Episode 198: What Fleet Managers Get Wrong About Replacement, Rightsizing & Staffing

Hey, welcome back to the Fleet Success Show. I'm your host, Josh Turley. And today we're going to be talking about replacement, rightsizing, and technician staffing. Which should you do first? Let's get into the show. 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. Hey, welcome back for another episode of the Fleet Success Show with your hosts, Josh Turley and Mark Canton.

How you doing, Josh?

Good. Good to be back in studio again. Feeling great. So today I wanted to talk about a— Tony last week at Connect gave us a pretty awesome just masterclass in how rightsizing goes way beyond just right-sizing, like, the number of assets in your fleet.

Yeah.

So there was a conversation we had had outside that room, right, around, um, which do I focus on first, right? Then we kind of took that conversation a different direction. But as you and I were talking about it, uh, like, how do we prioritize, right? And when I say which one do I focus on first, there's three elements. And he actually went way deeper.

Yeah.

But the three things that usually come up is, do I focus on my replacement plan first? As you and I talk about availability all the time, right? That's one of the first things that we always tell people is if your availability sucks, your replacement plan probably sucks too, right? It's one of the first symptoms we look for. So your replacement plan, getting that on track. The next thing would be utilization. So do you have the right size of assets, you know, the right number of assets, right type of assets?

Yep.

You know, so going through that exercise and really trying to make sure that you have the right number of assets in your fleet.

Fleet, right?

And then what's interesting about this is the last piece is your technician staffing levels, right? Right. And people get hung up all the time on, well, what's your technician asset ratio? And we throw that right out the window because it's garbage. Uh, instead we always look at your BEUs, and we call them asset equivalent units. How many repair hours do you need per type of asset? And that will tell you your staffing needs. What's interesting, and this is what drove the question, right, is there's a huge interplay between all three of these things, right? There's a big interplay between, you know, if you have more assets, then you're going to need more technicians. If you have the wrong type of assets, then you're going to need more technicians, right? If they're, you know, because your AUs are going to go up.

Right.

And if you're behind on your replacement planning, you're also going to need more technicians.

Exactly.

And you might not be replacing them with the right stuff. So you might be overspending the replacement plan. It's not going as far as it should.

Right.

So you're like, what do you do? You've got 3 things that are interdependent and interconnected. And if you do something over here, it's going to impact this thing over here. And so which do you focus on first?

Right.

So I have my ideas on this, but I'd love to know, like, if you were to order them in priority, like if you could only pick one, which one would you focus on first?

Sure.

Like put them in order. 1, 2, 3.

Cool. And, and I'm glad you asked me about priority because, yeah, because a lot of folks in that conversation get hung up on timing. Like sequence, you know, which one do I do first? And we can talk more about that later. But priority is the bigger question. And I would, I would prioritize replacement for sure. Replacement of assets for sure, because that is the one that has the, the greatest impact on all of those other variables that you're talking about and the trickle-down effect. And so if I can get my replacement right, then I'm almost inevitably going to get my right-sizing right, or it makes it much easier to do because those underutilized assets will show their face much easier. Inevitably, when you have a poor replacement program, I mean, 99 times out of 100, you have an oversized fleet. Yep. Because you have a greater spare ratio. And the one in a few, you know, those few times when we don't find that, their commercial rental is like through the roof and they know full well they're renting too much. Right. So you probably know it. Right. That sort of a thing. So if you fix that, not only do you reduce your asset count, you got newer assets, you know, and your utilization balances out, right? So now they're spending less time in the shop and you have a much truer sense of, hey, this is the amount of technicians I need. It kind of solves that problem. I don't want to say solves, but it brings you most of the way to solving that problem, if that makes sense.

And you're also deflecting more of the repairs to warranty repairs. And, you know, hopefully if you're not doing those in-house, it gives more to the dealerships. So you're not having to deal with that as well.

Exactly.

Which requires less burden from your side, right?

