Having the right maintenance contract in place can potentially save fleets a truckload of time, money and downtime-related headaches. These maintenance programs allow a fleet to outsource maintenance and repair work for their trucking equipment to companies that specialize in vehicle service. What’s more, today maintenance contract providers are often working with a plethora of data to help fleets analyze the nitty-gritty minutiae of their equipment.
“There’s value in the data throughout the entire repair process, from the time the truck shows up to knowing how much this repair actually cost, to what type of repair we actually did,” says Chris Micheal, senior manager of service operations at FleetPride. “Was this a preventable breakdown? Is it something that we could have caught as preventative maintenance or was this unexpected? For your typical customer, we are tracking all the information that we are receiving right there from the truck as we plug in and as we do our repair.”
On this episode of Fleet Uptime, we drill Micheal with our toughest questions regarding getting the most uptime for your buck when entering into a maintenance contract. Watch the video above to learn about what to look for in a fleet maintenance contract, questions to ask when customizing a contract, and the value of standardizing fleet service data across multiple locations.
Here’s a transcript of the show:
David Sickels: Hello and welcome to Fleet Uptime, another opportunity for us to talk best practices in technology, truck parts and service to help you maximize equipment uptime and profitability. My name is David from Fleet Equipment and today we are talking about maintenance contracts. Now these maintenance programs allow a fleet to outsource maintenance and repair work for their trucking equipment to companies that specialize in vehicle service.
And a lot of fleets tend to take advantage of contract maintenance when they want to try to control their expenses or maybe free up some of their in-house resources. But here’s the thing, not all maintenance contracts are created equal.
So today we are digging into the nitty-gritty of getting a maintenance contract that gives fleets the most uptime for their buck. And to help us do that, we are speaking with another master of uptime, Chris Micheal, the senior manager of service operations at FleetPride. Let’s get to it. Chris, welcome to the show.
Chris Micheal: Glad to be here. Thank you for having me.
David Sickels: Of course. Of course. So a lot of times in life you hear the word contract and you might furl your nose a little bit, but in this case that is not what’s going to happen at all because maintenance contracts are actually a really, really good way for a lot of fleets out there to enhance their uptime, maybe save some money, free up some resources. So can you tell us from your point of view, what are the key components of a maintenance contract that is going to maximize a fleet’s uptime?
Chris Micheal: Yeah. So there’s actually a few different components and it’s really not just about the fleet, but also about the service provider themselves. I mean, we have to go into this thinking about it as an agreement, a partnership. We’ve got to work together. And so when we start looking at these contracts, we have to think about it from two perspectives.
One, what is going to be valuable for the fleet, and then, two, how can we provide that value? And so when we started thinking about these maintenance contracts or service contracts, we start thinking about it from the perspective of, all right, they want to maximize their uptime. We don’t want to look at how much downtime we’re going to provide.
So we need to be able to say, okay, can we provide some type of priority for their units to get into our shops? Or at least, can we provide some type of commitment for small or minor repairs to get them back out on the road as quickly as possible? And then of course, we also have to figure out what is the cost savings that we’re going to provide them for using our shop over going somewhere else.
So is there a discount that we can provide them either on parts or service? And so when we start looking at these service contracts, we really try and keep those aspects in mind from the service perspective so that way we can make sure we partner with them. And then of course, the last part of it is how do we actually add value to their overall business on day-to-day?
So is there some type of data or something behind it that we can start providing, let them start seeing the health of their fleet, what’s actually happening on a day-to-day basis. Is there something going on that maybe we can try and be preventative about bringing more of their fleet early so that way we can keep them on the road longer?
David Sickels: Interesting. So I want to kind of dive into what you just said there about data. Is there anything on the data side or the telematics side or anything of that nature that you can do on your side to help the fleet make sure that they’re getting the most out of this partnership?
Chris Micheal: Absolutely there is. The service event is going to be documented from start to finish. And so there’s a lot of touch points we have in there and that also means there’s a lot of data points. So we have everything from the initial time of entry into our shop, when did it arrive to the time that it actually left.
Also, what time did we complete the repair? Maybe the fleet’s not even aware that it sat at our doorstep for a day before a driver came and picked it up. That’s a whole day of downtime that could have been prevented if they would’ve had someone available. Vice versa, we can also start diving into the actual repairs.
So can we actually document and code these repairs in such a manner that the fleet finds valuable so that way they understand that, hey, you’re doing 20% more break work right now than you were the same time last month or this same time last year.
