A fleet manager’s guide to a utilization review

Do you want to have a best-in-class fleet to support your organization in an effective and efficient way? One of the first things you should address is fleet utilization. Having a fleet that is the right size with the right type of vehicles using the right fuel is a starting point down the road to optimum maintenance staffing (if you own your own shop) and future replacement planning. With some time and experience, most fleet managers can do this type of internal review with impactful results.

Utilization reviews call for organizations to have a mobility mindset. When a transportation requirement is identified, the default should not be to purchase an additional resource. Management and users should first ask whether that requirement can be met more efficiently by other means such as leasing, renting, public transportation, employee reimbursement or loaner pools. Vehicle ownership should be the last resort. Where ownership is the best option, care should be taken in matching the asset to the requirement in a way that promotes efficiency and sustainability.

Assessing vehicle utilization over the past three years has been challenging. In some cases, vehicles were parked because employees were working from home, or had left positions and not been replaced. In other cases, utilization increased as employees could not travel together so had to each take a vehicle. These factors must be considered when looking at overall fleet usage. A formal five-step process can ensure that utilization reviews are worth the time invested.

1. Review vehicle utilization data for each asset.

2. Identify averages of usage by vehicle classification.

3. Establish utilization thresholds (for example, 70 per cent of the average for that class).

4. Interview users of low-usage assets.

5. Assign final vehicle dispositions with cost/savings.

Interviews with fleet users are key as the odometer reading of an asset may not fully reflect utilization. A work truck, for example, may drive only a short distance to a job site but remain there all day. It is fully utilized even though it only travelled a short distance. Asset criticality must also be considered in studying emergency fleet utilization. A specialized response truck may be used only once a month, however, if it is the only asset of its type and is critical to operations, it cannot be eliminated.

The outcome of this process should be one of the following vehicle dispositions.

Retain – keep current unit in service and replace according to the organization’s multi-year replacement plan based on optimum lifecycles.

Replace – commence the process to replace the asset immediately with a like asset.

Right-type – replace the asset at the next replacement cycle with an asset more suited to the job function.

Right-Fuel – replace the asset at the next replacement cycle with an alternative fuel. Eliminate – the utilization does not justify retention and the asset should be eliminated.

Other – the requirement for an asset can be met through borrowing, leasing, renting or the use of a pooled asset.

Once a disposition is determined, it is possible to calculate the costs or savings associated with the changes. The one-time cost-avoidance of eliminating a vehicle from inventory is only the start. The number does not reflect the longer-term capital or operating cost implications of eliminating or downsizing an asset.

A utilization review is not an activity that happens once with lasting results. Organizations need to develop fleet utilization policies that cover vehicle justification, use and disposal. These policies should include:

Alignment with job descriptions and necessary specifications. Vehicles should only be kept for specific jobs in the organization where their specifications have been developed to match the needs of the job to which they are assigned.

Frequency and volume of utilization. Vehicles should be used regularly enough and for long enough periods that the mobility need associated with the work being done cannot be met with an alternative such as a rideshare, a pooled vehicle, a rental, or a travel reimbursement.

Emergency need. If a particular unit needs to be constantly available to respond to emergencies, it may be necessary even if its frequency or volume of utilization would not otherwise justify it.

The policy should state that vehicle utilization should be reviewed on an annual basis. Vehicles with utilization well below the average for their vehicle class should be pooled or eliminated as appropriate to ensure that the size and composition of the fleet are optimized. Regular reviews of asset utilization also provide an opportunity to consider the organization’s progress toward converting to alternative fuels and electric fleet assets. As new vehicles arrive to market and new charging technology becomes widely available, utilization reviews are a good time to consider which units should be candidates for right-fuelling.

This policy should be part of the organization’s Fleet Policy Manual and should be reviewed annually when it is applied to review the utilization of the organization’s fleet.

The two most important factors that contribute to the success of a fleet right sizing program are mindset and data. On mindset, fleet users should be encouraged to be proactive in identifying units which are under-utilized. Fleet liaisons in each department should be provided with monthly utilization data so that they can review, comment, and make recommendations with greater frequency than the annual review process allows. Rather than dreading a utilization audit, employees should welcome the opportunity to consider the most efficient way of supporting the organization. Results of these reviews often reveal that fewer, more reliable vehicles can replace older vehicles resulting in a newer fleet that drivers can rely on. None of this is possible without comprehensive, accurate data.

As a minimum, mileage and/or hours of use is needed. As previously mentioned, however, this is not the only indication of asset usage. The number of trips and idle time are other utilization indicators. In the end, an asset is being utilized any time it is not available for another use. Telematics systems are the best way to get this type of information.

There is no better time for this type of review. Gather your data, educate your users, write some policies, and follow the five steps described for a fleet that fits your present and future needs. FM/S

By Stephanie Wallcraft