Episode 227: The Hidden Costs Killing Fleet Operations (It’s NOT What You Think)

Hey, welcome back for another episode of the Fleet Success Show. I'm Facundo Tesoro. Today I'm joined by Brett Dash from ServiceUp, and we talk about taking a look at some of the hidden costs that folks aren't thinking about when you send work out to a sublet shop. Hope you enjoy.

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I'm Facundo Tassar, as I mentioned. I'm the Fleet Success Ambassador here at RTA. I do a bunch of fun stuff, travel around, visit fleets, talk fleets, come to shows, all that kind of stuff. But today I'm joined by Brett Dash from ServiceUp, and we're gonna talk a little bit about some of the things he's discovered through his company. So Brett, tell us a little bit about yourself. How did you get to ServiceUp? So a little bit about you.

If you don't mind, before I answer that, I've got a small surprise for you.

Oh, geez.

I love surprises.

Coin check. Yes.

You remember that? Yes. You know what to do with the coin check?

I don't remember now. What am I supposed to do with it?

You got your coin on you?

No, actually, yes, actually I might. Uh-oh. It might be in my bag. Do I need to swap it with you?

I don't know. If it's an honest answer and it's in your bag, I'll trust you with it.

You know, actually, I don't think it's in my bag. I think it's in my room.

Okay, so you owe me a beer.

I do. Okay, no problem. Owe you a beer. Yep. Okay, so here it is. Well, you can take it out of this thing, right? It's in a little cardboard.

I think so, yeah.

How do you take it out of this?

There you go. I came prepared anyway.

Nice. All right, so are you going to drink the beer or am I going to drink the beer? Oh, so we're going to drink a beer.

It's totally up to you. We can save these for later since it isn't exactly 5 o'clock here.

Lid saver fillet.

But I figured I'd give you a little throwback for your— Oh, that's good.

Yeah.

For the event you hosted earlier this week.

Perfect. Now I'm trying to think about where it is in my room. I think it's in my luggage. Hopefully Bradley's not listening to this. All right. Okay.

So anyway. Yeah.

So tell me who you are and how you got to where you are.

Brett Dash, one of the co-founders of ServiceUp. I currently run the partnerships division of ServiceUp, which primarily includes everything involved with our marketplace and APIs.

Okay, cool. So before getting there, what were you doing?

I had a bit of an interesting path to get into fleet. Don't have a fleet background.

All of us have the case.

Yes, exactly. I don't think anybody wakes up when they're 8 years old and says, I'm going into fleet.

I do know one person. I think the story, I think Steve Saltzgiver.

Okay, that's fair.

I think he has said this. I mean, I don't know if it's true, but I believe it anyway.

Yeah, I'll concede that one. I'm sure that's probably factual. But no, I actually began my career career in hotels. I wound up in the San Francisco Bay Area and got sucked into tech. I have an enterprise software background, and being surrounded by entrepreneurs out there, thought I saw a gap in auto repair. We started a product on the consumer side actually that was made to be DoorDash for car repair. Worked with consumers initially. We actually got a lot of traction there but found our value prop really resonated with fleets more, so moved into the fleet space with more of a managed service model that has become and evolved to a much more robust, basically fleet repair management platform for all types of vehicles and all types of repair.

Okay, so you gave a little bit of what— anything you want to add to what ServiceUp is about? Because I think that'll really help add context to the conversation. So anything else you think you need to add there for the listener to know?

So ServiceUp, we effectively enable a marriage between fleets and shops around the country for all types of repair, all types of vehicle class 1 through— we're actually announcing this week 1 through 8. We were kind of focused on 1 to 4 initially and now we're getting pulled upstream. Our sweet spot has really been in more centralized fleets up until about a year ago. So fleets that were all in a single lot go home to the same location every night. We've evolved our platform now to be much more fleet-friendly to any type of fleet so that fleets can capture data on the repair side and during the repair cycle that no other platform can actually provide them and make better decisions about what is happening to the vehicle during the repair and what type of repairs they need to focus on by way of efficiency and downtime and all of that. So we've now recently opened up our software in a way that all types of fleets, whether it's decentralized or centralized, can actually effectively use the platform.