Now you’re spending 100% more on actual labor than you were last year because hey, if the labor prices have gone up or hey, you’re having a lot more breakdown events. So there’s value in the data throughout the entire repair process from the time the truck shows up to how much did this repair actually cost to what type of repair did you do? Was this a preventable breakdown? Is it something that we could have caught as preventative maintenance or was this unexpected, there’s no way we could have stopped this and so now we’re trying to do a triage.
David Sickels: Got it. Are you able to go into any more detail as far as if you’re grabbing this data for the fleet, do you have to give that fleet maybe a telematics device or recommend some kind of device that they install on their equipment so that you are able to read from that computer? Is that how that would work? Or do you have kind of your own system that you’re working on?
Chris Micheal: So great question. And there are a couple of different ways that we can go about this, depending on the size of the fleet. We have to keep in mind that every fleet’s going to be different. We have different size fleets and different size customers. We have some that are only running a handful of trucks, and so maybe that type of telematic solution doesn’t quite play into their bottom line at this point in time.
We have others that are 10,000 trucks strong or trailers strong, and we have to make sure that we can track and maintain all those at the same time. So when it comes to the question of how we collect the data, it really depends on the fleet customer themselves. And so for your typical customer, there won’t be telematics information involved.
Instead, we are tracking all the information that we are receiving right there from the truck as we plug in and as we do our repair. So a lot of it comes down to what are our people entering at the time of repair. Now when you start getting into larger fleets, 50 to 100 trucks is simply when we start seeing this, or sometimes we can see it a lot larger or I should say all the time, a lot larger.
That’s when we start looking at telematics. And so now the telematics question comes down to what data can you receive from the fleet versus what data are you providing to the fleet. So for example, if you’re really looking to partner, and this is becoming more of you are managing their fleet for them, you’re going to want to suggest a telematic solution for them.
You’re going to want to make sure that you have log-ins for that so you can pull that data, you’re getting regular reports on that data and preferably you’re actually punching that into some type of maintenance program that you can actually track these trucks and recommend when they should be coming into your shop. Now…
David Sickels: Got it.
Chris Micheal: For larger fleets, typically they have that telematics already in their truck. And so really the question is can you gain access to some of that data, specifically the mileage and the breakdown information? That way when that truck suddenly hits that specific preventive maintenance point, you’re getting a notification. You can tell the fleet, “Hey, I’ve got a shop right nearby.” Because you have the location of the truck. “It’s time for it to get that PM. Go ahead and bring it in. I’ve got you scheduled for this day and we’ll get it worked out for you.”
David Sickels: Got it. Got it. That’s really interesting. So, Chris, I want to just back up for one second and talk about your background a little bit. We were talking the other day about kind of what your journey has been. I found it really, really interesting and insightful, especially as far as our conversation is going today. Can you kind of tell us where you started and your journey to where you got to now?
Chris Micheal: I’d love to. So for me, I actually started off on the automotive side of the industry. And for me, it was all about turning wrenches. I was a master technician for BMW and Mercedes-Benz, and I did that for about five years. And after a period of about five years, I finally decided this really isn’t quite what I want to be doing.
I wasn’t happy with how that industry was treating their customers or how it was developing, what they were doing. They were very efficient, but they lost that personal touch. And so I started looking elsewhere and that’s when I found my opportunity in heavy-duty transportation. And so I actually started service writing for a group and started writing their tickets.
After about six months, I saw a huge opportunity for growth and for them to actually step up to the next stage of service, if you will. And so I became their aftermarket parts and service manager. I stayed with that group for a couple of years and we grew their aftermarket business year over year double.
So it was absolutely fantastic for us. We saw a lot of opportunity there and we also got to implement a lot of changes inside the service business out there that allowed us to really focus on the customer and drive some of those benefits that automotive have seen for the last 10, 20 years.
From there, I worked up to a corporate office position where I actually got to work with the WheelTime network, 256 aftermarket locations that really focus on bumper-to-bumper, all makes, all models. Fantastic group, worked with them well and got to do the same type of thing where we did process implementation. We got to grow the aftermarket side of the business of as far as what we can actually do in capabilities.
And then I made a very unusual jump. I actually jumped from heavy-duty service transportation over to software of all things. Not something you normally hear in our industry, but it actually played a very key position in what I do today. So with that software, I moved over to Decisiv, which actually provides service relationship management software.
