Identifying Fleet Value
Each month NPTC President and CEO Gary Petty writes a column in Fleet Owner magazine that focuses on the individuals, companies, best practices, and resources that make private trucking the force that it is in the American economy. Reaching more than 100,000 subscribers, three-quarters of whom are private fleet professionals, this column provides an excellent forum to communicate the value of the private fleet. Click here to view the archive.
Gary Petty | email@example.com | Private Fleet Editor for FleetOwner Magazine
Gary Petty has more than 30 years of experience as CEO of national trade associations in the trucking industry. He has been the president and CEO of the National Private Truck Council since 2001.
Last year, NPTC officially launched one of the most dynamic private fleet management tools ever to enter the marketplace. The Private Fleet Assessment Program (PFAP), sponsored as a joint venture by NPTC, Schneider National and Optima Associates, is a uniquely innovative web-based management resource designed to help private fleets find pathways to world-class performance against best practice standards of the industry.
Perhaps the biggest take-away from the first 18 months in which the PFAP has been deployed is that, while not necessarily easy, the process of quantifying private fleet value is totally dependent upon knowing and understanding all direct and even indirect transportation costs. In so doing, private fleet professionals can optimize their unique customer service performance by leveraging their internal efficiencies.
The assessment process involves identifying all transportation costs and assessing their performance and procedures when compared to reliable benchmarks and world-class practices. The program evaluates eight key pillars through the process of rating 40 attributes covering almost every aspect of private fleet operations. A score sheet identifies the carrier’s strengths and opportunities, and three waves of recommendations are suggested in priority order.
This assessment can be done online or during an onsite facilitation process. This process and subsequent analysis often has been helpful in locating thousands of dollars of potential savings. These savings could mean the difference between maintaining the internal transportation function and dissolving the fleet.
The most difficult part of the program has been simply identifying all transportation costs. Whether a fleet operates as a profit center or a cost center makes no difference — costs that are not known cannot be managed.
To adequately identify the true costs of operating a fleet of trucks, it is essential that private fleet managers work with their accounting department to design ledgers that include all costs (equipment payments, licenses, maintenance, taxes, driver wages and benefits, building expenses, utilities, maintenance and taxes, insurance, claims, legal, fuel, management and administrative support, and miscellaneous expenses such as pallets, tarps and straps).
The benefit of identifying all costs in such granular detail became readily apparent to one PFAP participant: After including all corporate charges into their costs, the private fleet manager actually challenged the corporate charges for office overhead by conducting a competitive bid for outside support. The corporation then agreed that the fleet was being overcharged and reduced the allocation.
Another fleet has improved its maintenance capacity by 30% by identifying the costs associated with wasted motion and poor shop floor layout.
So what have we learned? The first step in identifying all transportation costs is organizing existing ledgers into meaningful reporting dashboards which identify every transportation expense in a timely manner. Managing these costs is dependent on receiving this data as soon as possible and comparing these numbers against annual budgets and benchmarks from similar private fleets.
If you would like to get a better grasp of costs that could affect your fleet, visit the PFAP portion of the NPTC website at www.nptc.org.