How to Improve Fleet Utilization?
Aug 14, 2020
11 mins read
Imagine you’re a fleet manager, and should plan routes for delivery vehicles that day. Apart from the distance, you have to factor into other constraints like size of orders, costs, orders at each drop, time to load and unload to make sure orders reach your customers on time. Grueling isn’t it?
But the question is how to improve the efficiency of this scheduling process, and make the best use of the fleet? The answer lies in fleet capacity utilization. If you want to operate your fleet efficiently by making the best use of your fleet without incurring huge costs, this piece is for you. Without any further delay, let’s drive in!
What is fleet utilization?
Fleet capacity utilization (or) fleet utilization involves the measurement of fleet performance and use.
But is it really that simple an answer? There is optimum fleet utilization for each location, each class of vehicle at different time windows.
Therefore, if you ask for a definition, ten fleet managers could possibly come up with ten different answers. Fleet utilization is a comparison of demand to fleet capacity. Capacity and demand change daily, and hence the approach to manage it varies as well.
Why is fleet utilization crucial?
A well-utilized fleet not only improves productivity and reduces costs; it also boosts profitability. Here are the reasons why fleet utilization is important.
Ensure optimal usage of fleet
A parked truck attracts only storage costs. Also, an empty running truck does not attract any revenue. Maximizing vehicle capacity utilization helps you increase revenue potential with fewer resources.
Manage delivery costs
Fleet managers have to focus on delivery costs as it helps minimize unnecessary costs associated with delivering orders.
Right fleet size for operations
Analyzing fleet capacity utilization helps a company right-size its fleet by answering two critical questions:
- How many vehicles do you need to meet business needs?
- What are optimum miles driven (over a set timeframe, say, a day or week) so a vehicle is adequately utilized?
Four components of a right-sized fleet
- Right quantity of vehicles– Is there a right number of vehicles that can meet all delivery requirements?
- The right location of vehicles– Is a vehicle accessible within a short (er) distance for drivers?
- Right type/Class of vehicles– Do you have the right class/ type of vehicle that fulfills delivery requirements?
- Right time of vehicle availability– Are the vehicles accessible to drivers when they are assigned a delivery task?
Designing a multi-pronged strategy to enhance fleet productivity
The profitability of Courier, Express and Parcel (CEP) companies depends on its fleet productivity. To that end, fleet managers design a multi-pronged strategy to maximize revenue from fleet optimization by using the following insights:
- Driving habits, performance, and behavior
- The gap between vehicle specifications and its actual usage
- Trucks that suit driver requirements
How to maximize fleet utilization?
Managing and improving fleet utilization sounds simple, but it is a daunting task. There are a wide range of constraints when you plan to maximize fleet utilization like customer preferred time windows, route complexities, driver availability, costs and so on. Though maximizing fleet capacity utilization is intimidating, there is a process that helps you make the best use of your available fleet.
Focus on crucial fleet utilization metrics
If you are looking to improve fleet utilization, then begin by looking at the data. Here are the essential fleet utilization metrics that help you make the most out of your available fleet.
- Miles Traveled:
Traveling lesser miles reduces the number of trips and optimizes fuel consumption.
- Fuel Consumption:
Fuel consumption provides an essential and additional view alongside miles traveled. It helps your businesses minimize excessive fuel usage, thereby reducing fuel costs.
- Time utilization
Time utilization is the most crucial metric in any logistics scenario. It involves many aspects of a vehicle like:
- Time spent on the road
- Pre-loading and awaiting departure time
- Idle time
- Loading and unloading time
- Delayed delivery time
- After hours utilization:
After-hours utilization can bypass congestion issues, but it depends on environmental regulations. Fleet managers should check if after-hour deliveries benefit your business.
- Empty running/ Vehicle fill
Courier, Express and Parcel (CEP) companies focus on reducing their empty journey legs and maximizing their average weight utilization. It is essential to minimize the time spent loading and unloading to get this metric right.
- Drop Density
Drop density is the number of drops per driver or per route on a particular day. With a high drop density, you can reduce the number of vehicles used and improve its performance.
- Job History
After establishing all the essential metrics, it is easier to spot areas of improvement in the job history. Being logistics managers, you should analyze driver performance, routing, and then find patterns.
The only way to assess the original plan and the resulting performance is by analyzing job history. It helps you identify bottlenecks in delivery schedules by improving customer service or speeding up the delivery time. Also, it tells where you lack in terms of meeting customer delivery requirements.
Selecting the right vehicle size
While managing fleets, you cannot find a one-size-fits-all fleet size that suits ever-changing customer demands. Finding the right vehicle size for effective fleet operations depends on
- Different-sized vehicles
- Customized fleet requirements
- Under-utilization of vehicle deck
- Volume of deliveries
- Optimal use of extra vehicles
Loading and Unloading
It is necessary to make your every delivery count by reducing under-utilized space by planning deliveries, load shapes, volume, and height effectively. Beyond all this, there is a need to balance the time lost by drivers in unloading and loading in an optimized manner.
When your drivers are made to wait for a longer time to unload and load packages, they lose their driving time. This reduces the number of orders delivered in a day.
Last-minute re-routing challenges
The biggest challenge for a delivery company is to manage last-minute changes due to traffic, roadblocks, accidents, breakdowns, or rescheduling etc. It is necessary to use a dynamic route optimization process to accommodate last-minute change in delivery plans. This helps you avoid missed or failed deliveries and inform customers of likely delays.
