Drive Performance Using Key Indicators
March 2010, TruckingInfo.com - Feature
We've all heard the old saying: you can't improve what you don't measure. Yet that is exactly what fleets are trying to do these days.
There are some questions that fleet managers should immediately know about their fleet:
* "What is your fleet's average idle time?"
* "What is MPG this month, compared to last month?"
* "Which customers get the most late deliveries; the most on-time deliveries?"
If these questions can't be answered, it is time to realize an immediate positive impact to the bottom line with key performance indicators (KPIs).KPIs: Driving Performance the Data Way
KPIs are quantifiable measurements that drive fleet-and corporate-performance. Typically tied to an organization's goals, KPIs provide everyone in the organization with a clear picture of what success looks like. KPIs also clearly state what's going to be measured and how.
To be effective, however, KPIs must be:
KPIs must be key to an organization's success. Many things can be measured, but not everything measurable drives success. For instance, measuring the height of drivers won't help you reduce fuel costs, but knowing how long they idle their trucks will surely save you money.
For a KPI to be of any value, there must be the ability to accurately define and measure it. "Be a better fleet" is useless as a KPI because there is no way to measure what "better" is. More satisfied customers? Fewer accidents? Better HOS compliance? Yes, to all
of the above.
Once a KPI is in place, it is critical to stick with it over time. These annual
benchmarks will be a measure of ongoing success.Stepping up to Better Performance
We all know measuring things such as idling and speeding can be a challenge so there are certain steps to follow to leverage KPIs for an accurate measure of a fleet's operational factors.Step 1: Establish KPIs
The first step is setting relevant KPIs. The most successful fleets establish two to five high-level
KPIs and use them to track performance over time.
Once KPIs are established, it is time to set targets. They should be aggressive enough to excite
management, but not so aggressive that drivers become discouraged.Step 2: Develop an Action Plan
Let's say a fleet currently has a 50-percent idle time (this happens more often than one would think)
and have set a KPI of five percent idle time. Even if you now know where you are and where you want to
end up, you need a plan for getting there. Step 3: Get the Low Hanging Fruit
While it's important to remember that installing a fleet management system is an evolutionary-
not a revolutionary-process, some benefits will come immediately, especially if a system is installed with robust, out-of-the-box capabilities.
In fact, most companies report an immediate 10 percent reduction in fuel costs, but goals must be
realistic. If you're at 60 percent idle time, you're not going to be at two percent tomorrow. And while two percent is realistic for some fleets, five percent may be more realistic for others.Step 4: Capitalize on Your Data
Getting driver and vehicle data is one thing. An even bigger challenge can be going through it, organizing it and sharing it to make your fleet more profitable. That's where having KPIs in place can help. They provide a clear place to focus your attention. And fleet management software gives you an easy way to slice and dice your data in a variety of ways that deliver results.
As more accurate data is collected, it can be used to make better and faster decisions. A report that may have taken 40 hours to generate in the past, can now be created in 30 minutes. This frees up staff to spend time analyzing the data, rather than compiling it.
You can even ask your fleet management software provider how your fleet compares to similar, but unnamed, fleets. Seeing how you compare with others provides a clear picture of what you're doing well and where you're falling short. It also lets you see whether your targets are in line with industry standards.
In addition, seeing numbers in black and white helps better manage performance. Numbers also help secure C-suite support and driver buy-in. When people can see improvement, they realize they can use the information to further their own interests, such as sales using the data to retain existing customers.
Establishing KPIs and using a fleet management system can turn your everyday data into valuable business insight-insight you can use to optimize every aspect of your fleet operations.Tom Flies is the senior vice president of product management at Xata, which provides on-demand software for the trucking industry. He's responsible for developing effective strategies by developing and building market-driven products.