Episode 175: The Power of Class Coding: Why Your Fleet Data Depends on It #fleetmanagement #podcast

This is the Fleet Success Show dedicated to helping you and your fleet succeed using the experience of fleet professionals and Hall of Fame fleet legends. The show that explores how the pillars of stakeholder satisfaction, intentional culture, resource efficiency, and risk management all combine to lead your fleet to success. We're glad you're here. Now let's get into the show.

Hello everyone, and welcome back for another episode of the Fleet Success Show. I am Mark Canton, head of product here at RTA. I've been in the industry for about 30 years. As a fleet manager, transportation director, consultant. And here I am at RTA helping to try to build the world's best fleet management software. And I'm joined by my good friend and colleague, Scott Rood. Scott, how are you?

Oh, doing just fine. Had a great week here at Spirit Week and winding down and getting ready to head back home.

Yeah, it's good to see you, my friend.

It's good to see you. Same.

So Scott, I know you're not the bragging type, but you've got quite a storied career and quite an awesome resume. You're a 100 Best Fleet judge. You've kind of been at all— Fed, private, the whole nine yards. Tell us just a little bit high level about your background and how you got here.

Oh, sure. Yeah. Started my career in 1981. I joined the Air Force. I was a technician in the Air Force. I did it. I was a shop supervisor, foreman. Superintendent, and my last assignment I was the vehicle maintenance manager for the base. So once I retired, jobs came easy. They really did. Good for you.

I'm sure a lot of people out there wish they could say that. God bless you.

So I took a job with the state of Washington. I was their maintenance manager, did that for a few years and kind of, you know, I wanted to move up. So I went over to the utility company. I worked there for a few years as a supervisor, and then I got an opportunity to be a fleet manager, and I did that for 8 and a half years for a county.

Okay.

And then Paul Lauria did a study for us, and a year later he hired me as a senior consultant. That's where I met you for the first time.

That's right.

And then I worked in consulting for almost 7 years now.

Okay. And how do you like that?

Love, love it. I mean, this is— I really found, uh, you know, my calling. This is something I really enjoy doing.

Yeah, I enjoyed it too, for a multitude of reasons. But one of my favorite pieces is— I mean, we both like to learn, we're both fleet geeks, um, but you get to just see so many different fleets in so many different sectors all over there. Exactly, really North America, some of South America for that matter.

Well, I was in Canada. I went up to Canada and did a project once too.

So exactly, last— you've been everywhere.

Yes, yes.

All right. So here's kind of why I brought you in today. Okay. You know, we talk a lot about a lot of different topics. One of the things that I've been on a kick for anyone who's been watching or reading my LinkedIn is just like fleet replacement, you know, and I've also been a little minor kick on utilization management. And I just feel these are such important kind of pieces of a great fleet management program. And I find that they're kind of often overlooked or not executed well. And to me, ironically, I think that's crazy because it will actually mitigate so many of your other issues that you're having. So we've spoken a lot about audit. We speak about it at Connect. I know you've spoken on it. We talk about it at NTA, all the various places. And one of the things that's kind of dawned on me with some feedback is, you know, some folks is maybe there's some assumed knowledge in there and maybe we kind of need to, maybe it's smart to kind of go down into the various pieces of that, right? And so with that in mind, you know, I, I wanted to talk about asset class coding, right? You spend a lot of time and a lot of energy class coding or reclass coding fleets, uh, so it's something that it's kind of become a bit of a, a true specialization for you. We turn to you almost always, um, and, and, and so you've got a lot of experience doing that. And so that's kind of— I want to hit you with a few questions about that if I could today. All right, okay. So first and foremost, I mean, I assume you agree, but do you agree that, you know, that taking the time to really properly class code your assets is an important exercise? And why? Give us the justification.

Oh, sure. Absolutely. I mean, you could do it yourself or you could use several systems that they have out there that is available to you to use for no charge whatsoever. But what class coding does is actually takes your assets and put them with like units, you know what I mean? So once you get them into where they're in like units, it makes it really easy to run some replacement analysis, utilization analysis, cost analysis. Exactly. So, you know, breaking them, it is definitely worth the time. When I was with the county, we did our own class codes too, and there was, you know, unique numbers for each of them. And they were, they were pretty well defined right down to two-wheel drive versus four-wheel drive. So, and then of course, the different weights, that's really important as far as because you don't want a sedan in the same class code as a, say, a small SUV, right? Because they are different. And so we have to differentiate between the different classes and the different sizes of vehicles. Right.

