How to define Fleet Utilization?
A fleet is a number of vehicles used by any company to transport goods from a source point to a destination in a given period of time. Now the performance of the vehicle is a key factor that determines the profitability of the company.
How we use the fleet or how efficiently the company uses the fleet is important.
Bigger companies in logistics use multiple fleets per day or a particular period of time to execute their trade.
Hence, the condition of the fleets used in fleet operations is very important to achieve the targets successfully without causing any damage to the fleet and the goods. Such a systematic and calculative approach of vehicle usage in the logistics towards a profitable business can be defined as the fleet utilization.
Why is it necessary?
For a company to be successful in any business, an intelligent team of management is a must.
So considering the logistics business, fleets are the ones who carry the goods from one point to another and they are the ones trusted by the traders for a successful transportation.
In such cases, the type of fleet, number of fleets and condition of fleets has to be managed very carefully by calculating its performance on a regular basis to know about the fleets in detail. Fleet utilization is a very important factor to keep the company’s business moving in a profitable way.
In case of any imbalance in the fleet’s usage, calculated fleet utilization details will be helpful to get them back on track by avoiding any abnormal activities with the fleet during the fleet operations.
Right fleet size operations
Fleet size in any fleet operation can be measured in different ways which varies with every trade depending upon the type of goods to be traded and the quantity of goods to be traded.
Fleet size is the measure of either the number of fleets used in a particular trade or the capacity of fleet used in a particular trade.
If the quantity of the goods is larger than the capacity of a fleet, the fleet management team will have to use multiple vehicles in a fleet for the execution which obviously results in extra expenses like driver charge, fuel cost, toll costs, etc.
In other cases, if the quantity of goods is minimal, the capacity of the vehicle is a key to avoid usage of multiple fleets, which can be profitable for the company. Higher the capacity of the vehicle, lesser the fleet and lesser the expenses by avoiding the usage of multiple vehicles.
So fleet size calculation during fleet operations is a very important factor for the fleet management to serve the customers in a profitable way for the company.
Components to choose right fleet size
Now how to choose the right fleet size? Fleet size is the number of vehicles used in a day on a particular route. Apart from the number of vehicles in a fleet, capacity of the vehicle is also a key factor in a fleet size. More the capacity of vehicles, lesser the fleet size.
Frequency of the fleet operations is important for the customers which will avoid delay in delivery and reduce waiting time for the customers to receive the goods. In such cases, the size of the fleet and capacity of the vehicle plays an important role.
Higher the size of the fleet in a particular route, more will be the frequency of the trade depending upon the type of route planned. Routes with more stops will affect the frequency of fleets by increasing the waiting time of the customers. In such routes, smaller vehicles and lesser fleets will be effective to operate.
Otherwise, in case of larger fleet operations and vehicles with higher capacity, appropriate routes have to be planned for the transport with less stops, low traffic and roads with good conditions.
An alternative way to increase the frequency of fleet operations is by planning the multiple routes in case of larger fleet size.
7 WAYS TO MAXIMIZE FLEET UTILIZATION
Mileage is the measure of the distance travelled by the vehicle per litre of the fuel. Considering the fuel costs, mileage management is the most important aspect in fleet utilization to be cost effective.
Selecting the type of vehicle is important for better management. A vehicle with lower performance will result in high fuel cost with less mileage. Hence, vehicles with good conditions and performance have to be selected for the fleet operations for a better mileage.
Especially during the long distance operations, mileage plays a vital role. Driver is the one who is responsible for the mileage management as he is the one directly connected with the vehicle. Over speeding will result in lesser mileage which will not be cost effective.
A driver who drives economically will produce good mileage for the vehicle which is very cost effective and profitable for the company.
Maintenance of the fleet also has a huge impact on the mileage. Vehicle with regular maintenance will have better mileage, like regular change of engine oil, tyres with proper air, good quality tyres, etc.
Time is something that is more precious than anything which can never be compensated once it is lost. Time utilization is an important aspect of any business, especially in logistics. Every business is time bound, to be productive, a company has to be efficient in time utilization. How do we make the best use of time?
