Vehicle Management: Track Utilization, Plan Replacement, and Calculate TCO with an FMIS
Do you have the right number of vehicles in your fleet?
How often are they used?
Do you need more assets?
Can you eliminate some?
When should you be replacing your vehicles and equipment?
When owning or operating a fleet, these are questions you need to answer.
They might seem simple, but getting the information to make these decisions – and obtaining it quickly – can be more difficult than it seems.
Fortunately, like most things today, there’s an app for that (or at least software). Fleet management software solutions can keep your vehicle information organized and provide you with the information you need to improve your vehicle management program. The FMIS will help you make informed, data driven decisions regarding your fleet.
Track Vehicle Utilization
Before you can determine if you have the right number of vehicles for your fleet and which ones need to be replaced, you need to be able to track and analyze your vehicle utilization.
Do you know how often each asset is used? Is it used more than other vehicles? Has it been sitting on the lot for weeks, undriven? Knowing this will help you right-size your fleet and ensure you have the correct types of assets.
What Data Do You Need In Your Vehicle Management Information System?
There are many ways to monitor how often each asset in your fleet is used. Some common types of information you can track include:
- Miles driven
- Engine hours operated
- Days used
- Number of trips operated
- Total fuel consumed.
All of this information, and more, can be easily obtained through a Fleet Management Information System (FMIS). In addition to more general asset identification information, you can use the solution to track maintenance and repair costs, fuel usage, miles driven, hours operated, or trips taken.
By entering this information this information into your system, you can quickly generate reports to see which vehicle is used the most often, which has the most miles on it, which has the fewest, etc. This will give you the information you need to start asking critical questions such as:
Why is this vehicle used the most often?
Why isn’t this one being used? Do we really need it?
Right-Size Your Fleet
By tracking the utilization of your fleet assets, you can begin to determine if your fleet is the right size.
Listen: What Does Fleet Right-Sizing Really Mean?
To start, you need to review the vehicle utilization data pulled from your fleet management software system. Determine the average usage of vehicles of the same class in your fleet and then look for anomalies. What assets fall below the median? Which ones are used more than the average asset in that specific classification?
Those vehicles whose average annual utilization is considerably lower than the class average should then be targeted for additional scrutiny.
Pull a list of these vehicles from your FMIS and start looking at each vehicle very closely. You need to determine how critical it is to your fleet, and why it is underused. It could be because it’s only used in specific situations or seasonally. If that’s the case, then you need to determine if you need to keep it in your fleet, or if you can lease it when you need it, borrow it from another fleet, or use employees’ personal vehicles. If you’ve invested a lot of money into outfitting it for your fleet, then you likely want to retain it.
Before making decisions on these underutilized vehicles, talk to each department that uses them and determine how critical they are to keep. After those discussions are held, you can then decide which vehicles will be kept and which will be eliminated. You can also look at setting up a motor pool, or a fleet sharing program for an infrequently used vehicle.
Determine When to Replace Vehicles
Once you know how many vehicles you need to have in your fleet, you then need to determine when those assets should be replaced. This can be one of the most difficult decisions you need to make. You don’t want to lose money by replacing a vehicle too soon, when it still has useful life left, yet you don’t want to wait too long and endure costly and more frequent repairs – or risk having it break down or require more downtime.
Some general guidelines you can use are:
- Is the vehicle safe to operate? If the vehicle is not up to current safety standards, then it should either be upgraded or replaced. Operations have the responsibility of keeping their drivers, staff members, and others on the road safe. If a vehicle has a known safety issue that can’t be repaired, then the vehicle should be replaced.
- Does the vehicle need frequent repairs? While preventive maintenance and minor repairs are to be expected, if an asset starts to require frequent, or large, costly repairs, then it can be time to replace it. If not, it can result in unwanted downtime and increased costs for labor and parts. Run reports in your fleet management system to determine how often a vehicle is being serviced, and how many services are for PM vs unscheduled repairs.
- Is it costing too much to operate? Through your FMIS, you can track the amount of fuel each vehicle uses. If you’re starting to see a steady uptick in the amount of fuel used without a corresponding increase in miles driven, then it can be time to replace it with a more fuel-efficient vehicle.
- Are there other reasons to replace it? If the needs of operating divisions are changing, and you need different types of vehicles, you should replace an asset to match the needs of the end user. Also, if your fleet is making the transition to electric vehicles, it can be a good reason to replace your conventionally fueled vehicles.
- What is the Total Cost of Ownership? Perhaps the biggest factor in determining when to replace a vehicle is its TCO. This helps you determine the overall expense of keeping an asset in your fleet. Through your fleet management system, you can store the information you need to pull to determine the TCO of each vehicle.
How To Determine Total Cost of Ownership (TCO)
Knowing the TCO of each asset in your fleet is vital to your operation. This information helps fleet managers correctly operate their vehicle management program by providing the cost of keeping each asset in your fleet. This will help determine when a vehicle needs to be replaced.
The key is gathering the information you need to determine the TCO. You can do this in a variety of ways. You can start with your FMIS and pull your repair history, cost reporting, utilization reports, vehicle information, and more, from there. You may also want to ask the experts on how to best set up a process to determine TCO.
Ask the Experts: Need to Know your TCO? Ask Our Consultants!
Fleet Management Software Can Improve Your Vehicle Management Program
An FMIS serves many purposes, including asset management, shop management, work order management, cost reporting, utilization management, and much more. The data recorded in the system can help the fleet professional make informed decisions about right sizing their fleet and determining when to replace vehicles and equipment.
To learn how RTA’s fleet management software solution can help you improve your vehicle management program, schedule a free demo with our experts!
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