Today, the efficiency of a fleet majorly depends on how you manage last-minute routing challenges.
How can technology improve fleet utilization?
Being a CEP business, if your fleet operations aren’t contributing to profitability, it needs to be worked upon. Especially, if your fleet operations are in a constant state of flux like high vehicle downtime, traffic congestion, high fuel consumption, or poor on-time delivery rate, you need to improve fleet capacity utilization.
But improving fleet utilization in the last-mile delivery is a tedious and burdensome job. Such jobs become more burdensome when you don’t use a technology like last-mile delivery software. Let’s find out how a technology like last-mile delivery software helps in improving your fleet capacity utilization.
- Provides fleet utilization metrics
Being a fleet manager, you are under constant pressure to manage the efficiency levels of your fleet. With high competition in delivery services and rising operational costs, it is necessary to track your inefficiencies. This is where fleet utilization metrics come into play. It helps you answer three critical questions.
- Are we currently making the best use of the fleet?
- How well are we utilizing the fleet?
- How can we improve our fleet capacity utilization?
Without knowing these answers, it becomes challenging to create targeted plans and make objective decisions for an improved fleet performance. Fleet utilization metrics in the last mile ranges across cost-efficiency, customer service, and productivity.
For instance you find that delivery costs are rising due to high fuel consumption or there is a reduction in mileage. How do you know the exact quantity of fuel excessively consumed or vehicles that gave lesser mileage than expected? Only with the help of fleet utilization metrics can you find the factors that lead to lesser fleet capacity utilization.
By investing in advanced analytical capabilities, you can easily track, identify and solve for inefficiencies that lead to under-utilized fleets. It helps you find vehicles that result in low drop density, empty miles or rising fuel consumption, and solve for them. The metrics it provides help you rectify inefficiencies of fleet and maximize fleet utilization.
- Makes deliveries sustainable
Today, sustainable delivery is not a want to have option. Rather it has become a must-have aspect for all businesses. A study found that 44% of consumers most likely buy from a brand that has a clear commitment to sustainability.
To attain sustainability in last-mile delivery, you should minimize the carbon or greenhouse gas emissions. North America stands as the second highest emitter of carbon emissions after India in last-mile delivery at 5 million tonnes of CO2 released annually.
By investing in technology like a delivery management software, your businesses can improve fleet capacity utilization that in turn makes last-mile delivery sustainable.
Delivery management software makes optimal clusters of deliveries based on delivery zones, fleet capacity and time windows. It ensures that your vehicles don’t overlap and makes maximum deliveries traveling less distance. This results in high drop density, optimal load capacity, and usage of a lesser number of vehicles, thereby minimizing empty miles.
With delivery management software, you can plan forward and reverse logistics deliveries effectively. It automatically batches deliveries for backward and forward shipments in the same service areas together. This reduces the distance traveled per order and improves fleet utilization.
- Helps deliver orders at customer’s preferred time
What happens when you don’t provide multiple delivery time slots to your customers? Either there will be a failed delivery attempt or the customer leaves you. It is more difficult and costly to acquire customers than retaining them. Also, every failed delivery attempt can multiply costs and minimize efficiency. So, how do you counter this?
By enabling a feature like Delivery Linked Checkout, you can give your customers multiple time slots to deliver their orders. It helps you easily optimize your fleet capacity and costs so that you can deliver orders at greater speeds. It enables you to make predictable and customized delivery experiences while boosting operational efficiency.
So, delivery linked checkout leads to faster and flexible deliveries that helps in providing friction-free customer purchase post dispatch. It improves your First Attempt Delivery Rates (FADR) and minimizes cart abandonment. Overall, it helps you secure profitability without compromising on customer experience.
- Optimal delivery routes + Improved load balancing = High Fleet capacity utilization
How do I ensure 100% fleet capacity utilization for loads? If you are a fleet manager, this is the question that tests your delivery management capabilities.
Fleet capacity utilization is not as easy as it sounds. Being a CEP business, you need to manage capacity, time schedules, routes and costs simultaneously. And this is quite challenging without a technology solution like dispatch management software.
By using dispatch management software, you can simultaneously manage loads and routes for your fleet. Its advanced algorithms help you plan delivery routes and decide on optimal fleet capacity together for different customer preferred time slots based on real-world business constraints. This minimizes the distance traveled by your fleet and reduces the number of vehicles used, thereby improving your fleet capacity utilization.
Fleet capacity utilization: The key to improving your profitability
We know that it is not possible to make a 100% utilization of your fleet. But when you improve your fleet utilization by just 10 -20%, you can see it reflecting in your business’s profitability. It is necessary to leverage analytical insights from fleet utilization metrics to right-size your fleet and maximize fleet utilization.
If you want to gain insights on fleet utilization metrics and maximize fleet utilization, the only way for it is investing in a fleet management software. It helps you reduce the last-mile delivery costs and improve your efficiency.
Locus’ fleet management software provides advanced analytical insights on essential fleet utilization. These insights help you track fleet performance, identify inefficiencies and improve your efficiency standards. Based on your different business constraints, it automates your load assignment tasks. This helps in maximizing your on-ground fleet performance and devise strategies to improve it.
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How to Improve Fleet Utilization?
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