The percentage of service labor hours completed by fleets has not changed since the last study, according to Blodgett, although fleets continue to say they would like to outsource more service work. In the first study in 1998, fleets said they intended to outsource more service work over the next four to five years, he noted. "But when we completing the study again in 2003, we discovered that the outsourcing had not increased."
Why not? The top three concerns fleets have in outsourcing:
- the quality of the service work
- the cost
- the turnaround time.
Blodgett also noted, "We typically survey fleet maintenance managers, and it is not unusual for them to think that they can provide better quality work at a lower cost and in less time. Do they actually consider the true cost when comparing? Do they include all the overhead and insurance cost and other cost associated with having their own shop? Maybe not, but if you are going to market your service capabilities to a fleet, these are the objections that need to be addressed."
MacKay & Company also asked fleets how far in minutes or miles they would be willing to travel for different service activities. The results showed that the more frequent and/or less complicated service activities (PMs, alternator or starter replacement) the less they were willing to travel. For more specialized services such as paint and body or engine overhaul, fleets were willing to go twice as far. Forty-five minutes or 40 miles was the outer limit, and this distance is down across the board from MacKay & Company’s last study, according to Blodgett.
Down the Road
Looking out four to five years, fleets continue to say they would like to outsource more service labor work. The total service labor opportunity is anticipated to increase about 6%. The study asked fleets by service activity if they plan to outsource more service work and if so to what channels.
In total, fleets said they would like to outsource about 5 more points of service work -- from doing 75% in house today to about 70% in five years.
"The question is, will they, and will the capacity be there if they want to?" Blodgett said. "The five-point increase in outsourced service work translates into a 20% increase for the service providers compared to what they do today. We have not seen that type of increase in capacity over the last 10 years (whether in brick and mortar or hours) from service providers (OES or independent). Will we see it in the next five years?"
Perhaps. MacKay & Company believes there is more motivation for fleets to outsource now with more complicated vehicles, aging technicians in their shops and longer life components, Blodgett said.
"The bottom line is there is a big opportunity for those service providers who are successful at garnering more of the service work the fleets are currently doing themselves."
Blodgett’s final comment was to make sure you communicate with the fleets you are providing service work. “ I can’t tell you how many times in focus groups or fleet interviews, fleets have complained to us about lack of communication on status of their truck. Even if it is bad news, they need to know so they can make plans accordingly.”