By LARRY GEMMA
SPECIAL TO CONTRACTOR
While attending my son Paul's college graduation, I reflected on my 25 years since my graduation and analyzed what I would do differently, if I had the opportunity to start over.
After a long reflection, I came to the conclusion that if you want to succeed in business you must drive the top line hard, while never forgetting that your major focus must always remain on the bottom line.
Today, I feel that one of the most important aspects of the plumbing, heating and cooling business is your vehicle fleet. Your fleet is your visible icon to the public and a major marketing tool. It also represents one of your major expenses and, if not managed properly, can cost you your entire bottom line.
The average cost of maintaining our fleet of more than 165 vehicles is currently at 5.2% of gross sales. This takes into account fuel and repair costs, as well as replacement costs. At the time when our fleet consisted of less than 100 vehicles, our fleet cost was 7.5%. To Gem Plumbing, this difference represents just over $100,000 in savings — cha-ching!!
In 1999, our fleet maintenance costs were nearly $26,000 per month for less than 100 vehicles. In 2002, we hired Joseph Andrade as fleet manager, implemented Dossier 32 software for tracking our fleet maintenance costs, added a complete mechanics garage with lift and full-time mechanic, began utilizing Wrights Express fuel cards to track mileage, developed vehicle condition reports to track issues with the fleet and drivers, and implemented strict policies and procedures. We installed an @Road GPS system into every vehicle to minimize excess use and issued strict maintenance schedules to each driver. Failure to adhere to maintenance schedules would result in employee discipline and could cost the technician the use of his vehicle.
Driver abuse is a sore subject but it's real and we measure it.
Measurement
Our measurement (benchmark) systems are critical to the success of our fleet department. Much like my favorite game of football, it's about keeping score. As I pondered the upcoming AFC Championship game between the Indianapolis Colts and the New England Patriots, I wondered if these players are so over confident that they think they will win regardless of the stats for or against them. In our early years we used to be the same way. Dam the torpedoes, full steam ahead was our motto.
As time has mellowed us, we now feel that we must invest the money to create systems that will ensure controlled growth and maximum profits. You should always plan for growth with all your departments. It will make your life easier.
It's no different in our fleet department. To think that our vehicles will never break down, wear out or need to be replaced is just plain risky. There was a point in time when most of our trucks were new. No need to worry, right? WRONG!
If vehicles are not well maintained from the very beginning, you will be replacing them much sooner than you think. These trucks take a beating everyday. Let's take a look at some of our measurements:
- Preventive maintenance. At least 69% of all our dollars spent on the fleet must be spent here. If this number varies greatly, we've got issues. This percentage represents oil changes (the most important thing you can do), brakes, tire rotations (every 25,000 miles), transmission check-ups, wiper blades, ball joints and other parts that seem to fail more quickly.
- Repairs. These are ball joints, rear ends, radiators, transmission problems and any other items that, even with preventive maintenance, will break down. If you do a good job with your PM program this number will come down quickly. We currently benchmark with the number at 20%, but we can do better.
- Breakdowns. If a truck is sidelined or breaks down and causes downtime with our labor force, we put it in this category. This number, obviously, should be 0 but that's impossible. We find an acceptable number is 5%. Yours will vary, depending on the age of your fleet, condition, driver care, etc.
- Driver abuse. I must admit, this is a sore subject but it is very real and we do measure it. Acceptable level is 0; reality is 6%. Here is how we measure this. If a driver has any accident that is his fault, we deduct the first $500 from the driver's profit bonus. If there is damage at any time to the vehicle, the full amount of damages is deducted from the profit bonus. Our employees are watching our vehicles like they own them now.
- Mileage. Because of the strategic dispatching techniques we utilize, we can generally keep our technicians within a 55-mile radius. There are selected times when this is not possible but GPS helps us track unnecessary mileage. We view the GPS reports daily and any vehicle misuse is documented and discussed with the technician.
- Warranty. Keep your records up to date and accurate, and you will get every warranty you have coming. We save tens of thousands of dollars because we maintain or records on our computer and can e-mail them in an instant.
Currently, with more than 165 plus vehicles, our fleet cost is below $20,000 per month. So, as you can see, even with twice the number of vehicles, our costs are lower and our fleet is lasting longer.
Preventive maintenance has increased the life of the vehicles, which adds to our bottom line — and it's all about the bottom line!
Larry Gemma owns Gem Plumbing and Heating Co. with his brothers Leonard, Anthony and Edward Gemma. If you have questions on fleet management or another subject, call him at 401/867-5309 or e-mail [email protected].