Whether you operate a small fleet of lift trucks, just one truck or a fleet that spans many facilities, smart lift truck fleet management can save you money and refocus your energies on core activities.
"Customers simply don’t have the time or interest to be in the lift truck business, preferring to focus on core responsibilities. Six months’ worth of lift truck fleet data provides an excellent baseline to see where cost savings can be achieved," says Dixie Connor, senior marketing manager for Nissan Forklift Corporation North America.
Fleet management is flexible in that it might mean:
-- Completely outsourcing your maintenance, parts, billing and day-to-day management of the fleet;
-- Any combination of utilization analysis by lift truck, cost tracking by truck and analysis of economic life from a total cost of ownership standpoint;
-- Consolidated billing over a national fleet, parts and service invoice explanation and standardizing costs for labor, parts and service among a host of different distributors in an OEM lift truck dealer network.
The face of lift truck fleet management has changed. "Keep in mind that in recent history, many companies’ growth is the result of acquisition. So in addition to multiple locations, they’re dealing with multiple business cultures and processes," says Jim Moran, senior vice president of Crown Equipment Corporation. He says that leads to uncertainty about how many lift trucks a company owns, operates and maintains.
Many lift truck manufacturers have entered the national accounts business for lift truck fleet management, and each offers a different variety of services to take responsibility for your fleet. But their common goal is to help educate you about the total cost of owning and maintaining a truck fleet, and some of those costs might surprise you — starting with the fact that your fleet is probably 10 percent or more larger than you currently need.
"In most fleet studies, we find that most customers have more trucks than they really need because of underutilization of the trucks they have," says Mike Casey, vice president, corporate accounts for Wisconsin Lift Truck Corporation. "And we can typically reduce the number of repair parts on the shelves or completely eliminate spare parts inventories by outsourcing to us," he adds.
Rightsizing your fleet
Truck fleets tend to grow needlessly in size over time as new trucks are bought and old trucks aren’t sold off. "In the first year of a fleet management program, a customer should expect between 15 and 25 percent savings which will come from rightsizing a fleet, reduced administrative cost and training operators to better handle equipment," says Warren Eck, vice president of fleet management and financial services for Yale Materials Handling Corporation. He says that you should suggest your prospective fleet management company pay for the cost of the in-depth analysis of your plant if it can’t project and guarantee that kind of savings the first year. He says this arrangement can protect you from just anyone who hangs out a shingle saying "fleet management."
"Most people say they use a lift truck eight hours a day on a single shift operation. But that’s impossible," says Tom Rigby, fleet systems manager for Komatsu Forklift USA. If you use a truck from five-and-a-half to six hours a day, that’s a lot of use. Komatsu’s programs amaze a lot of users by tracking just how many hours a truck is used a day, and based on that, helps determine how many trucks are needed and where.
Bill Buckhout, manager of fleet management services for Mitsubishi Caterpillar Forklift America Inc., says the first step is to rightsize the fleet with trucks that don’t have the kind of breakdown potential that the current fleet has. "We often place, at no charge, units that managers could use as backups if a truck goes down. Then over time, we gradually remove those trucks as managers understand how backup units sit unused," he says.
In manufacturing sites, it's harder to improve utilization because users have grown accustomed to keeping trucks at their disposal — even if used just an hour a week. The key to reducing the number of trucks for manufacturing is to place trucks centrally so they can be used as needed and returned for someone else’s use. The challenge is to develop a plan.
Fleet management vendors emphasize their ability to support parts and service on mixed-fleets of branded trucks. Crown can too, Moran says, but prefers minimizing the overall number of brands. "We’re better at supporting our own products," he says. "The up-front goal with any fleet management partnership is to continuously pare down the number of different brands until we’re only working on our own brand."
Determining total cost and economic life
"Many customers have very old equipment and are continuously dumping money into a fleet that they could have purchased three times over with new trucks. And this new equipment would offer improved technology," says Stan Garrison, regional sales manager, Hyster fleet services for the Hyster Company. He says the key to the customer survey is obtaining hour readings. "We look to get two hour meter readings off each piece of equipment spread over a 45-day period. That gives us a snapshot of what any truck is doing on a given day," he adds.
