Fleet management metrics are not a new phenomenon, but has gained increased emphasis in recent years. Senior management and sourcing groups are demanding the use of metrics to measure the performance of the fleet and its suppliers. In addition, tight budgets and high expectations by management make metrics a crucial element to maintaining a cost-efficient fleet.
You may think you manage a well-run fleet, but how do you really know unless you have objective data to prove it? Metrics is the process of developing objective sets of data to measure how your fleet is doing relative to goals.
However, selecting the right metrics to monitor and identify the underlying root causes of poor performance in your fleet may not be as easy as you think.You could measure anything and everything. But, if you are tracking metrics just to maintain data, you are measuring the wrong things. To be truly effective, the metrics you develop and track need to be part of the everyday management of the fleet. First and foremost, a good metric is measurable.
Developing Powerful Metrics
The most powerful metrics are those that directly measure desired business outcomes such as cost reduction, performance improvement, supplier service consistency, or anything that has numbers associated with it or that can be quantified. When determining the metrics to use, ask yourself: Does your fleet operation run within the parameters of a well-defined budget? Are your systems and software providing you with useful information on a real-time basis? How granular is the monitoring of your remarketing process? Are you monitoring resale values, geographic regions, or individual auctions?
Other examples of fleet metrics include monitoring vehicle utilization; route optimization; maintenance expenses; preventable accidents; or analysis of fuel efficiency by vehicle; driver; route; and business unit. This data needs to be accessible on a timely basis. With this data in hand, you can compare current fleet performance against historical data to set achievable performance goals. Whichever metric you choose to monitor, what really counts is actually using the data.
Metrics analysis will identify inefficiencies and allow you to focus on these specific areas. Whether your initiatives are successful in rectifying these inefficiencies will be borne out in subsequent metrics. It is important to realize that only by putting this data into practice can you develop performance metrics to optimize fleet resources. But don’t get stuck in your ways. Do not hesitate to discard metrics you find you are not using on a day-to-day basis. Focus attention on areas that make a difference in daily fleet operation. Good metrics evolve, and by continually measuring the same metrics, you may be missing new opportunities to improve. It is also important to have an open-book policy and share data with management, internal customers (such as driver supervisors), and suppliers. From the perspective of management, this will validate that you are getting optimum performance from the fleet.
Any experienced fleet manager will tell you that the single most important cost metric is lifecycle cost. This encompasses the entire spectrum of both fixed and variable costs, and is expressed in the classic cost/use ratio of cents per mile or dollars per month.
Although lifecycle costs cannot ultimately be determined until after a vehicle is sold, the same metric should be tracked throughout the vehicle’s life in service. The only variable is depreciation — the actual cost of which is not determined until after the sale.
Setting goals based on unrealistic metrics isn’t helpful. Metrics should be reasonable and credible under normal conditions.
Simply “measuring for the sake of measuring” accomplishes little. Fleet managers should determine what is important. Not all such metrics are related to vehicle costs, either. The key is to establish a benchmark, then track performance going forward. The benchmark can be from the current point forward or it can be used to establish historical metrics and track trends.
Show Me the Metrics
When you start measuring fleet performance, set realistic goals for improvement. When you achieve your goals, raise the bar and keep measuring.
Maintaining an efficient fleet is not a goal, but a journey. You need to keep feeding the metrics back into your processes to continually improve your fleet’s performance. Metrics can modify behavior. Push your metrics to your internal customers and suppliers to show them how they can contribute to improving fleet efficiency and make it more cost-effective. You are what you measure.
But, most important, metrics must measure factors you can actually control. As one fleet manager told me: “If someone tells you that they run a well-managed fleet, ask them to show you the metrics.”
Let me know what you think.
Originally posted on Automotive Fleet