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How to Cut Motor Pool Costs with Utilization Metrics

The goal of a right-sized motor pool is simple: It is to have the right number of vehicles — and the right types of vehicles — at the right locations where they are needed. Achieving this goal can seem challenging unless you have the right tools and systems in place. The return on investment (ROI) of a right-sized fleet is proven and significant. A fleet can easily save tens to hundreds of thousands of dollars in reduced fleet direct and indirect costs, cost avoidance, and improved efficiency.

How much can you save? In most cases, fleets that correctly measure utilization find that they need fewer vehicles and will see almost immediate return on investment when using a fleet management information system (FMIS) such as Agile Fleet’s FleetCommander. Agile Fleet estimates that a fleet will save between $3,000 to as much as $8,000 per vehicle that is eliminated from the fleet. Savings are a function of reduced maintenance, depreciation (the highest fleet expense), insurance, parking, tags/registration fees, and reduced staff time managing the fleet. For instance, if the FMIS identifies 10 unneeded vehicles in a fleet, eliminating those vehicles results in an immediate savings of between $30,000 and $80,000 per year. Cost avoidance by not having to replace those vehicles is another important savings factor. At $30,000 per vehicle replacement costs, this fleet can realize $300,000 in cost avoidance as well. And a right-sized shared fleet can also be the key to cutting personal vehicle use reimbursements, which can add up to hundreds of thousands of dollars a year.

Vehicle sharing is a key component of nearly all right-sizing initiatives. If you have the right quantity of vehicles (e.g., you need 17 vehicles) but they aren’t the right type (e.g., pickup trucks instead of sedans), you will be unable to fulfill your mission. Likewise, if there are plenty of vehicles at the downtown office but none are available where drivers need them at the remote office, you’ll fall short. And, finally, if vehicles are available but drivers don’t have access to them, it’s a challenge. Therefore, utilization data related to a shared vehicle fleet should help you understand if you have the right quantity and type of vehicle available at the right location at the right time.

Using an FMIS to capture right-sizing data — while it requires an initial capital investment — will enable fleets to quickly identify their vehicle needs. In addition, sharing vehicles via an automated system will automatically and continuously collect utilization data. And, when you automate the process of sharing vehicles (web-based online reservations, self-service key dispatching, automated reporting, and billing) staff who may have been tied up managing day-to-day motor pool functions are freed up to focus on other duties.

Use the Right Metrics

The key to effectively measuring utilization is capturing the correct data to get a complete picture of the fleet’s usage. But what metrics do you need? Typically, fleets rely on a single metric, such as dispatch times and dates, vehicle movement via GPS or telematics device, distance traveled or mileage.

But are those the right metrics? Let’s take a closer look:

Capturing dispatch times & dates through an automated vehicle sharing system — This is a true metric that shows when the vehicle was “consumed,” i.e., not available for use by others. If someone has the keys in their hand, the vehicle is committed. Automated vehicle sharing systems are good at capturing when vehicle keys are picked up and when they are returned. This is done via staff ed dispatching locations or via self-service automated kiosks and key control systems. The goal is to have undisputable, accurate dates and times for all key pick up and return transactions.

Measuring all movement via GPS or other telematics devices — This is a great measure of when a vehicle moves but may not accurately reflect when the vehicle was accessible to those that need it. For example, if a driver picks up keys to a vehicle at 8:00 a.m., drives to a meeting at 11:00 a.m., returns from the meeting at 2:00 p.m., and returns the keys to the motor pool at 4:00 p.m., GPS may show the vehicle was only used from 11:00 a.m. to 2:00 p.m. However, the vehicle was unavailable to other drivers for the entire duration from 8:00 a.m. to 4:00 p.m.

Measuring distance traveled — If all you have is odometer data, that’s better than nothing. However, distance traveled tells very little about how many vehicles you need to fulfill your mission. Time-based utilization metrics give you the best view of how many vehicles you need.

While it isn’t entirely necessary to use an automated system when right-sizing, a paper-based approach to capturing utilization metrics has significant limitations and won’t provide the necessary depth for making the true analysis that data collected through an FMIS will.

For instance, if a vehicle reservation is manually collected into a reservation book, the fleet manager can measure that employee’s usage of that vehicle, however it may not paint an accurate picture of usage. If that vehicle is used to travel to a meeting that lasts just an hour or two, the vehicle will, likely, be tied up for an entire day by that single employee. During that time the vehicle will mostly be idle. In addition, other employees will likely be forced to use their own vehicles. This results in higher personal vehicle reimbursement costs. The fee for the employee who had the shared vehicle at his or her disposal for the entire day — to cover the two-hour time frame needed for the meeting — would also be unnecessarily expensive, since his or her department would be responsible for the user fee for the entire day, not just for the two hours the car was needed.

In the manual scenario, too, the amount of staff time also factors into the cost of running the fleet, since it could take up to several employees to manage the manual reservation process, hand out keys, and do billing and reporting.

The upside of using an FMIS is that the entire process of vehicle-sharing and metrics collection is automated. This includes an easy online reservation capability, and freeing staff from time-consuming administrative work scheduling and dispatching vehicles and managing keys, as well as manual reporting and billing. Self-service motor pool systems eliminate the need to hand out keys and offers 24x7 access to vehicles.

Analyzing the Metrics

The right balance of classes of vehicles and number of vehicles at the right locations is the ultimate utilization goal. Achieving this balance will increase efficiency (employees will have access to the vehicles they need) and will save money (they won’t need to use their own vehicles for reimbursement). A question we get asked all the time is, “What is a good utilization rate for a fleet?” We know what people are trying to ask when we hear that question, but we also know the answer isn’t quite that simple.

Utilization data for all fleets varies. There are key things to consider from fleet to fleet. For example:

Weekends & holidays. It is very common for fleets to measure utilization using a simple math formula that considers (# of days driven) / (# of days measured). That’s great if you drive 7 days a week. But if you are a fleet that typically drives Monday-Friday, your utilization rates will always be almost 30% lower than a fleet that drives 7 days per week because your vehicles sit idle over the weekend. Your FMIS should be able to exclude weekends and holidays when considering utilization rates.

Cycles in data. Utilization rates at a university that has a major agriculture program may have extremely high utilization rates during the summer season but not at other times. Their utilization rates would be very different if you measured them in the summer versus the winter. So, we always suggest that we help an organization understand utilization rates through an entire fleet “cycle.”

Measuring classes of vehicles separately. It’s important to understand utilization for each class of vehicle. For example, a 90% utilization rate for a passenger vehicle from a shared fleet would be pretty good. In the same fleet, if heavy equipment is shared, utilization of a bridge inspection truck at 40% would be great. The type of vehicle matters.

Read this report in its entirety and learn more about:

  • Interpreting the data
  • Avoiding analytic pitfalls
  • Knowing how to let the data tell your utilization story
  • …and more.

You can download the full report by clicking below.

Download: Show Me The Data