Don’t fall into the trap of asking for a quick turnaround from a site survey audit. Customers that ask for a two-week response will tend to get a report with more general estimates. "Once we are centrally billing all your maintenance invoices, we know what all your maintenance costs are as well as utilization. The fleet audit is just the first step, after which we begin collecting data to make more sweeping cost changes," says Buckhout.
"It usually takes two to three years to develop all the needed data," says Rigby. Komatsu asks for maintenance records in its initial survey and typically doesn’t get them. "This automatically proves the value of the fleet management proposal. If a company doesn’t know how much it’s paying for a truck, how can the right decisions be made about replacement and maintenance?" says Ribgy.
TCM Lift Trucks offers its Fleet Maintenance software package to guide dealers through an application survey that describes each lift truck application. TCM dealers then suggest what truck would be best for the job. "But don’t forget that maintenance and tracking its cost is key to developing any fleet management program," says Jere French, vice president of marketing and corporate vice president for TCM Lift Trucks. The TCM survey takes into account the environment, the surfaces the trucks are running on, duty cycles and products being handled. All these data help develop a meaningful profile.
"Fleet management means putting together a complete package," says Gregg Lao, fleet management business manager for Toyota Material Handling USA, "and that package includes financing, administrative services, equipment and consulting. The customer is looking for quantifiable cost savings."
"Keeping trucks longer than they should be is a trouble spot," says Casey. Trucks are kept beyond their economic life so they cost too much to maintain.
"Customers don’t tend to resist our suggestion on replacement, but there are problems with the way some companies design their accounting systems," says Casey. Companies have a determined number of years that they want to depreciate a piece of equipment, but it’s not necessarily the best fit for cost containment. His firm typically recommends a faster truck turnover schedule.
"Customers need all the facts before costly capital expenses are incurred, but it’s difficult for them to determine the appropriate time to make the purchase," says Connor. They want to know when the equipment is costing more to maintain than to purchase new. That’s where Nissan’s Fleetraxx Utilization and Expense Matrix can help. It tracks hourly operating costs against utilization for each vehicle. "If a unit’s utilization is low and hourly operating costs are high, it may be time to retire that piece of equipment," says Connor. If a truck is used on a seasonal basis, she suggests it may make sense to rent.
Eck says that the one thing most people focus on is the cost of a new truck, which may be from $20,000 to $40,000. "But when you look at purchase price, it’s just a small component of total ownership cost," says Eck. He says total costs are like a mountain, with purchase price at the top; repairs, financing, spare parts, fuel and maintenance in the middle; and training, administrative costs including accounting, research and analysis at the bottom.
Eck reports: "The average cost to process purchase orders and payables ranges from $60 to $90 per transaction. At an industry average of 20 purchase orders per vehicle, overhead costs for maintaining a lift truck fleet yourself become significant," says Eck.
National accounts
Properly managing a national fleet can be a tough task. Gathering information on something as simple as the number and type of fleet equipment can take weeks to obtain — not to mention age and condition. Nissan’s Fleetraxx software lets customers understand service expenses from both a micro and 20,000-foot level, allowing them to reap benefits on a national perspective.
National customers are asking for bundled services, like centralized billing for work performed by many dealers — detailing the location and what was done. "Large customers with multiple locations find it hard to get a handle on their fleet costs, and our maintenance tracking software can provide users with needed reports," says Garrison.
At the same time, if you take a large corporation with multiple sites, they want the same menu of services. But when you get out to the location, it’s imperative that services be tailored. "There’s no cookie-cutter approach to fleet man- agement," adds Garrison.
Mitsubishi performs invoice interrogation and quotes national labor rates and parts prices as well as national terms and conditions for purchase and repair of machinery. They look for consistent pricing nationwide.
Komatsu Forklift USA offers an Internet-based lift truck fleet management program. "With our national accounts program, our dealers input data from across the country, and we can install a customer-based program so you can see how your fleet is performing with utilization, maintenance cost and frequency of repairs at all of your sites," says Ribgy.
