10 Metrics to Optimize Fleet Efficiency
You can’t manage what you don’t measure. There are a number of statistical measures that fleet managers can use to achieve optimum efficiency. Here are 10 of them.
May 2012, Automotive Fleet - Feature
At a Glance
Metrics fleet managers should use to help optimize efficiency include:
- Customer service.
- Departmental cost per vehicle.
- Accident rates and costs.
- Lifecycle cost.
Sometimes, “metrics” sounds like one of those business seminar buzzwords that people toss around, without really knowing what it means. But, metrics are most definitely real, and they are part of any successful organization.
Fleet managers use metrics, whether they know it or not, every day. Metrics help managers know where they stand. They measure performance, provide benchmarks, and offer goals and targets at which the day-to-day and strategic activities of the fleet function can aim.
What Are Metrics?
Consider the following questions:
- What are you doing?
- How well are you doing it?
- How do you know how well you are doing it?
- How can you demonstrate to others how well you are doing it?
In a sense, the answers to these questions provide a pretty good definition of metrics. Metrics are measurements which provide these answers; they define what you do, they tell you how well you’re doing it, they provide easily understood data to evaluate progress, and they do this for others who need to know. Among some technical definitions, Merriam Webster defines a metric as “a unit of measurement,” which works quite well.
Just about any activity can be measured using metrics. A batting average in baseball is a metric. Miles per hour is a metric measuring speed. Units of weight, size, and distance are metrics. Time itself is a metric. Some metrics are more useful than others.
For example, a fleet manager can measure and track the use of power steering fluid — the simple fact that it can be done doesn’t make it a useful metric. In business, answering the four questions mentioned above is an excellent starting point when devising metrics, and judging whether they are useful in measuring and achieving optimum efficiency.
As previously stated, just because nearly anything can be measured, doesn’t mean it should be. One method of determining the quality and usefulness of a metric is known as the S.M.A.R.T test:
S – Specific. A metric should be clear, unambiguous, and easily understood.
M – Measurable. Good metrics can be quantified and measured against other data. Avoid “yes/no” metrics.
A – Attainable. Setting goals based on unrealistic metrics aren’t helpful. Metrics should be reasonable and credible under normal conditions.
R – Realistic. They should fit within the company and department’s constraints.
T – Timely. Metrics should be achievable within the time frame given.
Simply “measuring for the sake of measuring” accomplishes little. Fleet managers should determine what is important, and what might be interesting, but not useful in targeting efficiency. Not all such metrics are related to vehicle costs, either.
In a process (fleet management) that throws off a remarkable volume of data, identifying and establishing metrics that point toward maximum efficiency is important. Here are 10 of those useful metrics:
1 - Customer Service
Tracking the service of internal customers, which include not only drivers, but peers, superiors, and anyone else with whom your department interacts, is not only a good business practice, but will increase efficiency.
Some metrics for tracking customer service levels are:
- Phone answer times. How long does it take for the average incoming call to be answered?
- Dropped calls. How many calls are dropped before they’re answered?
- Resolution. How long does it take, from initial contact to final resolution, for problems and/or requests to be answered?
- Metrics for tracking customer service include phone answer times, dropped calls, and resolution.
A short follow up e-mail can be sent after any contact, asking the customer to rate service on a simple scale of one to five, for example. In this case, measures are helpful in setting internal standards, however only the customer can measure your service levels.
2 - Organizational Performance
How much, if anything, do you know about how well your department is performing? Whether or not you have staff, is the fleet function operating at peak efficiency? What metric(s) can be used to measure it?
For fleet managers, the bottom line is the provision and operation of a fleet of vehicles at the lowest cost possible (within such constraints as safety, legal, and regulatory requirements, etc.); however, doing so with an inefficient organization contains added costs.
Determine what activities you and your staff conduct on a daily basis, and develop a performance ratio to track them, such as tasks per hour. No need to differentiate — there will be phone calls made and answered, e-mails received and sent, administrative and clerical tasks completed — but stay on a strategic level.
The more tasks per hour of work you and your staff can complete, the more efficient and productive the department will be.
3 - Departmental Cost per Vehicle
Vehicle costs are most effectively expressed and tracked in a ratio to use. A similar metric can be developed to measure departmental productivity. The fleet function has a budget. It contains all costs associated with the operation, administration, and management of fleet vehicles, such as salaries, administrative costs (phone, space, supplies, etc.), benefits, etc.
Measure what the ratio of these costs are per fleet vehicle.
For example, let’s assume a fleet department consists of a fleet manager and one clerk. Total annual salaries and benefits are $150,000. Other costs, including a corporate allocation for office space, telephones, office supplies, systems support, debt service, and miscellaneous expenses total another $50,000, for a total of $200,000. If the fleet is around 500 units, the annual departmental cost per unit would be $400.
Benchmarking this cost internally is a simple metric for tracking departmental efficiency.
4 - Idea to Implementation
Vehicle manufacturers track the length of time it takes them to produce a new model very closely, the so-called “design-to-build” timeline. With both events and technology changing at breakneck speed, it is critically important for them to be nimble, not only in reacting but in planning as well.
A fleet manager must also be nimble, as many of the same events and technology impact a fleet’s function. Tracking the timeline from the “idea” stage on to implementation is a metric that measures how efficiently a fleet manager can react, and how effectively he or she can anticipate changes in the industry.
The metric is simple: record the date an idea or proposal was first submitted and the date it was implemented. The number of days between the two is the measurement. It reflects a number of factors, including some that are not within the fleet manager’s control, such as approval chains, staffing levels, and available resources.
What is important is the internal benchmarking that ensues. If the first result is around 30 days, the goal should be to reduce it, a sure sign of increased efficiency.
Keep in mind that some changes are more or less perfunctory, such as a minor change in policy, while others are more strategic, i.e., a change in replacement cycling or implementing a GPS program. Sometimes called “process efficiency,” this metric is a key efficiency measure.
5 - Focus on Paper
With the electronic communication tools available in the 21st century, the enemy of efficiency is paper. As little as 20 years ago, operating a fleet of vehicles generated reams and reams of paper, necessitating banks of filing cabinets, hanging files, and other accoutrements of paper recordkeeping.
In 2012, however, there is no reason that any fleet function needs such paper records. There are, of course, certain documents that need to be retained as originals (e.g. titles), but, for most other paperwork, a scanned copy is both preferable and legal. That said, tracking how much paper and how many paper records are eliminated will reveal the level of efficiency the department has achieved — not only in efficiency, but hard-cost savings in materials and postage as well.
Certainly, you won’t be counting individual documents or sheets of paper that are replaced with electronic copies. Simply deal with categories: memos, invoices, forms, and contracts. All can be scanned and kept in a computer folder, rather than a manila folder in a file cabinet drawer.
One can make reasonable estimates as to the volume of paper a process change can eliminate. This is the metric that can be used.
The first five metrics focus on how the fleet organization can itself, in what it does and how to do it, optimize efficiency. The next five will likely be more familiar, metrics that are tied directly to the operation of the vehicles themselves, with a focus on the “80-20” rule: 80 percent of costs are contained in 20 percent of categories.