So is there like a sweet spot of fleets that you're looking to work with or have discovered that, man, because they have this particular structure or setup, they're really struggling with being able to keep up with things that are not in their shop?

Yeah, so we tend to be adopted best by more complex fleets. Multiple regions, multiple vehicle types, vehicles that are used very heavily, whether it's last mile delivery, rental, etc. Those are, those are kind of our sweet spot where they need to capture a lot of data around that repair cycle. Usually we're kind of 200 vehicles in the fleet on up. We work with, with many fleets that are in six figures, a number of vehicles as well. We are applicable to smaller fleets. That's more of a mindset around the fleet manager, fleet owner of Are they looking to scale from, say, 40 or 50 vehicles and grow their business up to something that's 500, 600, 700 vehicles and need to put processes in place to manage that repair cycle and really understand how downtime is going to affect them. But that kind of high level, that's, that's where we target.

Perfect segue into kind of the meat of the conversation, which is through your service, you've been able to identify that there's a lot of hidden costs that people aren't thinking about. And I mean, I've lived it. I remember in, I think it was 2018, I wrote an article for Government Fleet Magazine about the hidden expense of a technician, 2 technicians taking a vehicle to a shop because it was happening to me and it had been happening to me. And so I just did a very simple math. And it was kind of funny because when we connected last week, somebody had just brought it on my radar that they found it and they're like, hey, this is really cool. And they sent me a message about it on LinkedIn because they were having that same problem. And so there's a lot of cost associated. I was thinking about, well, you've got the technician time, but start, talk to me a little bit about those costs. I think those iceberg, right? You've got the, what percentage is it, the invoice?

So generally, you're looking at 30% to 40% of the true cost of a vehicle repair is the fixed cost.

Right.

And that's what everybody goes to first. You brought up government. Specifically, when you look at government, you've got elected officials and constituents that may dig into some of these numbers. And all they're thinking about is parts cost and labor cost. And the reality is downtime and all the facets that feed into downtime is really the true cost of repairs, or at least when a vehicle is out of service. There's a lot of different aspects that you have to factor in when you're thinking about the true cost of repair.

So it's as much as 60%, 70%?

Yeah. So you think of it as an iceberg.

Yeah. So that some of those costs are operational downtime, towing, administrative overhead, and repair overspend.

Yeah. Yeah.

I particularly like, which one of those, is there one of those that you find over and over again that's causing issues or?

All of those really feed into the overarching theme of downtime.

Yeah.

And it's figuring out what is causing that downtime and where you can lean that out as much as possible. And that's what we're trying to dig into mostly is like give fleets the ability to analyze what's going on and, and A, figure out what the costs are, B, figure out where that drag is and where those inefficiencies are, and then C, make a decision on how to fix it. You've got to factor in those costs, especially if you're going back to an elected official to say, I need X or Y, either an additional in-house technician or additional piece of software, whatever it is.

Yeah, you know, one that— so like I was just thinking about as you were saying it, I'm going back to my dad's mechanic shop, right? So we had a towing company that we would contract with. And so a customer would call us, hey, I've got this problem. All right, we'll go pick up your car. Not we, we'll have somebody go pick it up. They go to pick up their car, they give us the bill, we pay the towing company, so we add that to their invoice. We're able to capture that. But then when you get into different parts, like in a fleet, government fleet, in a government fleet, they might call fleet to tell you they have a vehicle. They might have it towed in by some random tow company, so then that cost goes somewhere. And then that gets forgotten about. And then of course, you know, the operational downtime, that one's never being captured, like ever. The admin, there are sometimes fleets that charge an admin fee. Majority of them do not. They should be part of certain markups. They're often not. Yeah, and then the overspend. I mean, there's nobody, you've got a million things going on and they call you and you got, you need this part, this part, this part, and this part. And instead of saying, do you have any alternatives to that part? It's just like, yeah, just get it done.