Edgar Warriner, national and major accounts services for the Raymond Corporation, says that administrative transaction costs for large, national fleets can be substantial. "We work with large fleet users to reduce or consolidate purchase orders and invoicing. We can also provide a single source for all service, support, leasing and parts," he says.
Turf battles, equipment misuse and pushback
Eck says that turf battles in companies keep trucks from being used for different purposes all over the plant. "We found that at one site, a truck was just used in the morning in one part of the plant, and a similar truck was used afternoons in other areas. We suggested just one truck for both places, sharing use and cutting the costs of a truck," says Eck.
Fleet managers report that a lot of fleet cost comes from avoidable damage, abuse and misuse of the equipment. "Our Hyster dealers work very hard with customers to whittle down this cost with an extensive operator training program. It’s specific to applications and truck types found at each customer site," says Garrison.
His company uses electronic devices and impact sensors to time, date and stamp events for each truck. If you develop a system that ties operator ID to truck and time, it’s pretty easy to track how each operator might damage rack, truck or product. Damage can be due to carelessness or because the truck isn’t specified properly for the application.
Mitsubishi has installed keytrollers where lift truck operators enter a code. They’ve tried impact sensors and monitors, and lift truck operators try to sabotage them. "But monitors are the wave of the future. Surely you will get a vehicle monitoring system as part of a new truck purchase in the near future," says Buckhout.
Garrison says some customers have been doing fleet management their own way and don’t necessarily see the big picture. Those on the local level can fight your doing a fleet management study because they see outside fleet management as losing control or as a continuation of past failed efforts.
Then there’s the Big Brother mentality of tracking trucks by hour and operator, though its net effect is to reduce damage to trucks, product and the plant.
"I read a recent article written by Tom Andel, chief editor of MHM, in which a competitive lift truck manufacturer is looking at cellular telemetry. It will allow remote access to lift truck data and address individual truck utilization and operator error," says Moran.
In some cases a local facility may not want to give up its local maintenance staff, so national accounts work with the staff to do preventive maintenance and warranty work, and the customer performs maintenance repairs or vice versa.
"Oftentimes, the suggestion is made to eliminate maintenance groups, parts inventories and numbers of trucks. That means job security and a lot of grief for operators and maintenance staff. And it’s often the case that the customer has way too many lift trucks," says Buckhout. When Mitsubishi studies a site and recommends eliminating ten trucks, it represents a security blanket for managers required to meet production quotas. "They want a lot of standby equipment and don’t recognize the cost. That’s when it is difficult to get equipment out," adds Buckhout.
Casey relays that suggesting a maintenance department be eliminated can be a stumbling block. "We find that companies tend to reassign workers. In some cases, we train the workforce with better guidance on how to repair trucks and manage maintenance costs."
Addressing trouble spots
Success in fleet management depends on more than pressuring the fleet manager for reduced costs. "If, from the customer’s view, lift truck fleet management is all about discounting labor rates and parts pricing, then the math usually doesn’t really work. The customer ends up with inaccurate expectations and is quickly disappointed," says Moran. Crown offers centralized invoicing and maintenance review processes that help users focus on trouble spots within their organizations.
Look for fleet management providers to help identify troublesome or inefficient applications. If an operator gets on and off a piece of equipment frequently, Mitsubishi recommends a stand-up truck rather than sit-down because you can just hop on a stand-up truck. The company looks at attachments to handle more material more quickly and effectively. "One customer might move rather light loads and pallets long distances with a standard set of forks. We recommend a single-double attachment to allow twice the product movement," says Buckhout.
At one facility, Buckhout says the user moved $3 million computers and had two workers walk on either side of the load to ensure safety. Mitsubishi provided a special attachment that eliminated the need for two workers and permitted faster travel.
Lease and rental
When it comes to leasing or rental decisions, Yale first determines which trucks are part of a core fleet versus identifying occasional-use trucks or specialized lift trucks which Yale finds are candidates for rental or leasing. Specialized trucks — for example, with ram attachments or customized clamps — can be good candidates for leasing, as they may not be available through rental.
