Fleet managers have the task of controlling fleet costs, among other duties. These include increasing productivity, improving efficiency, and reducing fleet risk. They must also concern themselves with idle time, fuel consumption, driver training, and more. This wide array of tasks makes it difficult to focus on one aspect of the fleet optimization.
What exactly does optimization mean in the context of a fleet? And, how do you achieve it when there is already so much on your plate? Below, we look at fleet utilization and its role in optimization, as well as practical ways to optimize your fleet.
What is Fleet Optimization?
Fleet optimization is, essentially, fleet management. In and of itself, fleet management is the optimization of all functions and operations of a fleet. We’ve listed many of these functions at the beginning of this article. However, fleet optimization is much more than management.
Management ensures the completion of all tasks and proper functioning. Optimization focuses on making those processes better than they are. Consider this, 42% of fleet pieces experience utilization in only 5% of operations. Another 37% experience only 15% of utilization throughout the year. Fleet companies pay thousands of dollars for this equipment to sit in a storeroom, unused.
Proper utilization of equipment leads to reduced costs and increased sales. It also leads to downtime reduction, lower fuel consumption, and more productivity. Essentially, fixing utilization issues is the key to optimizing your fleet.
Why Maintaining Fleet Optimization is Important
It’s a common misconception that a piece of equipment doesn’t cost you anything if it’s not running. On the contrary, unused equipment is an absolute drain on your business.
As mentioned, nearly half of a fleet's equipment/vehicles rarely meet utilization goals. In fact, their utilization often rests at around 5%, far from the optimal 100%. Any equipment that sits in storage without use costs a business money. Not only does storage cost money, it’s pointless if you’re rarely going to utilize what you’re storing. If a fleet company is unaware of the assets they have, they may purchase more equipment. Often, they have what they need at another job site.
So you’re paying a lot to store equipment you don’t use. But you’re also purchasing redundant equipment because you don’t know what you have or where it is. Then, it will likely sit in storage after use on the job site. To make matters worse, you must also pay to maintain this equipment. No matter the equipment – vehicle, tractor, container – you must maintain it. Vehicles and equipment can’t sit for years without incurring issues, especially if they’re out in the elements. Even containers rust after a period of time.
Optimization of utilization also ensures your fleet is the right size. Right now, you may have 3 vehicles that are each used for ⅓ (or less) of your operations. Instead, one vehicle could do the job of all three. In that sense, you’ll only pay for the fuel, upkeep, storage, and operation of one vehicle. Don’t forget that you’ll also only pay for the initial investment of one vehicle instead of three.
You can see that proper utilization could save you thousands of dollars. For larger companies with more assets, you may save millions. So, how do you achieve proper utilization? We’ll cover that below.
How to Maximize Fleet Utilization
Maximizing fleet utilization wasn’t always an easy task. For most fleets, it was once a matter of pen and paper records. With the internet, fleet management software and tools quickly came to fruition. But no tool has been as beneficial to fleet utilization as GPS tracking. Today, we benefit from asset tracking for large equipment and GPS fleet tracking for vehicles. Both provide tremendous benefit to fleet management, including improving utilization.
To increase your equipment utilization rate, you must control some of your metrics. By some estimates, there are around 15 metrics that fleet managers should pay attention to. But there are only five true fleet utilization metrics, and they are the following:
- Arrival and leave time of assets
- Travel time
- Equipment use/ engine run time
- Idle time
- Maintenance events and time
Focusing on these metrics helps you to establish a baseline of your operations. From there you can build a fleet optimization model. A fleet optimization model considers metrics and environmental impacts. This helps to calculate total cost of ownership. You'll better understand your fleet and which telematics features will work best. Below, we feature the best telematics utilization optimization features. We’ll also feature a few techniques to improve fleet optimization.
Fleet Replacement Policy
Updating policies is the first step in the effective adaptation of changes to a fleet. For the purposes of utilization, implement a vehicle replacement policy. The average lifecycle of a vehicle is 6 years or 90,000 miles. Once a vehicle operates beyond this time frame, it typically incurs higher maintenance and fuel costs.
Putting a boundary on overutilization is a great way to reduce costs once a vehicle is past its prime. However, it’s the underutilization you want to concern yourself with. As we’ve discussed, resting assets are a drain on your fleet. Set a boundary for utilization. If the asset isn't used within your limits, you may consider consolidating your assets. In other words, consider getting rid of assets in favor of using other assets more. Another option is to sell rarely used equipment and only rent it when it’s needed.
Asset tracking allows you to see where all of your assets are, how and when they’re used, and more. This insight helps you ensure you have the assets you need, where you need them. It also ensures you have the right number of assets for the job. Knowing your assets is the first step in decreasing waste and increasing utilization.
Another benefit of tracking your assets is theft prevention. In the case of a theft, you’re able to see where your assets are in real-time. This assistance to local authorities often leads to a speedy recovery.
Hours of Service & Idle Time
Telematics systems record Hours of Service (HoS), idle time, engine run time, and more. This visibility helps you see asset utilization, where, and for how long. With a lifecycle policy in place, you can determine which assets meet your guidelines. If they're underutilized, find ways to increase their use or consolidate your assets. You’re no longer relying on potentially inaccurate reports from drivers or operators. You’re also receiving data on the assets that aren’t reported on frequently. Telematics analyzes this data and provides trend reports. From this, it uses algorithms to determine optimization potential.
One of the simplest ways to increase utilization is to improve route planning. Route optimization ensures your vehicles are on the most efficient routes possible. This allows them to reach their destinations on time or before expected delivery. Faster travel times increase the number of trips your fleet can handle. Also, optimized routes decrease idle time and fuel consumption. You’re able to manage multiple functions of fleet management with one tool.
Geofencing is a handy tool that lets you set a virtual fence around an area. This may be a job site or storage warehouse. The geofence allows you to see when an asset arrives or leaves. You can set up alerts to tell you if an asset leaves the perimeter at unauthorized times. This allows you to monitor how much time drivers spend at a job site. You can use it for theft protection, to increase productivity, or to prepare for shipment unloading ahead of arrival.
Azuga fleet tracking and asset tracking provide all of the features above and more. Learn more about increasing your fleet utilization with GPS tracking from Azuga.