Key Metrics for Operational Efficiencies
By Marek Krasuski
Transportation companies face continuous pressures in their daily operations. Chief among those challenges is the cost-benefit ratio to any purchasing decision. The breadth of management tools is, as well, one important consideration in the decision making process, though admittedly less so in recent years. Companies have wrestled with affordability issues, thinking that management hardware and software costs exceeded their financial reach. Years ago a management package could cost up to $100,000 but today leasing options with reasonable monthly rates have made accessibility possible for virtually any operator, and opening the possibility of yielding substantial benefits.
Yet with a sluggish economy the question presses: how much additional capital should be invested in management resources? Trucking in recent times got some relief from the slump in fuel prices, but these savings were offset by other costs. Vehicle purchases increase as a result of new technologies required to satisfy stringent fuel emission standards and safety regulations. And with the advent of state-of-the-art systems attached to new vehicles, fleets rack up additional costs in the training of their technicians to stay abreast of newer innovations; this, amid complaints that newer trucks with diesel emissions technologies are responsible for additional downtime and expense. Indeed, as much as 90 percent of breakdowns are due to emissions-related problems.Another cost for carriers is the influence of environmental, health and safety pressures. Considering that drivers are the largest source of Worker Compensation claims, fleets failing to address these concerns do so at their peril. Despite the temporary drop in fuel, prices are rising once again thanks in large part to carbon pricing and the reduced output of oil by OPEC countries. Moreover, forward thinking fleets look beyond the variable costs of conventional fuel to alternative fuels and related technologies. Reduction strategies are the order of the day, especially since fuel costs are the biggest operational expense. To this end management tools are essential for measuring the rate of fuel consumption and the need to undertake cost-cutting measures. Fuel monitoring systems, common among most fleet management providers, provide easy and effective methods of reducing costs and boosting productivity with information on exact fuel consumption measurements. Fuel reports identify which vehicles are operating at peak efficiently and which need to be retired. Fuel management software reportedly saves as much as 25 percent annually and 30 percent on idling expenses. As well, accurate measuring of fuel consumption greatly assists in calculating fuel tax reports. Many reporting systems include apps that calculate carbon footprints of all vehicles in a fleet, critical information that can aid in securing green contracts by demonstrating environmentally sound business practices.
In the wake of mounting compliance regulations such as Hours of Service (HOS) and Electronic Logging Devices (ELDs) scheduled for implementation later in 2017, expect demand for management tools to rise. There are compliance packages available to help ensure conformity with ELDs as well as future changes that are sure to be introduced by the regulatory agency, FMCSA – Federal Motor Carrier Safety Administration. Aside from the many complaints by industry stakeholders regarding excessive regulations, fleets using ELDs have reported significant gains. Among them are: a 12 percent reduction in motor vehicle crashes, a decline in speeding and hard braking, and fuel savings up to 25 percent.
Key to any reporting system is the ability to observe driving behaviour. Tools are readily available to monitor the complete range of driving patterns, ranging from the number of times the brakes have been engaged, to the speed at which the vehicle travels, the rate of sharp turns during a shift, hard braking frequency, idle times, ignition on/off rotation, and to the entry and re-entry into a particular zone. Monitoring driver behaviour does not always sit well, especially with drivers who resent being watched by electronic devices that report information back to head office. As long as they arrive safely and on time to their destination, they say, why bother with the Big Brother tactics? But that’s only half the story. Rather than a punitive measure for judging driver performance, proponents argue that a monitoring tool provides detailed insight into driver behaviour that can lead to enhanced results. For example, insight into idling time can lead to suggestions on lowering this metric if it’s shown that idling is excessive. Detecting speeding or rapid acceleration can lead to modified behaviour that saves fuel, reduces risk of CVOR infractions, and decreases risk of unsafe driving and collisions. Monitoring provides fleets with information on where drivers spend time, their arrivals and departures, and length of stops – critical data for streamlining operations.
Management tools can and do encompass the entire range of operations, if desired. Common to the suite of reporting options are cross-docking modules that monitor freight shipments. These modules consolidate shipments through several terminal locations. Cargo status can be monitored and all information fed directly back to head office. Cross Dock functions provide a high degree of process control and keep customers abreast of shipment status along with driving efficiencies. Today’s integrated monitoring packages provide multiple modules linking all logistical operations. Dispatch modules, for example, efficiently direct incoming and outgoing traffic, thereby improving control and visibility of operations. The dispatch function allows trucks to be monitored, in real time, for their location, load status and availability. Dispatchers can efficiently expedite deliveries by matching the nearest available truck to a pick-up location and sending the information to the driver’s onboard computing system or handheld device. Key delivery details transmitted electronically eliminate the time wasted on potentially dangerous cell conversations.
Since tires are the largest operating cost next to fuel, a comprehensive management package would not be complete without a tire monitoring system. The cost per mile of tires cannot be accurately measured without a reliable method of measurement. Common to tire monitoring systems is their ability to measure, in real time, tire pressure, temperature, and tread depth. Underinflated tires cause significant reductions in fuel consumption and lead to reduced tire life cycles. An accurate reading of tire status leads to corrective measures that will keep tires in maximum operating condition while saving fuel.
Indeed, adoption of a management tool system has, in fact, led to significant savings. The North American Council for Freight Efficiency (NACFE) released information showing that fleets which have adopted reporting technologies and invested in driver training were ramping up fuel savings of $5,700 per truck up year. The study which looked at 60 technologies and practices over a 10-year period also noted an increased adoption rate of products and services from 31 percent to more than 50 percent.
Further, management tools can be tailored to specific customer applications. Carriers specializing in perishable and refrigerated foods, for example, can obtain tools that require drivers to comply with specific procedures in the handling of reefer units. Programming checks and balances into mobile devices require drivers to comply with step by step procedures in the loading and unloading of merchandise. Software functions remind the driver to probe food before loading to ensure accurate temperature. Failure to do so prevent the driver from continuing the trip until the required data has been entered into the system.
Important to most companies is a management toolkit that is scalable to need, currently and into the future as fortunes change. For example, load tracking may not be currently necessary, but may be so in five years’ time. Similarly, parts inventory may not be an issue today, but will be when fleet size doubles. A modular approach available with many systems, therefore, enables clients to build their solutions in tandem with company growth.
As commercial transportation becomes increasingly complex with the advent of mounting compliance standards and sophisticated technologies, fleets are well placed to capitalize on the breadth of available management tools.☚