And I think that'll be intuitive for most of our listeners. But like for the newbies out there, you're talking about, hey, you know, we're going to use this data for determining chargebacks. We're going to use this for determining life cycles. We're going to use it for determining minimum utilization thresholds, right? So that's your point, right? You don't want a sedan mixed in with a 2-ton dump truck.

No, no. And some fleets still, what they'll do is they'll develop rates for a class of vehicles.

Right.

So if you don't have the right vehicles in the right classes together, you could be overcharging and undercharging people. Or cross-subsidizing. Yes, absolutely.

Exactly. So it just creates all kinds of problems, right? Correct. I know if we had our FMAs in here, Griffin and Christy and Andrew, they would also talk about how all the lifecycle analyses are no good.

Absolutely.

If you're mixing that, right? Because you're going to get, you know, very different components. So hopefully this is making sense to folks, but if not, take our word for it. If you're going to do any kind of data analytics on your fleet, you're going to need a solid class coding system, right? That's, that's kind of the, uh, the foundation. That's the message there. And happy to talk about that more if that's of interest to folks, uh, or you can ping us, right? Um, so, so, oh, and I want to go back something though, because you mentioned that there are free systems out there. You mean like you're referring to like NAFAs class?

NAFAs and, uh, APWA has very, very extensive class coding system. It's 10 digits.

Right. Sure.

Alphanumeric. So it just depends on how deep you want to go with it. NAFA has a great one. It's 4— it's 4-numerical code, but it really helps because it breaks it down by class. So they'll have the zeros, which is your attachments. 1 will be your— you know, and then the class 1, 2, 3, 4.

Right.

And then of course the 9s are your equipment.

And generally speaking, we're using these days, we're using some sort of hybrid NAFSA or kind of, let's say, expanded NAFSA system.

Yes, we are.

We use on most of our engagements, right?

Yeah. Because a lot of times I'll take the NAFSA one if I'm using it and I'll go in there and some won't seem right. And the one that comes to mind is excavators.

Okay.

They have like a 9150 and a 9250, which is just excavators. And you know as well as I do, Mark, that excavators come in many, many sizes.

Yes, right.

Exactly. And lumping all those together is not doing you any justice. Right.

Exactly.

Because you can get a mini excavator for under $100,000. You can get the largest one and they're going to cost you close to $400,000. Right. They should not be in the same class.

You know, that actually segues perfect into where I want to go next. But before I do, there is such thing as over— like, we, we've come across a fleet where every single vehicle was its own class.

Correct. Yes.

And we won't get too deep into it now, but that also doesn't help you because it doesn't allow you to aggregate data and analyze trends, right?

Correct. Yeah.

So, so you want to kind of get as— what's the word— like, as, as, as detailed as reasonable, right, for what your uses are and for what kind of analytics you're trying to do, right?

I mean, if you got two excavators and one's a mini and one's, you know, a larger one, that's probably OK.

Right. Depending on what you're doing.

Absolutely.

Right.

Absolutely.

And you might need a class then of one.

Yes.

Because if they're just too different, right? The reverse is true, in other words, right?

Yeah, because a lot of people— we'll talk about sedans, for instance. I mean, you could go compact, subcompact, intermediate, and full size. If you only have a handful of vehicles, a handful of cars, you might want to go with just one of those.

Right.

Exactly. But now when we start looking at— now we're looking at hybrids and electric. So what do we do with those?

Right. You got it. Right. Exactly.

So, I mean, you could get really crazy with these or you can get really simple with these. It all comes down to the size of your fleet, I think.

Yeah, that's a good point. But more often than not, what we're really seeing is we— yes, we've seen, again, too far, like I just mentioned, but more often than not, it's the opposite. It's just too much lumping in.

Yeah, that's what I'm saying.

To the same thing.

Right. They'll have like a handful of codes, like You know, I've seen some with like maybe less than 10, right? And then I'll break them out and come up with probably about 40 or 50.

