The following article is contributed by my friend and former colleague, Scott Sigman. Scott is Director of Business Development for Vanguard Services, Inc. headquartered in Indianapolis, IN. Vanguard Services specializes in permanent driver staffing. Vanguard provides top quality logistics talent to clients, allowing them to attend to their core business. Mr. Sigman earned the designation Certified Transportation Professional (CTP) from the National Private Truck Council early in 2007. Scott may be contacted at ssigman@vanguardservices.net
Will your carriers soon be short of drivers? Are your dedicated operations being used to cover only higher revenue or bigger company routes in order to maximize utilization? Are you and your customers increasingly worried about timely truck deliveries? If so, then taking a fresh look at private truck fleets might be in order.
The American Trucking Associations project that a combination of increased freight traffic and the retirement of as many as 219,000 older drivers over the next 10 years will result in a total industry requirement of 539,000 new drivers. That’s an average of about 54,000 new drivers annually.
MIT’s Center for Transportation and Logistics AgeLab has also focused on the disruptive impact of aging on transportation workers, noting the need for quality, qualified drivers in coming years. They reported that the aging structure of the US population is already impacting the way companies do business. MIT’s research suggests that supply chains of the future must be designed, built, and managed differently to anticipate these market changes.
A strong, well managed private fleet can offer strategic, competitive advantages that can offset market dynamics while positively impacting a company’s overall operation and budget. When a company’s supply chain is thought of as a competitive weapon, private fleets become valuable components because of their flexibility and scalability.
Competition is no longer just measured as product against product. It’s supply chain against supply chain. Bottom line results come from putting the best product in the market as efficiently as possible.
Private fleets usually don’t serve all the transportation requirements of an enterprise, but can make transportation budgets stretch further when effectively managed. Delivery and route planning in the face of a driver shortage are more difficult when strained contract or common carrier capacity challenges the reliability of pick-ups and deliveries. A private fleet helps insure continuity of customer service and delivery.
Private fleets have the potential to serve as a base of transportation services while raising brand awareness as a rolling company billboard. When your company delivers reliably and has a 53 foot billboard to announce the fact, the potential for increased sales grows significantly.
There are five key elements needed to structure a professional private fleet.
The National Private Truck Council’s Fleet Management Institute points to five key elements in structuring a professional private fleet. These critical areas are often interwoven.
1.) Use the right equipment. Company engineers must set specifications for equipment as well as maintenance & repair procedures, timing of replacement cycles, fuel economy and power, size and weight, among other criteria.
2.) Measure the Financial implications of a fleet, especially for defining whether the fleet is a cost or a profit center, whether to lease or buy equipment, hire or outsource staff, negotiate terms for payment, and whether to serve external customers (for backhauls or triangulations) or not.
3.) Measure the Operational capacity needed to manage the fleet. Requirements include commitments of staff and systems, origin and destination capabilities, support from customers, storage capacity and sufficient utilization of assets.
4.) Understand Regulatory compliance in terms of fleet Safety and Security as well as for service quality and risk management.
5.) Human Resources: Will your company outsource or in-source its fleet drivers and mechanics? Many leading private fleets lease their drivers and maintenance employees to allow flexibility in seasonal headcount. Leasing drivers also mitigates risks and costs to the fleet operator in terms of workers compensation, responsibility for unemployment claims and eliminates in house staffing as well as costs of driver recruitment, advertising, screening, selection, background checking, and hiring administration.
Customer Service
The synergies a private fleet can deliver benefit multiple company departments. Marketing, customer service, operations, finance and human resources all benefit by balancing delivery costs and improving service reliability. Improving transportation efficiency almost always creates a positive Return On Investment (ROI).
Cost Effectiveness
Aberdeen Group estimated in 2006 that mid size companies missed over $134 billion in supply-savings opportunities, not even considering potential for delivery-savings. Outsourcing is increasingly seen as a successful supply chain strategy.
The 16th annual Logistics Playbook, a report on trends in logistics and transportation produced jointly by Capgemini U.S. LLC, Georgia Southern University and the University of Tennessee, in 2007 found that 87% of companies outsourcing management of their logistics were satisfied with the performance of the business partner.
The Operations Director for a top 50 national chemical distribution company based in the Midwest, with strong cost accounting and management oversight in place, recently reported that the company enjoys private fleet benefits in moderate length (200-225 miles) deliveries.
For customers that utilize their private fleet, delivery cost can be as little as one third of the rate charged common carriers or even contract carriers who have proposed pricing for business. This level of cost competitiveness involves high utilization in a headhaul - backhaul shuttle operation. The opportunity for third party revenue helps mitigate internal expenses, and includes savings from the level of profit common or contract carriers charge.
Company Success
Private fleet operations can ensure that companies have the pick-up and delivery system in place for the base of company business. For-hire carriers seeking a profit can be benchmarked against a successful, well managed private fleet. Carriers may more competitively serve in lanes or on routes beyond the private fleet’s scope. Viewed either as a cost or a profit center, best-in-class company fleet operations can cost effectively lease in equipment, lease staff to reduce headcount, sustain or improve safety and security, and operate with a high degree of flexibility. Improving customer service on outbound shipments and aligning with production functions on inbound transportation help fleet operators sing for joy.
Scott
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Well, our company has been loking to the service of private fleet for quiet some time now and i think it can be best possible way in lot many situations
Posted by: trucking software | December 22, 2007 at 04:59 AM