Fleet rightsizing is a proactive, strategic plan to have the right type of vehicle, at the right locations and available at the right time.
While some may find they have too many vehicles and are overspending, others can realize they need to increase their fleet to meet customer demands and grow their business. Here are some helpful tips for rightsizing your fleet.
1. Set an internal utilization threshold for your fleet’s vehicles
To begin, a fleet must first determine the utilization thresholds for their vehicles or vehicle groups. This is the minimum number of miles driven or hours operated (per day, month, or year) to warrant having a vehicle.
There are a number of factors that can impact this number or the way it is counted. For example, an HVAC company would need to calculate the utilization threshold by hours operated instead of miles, as the technician would spend much of the time at the clients house, rather than driving. On the other hand, a company that is seasonally based would be more likely to calculate the utilization threshold by year or by season.
2. Determine the utilization of each vehicle
Every company uses vehicles for different reasons. Therefore, analyzing and categorizing each vehicle into different segments, helps ensure the return of investment is profitable and all vehicles are being used to the best of their abilities.
Calculate and determine the utilization of your vehicles by measuring the vehicle usage. Ask yourself the following questions:
- What are my vehicles being used for?
- How often are they being used?
Calculating a vehicle's utilization is much simpler than it used to be. For instance, using customizable asset utilization reports, such as the one Geotab provides, it is easily visible which vehicles are the most and least utilized.
The Asset Utilization report is completely customizable based on the information an individual is looking for. It can be broken down by vehicle type/location, can build any calculation for the percent utilization, can include time in use (calculated through on-duty versus off-duty use). Data can also be broken down in different bands including time of day, months or kms and much more.
3. Determine the number of over and under utilized vehicles
Although this may seem tricky at first, determining this number is simply a matter of comparing a vehicle’s utilization by the company’s set threshold. Breakdown the information in a way that makes it easy to look at the bigger picture.
Consider the following questions:
- Do you have multiple locations? If so, you may want to segment out the information by location to determine if there are patterns of under or over utilization.
- Do your employees work in shifts? If so, segment the information by time bands to determine if vehicle utilization is optimized for each shift. For example, if there are three drivers that work at three different times, there is a possibility of sharing a vehicle instead of having three different ones.
By auditing your fleet and answering the questions above, it will help you get a better understanding of which vehicles are utilized too little, or too much. This will also make it easier for you to meet your quarterly or yearly goals.
4. The simple questions
Taking a step back now and then to re-evaluate can be helpful to staying on top of changes.
A few basic questions to ask about each individual vehicle include:
- What is the vehicle’s assignment (vocation)? Can a smaller, more fuel efficient vehicle be utilized instead?
- Is the vehicle the right size for the job? Note: a fleet may notice that they are using a class 8 vehicle for certain tasks when they could be using a less expensive, more fuel efficient vehicle, such as a class 5.
- Is the vehicle the most economical? Does it have the lowest Total Cost of Ownership (TCO)?
- At any given time, how many vehicles are out of rotation for maintenance?
By answering these questions about your fleet, and combining the knowledge with an industry report such as Geotab’s Fleet Industry Trend Report, you will gain insights on driving activity, fleet composition, fuel economy, TCO, and more. These are all important aspects of a fleet and can make a huge difference when trying to be successful and rightsizing your fleet.
5. Implement changes
After gathering all this information, you will be able to start making informed decisions to rightsize your fleet as you will know how many vehicles are needed, where, and what the best type of vehicles are for your fleet.
Here are a few possible scenarios that you may encounter:
- You have too many underutilized vehicles.
- You have too many overutilized vehicles.
- You notice discrepancies in utilization by location. For instance, one location may have a large surplus of underutilized vehicles, whereas another may have to rely on rentals due to demand. Consider analyzing each location to get the answer to this question.
- Vehicles are being used in only one timeband. For instance, if you have drivers working in different time shifts, consider car sharing, which includes looking at the times of the days that the vehicles are being utilized to determine if a vehicle can be shared between drivers.
Keep an eye on the future
When rightsizing your fleet, one of the most important factors is to consider future demand. Look at internal trends, is demand increasing or decreasing? Knowing this information at all times will help you figure out if you need to increase or decrease your vehicles again.
Utilization = Demand divided by capacity
Rightsizing your fleet is an easy and simple way to save money while increasing efficiency and productivity. By following the steps listed above and answering the questions in this blog, you can set your fleet up in a way that will utilize each vehicle perfectly.
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