Right, right.

All right.

So let's talk about— because you just mentioned that excavator, right? And how varying in price they can be based on what their capability is, right? Which is just one of many factors on their price. So price is one of the things that you would differentiate on. Is that fair?

Yes, it is. Yeah. Okay. Yeah.

So it's a good— it's a good sniff test. If you got a $50,000 asset in the same class as a $100,000 asset, probably something is off there, and more, more often than not, right? But you got to think of it in terms of relativity or percentages, right? If you have a million-dollar asset lumped in with a million one hundred thousand dollar asset, they might be probably gonna be okay. Yeah, so, so price is kind of, you know, I know with the FMAs who are running all these replacement analytics for you Price is a big one, right? Because they, they want to make sure that they have accurate forecasting of what the capital budget needs are going to be, right?

Right.

So obviously that should, that should be like a, an immediate cue for you. Okay, what are some of the other things that you differentiate on?

Pickup trucks. You got regular cab, extended cab, crew cab.

Okay.

Uh, but you can take that same pickup truck and now you put a bed on it, right? Now it's a utility bed, right? You might have put a dump bed on it. A flatbed.

Okay.

Um, you might put an aerial on it, so those all need to be differentiated.

So certainly the build, the build, or the upfit, or the equipment, right?

And the uniqueness of that asset as well, right?

Okay. So, so the build. So if you— but if you have a, you know, a 3-ton truck with an aerial on it, a small aerial on it, and they're all the same, then they all go together.

Absolutely.

But that wouldn't go the same as a 3-ton truck with utility bed, right, or something like that. So the build is key. Sometimes the configuration kind of depends on the fleet. Like, you might care to know that you got an extended cab or a king cab. And in other cases, if you just got a regular cab, kind of depends there. But generally speaking, you want to at least look at it, right?

You want to— you do. And like I said, cost, it all comes down to cost.

That's a good point too, right?

Cost and quantity, basically.

Yeah. Now, some fleets, again, the other extreme of it is, do you go into trim? I think the answer is kind of maybe, you know, like if you have a, if you have an F-150 and you're getting it for the executive at your construction company and he or she wants, you know, like the, the Platinum or the Raptor or something like that, right? You probably need to treat that differently than your standard work F-150.

Right.

But to your point, that will show up in the cost.

Yes, it would. Yeah. And we had this conversation years ago, Mark. I mean, we, we We talked about it and at first I didn't agree with you. And then all of a sudden it was like, wait a minute, that is a significant cost upgrade to that trim level. And then I kind of came around. You were right. Oh, thanks.

Thanks. So there's some other pieces too that could— again, it depends on your fleet, but potentially could impact. So in other words, you could have the same cost and the same build, but maybe utilization is different, right?

Right.

For whatever reason, these folks are putting a, you know, to make a silly number up, 100— well, you see it in trucking, 100,000 miles in a year versus 5,000 miles in a year.

Yeah, it's depending on, you know, what the nature, the, the work conditions for that, that asset as well.

So it's both utilization and use cases, what— correct, I'm hearing you say to me, right?

Like, because no one goes to school for fleet management, chances are you were never formally trained on how to successfully lead a fleet. That's where the Fleet Success Playbook comes in. The Fleet Success Playbook is your guide to building a safe, reliable, and efficient fleet that provides exceptional service. Learn all about the 4 pillars of fleet success: stakeholder satisfaction, intentional culture, resource efficiency, and risk management. Get nearly 100 years of combined advice on common challenges, practical solutions, actionable tips, and really with real-world examples from fleet industry experts who have been there and done that. Visit www.fleetsuccessplaybook.com to request your free copy today.

And that's a really good point because you could, you know, sometimes you'll see that in the data where it's like two organizations have the exact same truck and one is— one organization's trucks are costing a hell of a heck of a lot more. Right. And normally it's a sign of a difference in stewardship, let's say. Right. How well they're taking care of that truck. But sometimes you'll look in and you'll realize, oh, it's because these guys to do their job necessarily have to beat the living you know what out of it. And these folks are just kind of driving it around town and moving some stuff on the back of it. Right. And so use cases absolutely, or it can be a factor. It can be, it can be a factor, I think is the way to say it. Right.