The nature of that work is changing, right? Dramatically. Now you're going from reactive repairs to mostly preventative maintenance that enable you to be proactive and catch bigger problems sooner. So it has this transformative impact. We've always found that it has this transformative impact when someone truly adopts a strategic replacement plan. And you have all these downhill effects. They've been talking for years about how they can't get out in front of their maintenance. It's always reactive. and then you go and fix replacement and somehow it fixes the reactive, you know, and, and that's what it is. And then all of a sudden PM compliance improves and you're like, well, why is that? Well, because when people have newer vehicles, they want to keep— it's just a human nature thing. They want to keep it nice. Yeah, yeah, exactly. So from a priority perspective, that is for me number one. I mean, I can go on for days with you.

If you'd only pick one, like, that's the one I'm going to start with because it will impact the other two just indirectly, but, you know, significantly.

Yeah, exactly right. Yeah. And so, and so that's where I would, I would definitely go. And now here's the thing. I'm going to— the other two are challenging from a priority, but I'm going to say right-sizing your fleet. And I include right-typing when I say that.

Correct. You know, as Tony mentioned, for everybody that doesn't know, like when we talk about right-sizing and right-typing, right-sizing is the number of assets you need in your fleet. Right, typing is making sure you have the right asset.

Correct.

So for example, that you're not throwing an F-250, you know, the dually at a problem that a, you know, small Toyota Tacoma could handle.

Exactly. Right.

I don't need a 4-wheel drive, a 2-wheel drive, you know, inline-4 or V6 would work just fine.

Correct.

Right. So making sure you have the right type of asset for the right type of work and matching those things, not just do I have an asset that can do that job.

Exactly right. And, and, and that's so common. And yet shocking to fleets when we come in that it's like, it's amazing thing. And the reason for that, that it's so common is if you think about it, if you just follow the technology, I mean, when you look at what an F-150 can pull today and compare it to what a 350 could pull 10 years ago, you'd be shocked. The F-150 is more powerful, you know. So you got to look at those sorts of things and what, what, what generally happens. Oh, well, if you had a 350, I get you another 350 and I get you another 350 and I get you another 350. So we have regularly found situations where we've increased the quantity and still found savings for the organization because we've improved the right typing. That said, I want to be clear, like, there is such thing as the reverse. If you got, you know, a 10-yard dump truck and you need 100 yards, you're going to run that thing to the ground trying to get the amount of material moved that you need moved, right? So there is such thing as the reverse, right? We, we, we did something here for a local county where they just had a lot of off-road use and they were putting these stock vehicles, you know, into the desert here and destroying these things, right? And it was like, okay, it wasn't the right build. We needed something bigger, something more expensive, something more bulky. But in the long run, it saved them money, right? Okay, so right-sizing, because again, that's going to impact how much, you know, work is going to be needed for those technicians. But also, there's two more reasons really. Second is inevitably doing that rightsizing exercise opens— it's a really great opportunity to open the eyes to the organization about what else is going on. And so what I find it to be is a backdoor entryway into making an impact on replacement. So don't help— don't call me a cheater out there, but it's very common that it's like, hey, you find these things and they're underutilized and we could get rid of this truck. And then you sit down and do the interview and you know, you know, hey, Chief, whatever, or, you know, so-and-so, Supervisor John and Susie, why don't you want to get rid of this truck? Mark, you don't understand. I gotta have this truck. This other one over here, it's— it was gone 3 days last week, and 2 months ago this one was out for 6 weeks. And so they, they, they're hoarding those spares because it's the only way they can execute on their mission, right? And so then you say to them, okay, well, but you're not really— you're not getting enough utilization. All right, well, look, let's make a deal. If I could get you newer vehicles that were more reliable, could you give up a spare here? Instead of having 10 spares, could we go with 5? Right. Sort of a thing. And all of a sudden their faces light up and the answers are yes. And then you do the math and you show how you can actually save people some money by getting them newer vehicles and cutting down on their fleet. And so that happens so frequently and so commonly that that's another reason that I would pursue the rightsizing of the fleet from a priority perspective. But then the third reason is right-sizing always saves money if done properly. You know, no matter how, you know, at least in our book, right? We've never not saved more money for an organization than what we charge them, you know, for the, for the consulting gig. Because normally in those gigs, you're charging based on some estimate of the level of effort it is to do the work.

