Standardizing Vehicle Specs to Slash Fleet Costs
While it is tempting to adopt a “more-the-merrier” approach to vehicle spec’ing, fewer specs can actually offer more options, netting happier drivers and fewer administrative headaches.
Standardizing vehicle specs can lead to significant savings.
How can fleet managers squeeze more profit from their operations? One way is by standardizing vehicle specs across the entire organization.
In a nutshell, “spec standardization” is a strategy that identifies the fewest number of vehicle configurations that can meet the requirements of the widest range of business divisions and branches within an organization. The idea is to develop “core specs” for specific roles — such as service, sales, and estimators — while still allowing for slight variations, depending on the particular needs of each location (such as four-wheel drive for off-road conditions or higher drive axle ratios for mountainous terrain).
The Benefits of Centralizing and Simplifying the Approval Process
By centralizing — and simplifying — the vehicle approval process, fleets can achieve several financial and administrative benefits.
1. Simplified ordering. A few years ago, Mike DeCesare, national truck sales manager for fleet management company ARI, began working with a client that used 28 different vehicle selectors — just for one business unit.
“We found many of their specs were for almost the same vehicle, with very minor differences between the choices. This was creating the opportunity for a lot of mistakes to be made when it came time to purchase vehicles,” DeCesare said. “We studied the business, talked to the drivers, and were able to uncover opportunities to reduce the 28 vehicle configurations down to 12 common specs, with a few additional options we could add on.”
The result? “We were able to cut the company upfit cost, on average, by $500 per vehicle,” DeCesare said. “That doesn’t sound like a lot, but, when you’re ordering 700 vehicles per year, it adds up pretty quickly. In some cases, the company saved as much as $2,000 per vehicle, while, with other specs, we had to add some equipment. But, the net result was an average savings of $500 per vehicle.”
2. Increased buying power. If a fleet can bring more orders to one vehicle manufacturer and upfitter, it increases the leverage to negotiate greater discounts.
“The fleet needs to look at how many different ways it’s been dividing up chassis and upfit buys,” advised Jim Palin, senior truck applications engineer at GE Capital Fleet Services. “The more orders you place with any one manufacturer or upfitter, the better your pricing is going to be. You’re diluting buying power by spreading buys over multiple manufacturers.”
3. Consolidated parts inventory. Standardizing vehicle specs also directly impacts parts and repair costs.
“One of the best things about standardizing — if a fleet has its own repair shops — is the ability to reduce your parts inventory, where you’re only stocking for one truck and not across the OEM spectrum. You don’t have to stock different kinds of engines, wiring harnesses, and the whole nine yards,” said Steve Jansen, manager of regulatory compliance and truck services at Donlen. “By standardizing, a fleet can reduce its parts inventory, which lowers costs.”
4. Enhanced technician training. Through standardization, fleets can save money by focusing technician training on only a select few manufacturers, powertrains, and vehicle configurations. As technicians become more knowledgeable with fewer vehicles, they’re better equipped to accelerate repairs and improve equipment uptime.
“By training technicians on one type of truck, instead of across the whole spectrum, they become much more familiar with the idiosyncrasies of that particular vehicle, which could take a non-trained tech many more hours to uncover,” Jansen said. “The familiarity enables the tech to solve the problem much more quickly.”
5. Flexibility to shift assets across the organization. Developing common specs expands a fleet’s opportunities to move resources around as business needs might dictate.
“Standardization gives a company flexibility to adjust as the business climate changes,” said Steve Jastrow, manager of strategic consulting services at GE Capital Fleet Services.
DeCesare of ARI agreed. “In an ever-changing world, if a fleet has a vehicle that has been specialized for a certain region, like the snow belt or the Northeast, and business declines in that area, a standard spec vehicle will provide more flexibility in terms of redeployment,” he said.
6. Equitability across the driver base. Ken Gillies, manager of truck ordering and engineering for GE Capital Fleet Services, put it this way:
“Whatever the role, salesperson, service tech, etc., having them in the same kind of vehicle across the board lessens the potential for people to complain that drivers in another region have all these upgrades and they don’t. That turns into a bit of a headache for a fleet manager. It’s not just a cost issue; it has become an internal issue, because there is a perception that there is not fair treatment across the board.”