Yeah. I guess the best scenario would be as you, a truck, say like in public works, it's going to be, used and abused a lot more than, say, parks or facility management. It's just the nature of the job. They're out on the road, a lot of factors, off-road.

That's a great point. And they'll have very similar equipment too.

Yes, absolutely.

Yeah, yeah, yeah, yeah. So, so again, so how they're used and also how much they're, they're using are kind of key factors.

Correct.

So in terms of replacement planning, basically these factors are going to be an indicator as to what that lifecycle might be like and what your replacement costs are going to be like.

Correct.

But you're also going to want to do it with utilization management. So, for example, if you want to set a minimum threshold to justify acquiring that vehicle, you need to look at all of these factors as well. It's not just a replacement plan.

Yeah, no, I mean, yeah, utilize it. I mean, because a lot of people throw a number at it. You need to use the vehicle so many hours or so many miles.

Right.

In a period.

Right.

And I kind of balk at that a little bit. And the reason being is because we'll take that van that the facility people are using.

Yeah.

That guy gets in his van, he gets his work orders. He may, he may be at a building all day. He'll drive like 6 miles and he'll be at that building all day. And then he'll come back at the end of the day and park the vehicle and leave.

Right.

If you look at the mileage, you're going to say that vehicle's not very well used. Right. And I disagree.

Yeah, you're absolutely right. I've mentioned this one on air before. I couldn't agree with you more. Like, you're making my heart heart sing by saying it out loud. It's like somebody else said it.

Yes.

You know, it's a great point because that, that, you know, let's, let's— I always say plumber, but it could be carpenter, any trade, right? They're up and down all day. Supplies, parts, you know, maybe they got a welder on the back, right? That thing is utilized.

Yes, well utilized.

Not going to show on the mileage, it's not going to show in the gas. No, it's not going to show on the engine runtime, it's not going to show up in telematics data. So I mean, this is, this is maybe another podcast for another time.

Oh yeah, I know, sorry.

But my push on that is I think, I think fleet needs to evolve to be more open-minded about what we're calling utilization and what utilization data we're tracking, right? Like, I would love right there an integration with the work order system for that public works group, let's say. And hey, man, that guy or gal did 100 work orders today. That's utilization. And they needed that van to do it, right? So yeah, so that's a, that's a good point.

Well, coming back to the, you know, how to figure that out, it's all going to be in the data. You got to look at, you know, how that vehicle is used. What you paid for it, you know, what's— what application are you— what other applications are you trying to group together in that? And I think once you do the analysis and look at all those factors, that's going to give you the key or the information you need to say, okay, yeah, we might want to separate these vehicles out into a separate class code and then we'll put these into this class code.

Right.

So, you know, once you do your class codes, you're not done. You know, I mean, it's just— there's more to do and you're evolving all the time. Right. So that's a good scenario I just said there for, you know, get your basic class code set, let it run for a time or period, and then over time you can see and the needle may move and you may want to move some assets into their own, their own piece, right?

Yeah. And if you're going to error, again, there is such thing as overgranular, but if you're going to error, error on the side of too granular probably, right?

I think so.

And then what you can do too is for those of you who are worrying about that, what we do is we create categories. So we'll take, you know, a certain amount of classes and put them in a larger category, right? Like these are our box trucks and then these are all the types of box trucks, right? And so you can kind of still get that high-level piece if you need it for reporting, for creating a decent-looking pie graph. Yeah, that people can actually read. Like, we get that.

Yeah, we call it like class types. Class types.

Yeah.

Yeah. Okay. So, so that's a really good So that's where you would link your automobiles, your pickup trucks, light duty, medium duty, all the way up to equipment, off-road construction.

Right, right.

Yeah.

And I don't know why this only hit me now, but we mentioned NAAFA, we mentioned APWA, and ATA is probably the other.

Oh yeah, absolutely. I don't want to forget them.

Yeah.

Okay.

All right. So, so you've kind of been doing this throughout, but like, you know, what other like you have, what like you do this a lot now. So folks are already hearing that you you kind of have the NAFSA system and our system memorized. Oh yeah, yeah, you know, and you happen to be good with numbers. I know that about you. But are there other— like, how do you— how do folks get started? Like, literally walk us through what is your process, or, or, you know, how would you might help someone who's going to try to go do this on their own?

