Vehicles have a limited lifetime, and the frequency of breakdowns and cost of repairs goes up proportionately as vehicles age. The rule of thumb is the older the vehicles, the more the problems and greater the risk of catastrophic failures.
One analogy is a person’s health. Approximately 80% of a person's lifetime medical expenses occur in the last years of life — a similar ratio is true with vehicles. As company vehicle service lives are extended, the units in operation are older with higher mileages. Invariably, these units will require more maintenance as their parts and components begin to wear out and need to be replaced – oftentimes these are major components.
With the inventory of replacement parts in short supply, sometimes vehicles may sit idle at a repair facility waiting for the delivery of parts that are on back-order In addition, the longer a vehicle is in service, the odds increase of it being involved in a collision or another accident. In addition, downtime is also caused by numerous other circumstances ranging from tires damaged by road debris, to recalls, vehicles booted for unpaid tickets, to expired license tags.
While many vehicle downtime events are unavoidable, downtime can be managed and minimized by adopting a proactive versus reactive maintenance program and by implementing a driver-based versus asset-based fleet safety focus. Fleet data analysis can identify recurring downtime issues. It’s important to determine the root causes of downtime so procedures can be developed to minimize such problems in the future.
Managing the Cost of Downtime
With fleet budgets tighter than ever, it makes it imperative to track all expenses associated with downtime. However, not all fleets track downtime costs, one estimate showed only 36% of fleets do so. Also, because there is no universally accepted industry definition of downtime for light-duty fleets, benchmarking downtime with peer fleets is difficult.
For instance, should downtime include all repair events? Or only unscheduled events? Also, downtime metrics vary widely. Should you track cost of downtime hours per day, vehicle downtime per month, total downtime costs per event, or something else? Regardless, one thing is true; fleets generally underestimate the total cost of downtime, but it can be managed. For instance, vehicles participating in a scheduled preventive maintenance (PM) program experience about 20% fewer maintenance-related downtime days than those that aren’t.
In essence, the objective of a PM program is to ensure a vehicle is able to operate without any break in service until its next PM. A scheduled PM program helps to identify service issues before they become major problems. Follow-through on fault codes and alerts from onboard diagnostics and telematics systems will fix small issues before they become major, more costly, issues.
In addition, many incidents of unscheduled downtime can be avoided using predictive maintenance, namely forecasting when components are near the end of their useful life based on historical maintenance data rather than waiting for component failure. Developing a maintenance schedule to replace or rebuild components before the end of their expected lifecycles, fleets can offset higher expenses incurred from unscheduled downtime.
Another cause of unscheduled downtime is vehicle overloading. Fleet maintenance surveys consistently show that overloading is the No. 1 cause of unscheduled maintenance for trucks. When a vehicle is overloaded, its emergency handling capability is reduced, which can contribute to an accident. For instance, braking distance increases, which can cause drivers to misjudge stopping distances, and tire failure rates are higher because tires run hotter.
Hard Costs vs. Soft Costs of Vehicle Downtime
Downtime costs are typically broken into two categories: tangible costs of downtime (hard costs), and intangible expenses (soft costs) due to driver inactivity.
Hard costs related to downtime include lost revenue, towing charges, temporary rental, and employee overtime. Soft costs are those incurred during driver downtime such as lost employee productivity, lost revenue-generating opportunities per day, and delays in delivering the product or service your company provides to its customers. The key components to calculating the total cost of downtime are:
The costs of repairs necessary to get the vehicle back on the road again. This includes the cost of labor, replacement parts, diagnostic fees, and towing costs,
- The approximate compensation costs of drivers to fully calculate employee soft costs, along with employee productivity costs. When drivers are not able to work due to a vehicle problem, they cannot produce revenue. This is a lost “opportunity” cost that impacts current and prospective customers.
- In summary, you need to track downtime in detail. Sometimes, the largest expense of downtime isn’t related to the actual repair, but other related soft costs, such as employee compensation and the lost revenue generation from the product and service provided.
The end result is that vehicle downtime negatively impacts the ability to perform service jobs, complete deliveries, or make sales calls, all of which result in a loss of productivity and revenue. Reducing downtime will reduce overall operating expenses and optimize vehicles productively, which increases fleet uptime.
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Originally posted on Automotive Fleet