Leasing ties in very nicely with fleet management. It forces the customer into deciding on what to do with a truck at lease end. In effect, leasing moves more new trucks with better features into your plant.
Garrison says once a company obtains six months of meter readings off each piece of equipment, a good utilization study can be performed. Those hours are tied to leasing decisions, and customers can tie a lease into how much they’ll actually be using a truck.
"We project maintenance cost over the next five years versus buying a new truck and maintaining it for the same period or leasing it. Then the customer sees the benefit of parting with old trucks," says Garrison.
In low utilization areas, leasing may not be the answer. If there’s a large truck fleet, it may be better to respecify the trucks to standardize on masts or attachments. This gives more freedom to rotate the equipment. Then you can equalize the hours on each truck so that at the end of a lease, each truck has about 10,000 hours on it. This allows you to roll out those trucks and put new ones in.
If a customer is just starting a lift truck fleet management program and doesn’t know how much equipment he needs, Mitsubishi installs equipment and gives the customer an option to return a percentage of the equipment over time, or trade it out for equipment that might be more appropriate. The company uses its own FMS Equipment Rentals Inc. for nationally based, short- and long-term rental. "This is far more flexible than any user could get with a lease," Buckhout contends.
Paying too much
"You can’t control what you don’t measure, and if a customer doesn’t know what his fleet costs are, he’s paying too much," says Buckhout. In fleet management, you’re typically starting out from ground zero on cost tracking, and that’s especially challenging for customers with cyclical businesses.
"I see a lot of customers with 15-year-old fleets that are struggling to keep them up and running and spending way too much money on them. Users find it’s easier to dump $2,000 on a truck than to get capital money, but customers are beginning to understand that this isn’t a good way to do business," says Garrison.
Mitsubishi Caterpillar Forklift America does innovative things like centralized billing where they take all customer repair invoices, consolidate them, review and approve them. "We compare the cost being charged with the manufacturer’s standard warranty labor repair times for any repair. We adjust dealer invoices accordingly so the buyer is paying the proper charge," says Buckhout. "This takes the customer out of the business of out-guessing the service company," he adds.
"Something we always hear is, ‘Why should we get rid of a 10-year old truck when it costs only $1,000 to maintain and a new one costs $20,000?’" says Eck. But when you really examine that $1,000, you’ll find additional costs of downtime, includings the cost of rental equipment while the truck is down. "We find that $1,000 easily becomes $5,000 or $6,000 per year. And when you look at the additive cost over the years and the actual salvage value of that piece of equipment, the customer has typically paid many times over what the truck is worth," he adds.
The dealer’s contribution
Wisconsin Lift Truck Corporation is a major dealer that services a broad range of lift truck brands in Illinois, Wisconsin and Michigan. Casey says that though they help lift truck OEMs with their national accounts, he finds these efforts are sometimes too broad for some companies that have a large fleet but aren’t big enough to be a national account. That’s where the dealer can step in and handle fleet management.
Wisconsin does a fleet study and establishes a rotation system and replacement schedule. "We have engineers on staff to visit a customer site and perform material flow studies. We can also re-layout a warehouse to get the most out of cubic storage and minimize travel," says Casey.
Raymond reports that its dealers provide consulting services to improve warehouse layout to get the most throughput with the fewest lift trucks, to reduce costs with fleet services and to reduce product and plant damage with lift truck operator training.
One area where Crown is different from others is that it owns 30 of its own dealerships, located in major markets. It provides the company more flexibility when dealing with national accounts.
Continuous improvement
Another important element of lift truck fleet management is continuous improvement, which means keeping an eye on ongoing maintenance cost and utilization of each truck. "If there is a recent high incidence of avoidable damage occurring, it may appear that additional driver training is needed or it may be that an application has changed and the lift truck is now mismatched to the task," says Eck.
