Learn how you can enhance visibility and more accurately measure maintenance costs to open the door for significant opportunity
Standard cost management tactics can effectively control a portion of your maintenance spend, but if the metrics by which you monitor maintenance costs are off target, you may be missing a bigger opportunity.
For many organizations, vehicles are essential tools that employees need to conduct business. This means they’re often in use for extended periods at a particular jobsite (idling); therefore a vehicle’s odometer (and in turn, the cost-per-mile measurement) isn’t necessarily the most accurate reflection of a unit’s actual utilization. Fleets have traditionally monitored maintenance spend by measuring cost per mile, but this KPI may no longer be the ideal metric.
Today, a growing number of fleets are using the maintenance cost per gallon (mCPG) approach to more accurately measure their maintenance expenses, since this methodology better accounts for a key element of the equation: utilization. The mCPG metric is based on the amount of fuel a vehicle uses which accounts for the wear and tear a vehicle incurs when it’s running or idling at a particular location for extended periods, not only when it is moving.
With enhanced optics into utilization and your true maintenance spend, you have the visibility necessary to drive change with best practices that can significantly impact the bottom line.
When it comes to maintenance spend, the longer a vehicle remains in service, the more it typically costs to maintain. Generally speaking, maintenance costs continue to increase year over year, but as the vehicle ages, its utilization often decreases. Therefore, while an older unit’s total maintenance costs or even cost per mile may be on par with that of newer vehicles, the older vehicle incurs more maintenance events and is typically far less productive. The older that vehicles are, the more prone they are to component failure and higher costs in maintenance and fuel usage.
The reality is that maintenance expenses are a byproduct of other decisions: How much you utilize assets, how often you cycle vehicles, how well you adhere to recommended PM schedules, how many vehicles you need to effectively support your business, etc.
In most cases, the greatest opportunity to lower your maintenance expenses is through proper replacement cycling which inherently shifts utilization to younger units. With enhanced optics that more accurately measure your maintenance costs, you are able to develop a picture of what your optimal fleet looks like and determine how best to reach your fleet’s optimal state over time. That may include investing in upfits or tools that will make vehicles more applicable to specific jobs within your industry, defining a purpose and place for each vehicle as opposed to expecting every vehicle to handle every job.
This methodology also highlights the importance of always looking at your fleet spend holistically. Remember, your acquisition strategy impacts your approach to maintenance, and your decisions around preventative maintenance impact the longevity of your vehicles, all of which impacts utilization and productivity. Recognizing that virtually all vehicle decisions are interconnected can uncover opportunities for significant cost savings.
Preventative maintenance is the most significant way to curb downtime. Find out more by downloading our free whitepaper on downtime and driver productivity.