So I'll give a quick example on the last piece that you're talking about of overspend and managing the minutia around that. So actually at this conference, I was talking to a fleet manager that manages a fleet of about 1,000 vehicles. They have rules. In place, audit rules in place to follow, to deploy to their shops and have their shops follow. Using cabin air filters as an example, in 90% of cases, they have a timeline on how long those cabin air filters are supposed to last. However, about 10% of their vehicles are in extremely dirty job sites and those air filters need to get replaced however frequently, much more frequently than your standard your standard cycle. He wants those replaced when they're dirty. So he went to, not to talk too poorly about fleet management companies, but this is, the innocent shall remain nameless, was discussing that with them about how to manage at a granular level what to do about the air filters. Their solution was then— so what was happening is the air filters that needed to get replaced, those 10% were getting declined every time because it had just happened 3 or 4 weeks prior.

Right. Okay.

So he said, no, I need those replaced. But it was outside their parameter that covered the 90%. So their solution was to just approve all air filters. And now anytime a vehicle's in a shop and the shop's like, oh, well, we just do the air filters every time we do lube, oil, filter. They're now paying for an air filter 100 times more frequently than they're supposed to be. And you've got to find ways to track that and bring that to the attention of the decision makers and the operational people that are in charge so that you don't hit that overspend and start paying for things, extra wiper blades, whatever it may be. You're tracking all of that.

I mean, I'm thinking of the other example, which is a super common one. I'll give the example as a starter.

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You replace a starter and I was actually just talking about this with somebody yesterday. You know, let's say that you have Joe at your fleet and Joe is a guy that always replaces starters. Great guy, does the job well, whatever. Joe's not there and you gotta get somewhere and send it repaired somewhere else. Mm-hmm. Um, how do you know that you did or didn't do a starter? Or what if Joe's out, um, you know, on a leave of absence and that starter got replaced somewhere else and now you gotta send it back because it's a starter problem and Joe's the one who works on it. And then how do you know that you actually did it? You know, so the tracking of things that you've already done too.

Yeah. And a lot of times, like some of the operational drag we talk about is repurposing staff. You might have a tech or somebody that's supposed to be wrenching and instead they're moving vehicles around, right? If that's happening or you have dedicated staff to do it, but the one that moves certain types of vehicles around is out that day and they bring it to a shop and they didn't know that the starter hadn't been replaced yet and all of a sudden they replace it again and there's no audit rule in place to prevent that. All of a sudden you just double spent again.

Yeah. So how do you, how do you see technician shortage impacting, like what's the impact on fleets having to sublet things? Yeah.

So third-party repair is definitely increasing. We're seeing it across the board. The other tragedy is repairs are generally increasing. I think the most—

Repair costs?

Repair costs. Yeah. The fixed costs are increasing. Right. So I think the number I saw is something in the neighborhood of about 12% increase in overall repair costs over the last roughly 18 months. So fleets that have in-house technicians are needing to create a better strategy when using third-party providers. They have a lot more control and visibility right now into their in-house technicians. They manage them, they're using shop software of some sort to see everything that they're doing. When you go third party today, as soon as those keys leave your hand and go into the shop's possession, you no longer have that visibility. Then you're communicating with those shops via text message, via email, phone calls, all of the above, and you have no way to see all of that. So you've got to build a strategy around doing the best you can to get as much information from those shops and build trust with those shops. And ideally put some type of rails in place that prevent the shops from either fraudulent behavior or ensuring that they're, you know, following labor guide times and all of that because you're now no longer in control of those technicians. And you need to get that visibility and build a plan around, okay, how do I understand exactly what's happening to my vehicle and does it really need to be done? Am I getting photos of this? Where am I storing all of this and how do I ingest that data? And centralize it so I don't have siloed repair data now from 18 different brands and my in-house technicians. So it's really important to focus on figuring out that strategy on how to use those third-party providers.