One reason that Yale has kept its contract with the Saturn plant in Tennessee for many years is because the company delivers continuous improvement. "If you’re doing your job as a fleet manager, you’re staying up on changes to production and handling. When operations change, it may make sense to move certain trucks out of the core fleet and into a rental situation," says Eck.
Owning or leasing a lift truck fleet requires a major financial commitment. The question is, do you need to own the fleet management process, too? MHM
Software Tracks Lift Truck Use and Misuse
Jason Bratton, partner with BEB Software Systems, markets software to lift truck dealers and other consultants who offer fleet management services. The company’s PMFleet.com software manages lift truck fleets to help determine the right replacement schedule for individual trucks.
Bratton says there are different ways to define fleet management. One way is to gather data and react to it. Another is being proactive on forecast replacement schedules and to plan for proper lift truck utilization based on planned annual hours.
The key question is: what is your planned utilization on lift trucks versus your actual utilization? Calculating true use helps with replacement schedules. "You don’t want a truck with 10,000 or more hours. Companies plan to use trucks about 3,000 hours per year, but actually use them much less," says Bratton.
When Bratton says his software tracks lift trucks in "real time," he means that his software performs recordkeeping and accounting functions on truck hours and performs an analysis of data on any truck’s service history and service details.
For some companies, tracking fuel consumption by truck is important, and that includes battery use. To some users, battery use is more critical than any other factor. Some trucks use up more batteries than others, which can point to problems either with the truck or with the battery handling and charging system. "We can detect driver abuse by gathering data through lift truck repairs and the details found in the service work order," he says. Bratton recommends the Keytroller system of hardware that provides a keyless password for each lift truck operator. The Keytroller system tracks hours, usage and idle time. "You can tell which drivers are just hiding out in the corner versus which ones are hard at work servicing orders," says Bratton. The Shocktroller, which is part of the Keytroller system, tracks damage or shock to the lift truck. "One of our customers that installed the Keytroller system saw a dramatic drop in lift truck accidents once workers knew they were being monitored," says Bratton.
Reach BEB at www.PMFleet.com or www.BEBsoft.com. Phone (816) 452-4222.
Five Steps to Fleet Management — A Vendor Perspective
1. Survey. Go in with dealers and gather data on a customer’s fleet including model number and serial number, age of fleet. Get two hour meter readings about 45 days apart, and then annualize hour readings.
2. Fleet Analysis. Project maintenance out for a five-year period and compare keeping the truck versus replacing it. Subtract the cost of maintaining the truck over five years from the cost of a new truck and compare with replacement threshold data.
3. Proposal. Go through the analysis with the customer. Look at leasing versus buying. Bring in battery vendors if it’s an electric fleet. Some users with IC trucks might be interested in converting to electric, so develop a proposal for conversion and look for any savings. Include operator training and consider installing electronic tracking devices onto trucks. Centralized billing and electronic equipment tracking by meter hours and impacts may be brought up.
4. Implementing the Proposal. Following up on vendor promises. On these last two stages, customer commitment is key.
5. Monitoring. Survey the customer’s equipment again a year later and provide another analysis. This is a continuous process. By this time, operator training has been performed, and we’re looking at holding down avoidable damage and monitoring it along the way.
Courtesy, Stan Garrison, regional sales manager, Hyster fleet services.
Everything on Wheels
Today’s fleet management programs can include more than just lift trucks. For example, "Our fleet management program includes batteries, chargers, towing vehicles and tuggers. It includes everything else in the plant that the customer needs to make business work," says Gregg Lao, fleet management business manager for Toyota Material Handling USA.
Nissan’s Fleettraxx software is an Internet-based program that tracks information on all types of fleet equipment, including floor sweepers, scrubbers, aerial lifts and battery chargers. It focuses on Class I-V lift trucks, but any equipment the customer wants to track is included. Reports can be generated from the customer’s own PC, says Dixie Connor, senior manager for marketing for Nissan Forklift Corporation North America.
Yale holds up its Saturn plant site in Spring Hill, Tennessee as an example of a successful fleet management program that covers everything on wheels at the plant, with more than 600 pieces of equipment at one site.