Right.

Right. And so even if you embrace, embark on this internally, you, you're going to find savings almost inevitably, especially if you sense that You know, usually organizations that pursue this is because they have a sense like, hey, that thing's got 6 inches of dust on it. Maybe it hasn't been moved in a while. Why is that? And you go and you kind of, you know, do this in sort of internal— it's almost a reflection, right? An organizational reflection of what's going on. What do we use our vehicles for? And you come out with this much better understanding of, well, what are our missions in these various departments and agencies? What's driving that? What are the needs of that? What work needs to be accomplished? And you can just accomplish, you know, so much more, especially if you can do something along the lines of like a zero-based, right? Like, yeah, what's the work I need here? You know? Okay, so you need a what? You need to do what? I'm going to carry what? What goes in your trunk? How many people do you move? You know, so forth and so on. Okay, this would work great for you. And you go down the line. The value of that is just tremendous. Not only can you save money now, but now you have a sort of a guide road for how do you continue to manage this into the future.

Yeah.

And so that's why I would pursue all of those, because again, then that will trickle down into what are the technicians I need? What kinds of technicians do I need? Right. If I might be changing the right typing of the fleet to, hey, I need more sedans or larger dump trucks, that's going to influence the kind of tech that I want to go hire.

Do I need a heavy-duty tech, a light-duty tech?

Correct.

Somebody with diesel experience or gas engine, right?

What's the ratio of that? Right. And what's the training I'm giving those techs and on my bay setup, right? And so that— right, exactly.

Because we've never had that issue where we can't get our fleet vehicle into the bay because we didn't measure the doors correctly on our brand new facility.

Yeah, well, exactly. You know, and it's always in the hottest states, it seems, that you got guys and gals working out in the blacktop because they can't get the darn thing into the bay. So, so then that brings me to the, to the technician. And again, I want to be careful about this. You know, those are the reasons I prioritize that. That's not to undermine or say the tech piece is not important at all.

Right.

But it's, it's, it's understanding those impacts. And so at the very least, if I'm doing them simultaneously, I understand their relationship to each other and how one might, you know, sort of influence the other. Right. And then when Tony talks about it, I think I really like his paradigm here, but he talks about you know, the 3 W's, when he talks about right-sizing your staff or technician staffing. And he talks about, you know, there's the workload, which you mentioned is the AUs and how many labor hours are necessary to properly maintain that fleet. And then that obviously tells you the workforce that you need, how many mechanics. If a mechanic can do 1,500 hours in a year and I need, you know, hundreds of thousands of hours, you just do the math, right? You got the numerator and denominator. This is how many mechanics I need. Yep. And then it also influences— both of those influence your facility, right? Your workplace. So workload, workforce, workplace. Because if I got 10 mechanics, it's not going to work with 5 bays. Right. And also, if I understand the nature of that fleet, to your point, is the door tall enough? Is it wide enough? Do I, do I do enough PMs that I need a PM-dedicated bay? Right. You know, those sorts of things. Am I out in the middle of nowhere and I need a bay for alignments because I don't have someone I can outsource that alignment to? And those are, you know, they're very— there's no true independent variable in all of that, right? They're all, they're all dependent. And so you have to really understand that network in that, in that relationship. So yeah, so from a priority perspective, that's, that's the route I would go.

Because no one goes to school for fleet management, chances are you were never formally trained on how to successfully lead 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 real examples from fleet industry experts who have been there and done that. Visit www.fleetsuccessplaybook.com to request your free copy today.

If you could, like, if you had to do it in sequence, that would be the sequence we would pick.

Probably, yes.

Like if you could only do one at a time, like that's the one at a time to go through. Correct. Now, as you and I were talking about this, I would say the last W2 is workflow. Yeah, I like that. I like that, the 4 W's, right? He didn't say this in his thing.

You're right, 'cause that process, if you're good at it.

