Size Matters for LCV Fleets
Fleet right-sizing is a continuously vexing issue. LCV fleet managers, in particular, must evaluate it from several points of view, including: number of vehicles in the fleet and load volume, type and capacity.
The change in business (up and down) caused by pandemic lockdowns has brought the issue into sharp focus with many fleets de-fleeting while others increasing capacity.
Factor in environmental and journey planning considerations, plus total cost of ownership, it’s easy to see how the tangle just gets knottier.
For light commercial fleets, having an under-sized fleet or the wrong fleet mix can result in service failures, which will create unhappy customers. It could also make it difficult to accurately price bids in a timely manner.
In an article entitled: How to right-size your fleet in 5 simple steps, telematics provider Geotab writes: fleet right-sizing is a proactive, strategic plan to have the right type of vehicle, in the right place at the right time.
But how do you do that when you can’t control the future?
Set utilisation thresholds
Geotab advises that you must first set an internal utilisation threshold for vehicles or vehicle groups. This determines the minimum number of miles driven or hours operated (per day/month/year).
The next step is to determine the utilisation of each vehicle, which can be simplified using asset utilisation reports (contained in fleet management software platforms) and telematics data. The process can be done manually, using spreadsheets, but will take longer and be more complicated. A software program with strong reporting capability will enable extensive “what-if” analysis to evaluate different options and achieve an accurate conclusion.
Right-size to save on fuel
The Alternative Fuels Data Centre in the USA advises that, in addition to optimising utilisation, there are many reasons why you should right-size your fleet, such as reducing emissions, saving money on vehicle maintenance, tyres and so forth, but one of the most compelling is to save on fuel. The starting point is an analysis (similar to the above) aimed at identifying waste and highlighting opportunities to reduce fuel costs. This information can be supplemented by the following audit:
- What is each vehicle for? What does it accomplish? (drive cycle).
- What is the daily/weekly/monthly mileage of each? (duty cycle)
- What is the fuel consumption?
- Is each vehicle the optimum type, class and size for the job?
- What is the age of each vehicle?
- Are any vehicles no longer cost-effective?
- Are any not being used or do they have too much downtime?
- Are there more cost-effective alternatives to owning or leasing vehicles?
Translating utilisation and cost of ownership data
USA-based CST Fleet Services has devised a data-driven approach it calls “KRSD” (keep, replace, share or dispose), which it uses to translate utilisation and cost of ownership data into vehicle recommendations. Data can come from various systems: maintenance, fuel, telematics and diagnostics and analysed using proprietary parameters to score each vehicle on utilisation and condition (see image).
Geotab cautions to keep an eye on the future. Fleet right-sizing is a continuous process not a one-time-only initiative. The company says to examine trends, think about if demand is increasing or decreasing and figure out if you need to increase or decrease capacity.
Geotab’s utilisation formula:
Utilization = Demand divided by capacity
The UK’s Energy Saving Trust says that this self-examination is effective for SME companies but larger ones may want to contract a route scheduling company to assign, route and track vehicles to build a fuller picture before making any significant changes. The Trust also urges businesses to ask if they need to have every vehicle type they ever use retained in the vehicle pool or if hiring in vehicles (for non-standard requirements) might be a more cost-effective option?
Common and costly wrong-sizing mistakes
In an article: 6 tips for managing a fleet of vehicles, Mike Albert Leasing highlights six common and costly mistakes:
- Oversized sales vehicles – a classic case of “my laptop needs more legroom”.
- Overloading trucks and trailers – a classic case of “sure it’s heavy, but it fits.”
- Disorganised inventory – a classic case of “it’s in there somewhere.”
- Mistakes in vehicle form and function - expecting drivers to double as contortionists.
- Not acknowledging that every vehicle is unique – a classic case of “one size fits all.”
- Specifying vehicles incorrectly and ending up with unnecessary features and functions.
There are many things in life we take care to right-size. Shoes, for example. No one would think twice about walking around in a pair that were three sizes too big or (worse still) too small. We take the time to make sure they fit well. Right-sizing a fleet is more complicated than buying shoes, which is precisely why it deserves at least as much consideration, if not more. Happily, there’s a lot of data, these days, that can be used to optimally size an LCV fleet.