Related Fleet Products
The Yale Fleet Savings Calculator is a helpful tool that fleet managers can use to determine basic lift truck fleet costs. It is available free on the Web. Go to www.yale.com, click on North America, fleet management and savings calculator. Also contact Yale for its more thorough Base Cost Analysis Calculator and a full-fledged fleet study.
The Residual Value Calculator allows users to generate residual value from one to five years for new lift trucks. The calculator takes into account shifts, equipment condition, hour meter reading, maintenance practices, environment and future economic forecasting. Crist Information and Research LLC. Visit. www.cirguru.com.
A 4-page brochure and interactive CD-ROM describes the Fleetraxx fleet management system, including sample reports. This Internet-based software application stores critical, real-time data on each piece of equipment in your fleet in an organized format. It identifies location, equipment utilization, hourly operating costs and will even send reminders for scheduled maintenance. Nissan. www.nissanfleetraxx.com.
Offered is hardware and software that monitors lift trucks, tuggers, personnel carriers and machinery. Critical information is recorded and transferred via wireless network to a Web server. Managers can access data anywhere. The Vigilant G2 helps distribution center managers comply with OSHA 1910.178 with a paperless, pre-shift safety checklist. Access Control Group. www.access-controlled.com.
The Advanced Truck Management System allows managers to access information on lift truck use, performance or damage through a computer or mobile phone. It uses speed limiting, driver access and crash detection. Transmon Engineering. www.transmon.co.uk
intelleFleet offers an automated industrial battery monitoring and reporting system. It lets users measure individual battery performance, reduce maintenance expense and extend battery life. Visit www.intellefleet.com.
collectiveFleet fleet management software is for public and private fleets. Use it to schedule, track and report on preventive maintenance, fuel use, job orders, meter tracking and more. CollectiveData. Visit www.collectivedata.com.
Nissan Motor Company announces a new lift truck, the Agres, a 69-Model range available in 1 ton to 3.5 tons. Look for the truck to be introduced in the USA in the first quarter of 2004. The truck was co-developed by Mitsubishi. On diesel models, 90 percent of black smoke is reduced, and the diesels have been quieted to 51.7dB-A during idling, which compares to the typical office environment. Standard safety equipment includes a roll control system for turning stability, a mast lock mechanism, a parking brake warning buzzer and an automatic transmission power cut-off system. Visit www.nissan-global.com.
Reducing Lift Truck Damage
At the IKEA furnishing store 460,000-square-foot distribution center in southern California, there is a fleet of 52 trucks of varied types. Bill Villanueva, maintenance supervisor, reported a great amount of damage taking place over three years that was due to rough lift truck driving habits. It was difficult to hold any one driver accountable for damage.
In early 2001, Villanueva installed automatic access control devices called Shockswitch ID. The system controls lift truck access by requiring a driver to log on with a simple key device assigned to each operator. The Shockswitch ID senses, records and reports all operating data and costs $29,000.
The system paid for itself in just three months as damage was cut in half. First year savings were about $90,000 over and above the cost of installing the monitoring units. Shockwatch. Visit www.shockwatch.com.
Sources
Access Control Group, www.access-controlled.com
BEB Software, www.PMFleet.com
CollectiveData, www.collectivedata.com
Crist Information and Research LLC, www.cirguru.com
Crown Equipment Corporation, www.crown.com
Hyster Company, www.hysterusa.com
IntelleFleet, www.intellefleet.com
Komatsu Forklift USA, www.komatsuforkliftusa.com
Linde, www.lindelifttruck.com
Mitsubishi Caterpillar Forklift America Inc, www.mcfa.com or www.cat-lift.com.
Nissan Forklift Corporation North America, www.nissanforklift.com
Shockwatch, www.shockwatch.com
TCM Lift Trucks, www.tcmlifttrucks.com
Toyota Material Handling USA, www.toyotaforklift.com
Transmon Engineering, www.transmon.co.uk
Wisconsin Lift Truck Corporation, www.wisconsinlift.com
Yale Materials Handling Corporation, www.yale.com
