivery requirements as currently scheduled
It can become rather complicated, especially when you factor in the key component — the delivery time windows for some of your customers.
If you have customers that only accept deliveries between 6 a.m. and 6 p.m., are there additional activities to utilize the trucks in the off hours, i.e. backhauls, additional customers with more flexible pricing? This will allow you to “slip seat” both drivers and equipment increasing the utilization of a given truck. Of course you will need to make sure you have drivers that can operate the trucks during those hours.
But improving asset utilization does not necessarily mean running a truck 24/7. It can also mean evaluating the mix of assets you have based on what you deliver.
Consider this example:
You are delivering to Chicago-area markets. Each customer takes 20 boxes and you can only make 15 stops during their delivery windows. You need a truck with a 300 box capacity; using one with a 1,000 box capacity means the truck goes out partially empty each time it leaves your facility. While the truck is running to the maximum time allowable, it is not maximizing the use of that asset.
A smart way to improve utilization is with dynamic routing. Many fleets use static routing which means the stops on a route are made in the same order every day, even if there is not something to be delivered at each step.
The problem comes in when one of the stops hasn’t ordered anything and there are no returns to be picked up. For example, if stops 2 and 3 do not order anything, then the truck goes from stop 1 to stops 4, 5, 6 and 7. This could potentially not be geographically effective, thereby increasing the miles and hours of the route.
Dynamic routing looks at all the stops for each day, and puts them in a sequenced format that will optimize the utilization of the assets and the drivers. Consideration needs to be given to returns, racks (bakery business), totes (retail), etc. but an effective dynamic routing program can measurably impact the utilization of both drivers and equipment. Backhauls can be factored into that routing.
We’ve seen improvements in the 10-15 percent range when these techniques are applied. But be advised you have to continuously measure and monitor your asset utilization because conditions change and that could impact your analysis. Having the right size trailers in terms of length, height and doors can affect the maximization of those assets for the jobs designed.
While all this may sound overwhelming, remember there are technology products that can assist you and in the end, you may be able to use fewer assets to deliver the same amount of goods, or at the very least, make better use of the assets you already have. Depending on your pricing and fixed cost absorption, it may assist you in developing new customers or opportunities (backhauls or picking up needed raw materials at times the trucks are not currently being used).