Business leaders often talk about the need for partnerships and collaboration with customers and suppliers. Most of it is just talk. Blanket price concessions, sales quotas and quarterly earnings objectives can quickly undermine any long-term desire to work more closely together.
Lift-truck manufacturers, dealers and their customers are all subject to such business pressures. And yet, they are finding ways to work together for their mutual benefit. When it comes to fleet management, a program's success can depend on the depth of these partnerships.
"The definition of a real partner is a business partner that you can trust to look out for your best interests," says Bill Hoks, director of distribution projects for Unisource World Wide. "They're not just looking for the sale. They're looking out for what's best for us."
Headquartered near Atlanta, Unisource distributes commercial paper, business paper, imaging supplies and packaging supplies and equipment. It maintains 17 million square feet of inventory capacity at various locations across North America that stock 150,000 different products.
The biggest benefit for Unisource from its fleet management efforts comes from having reliable service and usage information for each specific piece of equipment. The company couldn't track such costs when it had to monitor the activities of 70 different service providers.
"You can give me a serial number from one of our pieces [of equipment] and I can tell you exactly what it cost last year, and the year before," says Hoks. He uses this data to determine whether older machines are worth keeping or if they should be swapped out for new. Unisource has also cut administrative costs.
"We were processing well over 10,000 invoices per year. Now we process 24. You can imagine what that savings is," says Hoks. Crown's online billing system posts most transactions within 24 hours of completion, allowing him to pull up and review invoices and work orders almost in real time.
Smaller Firms Benefit Too
The benefits of effective fleet management—having the right number lift trucks that are cost efficient to operate—is no longer only within reach of equipment users with a thousand or more units. Ray Parent oversees operations for Newington, Conn.-based A.H. Harris & Sons, Inc., a concrete and construction material distributor with 35 locations on the East Coast. Growing through acquisition over the years, the private company has around 100 lift trucks of every make with capacities from 3,000 to 16,000 lb. Not only have Yale Materials Handling Corporation's (Greenville, N.C.) fleet management services given his site managers a central number to call for service, and standardized costs for repairs and maintenance, it has allowed Parent to track equipment usage across the company on an hourly basis.
"We had probably 20 different vendors who were handling our forklift maintenance services. Most of our locations were acting as single business units, contacting their own people for all types of services, including forklift repair and maintenance," says Parent. "It was hard to gage the quality level of the service that we were getting out there. The other problem was that pricing was across the board. One guy would have a flat rate of $50 [per hour], another guy would have a rate of $75 plus parts."
Service intervals for most of A.H. Harris's equipment used to follow a calendarbased schedule, with work performed every 30, 60 or 90 days. The problem was that a forklift at one of the company's smaller locations might only be operated a couple of hours per week while at the corporate site, which operates over two shifts, forklifts sometimes run 50 to 70 hours per week. As a result some machines weren't being serviced enough, and others were being over serviced. Going past the service interval had a considerable negative impact on the equipment in the dusty, rough environment of the company's worksites.
"We're seeing consistent service across the board. I don't have to worry about forklifts going 100 hours past the service date," says Parent.
Each site now reports hourly equipment usage to a Yale Fleet contact person every week. Parent can find out the cost per hour for each piece of equipment in each location. With some machines that have been in service for 12 to 15 years, he can determine when it is less expensive to lease a new unit rather than keep an old one running. The payables department at A.H. Harris also benefits from receiving one bill from one vendor per month, rather than processing 14 bills from 14 vendors and maintaining 14 vendor accounts.
As of this May, A.H. Harris had been working with Yale for 11 months. Looking forward, Parent expects to use the 12-month cost figures to budget better for next year. "I now have a firm number of where we are. I will know what our cost per unit per hour is," he says. "I don't have to guess what my needs are going to be for next year."
Beyond Tracking Hours
Rick Noe manages a fleet of approximately 550 material handling vehicles at the Toyota Motor Manufacturing plant in Georgetown, Ky., where the company builds its Camry and Avalon sedans, as well as four-and six-cylinder engines. Of late Noe has been benchmarking against other automotive plants—struggling to compare apples to apples—to see how large his fleet should be in relation to the factory's production volume.
"The ultimate goal? There are actually two: We're trying to reduce the overall number of pieces of equipment. Second, we're reducing the number of forklifts, and increasing tuggers. Tuggers are cheaper to buy and cheaper to maintain," says Noe. A wireless asset management system from ID Systems (Hackensack, N.J.) is helping with Toyota's fleet management efforts.
The system consists of three parts. The first is vehicle hardware—access controls that limit access to approved operators and other equipment that records vehicle activity. When a vehicle is within range, stored operating data is wirelessly transmitted to network gateways that have been setup throughout the facility. The final part of the system is software that helps manage the data and generate reports.
At Toyota, as Noe reports, they were having problems with contractors using lift trucks over the weekend. Aside from having to track down the equipment on Monday morning, there was no way to make sure that whoever was running the equipment had received the proper training. The ID Systems asset management system reads an operator's badge, compares it to an onboard database of people who have received the OSHA-required training, and turns the truck on, or not.
Toyota uses the vehicle motion data now available to monitor utilization, both for maintenance and allocation purposes. If a department within the plant requests additional equipment, for example, Noe's group first looks at their current equipment to see if it shows a high usage rate, minutes in motion out of the 450 possible minutes per shift. They've also used the data to move equipment from low usage areas to where it can be better utilized, and to eliminate excess units. Within a week of turning on the asset management system, the company identified one area in assembly where three forklifts were being used for only a few minutes each hour by three separate groups. They identified a central location where a single forklift could be parked and eliminated the other two units.
When service is due, maintenance people use the location tracking ability to find specific vehicles in the 7.5 million sq. ft. plant, and notify the operator via a paging feature that they will be exchanging the truck with a spare unit at a certain column location. Operation people even use the location data to compare the actual movement of material handling equipment to planned routes in the justin-time environment.
"ID Systems has allowed us to use motion for PMs, instead of hour meters. That probably reduces PM frequency by about 30%," adds Noe. Hour meters typically run whether a lift truck is moving or stopping at stop signs, or sitting and waiting for a truck to back up to the loading dock.
Toyota initially projected a return on investment for the asset-tracking technology of 27 to 28 months. It will take a little longer than that, not because of implementation glitches or the system's effectiveness. The introduction of its new Avalon model simply took precedence over the effort to reduce equipment."In all honesty we probably could have used the data better than we did. When we have a major model change there are priorities," says Noe. Ultimately, that's what any fleet management program comes down to, identifying opportunities and setting priorities for improvement.