He did talk about it, but he didn't call it out. And it's the workflow, which is if you can make the processes more efficient, well, now you actually need fewer AUs per fleet, right? 'Cause it's gonna lower your standard. Yes, it's a great point. And you'll be able to get stuff more efficiently. You can do more with less. I mean, that was grandpa's entire hypothesis.

That was Ron's claim to fame, right?

Yeah, we're gonna grow the fleet by 80%, we're not gonna hire another technician. Try doing that, right?

Yep.

Yeah. So you go through that, but it's difficult to do that if you don't have the right type of assets or if those are changing. It's difficult to do that if you suddenly get your replacement planning, because they do, they just, they trickle into each other all the time.

Right.

So as we're talking about, okay, if you could only pick one, but here's the reality is you don't have to just pick one. And the odds that you're going to succeed with just one are infinitesimally small, right? You know, because the likelihood is you're going to try to get your replacement plan passed. You're going to go to council, you're going to go wherever, and you're going to say, hey, this is what I need for next year. And they're going to look at you, laugh a little bit, and then say no. You say, well, now what? You're going to go through and you're going to do a zero-based, you know, asset study and you're going to figure out that, oh shoot, we need to replace these vehicles, get rid of this one and swap it out with this. And you're going to go back to council and you're going to have that same discussion and you're going to go back to council and you're going to say, hey, you know, we need this many technicians based off the fleet we have. And they're like, they're going to smile a little bit and they're going to tell you no.

Right.

So this idea of like just going one at a time, you know, it's going to kind of set you up for a little bit of failures that you might make a little bit of progress here and a little bit of progress here and a little bit there. But if you're doing it one at a time, it's going to take forever to get through that loop.

Yes.

So our recommendation is to actually hit all three at the same time.

Absolutely.

Right now, why— for our listeners, why would we want to try to do all three at the same time? Knowing that the output of one is going to impact the output of another? Wouldn't that just be like a waste of time and a waste of effort that, you know, I'm going to put all this time and energy into figuring out my staffing, I'm going to get my replacement plan done, and that work is all going to be for naught. I'm going to have to redo it again.

Sure. Yeah. So there's a couple of things on that front. So the one is what that allows you to do is take sort of an approach of more like a model building approach, right? And it's like, hey, we have options. And that's— I'm jumping ahead, but that's also, that's also a key piece, right? Like if I come to you and I say, hey, Josh, there's a problem, this is the only thing we can do, otherwise the problem isn't getting fixed.

I'm going to tell you, try again.

Yeah, exactly right. But if I come to you and I say, hey, look, this is the situation and these are some possible scenarios and some options we have, which one would you like for me to pursue? Right. That changes the situation very much so. Right. And so by trying to do all of those at once, you can kind of create that story. And again, we always talk about tell your story with data. Translate that data into meaningful context for the people who are reading it and understanding it to try to help them understand and make sure you're giving that context. So it's very simple and you can now show, hey, look, these vehicles are getting older and it's leading to this much amount of work. This is the nature of the work we're doing. We're pulling engines, we're replacing hydraulics and so forth and so on. And this is the cost associated with that. If we continue down this path, and we continue to replace at the rate that we're replacing, this is the change in age. This is the prediction on the maintenance and repair that will be needed, the cost that will be needed, the techs that will be needed, and the bays that we need, and so forth and so on. And say, hey, that's one way forward, but this is where we're going. Or by the way, we can start outsourcing some of this work and this is what we estimate that cost will be, right? Pretty straightforward modeling that you can do. Not rocket science stuff that I think that people will generally understand. Yeah, as the fleet ages and changes, You know, we can do that. Now you can come and say, or what we can do is we can maybe replace some of these assets while we're doing it. We can get rid of some, right? That reduces the load. We're going to save some money getting rid of some, right? This is the financing plan. We're going to have to replace it. So instead of asking you for $50 billion in cash, no, no, no, no. I need a couple million every year and we're going to spread it out and this is how we're going to do it. And we're going to offset that with these savings in operating costs because we're not going to be doing as much maintenance repair. Instead of replacing engines, we're only doing PMs and, and so forth and so on. And now we don't need to change our bays because we can fit another, you know, PM well or something like that to do more PMs. And you tell that, and you tell that story as well, right? And typically speaking, it still doesn't mean you're going to necessarily hit a grand slam because money and spending more money scares people always. But what it does is it gives you a set of options. Usually you can come with maybe 2 or 3 or 5 scenarios within there and show how each one impacts each other. And now it's a decision that needs to be made. Hey, would you like to go out and get the capital? Would you like to increase our operating costs and send me on a hunt for some training and give me some HR support? Or maybe what's likely gonna happen is some hybrid of the two, you know, or the, you know, and this is what we're gonna land and this is where we go forward, right? And I just feel like it changes the nature of that conversation pretty dramatically.