Time utilization depends on various factors like the size of the fleets, quality of the fleets, driving time of the fleets, external road conditions during the fleet operations.
Lesser the fleet size, higher will be the frequency of the fleet movement which will reduce the waiting time for the customers and goods can be delivered on time. In case of higher fleets on a particular route, it might result in lower frequency which might increase the waiting time of the customer.
Time is majorly calculated with the distance of route and speed of the fleet. Fleet management is responsible for the right utilization of the time with respect to the number of fleets used and total distance to be covered in a particular time period.
Fuel usage in fleet operations has a huge impact on the bottom line growth of the company. Higher the usage of fuel, lower will be the bottom line growth. Fuel effective fleet operations help in increasing the bottom line growth.
Why do we focus on the bottom line growth of the company?
A company’s profit is calculated with the amount of turn over (Top line) per year and the total expenditure per year.
Major expenses of the company are dealt with the fuel usage as the fuel costs are alarmingly high. How to maintain the minimal fuel usage during the fleet operations? Here we discuss in detail.
Route planning is key in fuel usage. Higher the distance, higher will be the fuel usage. Speed of the fleets is also important in mileage. When mileage is not maintained by the fleets, it will affect the fuel usage cost of the company.
Various other factors like vehicle idling, fuel thefts are also to be monitored for the better management of the fuel usage to be profitable.
4.Vehicle utilization rate
Vehicle utilization rate is the measure of the number of vehicles used in a fleet for a particular operation per day or a specific time period. It is also the analysis of the duration of vehicle under operation per day.
Vehicle utilization rate is directly proportional to the demand of the customer. Higher the quantity of goods, larger the size of goods, more will be the usage of vehicles.
Capacity of the vehicle plays a vital role in deciding the fleet size. Vehicle utilization rates of a company can be higher or lower. What matters is the efficiency and cost effectiveness of the vehicle usage.
5.Minimize fleet maintenance costs
To make a profitable trade, expenses are supposed to be reduced as much as possible for steady growth of a company. Fleet maintenance costs are one such area which lies under the shade of “prevention is better than cure”.
Maintenance costs are very important for the fleet maintenance but, the amount of cost used for the maintenance should be minimal. Regular maintenance of the fleets is better for the management to reduce major damages during the fleet operations.
If the fleets are not maintained on a regular basis, it might result in heavy expenses during unexpected breakdowns or any other malfunctioning of the fleets. Fleet managers should ensure that the operating fleets are in good condition before it starts the journey.
It is also the responsibility of the driver to drive the vehicle in a decent way without affecting the performance of the vehicle. Over speed, abnormal usage of clutches and brakes might also cause damages resulting in high maintenance cost.
Fleets must undergo regular services in order to minimize the maintenance cost.
6.Advancement in technology (Telematics)
Technological developments in all the sectors have made work easier and faster. Especially in the automobile and transport industries. Earlier it was all manual, now things have turned into electronic, automatic and digital which has made the users have a better control of the vehicles and also have a complete analysis of its performances.
One such advancements in the technology is the Telematics which provides various features to understand, analyse and have complete control over the vehicle for a better trade in the logistics business.
What are the benefits of Telematics in the transport industry?, here we have it in a nut-shell.
Telematics helps with various features like live updates and current status of the fleet movement, monitors driver behaviour, route optimization, maintenance and reporting.
7. Optimize routes for trip plans
How do you plan your fleet’s movement?
An intelligent team of fleet management is required to execute efficient, cost effective trips. To achieve such efficient trade, route optimization is a key factor that deals with the direction or the route plan of the fleet movement from its source point to its destination.
Distance, fuel consumption, road conditions are the various factors to be considered for a better route optimization for the trips. For any trip, shortest distance is a better way to execute the trade which reduces the fuel consumption and also reduces the waiting time of the customer by delivering the goods in a short duration.
Routes that have lower stops and less traffic must be prefered to ensure higher frequency of the fleet movement. If the conditions of the planned route are not good for the fleet movement, it would result in low frequency of fleet movement by increasing the waiting time of the customer and also increases the fuel consumption which will definitely affect the bottom line growth of the company. Hence route optimization is a must factor for the fleet management to ensure a profitable trade.