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Lift truck fleet maintenance: Slow and steady cuts the cost

Recognizing the potential for long-term savings, many fleet owners are keen to jump into a fleet maintenance program. However, they soon learn there are no substitutes for goal setting, clear communication and patience.
By Josh Bond, Senior Editor
May 01, 2013

A carpenter can only do so much with a broken hammer. Then again, if he has an endless supply of hammers, or a dedicated hammer repairman nearby, he might not be too bothered to care for them.

Lift trucks, as critical to a distribution center as a hammer to a woodworker, were for a long time treated with similar disregard, expected only to swing hard, drive production, and be close at hand when needed. Today, few operations are content to pour money into equipment and its maintenance just for the sake of keeping it around; and unfortunately, few operations have any real sense of what it actually costs to do just that.

Technology and data, whether grafted onto a fleet or built-in, have proven to be valuable tools for helping lift truck fleet owners identify and curb a fleet’s costs. Some users have collected mounds of data only to end up with piles of questions.

Lift truck manufacturers and third-party service providers have responded by developing creative options for outsourcing maintenance piecemeal or entirely, often for a flat rate, providing customers with predictability and comfort. Meanwhile, other users have entered into such agreements only to find interruptions in productivity while wondering whether they are paying too much.

The secret to achieving an optimal lift truck fleet maintenance program is to take things slowly. According to the experts we spoke to for this article, the process of driving cost out of a fleet in motion is not a matter of flipping a switch.

“Lots of people want to go from zero to 100 miles per hour, rolling out technology and making big changes,” says Brian Markison, senior manager of national accounts at UniCarriers Americas Corp. [Nissan Forklift, North America recently merged with TCM America to form UniCarriers Americas]. “But depending on what you learn along the way, it can take years. When a doctor takes care of a patient, they don’t go in and change all the medications at once.”

Establishing a foundation
The first step is to articulate goals. The number of things that can impact fleet costs—from uneven floors to process improvements—can result in an endless scavenger hunt in the absence of a clear end game.

Next, simply start measuring parts and labor maintenance costs per lift truck, both for routine and unplanned maintenance. This task requires nothing more complicated than an Excel spreadsheet. The data should then be overlaid with the lift truck’s utilization. “Once you know the operating cost and utilization, then you can start looking at trends,” says Mike McKean, fleet management sales and marketing manager for Toyota Material Handling USA. “If a lift truck is low cost and low utilization, do you really need it? If it is high, is it time to replace it?”

Replacement cycles are critical to controlling maintenance costs, but these two elements have been historically controlled by disconnected silos in an organization. Many companies have done a very good job of defining the acquisition cost component of an asset’s total cost of ownership, says Nick Adams, business development manager for the Mitsubishi Caterpillar Forklift America’s fleet services group. “That is good old fashioned purchasing methodologies. But once they’ve purchased, maintenance becomes secondary,” he says. “At the corporate level, the thinking is that the individual plant can worry about that.”

The cost per hour of ownership and the cost per hour for maintenance are therefore rarely evaluated side by side. The combination produces the true per-asset cost per hour, says Markison. “The more hours you put on a lift truck, the lower your cost of ownership per hour,” he says. “But there is a point where the per-hour maintenance costs of aging equipment will meet the other curve, and it’s no longer wise to retain that piece of equipment.”

It’s often wise to designate a person, either in-house or from a third party, to be responsible for coordinating operations and purchasing while working to break down the imaginary boundaries between each silo. Among other things, a holistic approach can prevent well-meaning cuts to capital expense budgets that result in skyrocketing maintenance costs.

Pros and cons of service agreements
Companies increasingly prefer to outsource fleet service, but making the transition away from decades of in-house fleet maintenance can be challenging. The cultural legacy of addressing issues “on our own terms” can lead to all sorts of problems. A technician scheduled to perform a planned maintenance (PM) might be turned away by a user too busy to spare the lift truck, or a fleet manager might feel compelled to review the details of each service invoice even though he’s paying his service provider to do the same thing.

“Those with successful in-house maintenance operations know the best way to drive down costs is to control each service event,” says Patrick DeSutter, director of fleet management for Yale. “If you buy guaranteed maintenance up front you’ve got comfort in the budget, but also the element of risk that you might have spent more than necessary.”

“They can have all the comfort in the world with a great service provider, the right technician and the right parts,” says McKean, “but unless the customer understands that spend and the utilization, they’ll never understand their cost per hour.”

C.D. Watson, product support manager for Combilift USA, says that the move to full maintenance contracts with a fixed rate often seems to help customers perpetuate their bad habits. “They’re leasing equipment and rotating, trying to keep equipment new and control maintenance costs,” says Watson. “But that’s where operators who don’t take ownership of the lift trucks end up beating them up, comfortable in the knowledge that new equipment is on its way.”

The ideal place for a flat-rate arrangement is toward the end of a fleet maintenance and fleet management overhaul, which, again, can be a multi-year process. With comprehensive and predictable data in hand, the disciplined customer can enter into the right agreement for the operation.

Similarly, the service provider will be assured by the consistency of the fleet’s performance, according to Scott Craver, product manager, business and information solutions for The Raymond Corp. “They’ll know actual utilization before PMs, and they can monitor abuse while boosting accountability,” he says. “Since it reduces the dealer’s costs, they are then in a position to pass those savings back to the customer.”

Right tools for the job
There is no shortage of tools and technologies that can help measure maintenance costs. But none of them are any good unless action is taken after the collection of data.

UniCarriers’ Markison offered the example of a customer who had a problem with impacts and was replacing two overhead guards each month as a result. After installing impact monitors, they were able to reduce the number of collisions to virtually zero. A different customer deployed impact monitors that locked out the trucks on impact—they ultimately gave the reset access code to each operator to avoid the hassle of addressing it on the floor.