Well, we talk about all the time that in order for you to buy into a decision, you have to weigh in, right? And if you come with a decision already made, then your superiors don't ever have a chance to weigh into it. This gives them an opportunity to kind of weigh the options, right? And like, which one do they have appetite for? And I like that you're talking about blending, right? In investment, if you, you know, do any kind of investing, 401(k), pension, whatever, we often talk about like, do you want to be really aggressive and do high-risk stuff? Or do you want to be more safe and invest in bonds and cash, right? And whatever. Or do you want to be some kind of balance, right? And so there's these trade-offs between the two. And I like that we're kind of presenting that same plan as do you want to invest over here or do you want to invest over here or some blend of all three? And this is what scenario A, B, and C look like. Here's the cap impact, here's the OpEx impact, and how does it blend together with the overall strategy of the city, you know, corporation, whatever.

Which is another great point, by the way. And I didn't say it, but you just kind of touched on it, which is, you know, when you're building these plans and these models, don't do it in a vacuum, right? Like what else is going on? Maybe the city has a green initiative or maybe there's a refurbishment going on some main building somewhere. You know, those sorts of things. Try to be mindful, try to understand what the overall organization's goals are and plans. And see how does this fit within that somehow, right? And if you can tell that story, that's usually a big help to you as well. [Speaker] Yeah, for sure.

And so I like, as we talk about too, is like this idea of even playing them off of each other.

[Speaker] Yeah.

[Speaker] Where you say like, well, we could do this and ignore this completely, but if we do that, like here's the impact. Or we could focus over here and not do this and here's the impact, right? And so I like this idea as we talk about, well, 1, 2, or 3, and we say, no, just do all 3. Okay, if we don't change anything, here's how many techs we're gonna need.

Right.

However, if we do our replacement plan, it actually lowers the need for technician staffing and we can change some things here.

Exactly.

So you can show these trade-offs immediately and really help paint the picture of if we don't do anything in A, then we have to do B and C. Or if we're just gonna ignore B completely, then like we have to go full tilt, you know, slide the slider all the way up on C and that's what it's gonna cost us. We can really start weighing each of these investments against one another. What I like about that too is that it does give you the option, you know, when they do that thing and they kind of smile and say no, well, which one are you saying no to? And exactly, you can't just say no to all of them because one of them is going to happen.

It's happening whether or not you want it to happen.

Exactly, you know, and so I like that we're painting this picture of, you know, it's, uh, how do they say it, it's like two truths and a lie. Like like, which one are we saying no to and which one are we saying yes? Because you have to say yes to one of these things.

Yes.

Because I can say no to all three, then scenario D is, well, then this is what's going to happen.

Yeah, exactly.

You know, because there's always a, like, do nothing, and there's consequences that happen when you do nothing.

Model that out. Do nothing. Okay, our outsourcing's going through the— whatever it may be, right? Our outsourcing's going through the roof.

Availability goes to the toilet.

Yeah.

But then, like, here's the impact to the fleet. Here's the impact to the mission.

Exactly.

And you're going to have to answer those calls when suddenly we can't send out and dispatch EMS, right? Or we can't dispatch, you know, public works vehicle to fix that sewer that just burst for the third time.

Exactly.

Because that's right, we don't have the availability.

Yeah. And we know how council members love to answer for that stuff.

Yeah. But you have to paint it in those pictures.

Yes, you do.

This is like the impact to the mission.

Yes.

