The “In-house” service shop has long been the industry’s choice for fleet preventive maintenance operations. When you combine the old adage “If you want it done right, do it yourself” with seemingly inherent economies of scale, it just makes sense, theoretically. I would challenge maintenance managers to roll up their sleeves and perform a real cost/unit or cost/mile analysis for their current PM services. Not simply direct costs (materials + labor), but TOTAL costs (hiring costs, training, insurance, inventory holding, utilities, management, overtime, waste disposal, IT, tools…, to name a few). The list goes on and on. See the comprehensive list below. Your fleet’s assets may be getting a good quality PM, which we would never discourage, but at what price?

There is a reason that successful companies of today don’t operate their own telephone switchboards anymore, or maintain in-house server farms, or operate robust internal HR, accounting, and marketing departments. Many of the “in-house” ancillary business functions, once required to operate at scale have been delegated to efficient third parties, and for good reason. Organizations benefit immensely by focusing energy and resources into their core competencies. Employees are expensive, inventory ties up capital, and overhead is either out of control, or out of your control. It is universally understood that the trucking industry we live in today is extremely competitive. Most major carriers offer LTL, truckload, dedicated, intermodal, and expedited services, but only truly excel and profit at one or two. 3PL and online retail are driving rates lower and lower, and Washington is driving regulatory costs higher and higher. Carriers are being squeezed from both sides while profit margins slip between the cracks.

Let’s set profit margins aside for the time being and identify the most tangible reasons that make quality PM service so important.

1) Safety – Easily the most important factor. The safety of drivers, motorists, pedestrians, and consumers is paramount. Thorough PM service increases safety for all parties involved.

2) Running Trucks Are Vital – They are also costly to repair. Quality PM service mitigates failure. If you don’t have enough running trucks to service your customers, you can either let them down or buy/lease more “spare power units”.

3) Compliance – A quality PM service will catch infractions 99% of the time. A truck on the side of the highway is not delivering freight, and typically pulls away with a list of citations and a ding on the DOT file, which undoubtedly bears expensive consequences. Having a good CSA score is important for many reasons and all operators will agree that there is always room for improvement.

4) Driver Retention – Top notch drivers are highly valuable members of any carrier’s team. Carriers compete for them and spend millions of dollars every year to produce and retain them. Quality drivers demand quality equipment.

 

The Dilemma

While quality PM service is highly important to everyone, it can also take up a lot of room on the income statement and balance sheet. Below is a fairly comprehensive list of direct and indirect costs associated with operating an “in-house” preventive maintenance operation (not including repairs).

To attain an accurate cost, allocate all applicable cost factors and divide by miles driven in a given period.

In-House PM Service Cost Factors
Tech/Mech Labor/Salary
Materials
Inventory Holding
Tools
Shop/Property
Taxes
Utilities
Asset Down Time
Driver Wait Time
Travel Fuel – Remote Units
Driver Hours – Remote Units
Spare Power Units
Management Costs
Insurance
Tech Recruiting
Training
Liability Risk
IT Systems
Overtime
Waste Disposal

 

If you have access to the TMC’s “Recommended Maintenance Practices Manual”, refer to section 5 “Fleet Maintenance Management”. It contains a wealth of information you can use to build a framework around your fleet’s maintenance requirements and hone in on related costs. If you are not a member of TMC, you should consider joining. You can get more information about joining HERE.

The ATRI (American Transportation Research Institute) also provides industry standards for fleet operating costs in the US (maintenance & repair included). They are a 501(c)(3) organization and offer information at no cost. Their latest figures indicate that “Repairs & Maintenance” account for roughly 10% of the overall cost of operating a fleet. This represents the next highest cost behind driver wages, fuel costs, and truck/trailer payments. (31%, 25%, and 14% respectively).

“In-house” vs. Outsource

As with all major decisions, it’s ultimately up to management to dig in and do what’s best for their organization’s stakeholders. If operating an “in-house” preventive maintenance program is deemed a core competency, it should demand the same level of commitment, focus, and attention as all other core business functions. If outsourcing makes more sense, it is vital for management to identify and secure strategic partnerships with efficient vendors that they can trust. In many cases, a combination of both may be the optimal fit.

Sharp HES

Sharp HES is committed to providing the highest level of preventive maintenance and inspection services to our partners in the transportation industry. Leveraging our 24/7 On-Site PM service model, and high volume capacity, carriers of all sizes can drive equipment up-time, mitigate PM related down-time, and focus valuable resources into core business functions. Contact Us today to learn how we can help improve your fleet’s efficiency, reliability, and safety.