Too many vehicles mean an underutilized fleet and unnecessary cost. Too few vehicles or the wrong type of vehicle leads to unhappy customers. File photo
How to Right-Size Your Motor Pool
Several cars sit idle in a parking lot. It’s a pretty harmless scene —that is, unless they’re part of your motor pool. Motor pools are meant to save money. Maintaining a group of vehicles available for checkout on an as-needed basis, rather than assigning vehicles to individual users or departments, can reduce costs, but not if the motor pool is too big. Too many cars in the motor pool lot leads to unnecessarily high vehicle expenditures, and often government agencies find themselves paying for more parking space than necessary.
All in all, an underutilized motor pool is a waste of resources and simply not cost-competitive. Having too few vehicles produces another set of problems. When no vehicles are available for checkout, the result is dissatisfied customers, who must find an alternate transportation solution.
“If the motor pool is too small, then employees are forced to find other ways to get from point A to point B, which equates to loss of time and frustration,” said Lon Ostenson, fleet manager of Public Works in Washington state.
The goal, then, is to determine the right number of vehicles to keep in the pool. Doing so contains costs, optimizes vehicle usage, offers users more choices, and keeps customers satisfied.
“With the downsizing of fleets in today’s environment, it is necessary to look at utilization of publicly owned vehicles. Departments have a need for transportation; however, they cannot always justify today’s requirements for a full-time, or assigned vehicle. With a well-managed motor pool, you are able to downsize the fleet, and maintain the department’s needs with a cost savings,” Ostenson said. “If you maintain high usage, the vehicle depreciation and maintenance cost will equate to a significant dollar savings for all shared users.”
But simply guessing a ballpark figure is not an adequate method in right-sizing your motor pool. To help, industry experts offer guidelines for finding that magic number.
1. Measure Your Metrics
Ed Smith, president of Agile Access Control, a manufacturer and marketer of fleet and motor pool management software, said, “If you can’t measure it, you can’t manage it.” Determining how often vehicles are used and what types of vehicles are used are the first steps in right-sizing your motor pool. “Every fleet manager should know on a day-by-day basis what percentage of utilization their motor pool is running,” Smith said. “In fact, they should be able to easily see what the utilization is by type of vehicles. Without this visibility, a fleet manager can only go by gut instinct when deciding on the right number of vehicles for their fleet.”
Windell Mitchell, director of fleet administration division for King County, Wash., underscored the importance of measurement as well. He said the key to right-sizing his motor pool is measuring the demand, determined by tracking the number of daily requests for vehicles and the number of non-filled vehicle requests.
Utilization. To illustrate the importance of utilization metrics, Smith recounted the story of an energy company on the verge of purchasing 10 additional vehicles. “They had 64 vehicles at one of their motor pool locations and were prepared to buy additional vehicles to meet a perceived need. Once they put our motor pool management software in place, it was plain to see that they never exceeded a demand higher than 42 vehicles on any given day,” Smith said. “The problem was that the motor pool dispatcher was basing her decision on the sets of keys in her drawer. She would look in the drawer and turn people away if she did not have any keys. As it turns out, her assistant would take the keys to clean and fuel the vehicles, other keys had been misplaced, or drivers had yet to return keys. Her visibility was limited to just the drawer. This pool was able to reduce fleet size by more than 20 percent with no negative effects on drivers or staff,” said Smith. In all, the company sold 18 of the motor pool vehicles, saving not only the cost of the 10 vehicles they were prepared to purchase, but also the ongoing costs of the 18 unnecessary vehicles in their lot.
Vehicle type. Sometimes tracking the percentage of utilization isn’t enough; tracking vehicle type can be equally important. One of Smith’s customers was a proactive fleet manager who understood the merits of metrics. When examining his fleet metrics, he noticed that the total utilization rate was near 60 percent. As a result, he asked the dispatcher to turn in some of her “cars.” After getting rid of some “cars,” utilization still did not make a jump toward 100 percent, so logically the manager again asked for more “cars” to be turned in. But that wasn’t the right solution. “When the story was relayed to us, we asked if the fleet manager was examining utilization by type of vehicle. It turns out that utilization of pickup trucks and vans was well below 50 percent. Passenger vehicles utilization — the “cars” — was near 100 percent,” Smith said. “So, eliminating cars exacerbated the problem. The correct solution was to look at the fleet utilization by usage type and eliminate pickups and vans.”
2. Get Online
Using an online reservation and tracking system can reduce errors, minimize the amount of time employees spend handling reservations, and increase accuracy. But perhaps most importantly, it makes tracking utilization and vehicle type a breeze.
“Online systems are what really enable right-sizing through improved metrics,” Smith said. “There is more valuable data. The data is more accurate. And, less time is required to gather the data.”
If getting connected with an online system seems more a headache than a help, think again. Online fleet management tools can be set up in less than 24 hours, and these systems can often be used on a trial basis before an organization commits to buying them.
