Key performance indicators (KPIs) are necessary if you want to measure your business and improve operations to reduce costs. KPIs help a company establish performance standards, track performance and ultimately to set goals for improvement.
Successful trucking fleets use KPIs to monitor almost everything from driver performance and maintenance costs to fuel mileage and CO2 emissions. Some widely measured trucking KP’s include asset utilization, on-time delivery percentages, fuel costs and maintenance and repair costs. When it comes to KPIs, there can literally be hundreds of them and there is no one-size-fits-all solution of which data points should be a KPI. It all depends on what is important to each individual company.
One of the closely managed KPIs that is a large part of fleet operational costs is maintenance and repair. A maintenance and repair KPI typically includes routine preventive maintenance costs and unscheduled repairs. Unscheduled repair costs include actual repair costs but could also include costs like towing and substitute vehicles. Some fleets might even include additional driver expenses, failed load delivery expenses and other expenses related to unscheduled maintenance. Some fleets also choose to include accident damage costs in this metric.
Each of these categories can be subdivided to gather data at a more granular level. How in-depth to get is up to each individual fleet. No matter what level of data you are capturing, you want to make sure the data is captured both at the fleet level and at the asset level. When analyzing the data, look for trends in your fleet and outliers to spot problem areas.
Tracking costs down to the asset level not only gives you an idea of which trucks/OEMs and models are performing the best, but it also can give you an idea about which of your locations are top performers.
The goal with your KPIs is to set standards and targets designed to make the most efficient use of your company’s capital. You can use your maintenance KPI as one of the many calculations needed to determine the best asset replacement cycle for the truck’s application. On a fleet-wide basis, the best overall replacement cycle is known as the “sweet spot.” Operating beyond that sweet spot makes it more expensive to operate and maintain the truck than it would be to replace the vehicle with a new piece of equipment. Maintenance and repair costs are a big contributor to determining a truck’s sweet spot.
If you are not sure which data to capture for your maintenance KPIs, I suggest you do a cost analysis of all your maintenance and repair costs. Once that analysis is complete, start with setting KPIs for the category in which you have the highest expenses and then work your way down.
One word of caution: You need to have a manageable number of KPIs. The toughest part about KPIs is managing to the final 10% of your goal. By that I mean once you start operating based on KPIs, there is always a desire to get better and better — to go from 90% of the goal to 100% of the goal. Often companies add more KPIs to get there. However, you have to resist the tendency to add too many because getting to 100% of goal is often the hardest part, and you can needlessly complicate your operation chasing too many KPIs.
You can collect data for your KPIs with the help of technology but you also can use a basic spreadsheet to track maintenance costs. The key is to collect the same data on each and every asset every time there is a maintenance or repair event. Of course, technology makes this easier by automatically capturing the data you want to analyze.
Your KPIs also can help you make sure you are competitive in the industry by allowing you to benchmark your fleet’s performance against your peers.
When you start operating by KPIs, it is not enough to just collect the data, you have to make sure to make good use of the data. When used correctly, KPIs are a roadmap to improving your maintenance and repair operation and reduce costs.
Brett Petersen is Vice President of Sales, Capital Equipment Solutions, for Corcentric. As a transportation operations and finance professional, Brett helps companies achieve their lowest total cost of fleet ownership. His hands-on expertise in operations and finance comes from holding c-suite and ownership positions in asset-based transportation.