Yeah. And then one thing that we talked about when we connected last week, I think it was last week, it felt like it was a long time ago, but I think it was last week. We talked about one of the things was, and you mentioned it, the communication between, because I remember having critical pieces of equipment at a vendor site and not knowing, like, hey, I know that's over there. I know that they're going to look at it today. I think I called them back. I don't know if I talked to him. You know, if you put it in email, then maybe it's documented. But if it's phone call, how do you remember? And you're like, oh, I called them, but what did I talk about?

Yeah.

So that's— I remember that was really important. One important thing that we talked about and the ability to document that. And I know you have that ability as well.

Yeah. Yeah. That's built into our platform. Not to go super sales pitchy on it, but like We listen to the fleets and as this third-party need is increasing, we've got to build those controls into our system. And if you're planning on expanding your third-party usage, you've got to really think about how you can capture the data and capture those comms in this instance and track them. Is it through third-party, another third-party phone system that you can centralized into a CRM? Where are you centralizing all these comms? Like, you really do need a strategy, and can you tie those to the actual vehicle itself and the vehicle history so you can reference it in the future, or ideally pull data and run reports on it so you can report to your higher-ups?

So what is— what are we— what haven't we particularly touched on that you think is important for people to know if they're relying on a few repairs a week that go to a vendor? Or it's a lot, or even I envision people could, you know, have— well, I know, actually, I wouldn't say envision, I know people that are, let's say, an employee of a municipality that have one employee and that's the fleet manager because everything goes out. So what's something that we have— is there anything that we haven't talked about in terms of what are people missing when they're sending work out?

When sending work out, I think we've covered a lot there. One factor I would consider if you're looking at revamping, say, a third-party strategy or revamping infrastructure is again, going back into the downtime and what is the impact of that downtime?

Yeah.

Especially like when you look at civic infrastructure projects, if you have a project that is occurring, whether it's on a light rail and a railroad or if it's in a tunnel or at an intersection of some sort, an off-ramp, whatever that is, that vehicle goes down and you don't have the appropriate provider in place, your technicians are too busy, whatever the case may be, that project has now been delayed. You have to measure that cost and you have to raise those flags to those that are involved in the process. If you're building a case to improve your processes, you have to factor that in. If you have to shut a light rail lane down or, I don't know the right term for it, but—

Yeah, that sounds about right.

Track, whatever. Track, there you go. You've now got 3 or 4 stops down and those are out of commission for however long. And all of a sudden you don't have a backup vehicle that's a heavily upfit customized vehicle to fix that. That is a cost of a downed vehicle. It's not just the labor time and the parts. That project is now delayed. And who's going to hear about it first? The citizens, right? And then who are they going to contact? Right. Like, you have to think about all these different headaches that feed into that downtime model, which is where we get back to that 30 to 40% is the fixed cost.

Right.

And you've got to think about the full impact of what is happening when that vehicle goes offline if you don't have an immediate backup in place.

Yeah, I don't think that— that's a really good example. I don't think that— and I was talking about government, municipality because that's where I spent a good amount of time in fleets. People don't need to smash their head against the wall to try to figure it out and do some math that they have no idea how to calculate. No. I've always told people, like, when you're talking to senior ranking officials and you need to talk to them about whatever, you need to put it about in their terms. Typically their terms are cost, service delivery, and risk. Like, if you put it in one of those terms, they'll listen. The service delivery part of it, absolutely, there's the cost involved. And the easy way to do it is, well, talk to your user departments, like solid waste. Like if you're not, if you don't have your truck available for you to pick up solid, you know, whatever you're picking up today, well, what's it costing you? Right? Like don't try to figure it out and then come up with some random number and then tell it to leadership. And the leadership is like, where'd you get that number from? Just ask, right? I mean, I've been in a similar position where like, oh yes, I want to calculate the impact here. I didn't have the information and I'm like, how are we going to do this? And then I ended up having a conversation. He's like, oh, well, it costs, this is what it costs if we have a truck down. I'm like, I should have asked you 3 weeks ago. Yeah, so yeah, don't overcomplicate it for sure.

