When it comes to your fleet, you need best-in-class uptime so you can get to your customers as promised. Fleet maintenance is more complex with new engine and exhaust technology, which, coupled with the shortage of qualified technicians, makes performing maintenance on your own a challenge. However, on-site fleet maintenance managed by a third party, gives you the opportunity to maintain your fleet at your location minimizing risk and eliminating the complexity.
Below, we examine the top reasons to shift your on-site maintenance to a third party provider:
1. Employee Risk: Employer Liability, Worker’s Compensation, Hiring, and Training
2. Administrative and Vehicle Operations Expenses
3. Environmental & Compliance Expenses
4. Shop Investment: Tooling, Technology, Parts Inventory
5. Transition Risk
Employee Risk: Employer liability and worker’s compensation are likely the most important factors after vehicle operations. Even if keeping maintenance in-house provides some gross cost savings, it can be quickly wiped out by one employer liability claim. When the evaluation shows only limited savings by keeping the maintenance insourced, one claim (frivolous or not) can eliminate those saving 5-fold or more. Additionally, employers often overlook the on-going costs in recruiting, hiring, training, and compliance. As an example, Ryder technicians get about 300,000 hours in training yearly. Soft costs are an important factor to consider when deciding whether to employ someone in a role that may not be core to your operations.
Administration and Vehicle Operations: Whether it is parts procurement coordination and inventory management, coordinating in-house and outside repair (like body damage), record keeping, or vacation/sick coverage costs, administrative expenses add up and sometimes are not included in a company’s evaluation of its total maintenance spend. More importantly, the vehicle operation cost category is the largest. Labor, parts, tires, emergency road service, plus the indirect cost of downtime and customer dissatisfaction, are expensive and impact operations.
Environmental & Compliance Expenses: Certain future environmental and legal responsibilities and related expenses are reduced or eliminated when you outsource. You can transfer go-forward environmental, waste, cleanup, OSHA, DOT, and safety matters to the third-party provider. The provider will be the party going forward holding those important future obligations, and we know these costs can be significant.
Shop Investment: Equipment on the floor, or IT and Telecom equipment is costly and needs frequent upgrading. Oil, lube, and compressor equipment is important and needs to meet environmental and local compliance regulations. Service vehicles to perform yard checks or nearby repairs can also be expensive to purchase and maintain. Spare vehicles are costly as well. In addition, investments are needed in tire and parts inventory management, as well as fleet reporting and management systems. These all impact your total cost of maintenance and insourcing, even if accounted for separately at the company level.
Transition Risk: Often, the biggest barrier for a company to outsource is taking that initial leap to transition. However, the risk of transition is minimized with a maintenance provider that may offer you a 1-year term. Lastly, the transition to a provider can come with a project and implementation management team to help with an efficient and effective transition, launch and operation.
By decreasing or eliminating these five factors through on-site maintenance with a third party provider, you can achieve a large benefit, while improving uptime, increasing fleet reliability, and having more time to focus on your core business.