“When structured correctly, an online reservation and tracking system helps track the number of unfilled requests and gives you information about the most popular vehicles requested,” Mitchell said. David Carr, manager of motor pool operations at the University of Washington is pleased with his online system. “It makes our system available 24/7 and maximizes our utilization. It makes it possible to measure utility.”
Online systems can be particularly helpful for organizations with multiple motor pool sites, erasing physical boundaries and encouraging shared resources.
“Online systems leverage all assets in a fleet, including vehicles and their staff,” Smith said. “Too many at Location A and too few at Location B? Relocate. Did a staff member call in sick at Location C? Let someone from Location B handle the dispatch functions of Location C without moving from his or her desk. A manager needs to compare utilization across locations? Run a single report that consolidates the information automatically. It’s that easy.”
3. Seek Outside Help
Logic might dictate that to right-size a motor pool, determine the peak demand and maintain that number of vehicles on hand. But that process leaves several vehicles sitting idle much of the time — wasting space, money, and resources. Instead, motor pool managers can seek outside help to meet peaks in demand. One option is using a rental car agency that can offer a low daily rate.
“Rental car companies can partner with a motor pool to reduce costs. A motor pool in which demand exceeds capacity can efficiently use car rental companies to augment the pool fleet in times of high demand,” Smith said “In essence, the rental car company is the ‘overflow lot.’ Online systems such as Agile FleetCommander can automate the process of notifying the rental car company that a vehicle is needed.”
Another popular option is using Flexcar to supplement a motor pool. With Flexcar, vehicles are located throughout a metropolitan area. For an hourly fee, organizations can use these vehicles. Flexcar pays for the insurance, gas, and maintenance costs, freeing companies from related financial obligations. Ostenson has been pleased with their services and says Clark County Public Works is even considering reducing its motor pool to encourage the use of Flexcar. Other outside companies such as Agile Access Control and KeyTrak can help companies with online tracking system needs.
Online systems make tracking metrics easy, but they can also aid in tracking who received keys, what time the key was issued, and the reason the vehicle is being used. This data storage reduces the amount of time spent tracking down keys and determining the last user.
Justin Bales, marketing representative for KeyTrak provided one example of how a key tracking system can help. “Fort Leonard Wood’s 58th Transportation Battalion Motor Pool had too many keys and not enough control to effectively manage them. With only two people to manually control keys, many were not matching up to correct vehicles. Too much time was spent trying to figure out who had the vehicle last,” he said. “Now, with KeyTrak positioned in the hallway, anyone who has authority to access keys can do so at anytime. It saves time and increases employee productivity.”
Essentially, the easier it is to track keys and hunt down late returns, the more vehicles will be available for use — and managers will be better able to right-size their fleets.
4. Talk to Your Customers.
Mitchell says getting input from customers about their needs can help motor pool managers correctly estimate the number of vehicles to maintain on hand, as well as the right type of vehicles. Sometimes, a little market research can help managers spot problems that may have otherwise gone unnoticed.
Additionally, understanding user needs can help provide better customer service. For Carr, helping the client is the ultimate mission: “In the university setting, it’s all about taking care of students, faculty, and staff (the customers). We want to help get them there and get them there safely.”
Don’t Make These Mistakes.
When asked what not to do, motor pool experts had several pieces of advice.
First, installing an online system is not a do-it-yourself project. “We’ve seen time and time again that organizations attempt to either build their own right-sizing tool or modify an existing asset management system to try to make it be a right-sizing tool. As one university fleet administrator commented after building his own system, ‘I’d never try that again.’ He spent two years trying to build a system before going to the marketplace to purchase one,” Smith said. “There are companies that that focus day-in and day-out on making today’s right-sizing tools even better. Our advice is to let someone else focus on right-sizing tools. You should focus on selecting the one that’s right for your organization.”
The second mistake is maintaining a fleet of vehicles that do not meet your customers’ needs. At the University of Washington, specialty vehicles, such as 4x4s for research and snow travel and 12-passenger vans for student field trips, are required to meet customer needs. A motor pool that doesn’t include these vehicles is useless for certain customers. Maintaining too many cars and not enough specialty vehicles results in underutilization. In this instance as well, not talking to customers and understanding their needs can lead to a poorly-sized motor pool.
Finally, operating a motor pool inventory without enough vehicles to accommodate late returns can cause problems. Thankfully, online tracking and reservation systems can help locate users and record late returns, helping tag repeat offenders and prepare for a late return even before it happens.
The Right Way to Right-Size
Carr has three overarching goals to right-sizing a motor pool: “First, the cost should be competitive with commercial rental agencies; second, it should be convenient; and third, it should fill a critical need that would be impossible or extremely expensive otherwise. When properly used, the motor pool can provide cost-effective and convenient transportation. This may encourage employees to use their own vehicles less and reduce demand on traffic, parking, and air quality in the area.”
I´m a Fleet Management expert, and the manager of Advanced Fleet Management Consulting, that provides Fleet Management Consultancy Services.