When you're managing a fleet or a warehouse, there are a lot of moving parts. Equipment and labor inefficiencies can slow you down and cost your company time and money. One way to identify areas where you can improve your supply chain and operations, is by measuring and tracking key performance indicators (KPIs).
Why measure KPIs
Tracking and analyzing fleet data gives you valuable insights into how your fleet is operating. Are you performing above expectations, on par with your goals, or below average? Fleet data will tell you which areas of your fleet are suffering and which are doing well.
Tracking and analyzing data can help you pinpoint problem areas in the supply chain and within your fleet. Once you’ve identified the pain points, you can create strategies to improve efficiency, performance, and operational effectiveness. You can even reduce cost and increase labor productivity.
When you’re looking at these metrics, it’s important to know what data you’re looking at and to set benchmarks to measure it against. You then need to know what to do with the results. That’s where key performance indicators (KPIs) come in. You can use your KPIs to compare your current productivity levels to historical data and data from other companies in your industry. Then, you can implement changes and improvements to meet goals and standards.
KPIs for Fleet Managers
Fleet managers will want to closely monitor KPIs centered around items that drive costs up in operations. Some examples are total cost per mile, individual parts and tire costs per mile, miles per gallon, and idle time percentage. If you want to drill down further, you can begin to measure KPIs around cost per case delivered, cost per delivery, and so on.
There are also KPIs that may have an indirect effect on cost. This includes on-time delivery rate, DOT or OSHA accident frequency, and the Facility Condition Index (FCI). Ultimately, you’re looking to see that every asset in the fleet is being used efficiently to help you increase productivity while driving down costs.
In order to choose which KPIs to measure, it’s important to understand what your organization is trying to achieve. The first step is to identify and map out your company goals and objectives. When you identify the KPIs to measure, you will choose ones that can have an impact on those objectives and goals. You will also be able to improve on those numbers moving forward.
Before you can start improving on metrics, you need to understand your starting baseline and establish what you want to measure against. Gather the current data on your fleet along with other industry numbers (e.g., those of your competitors). Use these as benchmarks for goal-setting and to track improvement over time.
KPIs for equipment utility
Cost per hour
Identifying the cost-per-hour KPI will show you how much it costs to operate your assets and how frequently you use each asset. Looking at this KPI, you can identify which assets are the most expensive to operate based on cost and usage. This data can help you make decisions about changes you need to make in your fleet, like replacing or redeploying equipment.
Cost per unit
The cost per unit KPI measures total spend in a specific category. You will use this KPI to analyze the cost against other units in the fleet to determine what each of your units cost to own and maintain. For this metric, you will need past documentation of your production capacity on an hourly, daily, and weekly basis. You will also want to review maintenance spend records to compare against the reliability and availability of each unit.
Cost per customer
Make your purchasing and processing more efficient when you measure cost per customer for your fleet (retail, internal, and external). Measuring these numbers will help you find the most efficient operating size for your fleet.
If you own an asset, you want to know if it’s being utilized. Measuring utilization will show you the actual time as asset is used compared to the time it was available for use.
Financial reports like actual vs budget variance, year-to-date budget and spend comparisons, and capital budget compliance will help you forecast and analyze your purchase plans. These reports will also help you control expenses for equipment and labor.
KPIs for equipment failure and maintenance
Mean time between failure (MTBF)
Downtime due to unexpected equipment repairs can cause major delays, among other issues, in the supply chain. Looking at the mean time between failure (MTBF) allows you to see the average number of hours or days between non-routine maintenance repairs (repairs not already scheduled for maintenance). You will want the MTBF number to be high, meaning you have a high number of days between equipment failures. If you find you have a particular asset with a low MTBF, you can assess its value and reliability for your fleet. Getting rid of costly assets requiring a lot of maintenance will help your bottom line and keep you moving.
Work order and preventative maintenance
Preventative maintenance (PM) compliance is the ability to complete scheduled preventative maintenance in an expected amount of time for that unit. If your equipment doesn’t receive the right PM, unexpected failures and repairs will likely increase. This, in turn, increases the lifetime cost of the asset and slows productivity. Keeping up with PM for your equipment can save you time and money down the road.
Measuring KPIs help you identify, analyze, and improve important metrics that keep operations moving with maximum efficiency. To improve efficiency and productivity for your fleet or warehouse, start by setting benchmarks. Then, identify the most important KPIs for your operations that will help you improve.