“The success of a technology is not because you put the device on the lift truck, it’s because you managed what came out of the device,” Markison says.

Before and after deploying any technology, Jim Shephard, founder and president of Shephard’s Industrial Training Systems, encourages customers to perform a root cause analysis of observed maintenance costs. “I see people chasing those costs, but they don’t have an avenue to go out and see what’s broken,” Shephard says. “Otherwise, they’re just logging problems.”

Generally, in an unchecked environment, there’s a lot of low-hanging fruit before any investment is needed in additional technology like telematics, impact monitors, or electronic checklists, says Yale’s DeSutter. “You’ve got to take those things on almost surgically based on where you know your costs are,” he adds.

The operator and the culture
Fleet maintenance is not just about the equipment, but those who spend their workday using it. “If you’re optimizing your fleet,” says Adams, “then you’re optimizing your labor force.” A truly optimized workforce should be part of a facility culture that places an emphasis on training, feedback, and housekeeping—all of which can impact on maintenance costs as well as productivity.

“One of the most common repair codes we see is shrink wrap caught in a radiator,” says McKean. “You’d think it would be low-hanging fruit to look at housekeeping, but we see it over and over again. Avoidable damage comes right off the bottom line and is directly proportional to operator training.”

Housekeeping can be a significant source of damage, DeSutter agrees, but it’s not just about picking up shrink wrap and pieces of pallets. It can also have to do with the condition of the floor in the facility as well as gaps between dock plates. “It’s amazing what an ounce of prevention can do in those cases,” says DeSutter.

As with uneven floors and other environmental factors, the operators are more often not to blame for avoidable damage to equipment. “About 95% of the time that I’m brought in to train operators there’s a process issue that is the source of the problem they think training alone will address,” says Shephard. “Too many think that the operators are the problem, as opposed to what’s really going on.”

The impact of labor morale on fleet costs cannot be underestimated, adds Shephard. If operators are involved in the evaluation of equipment before purchasing, it can generate pride and a sense of ownership, in addition to boosting productivity. “If an operator feels valued then they will use a keen eye to inspect and report,” says Shephard. “Otherwise, they’ll only focus on the things that are absolutely critical to safety, if that.”

What the future holds
With the right maintenance program, the right technology and an engaged workforce, fleet owners might find themselves, for the first time, with a truly accurate picture of a fleet’s cost.

McKean says that a good way to justify fleet maintenance programs is to draw a correlation between the cost of the lift truck fleet and the activity of the facility. “Instead of being viewed through the lens of capital expense, the fleet spend begins to speak to bottom line profits,” he says. “That’s kind of a far-fetched thought. Over the years, it just hasn’t been looked at that way.”

With precise data, customers and service providers will be able to tailor equally precise service arrangements. “‘Pay by the hour’ has never really taken off, because when you start invoicing based on usage, you need to be sure you can cost-effectively collect very accurate data,” says Adams. “Built-in telemetry is making that much more affordable. We’re on the cusp of hourly plans being a real mainstay instead of a nifty concept.”

Already, says Craver, the tendency is toward a convergence of information systems, with integrated systems directing an entire warehouse operation. “With maintenance, vehicle monitoring systems, labor management systems, and warehouse management systems, the industry has the ability now to build bridges between all these islands, bringing all that data to the manager’s desktop or smartphone,” he adds. “You don’t have to wait 90 days for a report that is a snapshot of a time that’s already passed.”

Warehouse experiment delivers peak performance

GENCO, a third-party logistics (3PL) provider, manages 38 million square feet of warehouse space across 130 operations for customers including many Fortune 500 companies. After partnering with a labor management system (LMS) provider and a provider of lift trucks and fleet management systems, the company was able to merge the two systems to reduce costs, increase efficiencies, and improve productivity.

The team chose a world-leading business process and document management company as its focus facility for the project. The 410,000-square-foot facility loads and unloads as many as 25 tractor trailers each day and had been experiencing many challenges with visibility from both a labor management and operational standpoint.

It was unclear where labor dollars were being spent and how employees were measuring up against labor standards. Equipment usage, time traveled, number of impacts, and utilization rates were not being accurately tracked, adding to the lack of accountability for lift truck operators.

The test facility deployed a fleet of lift trucks (The Raymond Corp., in 2009, including 26 counterbalanced, reach, rider, and orderpicker units. The supplier’s fleet management system was merged with a cloud-based LMS (Easy Metrics) to provide a comprehensive view of operations.

Among other functions, the fleet management system verifies that only appropriate personnel are authorized to operate each lift truck and that OSHA-mandated checklists are completed prior to operation. This complements the LMS database system, which supplies comprehensive data on individual and group performance. All of this information is combined in one streamlined report.

Labor accounts for 70% of warehouse cost, says Bob Simon, director of process solutions at GENCO. “We attacked the biggest elephant in the room and decreased a few percentage points in labor costs,” he says. “The total turned out to be a significant dollar savings for us and our customer.” Over the course of the trial period, the company reduced labor costs by nearly 10 cents per unit, decreased impacts, resulting in savings on time and equipment repair, and reduced pick labor by 12%.

“This whole process was a kind of testing ground for all three companies,” Simon says. “I think everybody was confident that it would work. It was just a matter of how well. We are happy with the outcomes, we are happy with the benefits that we’ve seen and we’re excited about taking this to our other facilities.”

About the Author

Josh Bond
Senior Editor

Josh Bond is Senior Editor for Modern, and was formerly Modern’s lift truck columnist and associate editor. He has a degree in Journalism from Keene State College and has studied business management at Franklin Pierce University.

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