You know, which goes to— we've talked about this before, but this is why availability is the number one metric, because it's the impact to the mission, right? Utilization is just one piece of this puzzle that we're talking about, which is rightsizing, right? Replacement planning impacts utilization, but only indirectly, right? Because it directly impacts your spare fleet. But availability is what's driving all these three, all three of these things.

Exactly.

Really, we're trying to increase the availability without, you know, in a reasonable and responsible way.

Yeah, exactly. And thanks for calling out painting that picture because I don't know that I always articulate it well. But this is— that's a big part of what I mean about giving the data context, right? So yes, I stick by the tell it in numbers because people understand numbers, talk to finance in dollars because that's what they understand. But being able to tell that story well and operationalize that, I actually think that's a key skill set of a fleet manager is being able to take what your operating agencies are doing and translate that into numbers and translate the numbers back. So to your point, Hey, these numbers go up, or, and this is the, maybe we can only get so many hours done, which will lead to this many more failures, which will lead to, and follow that whole thing to.

Tie the thread. You have to close the loop.

Gotta close the loop. How does this impact your experience?

So what?

Right, right.

So what? What difference does it make?

Correct.

Okay, you're telling me all this, but why does that matter?

Exactly.

How does that impact me?

Exactly.

And that's the thing that, you know, we, it's a key pillar of stakeholder satisfaction.

Right.

You have to understand the job to be done and the expectations that they have of you. So you can translate their job into fleet, into data, back to their job.

Exactly.

You have to complete the loop.

Exactly.

And this exercise, going through these 3 exercises, is how you're going to do that.

Oh, yes. It changes fundamentally your relationship with your stakeholders.

Yes.

When you do an exercise of this nature and if you do it well, usually much for the better because you walk away with this understanding that you didn't have before. And by the way, they walk away with an understanding they didn't have before. It just, it just so frequently changes the dynamic of those relationships. And to your point, right, like when you, when you help close that loop in that story, lean on those stakeholders. Hey, what happens if I don't get this out in 48 hours and it takes me 72? How does that impact you? Right? Get it straight from the horse's mouth so that when you're telling counsel about it, you can say, hey, go talk to the people who run that. You know, it's not me making this up sort of a thing, right? Yeah.

Yeah. You do this and those relationships will ultimately become more successful.

Definitely.

Which is ultimately what we want. We want to help fleets succeed.

Right.

How do you do that? To do that, you have to be able to close the loop.

Yeah.

So yeah, so do all three. Do all three at once. Don't sit there and try to sequence it, right? Um, understand how they interplay together, but really try to come up with the different scenarios. And honestly, you can come up with infinite number of blends on this.

Yeah, you really could.

So I like doing the, you know, do what happens if you're all in on A, all in on B, all in on C. Uh, D is you do nothing, right? Turn all the sliders all the way back down. And then come up with some creative blends, right? Like what would make sense? Maybe we go only 50% on each of these three things.

Exactly.

What does that look like?

Right.

What if we really focused on replacement planning and a little bit of rightsizing and a little bit of technician staffing?

Right.

You know, just kind of put some blends on like where you think— again, our priority is 1, 2, 3, right? Is going replacement, then rightsizing, then technician staffing. You could skew that way. You could go the other way and say, no, we've got resources, we have availability, we have good technicians in-house. Let's justify that because they're trying to cut my positions. Okay, then flip the model, right?

Right.

Just start from that side of things and then start hitting the other two.

Right.

You know, but if they are going to ask you, that's actually a great thing too. You want to try to defend why you need the staffing you do.

Yeah, exactly.

Start from there and then offer an alternative. Before you cut my staff, why don't we do this instead?

Let's go.

Let's go fix our replacement plan and we can lower our maintenance costs that way.

Yes.

Let's go replace some of these oversized assets and we can lower maintenance costs that way instead of cutting my tech pool.

Right.

Let's do it this way instead.

Exactly.

So, but you have to understand how all three of these work, where they're currently at, in order to be able to make those arguments. So that's it. With that, I think it's going to do it for this week's episode.

Yeah.

Uh, until next time, 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 evaluated by our consulting team, go to fleetconsulting.com.