I think that's a really good point actually. Like, if you can measure it simply, do it. If you know that, hey, this is going to delay a project X amount of time and there's, you know, Y staff that are on it, great, do that. But just like you're saying, the people in charge of making these decisions or who you need to get approval from, put it in their terms. Ask them, hey, how does this impact you? If we have to extend these projects or if we have to, if we hear an increase in constituent feedback that's on our public comments in our, you know, monthly council meetings, right? Like, how does that impact you? How does that make you look? What is that something that you can measure or is that like where on your priority list does that fall?

That's made me think of another situation where So many times we would order a part or somebody we would send something to would order a part that was for the repair and it was wrong or it was broken or it didn't work. And so now all of a sudden now they need to reorder it and it's going to take X amount of time. Like the communication of that is important, but well, what is the cost implication of continued downtime? That's a good one.

And I do with the more conferences I go to, again, I've been in fleet now a little over 5 years. It does seem that most of the industry is waking up to this, that it's not just like, let me get a race to the cheapest option that's out there.

All right.

That I need to figure out what is the most strategic solution or strategic partner for me in the repair world to accomplish whatever my object is, right? So great, maybe I'm getting a $60 an hour labor rate from this guy and he's promising me that he can take all my vehicles, but up the street there's somebody that's $90 an hour that's actually processing, right, or prioritizing my repairs.

Right.

And figuring out how to track all that is going to be really important. But you've got to start thinking about it. And I'm hearing a lot of that now where fleet managers are saying, hey, what is out there that can do this? And I'm trying to build this in a spreadsheet, but half my technicians aren't filling it out, or what can I do to improve this? So at minimum, it's good to see the industry is pushing this direction. And especially with the advent of AI, people are trying to figure out how to use those tools and all that. You know, get help on that side. Like we won't go into that conversation right now, but there's ways to make this more efficient. It's great to see the industry is thinking about it and now more and more people are actually solving that problem.

That's a great point that I hadn't thought about, which is, I've got 2 or 3 vendors I'm sending stuff to. Typically in government, it's going to be take the cheapest option. But where people struggle is, well, how do you defend going to not the cheapest option and having the data to say, well, look, they get things out longer, you know, quicker, whatever it may be. The quality of work is better, whatever, right? People are definitely not tracking that. They're just like, yeah, They send it and then their measure, the measurement might be from when the work order comes in until the work order's closed. But that really doesn't capture when the vehicle is actually available.

Right.

So yeah, that getting that data, being able to track every process of it or every part of the process plus the amount of time, all those things, totally key.

And what is that impacting? What business process, organizational process is hindered now with that vehicle out of action.

Yeah, for sure. All right, so wrapping up here, there's a little tradition that I stole from a podcaster who I think he's like the probably the most popular podcaster in the world. I think his name is Stephen Bartlett, an English guy, by the way. If you like podcasts, check him out. But so what I stole from him was he asks his previous guests to leave a question for the next guest. So you have an opportunity to think about the question you're going to leave for the next guest. So the question left for you was, what's one thing you were doing to move the fleet industry forward?

One thing I would honestly sums up in transparency. Perfect. Single word, transparency. Give you visibility into everything you need visibility into in our little segment.

Perfect. Yeah. I mean, I think And transparency is absolutely a thing. Again, going back to government, obviously in every industry, but if there's one that demands it, it's for sure government. And giving that transparency is key. And a lot of times I think it's missing because people don't have the time. They're not recording things correctly, but automation through what you're doing, that's a good one. Anything else?

I think that's it. I think that's it for now. I appreciate the time. It's been great working with you and the team here. Look forward to continuing the partnership.

Thanks for joining.

Yeah, appreciate it.

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