Oh, absolutely. What I would start with is the— what I just mentioned is the, uh, class types.

Okay.

You know, start with your automobiles. You know, see what kind of price difference, utilization difference you have with those. Right. And then move to your pickup trucks. Do the same with those.

Right.

And then so on and so forth.

Right.

Throughout the whole, all your classes of vehicles.

Got it.

So equipment's going to be a little tricky because you're going to probably have a Class of 1.

You're going to have a few of those.

You are.

You are. Right. Yeah. And then you got to decide, do I put— because let me wait before I say that. So you're saying start with the high-level categories and then work your way down. Makes it easier. So now you're looking at data in kind of small—

yeah, because if you're looking at like 600, for instance, NAF, they have over 600 codes. If you're looking at those as a bunch, you're gonna— it's too overwhelming.

It's overwhelming. Okay.

So I would say look at the class types first.

Okay, get them in those buckets.

Absolutely.

And then create smaller and smaller buckets. Yes. Okay.

Yeah.

And like you said, with the equipment, it's weird because, you know, like you can have, uh, I mean, you can have a generator. That's my favorite. Yeah, that you can hold like, I mean, like in a briefcase.

Right, and then you got one that's going to run this whole building.

Exactly. So do you group by generator or maybe you don't? Maybe you— well, the way I do application is small versus large equipment.

Yeah, what I do with the generators is I do the, uh, you know, um, what are the, uh, skid-mounted, your smaller ones, um, and then you got trailer-mounted, right? And then you got the, you know, the, uh, the larger the building, sure. Right. Um, the stationary.

Sure.

Excuse me.

And certainly, like, let's call this out too, because this is something we've talked a lot about at RTA recently, is, you know, there's equipment that are assets and there's equipment that are not assets. So you certainly don't want to mix those, right? If you're not depreciating this thing because you can just use your operating funds to go replace the lawnmower because you don't want to replace the blades anymore, that doesn't go in the same category as— no, we just classified that on $15,000.

No, that's, that's, you know, we classify that as small equipment, right?

Okay.

We do have a class for it, but it's, it's not tracked to the level that you would as you do your assets at.

Right.

Yeah.

And I think another key is, and I want to put words in your mouth, but you will treat this, you will put energy in differently depending on the nature of the fleet, right? So like if you're dealing with a landscaping company, you're going to get more into the granularity of each of these types of equipment than if it's just a general fleet. And, you know, those might get a little bit less granular on, on, you know, like lawn mowers and types of weed whackers. Is that fair?

Right. Yeah. Because we did several projects for landscaping companies and we had to do that. I mean, I had to change our class coding system to accommodate for the stand-on mowers, the riding lawn mowers. They had different—

because it makes a difference to them.

Yeah, right.

Yeah.

You know, was it a 36-inch cut or was it a 60? So we had to really expand it out. Just for them, but that's their type of business. And, you know, we needed to— we have to cater to the, the client.

And so those who are going to go try to do this, it's the same thing, right? Like, if you're, if you're a construction company, you know, what we might perceive as minor differences between, you know, hey, this excavator has also got a loader on the other end of it, right? It might be treated differently, sort of a thing, right? So depending on what you are, you're going to spend more time in those areas. So How do you kind of— I mean, the examples we gave were some obvious ones, but let's say you're like a government fleet. It's a centralized fleet. So you got everybody, right? You got law enforcement, you got public works, you got human services. I mean, you got everybody. What are some, you know, where are some of the focus areas that you kind of make sure you get more granular versus the areas you're generally less granular?

With those, I mean, let's break it down by the departments. Fire, they usually have like, you know, they got their— they have their ladder trucks, they have pumpers. They have the rescue and then hazmat. There's a few of them that they have. So you can— those would be fairly easy to identify and put into some classes. Police, you know, you got your pursuit and you got your non-pursuit, right? You also have your pursuit auto and you have your pursuit SUV, right?

And they got SWAT and all this other special stuff.

