Inventory management ideas for lowering costs

With repair and maintenance being a substantial portion of a fleet’s overall costs, it is important to take certain steps to reduce those costs in your shops wherever possible. In “An Analysis of the Operational Costs of Trucking: 2018 Update” ATRI (American Transportation Research Institute) reported that repair and maintenance averaged $0.167 cost per mile for 2017. This represents 9.8% of the total operational costs ATRI received survey data for that year. It is also the number five operational cost for that same year.

With repair and maintenance being a substantial portion of a fleet’s overall costs, it is important to take certain steps to reduce those costs in your shops wherever possible. In “An Analysis of the Operational Costs of Trucking: 2018 Update” ATRI (American Transportation Research Institute) reported that repair and maintenance averaged $0.167 cost per mile for 2017. This represents 9.8% of the total operational costs ATRI received survey data for that year. It is also the number five operational cost for that same year. 

Unscheduled maintenance can eat into your bottom line if it is happening too frequently. A FleetNet America benchmarking study discovered that unscheduled maintenance costs on average four times the amount that scheduled maintenance costs. So, if a fleet can have most repairs completed during a scheduled maintenance interval, the odds are in your favor already to save. There are several reasons unscheduled maintenance costs you more. Think of it this way: When maintenance is done on a scheduled basis you are doing it on your terms and with your pre-negotiated pricing on parts and labor. When maintenance is done on an unscheduled basis, it is like rolling the dice with costs, quality and efficiency. When you can cut down unscheduled maintenance you have more control over your spending and the repair in general. Driver and load downtime are also a byproduct of this and can lead to late appointments, disgruntled drivers, bad customer service, etc. Safety and liability also come into play when you’re having to repair a unit on the side of the road versus in a controlled environment. 

With this many factors involved, it is important to be able to perform timely repairs on a scheduled basis to help lower overall maintenance costs. If the maintenance is outsourced, it is imperative to have the correct vendor that can manage your overall maintenance program and reduce your unscheduled maintenance repairs. In a lot of cases, hiring the right third-party maintenance provider can help resolve issues you are having due to the expertise they can provide in these areas. 

If you are doing your maintenance in-house, inventory plays a major role in making this happen. You will have to set up your inventory to support your operations. 

Parts availability is key

With the fast-paced e-commerce environment, it’s important to be able to get the parts you need almost instantly. If you have a parts vendor that can provide your needed parts at the time of request, this is an important resource that should be taken advantage of. This will allow you to reduce your on-hand inventory and put those funds to work elsewhere. In areas where parts availability is scarce, you may have to create a slightly bigger on-hand inventory to accommodate.

Keep parts on hand to a minimum

The less you can keep on hand and still support maintenance operations, the better off you will be. However, you will always need to keep certain things on hand. If you use a part once a month or more, you should probably stock it in your on-hand inventory. If you look at your 12-month parts usage report and a specific part has only been used 11 times or less in a year, then chances are you should be okay letting your parts supplier provide that part as needed. Only stock your most commonly used parts to have the most efficiently managed inventory. 

Use VMRS to determine parts needs

If you are not currently using VMRS to track repairs and maintenance, I would highly recommend doing so, as it will allow you to track costs down to specific jobs and really start analyzing in detail where your costs are. Once you start using VMRS, you can see what systems require the most maintenance and in turn you will know what systems and components to stock for. For example, if you are seeing a lot of exhaust repairs then you could stock the necessary exhaust components, clamps and gaskets to support the average workload for those repairs. 

Set guidelines on non-inventory parts 

Once a non-inventory part hits your shelf, there should be a deadline on when that part is installed. In most cases, the part should be used within a week of receiving it. There should be no reason to order a part then let it sit on a shelf for an extended period. This will go against the hard work you have put in to reduce on-hand inventories. Remember: stale parts are no good for efficiency and keeping non-inventory parts for too long starts to resemble a stale stock item. 

Stock according to seasonal demands

As we know, there are certain problems that occur more or less often depending on the season. Hotter climates can bring issues with tires, air conditioning systems, belts, hoses, etc. Having plenty of tires to support your operation is essential during the summer months. 

According to a report released by the TMC, tire breakdowns account for around 53% of roadside breakdowns, so it’s safe to say that if you can change a tire scheduled versus unscheduled you are helping to lower your operating costs. Having the tires on hand when needed is essential to supporting this philosophy. 

Air conditioning components are another item that should be stocked up on specifically during the summer months. Drivers want and need their air conditioners repaired in a timely manner. With driver retention on the forefront of fleets’ minds, these repairs should be high on your priority list. Belts and hoses tend to break down more during hotter temperatures as the heat affects the rubber.

During the winter months, on the other hand, you should look at stocking more batteries, starters, washer fluid, wiper blades, air dryers and fuel-water separator filters. 

All these items are under more stress during the winter months due to the drops in temperature and moisture freezing problems. 

For example, during the winter months it is known that the colder temperatures can bring problems with the truck’s cranking system. Being prepared to address these issues in a scheduled environment is key to saving, so stocking extra batteries and an extra starter or two can help handle the extra workload. 

Excessive moisture can create a host of problems within the braking system, so regularly draining your air tanks and changing the air dryer filters will help resolve these issues during the winter months. With the changes in temperature in the fuel it can create condensation inside the tanks which, in turn, adds small amounts of water to the fuel. Keeping the fuel water separators properly maintained will help with this problem. Plenty of oil and coolant should be stocked during all seasons of the year. 

Having the right inventory on hand will help you tackle repairs in a timely manner during your scheduled maintenance intervals. Regularly auditing your inventory will help you find parts that are used but not charged or vice versa. This will ensure that your inventory stays as accurate and efficient as possible.

Travis Wynes is the chief executive officer for Mobile Transportation Service, an onsite fleet maintenance provider that strives to reduce downtime and overall maintenance costs to the fleet.