By Marc Canton
This is the third part in our series on Third-Party Consulting Services. Last week we discussed why you need consulting services. This week (and next!) we’ll explore the types of projects and evaluations third-party consultants can provide.
Diagnostic Reviews
Diagnostic Reviews are high-level overviews of your fleet operation. The third party will only get into limited detail on key areas. The goal is to identify “big-ticket” issues and/or what areas need further investigation. Typically, these are sponsored by executive leadership. The results are based mostly on interviews and review of documentation, with only high-level data analyses. Recommendations are strategic, not tactical.
Best Practice Review
Whether the review is of the entire fleet program or select functions, this is an in-depth review of both the intended practices of a fleet management organization (FMO) and the FMO’s actual execution. This is typically achieved via interviews of all fleet staff, fleet customers, stakeholders, vendors, etc., an in-depth documentation review, and several in-debt data analyses. Recommendations are both strategic and tactical, providing the organization with a clear picture of what the future mode of operation ought to be. Common areas of review include:
- Governance (policies, procedures & their execution)
- Acquisition, Allocation, Disposal
- Replacement Planning
- Utilization Management (including motor pool)
- M&R (In-house, Parts, & Outsourced)
- Fuel Management (Bulk & Commercial)
- Technology & Information Systems
- Chargeback Rates & Methodology
- Organizational Structure and Staffing Levels
- Facilities Assessment
- Driver & Safety Management
Life Cycle Analyses (LCA)
The goal of an LCA is to determine the best time to replace assets to minimize total cost of ownership, and to understand the impact of not replacing an asset at the optimal age. Utilizing historical and industrial data, and taking account for the FMOs current state of operations and maturity, the analysts identify empirically the exact replacement parameters (age/utilization) that your specific organization should utilize. In doing so, the organization can remove politics and subjective opinion from the replacement and resource battle.
Strategic Replacement Plans
Strategic replacement planning is perhaps the most important fleet function from a cost/value perspective, and yet is commonly overlooked or under resourced (time/staff/expertise). Nothing costs a fleet organization more than, well, the fleet. Even people typically cost less, which is not true in most management disciplines. And in fleet’s case, the amount of people necessary to manage a fleet properly can be directly tied to the size and composition of the fleet. Yet, many organizations are still replacing fleets reactively and most are only looking a few years out, confusing tactical replacement prioritization with strategic fleet replacement planning. The best FMOs have a long-term plan (10-20 years) that identifies exactly the spending requirements for each fiscal year, evaluates various forms of fleet financing (for example cash vs debt vs lease vs reserve) and utilizes iterative scenarios to identify the most advantageous way forward while keeping capital costs relatively consistent year over year. Strategic plans also consider the operational challenges of in-servicing and decommissioning vehicles, ordering lead times, replacement backlog management, fleet growth, and alternative fuel needs such as transitioning to electric vehicles (EVs). Moreover, good strategic plans help ensure that politics and short-term budget adjustments do not interfere with appropriate replacement practices. And perhaps most importantly, FMOs with strategic replacement plans tend to be much more disciplined about fleet replacement. Their fleets consistently show lower downtime, fewer road calls and lower total cost of ownership relative to peer fleets without a strategic replacement plan.
We’ll dive more into third-party fleet consulting next week! In the meantime, if you have questions, please reach out to me at MCanton@RTAFleet.com. If you’re interested in booking fleet consulting services at your operation, contact our Sales team at Sales@RTAFleet.com.