So the way to do those is you actually have to start with the department level. See what they have and try to class code them. I would never want to put police of any sort— say an SUV, you're not going to put a public works SUV with a law enforcement, right? Because of the, you know, the outfit.

Totally different. But it'll, but it'll hit our sniff test for you if you go try it.

Oh yeah.

And you're listening to us, the cost is going to kill you. Yeah, match, right? Like the utilization won't match, the, the use case won't match.

So yeah.

So you should have those protections built in.

Absolutely.

Right.

Because you're going to do what you call it. The life cycles are going to be different.

And therefore the life cycles are going to be different. Right.

Yeah.

Right. So great point.

Yeah. Okay.

All right. So that's kind of your go-to. Anything else? What, like, if you were, you know, thinking about like whether it's a KG veteran fleet manager out there or brand new, they're just getting into the industry. Like, what are your thoughts? What are the advice you give them?

Yeah. My thoughts are is I wouldn't tackle it alone. Don't go in there and try to create your own class codes. I mean, APWA did a great job creating theirs. NAFSA is really good too. And of course, ATA is—

especially for the trucking industry.

For the trucking, yes.

ATA one is solid, right?

But for a government fleet, if you look at APWA and NAFSA, those codes will— they'll meet your needs.

They're going to meet the needs of— yeah, I agree, government, but probably the overwhelming majority.

Yeah, like you said, if you get into trucking and maybe landscaping, it's going to be a little bit more.

Yeah, depending on— even construction is pretty well covered in there. Yeah, it is. But you might—

construction is covered very well in there.

Yeah, yeah.

Okay, so, but yeah, just get in there and look at the APWA. Uh, APWA is very comprehensive. I mean, it goes— it'll take you right down to, is it a four-wheel drive, Is it diesel? Is it gasoline? I mean, if you need that kind of depth in your class coating, I would say go with those. But if you need just kind of like a simple, I would go with the Naphtha.

Okay.

All right.

One last question for you on this, I think. Let's see where it goes. But, you know, years ago, I remember when I was first getting into fleet, the recommendation was to not differentiate by fuel type, which I always found a little weird and I never listened to. I was a rebel. These days we absolutely differentiate by fuel type. I think you almost have to because just like the dynamic of a plug-in, a pure plug-in EV is just so different, right? I mean, it impacts so much of what you're going to do with it. I don't know how you can. So I just want to kind of set the record straight on your opinion. You class code like, so if you have the exact same truck with the exact same build and one's diesel and one's gas, it's different class?

Different class.

Yeah.

OK. Look at what the cost for the diesel engine—

Well, the cost will normally tell you. True. That's a good point.

The cost is definitely going to say, hmm, I— I'm going to have to separate these.

OK. All right. Yeah. So there you have it, folks. Fuel matters.

It matters.

It gets its own class. Obviously, a lot of the time you've spent kind of growing whichever system you're working with is— and you'll do custom systems for people too, if they ask you to.

Oh, absolutely I will. Yes. Yes.

But you know, a lot of that now is with some of these new pro— what's the word? Propellant tech, whatever, fuel types, you know, electric.

We call it energy now.

Energy now.

We call it energy.

Alternative. You still seeing like CNG and propane out there and such?

Yes, I am.

Yeah.

Yeah. I just did a fleet, they had Refuse and yeah, Refuse is a great use case for that. Oh yeah, they were still on CNG.

Yeah. Cool. All right. Yeah. Well, thank you so much for your advice and your expertise. It's always a pleasure, my friend. I hope you all enjoyed that. Please feel free to send questions to us at podcast@rtafleet.com. We'll be happy to answer them and hope you all enjoyed the show. Let us know if you have other show ideas or more information you'd like to learn. Scott, absolute pleasure to have you here.

Yeah, thank you for inviting me. Appreciate it.

Yes, we've been wanting to do this session for a while now.

Yeah.

So I'm really excited to get to do it, my friend.

Okay.

All right.

Thanks.

Take care, everybody.

We hope you enjoyed the show. If you'd like to help support the podcast, please share it with others, post about it on LinkedIn, or leave a review. Want to learn more about our fleet management software Fleet 360? Check us out at rtafleet.com. If you want to learn more about having your fleet fleet evaluated by our consulting team, go to fleetconsulting.com.