There are many factors to consider when it comes to whether or not to outsource a fleet maintenance operation. Everything from the size of the beverage distribution operation, to its location, to even figuring out the basic priorities of the company itself, can factor into this decision.
Based on all of these factors, the operation may decide to completely outsource to a third-party service provider’s own facility, or have the third party work onsite at the distributor’s location, or instead rely on a hybrid maintenance system, outsourcing some operations and keeping others in-house. Says Ed Pritchard, vice president of fleet operations and purchasing for the Houston, Texas-based Silver Eagle Distributors, which does all of its maintenance in-house: “There are always conflicting strategies regarding in-house vs. outsourcing of fleet maintenance and all may have merit depending on each fleet’s individual set of circumstances.”
Adds Rich Marchant, executive vice president global operations, Crescent Crown Distributing LLC, which outsources to a third party: “The biggest issue wholesalers run into is that they’re mostly family-run businesses so they’re used to the shop being far more than just a fleet maintenance facility. It tends to manage a whole lot of other tasks: building maintenance, taking care of private vehicles, a number of things like that. So when you’re looking at a third-party provider, you’ve got to think about what happens if that goes away and then you’re left filling that void? What’s it going to cost if you have to replace that?”
Diving more deeply into the choices available, Ryder, one company that provides third-party maintenance services to beverage companies, offers two different types of service. The first is a complete outsourcing service where the beverage customer can free up its current facility space that may be utilized for a maintenance operation. “We offer the ability for that client to completely come out of that business altogether,” says Marc Thibeau, Ryder’s SVP of sales. “They can outsource the maintenance operations and mechanical requirements of their entire fleet to Ryder at any one of our 800-plus facilities across the U.S..”
The second choice is Ryder’s onsite maintenance offering, where Ryder comes in and takes over that whole operation onsite, in the facility of the distributor. “This might be useful when the customer has a maintenance facility onsite and they’re finding it difficult to recruit technicians,” says Thibeau.
When it comes to the factors that go into making the decision of what is best for the beverage operation, here are some to consider:
it’s all about the people: As one might expect, one of the most important factors to consider, according to experts, has to do with the available workforce the beverage distributor has at its disposal. Says Pritchard, “This may be the most important consideration of all. If you don’t have, or can’t find good people with the prerequisite skills and work ethic you don’t have the foundation needed to start your internal maintenance operation. Bottom line, it’s all about the people.”
Scott Pribula, who overseas the warehouse and distributors group for transportation solution consultant TransSystems adds that because third-party personnel are exposed to working with a lot of different fleets, that can also be a big reason to hire them. “They work on a lot of different vehicles,” he says.
Factor in the operation’s size: The size of your fleet can make a big difference when it comes to what works best. “Where we see an onsite advantage is typically when we see fleet sizes 75 units or more,” says Marc Thibeau, SVP of Sales, Ryder. “So you’ve got the economies of scale working with you from the staffing and the hours of operation coverage that are required to maintain and operate a facility.”
And Pritchard says in-house fleet maintenance operations become easily justifiable when you have as few as 20-25 trucks. “Possibly fewer depending on your access to quality third party services,” he says.
Pribula, of TransSystems, also points out that third parties that provide services for many fleets will pay a lot less for parts than an individual operation. “You will lose your leverage in regards to the costs for the parts and the liquids and what not,” he says. “The bigger the fleet the more leverage you get in the market place.”
consider Convenience: For some operators, just where their fleet is located can make a big difference as to whether an in-house operation makes sense. Points out Marchant, “In our business if your truck’s delayed an hour you’re missing deliveries, so having the fleet maintenance facility at your business is critical. Because if there’s something wrong you want to be able to pull that vehicle down to the shop, get it fixed and on the road before there’s a delay to the customers. So I think it’s critical that you have facilities at your site, or in close proximity.”
Factor in the Costs: Say Pritchard, “Benchmarking your total cost of equipment acquisition and maintenance for a period of at least 12 months and developing a plan to improve are the first steps in making the decision to outsource or control maintenance internally in hopes of reducing total vehicle lifecycle costs.”
Consider the quality of the service: Third parties tend to have newer equipment within their facilities, because, as Pribula says, “That’s their bread and butter.” “They tend to have the resources which allows them to be more efficient and turn the vehicle around faster,” he says. On the other hand, Pribula says there is something to the ‘taking ownership’ that comes with having a fleet’s own personnel working on maintenance and repairs. “There is a sense of pride,” he says.
Consider company morale: Says Marchant, “A lot of times the mechanics in the shop have been company employees for a long, long time which is of value for all of us. And outsourcing may be seens as exporting jobs away from the company.” In Crescent Crown’s case, the transition was able to go smoothly to a third party, which ended up hiring Crescent’s employees to continue to working in the on-site shop.