What that means is it is the interface that they get to interact with that customer. So you get to not only track your repairs and do all that type of stuff, but you also then get to communicate with the customer, provide that data and everything that we’re kind of talking about with the contracts. And so during my time at Decisive, I got to work with a very large OEM, Mack Volvo over the course of three years working, with all of their dealerships across North America, Mexico, the US, and Canada.
And so that was a huge focus on not only how do we provide efficiency inside of the shop, how do we cut administrative time because we don’t realize just how much of that time is actually spent on ROs that is a hundred percent cost to us as service providers, but also how do we then provide value to the fleets, to the customers?
How do we provide these types of service contracts, the maintenance, the telematics, and make that valuable for both parties? And so after that, I was actually able to join the FleetPride team. And so I’ve been with FleetPride now for a little over two years working heavily on their service operations.
We’ve doubled the service business in that time, and now have 85 locations across the U.S. And I’m pretty much doing the same thing where we are growing the efficiency of our shops, the value add to our customers and these types of service contracts where we can actually provide and drive that value directly to the bottom line of our fleet customers.
David Sickels: Very, very cool. So just out of my own curiosity, you said one of the reasons that you moved on from auto dealerships was that although they were very efficient, you didn’t like the kind of customer experience on the service side. Is there anything that you kind of pulled from that experience that you can point to now and say, “Hey, I’m not going to do it that way, I’m going to do it this way.” Or maybe the opposite, “Hey, they did this really well, this is what I’ve implemented here.”
Chris Micheal: Yeah. So there are a couple of great things that they’ve done and a couple of things that I would definitely stay away from. So let’s start on a good note. The technology that they have behind their systems is extremely efficient. It allows them to work with fewer people, provide more information and data available to both their employees and their customers, and it allows them to actually give their technicians and shops more data and information to be able to get that repair done in a timely manner.
So from the technology standpoint, I think it’s really valuable for us as a heavy-duty transportation industry to actually grasp onto that, to grab whatever we can and actually use it to our benefit. Because technology’s there to help us, and the more we try and resist it, the harder our job’s going to become. With that said, we also need to be able to focus on the employees that are actually driving our business.
That’s actually one of the downsides of automotive: They were so heavily focused on providing that customer experience that they forgot about their employee, and the employee’s actually the one driving that customer experience. And if you burn your employee, eventually it’s going to burn your customer. Automotive customers are slightly different. They look at a thousand dollars repair and they’re cringing. They think it’s absolutely horrible. You go look at heavy duty and we turn around and tell them it’s going to be a $5,000 repair.
Their answer is typically, “Well, can I have my truck back tomorrow?” Because for them, downtime ends up costing anywhere from 450 to 760 dollars a day. So if it’s going to be a $5,000 repair and three days, I’ve got to add that cost onto it because that’s what it’s actually costing my fleet customer. So for the automotive side, they didn’t really focus on the employee, they focus on the customer. And how do they cut that price to the customer?
And really what you have to do is drive that value home. You have to show the customer why it’s that expensive, and what value are you bringing them, bringing them. And then of course, for the heavy-duty side, we focus heavily on our employees now. And by driving that employee retention, by driving that employee satisfaction, they’re happy to come to work.
The customers see that they’re happy to come to work, they give that satisfaction to their customers, and they make sure their customers are loved and taken care of. So now I worry about my corporate office making sure the contract is good. My employees worry about the customer walking in the door, and we have a symbiotic relationship between the corporate and service center to be able to make sure that the customer is taken care of on every front.
David Sickels: Got it. Got it. Got it. So getting back into some of the nitty-gritty details about service contracts here, where would you rank, I would say the standardizing of the fleet services data across your locations? How important is that to fleets on a regular basis?
Chris Micheal: It is probably one of the most valuable things you could do, even more so than giving them a financial discount at your location.
David Sickels: Wow.
Chris Micheal: So I know it’s a strong statement. I’ll back it up fully. Think about it this way. You’re now a consumer. You are walking into a store. You turn around and buy anything off the shelf, a need that you have. You then go into the next store, and you buy the exact same item. You look at your receipts. Can you figure out what you bought, which store you bought it from?
Can you figure out what price you paid? Can you figure out if is it the exact same item? A lot of times you’re buying the same item, but when you look at the receipt, you can’t tell it’s the same item. It’s a different SKU number, it’s a different description on the receipt. The pricing may or may not be the same depending on which store. That varies from store to store, and that’s understandable. But you can always tell who it is because that’s right up at the top of the receipt printed.
So there are certain clarity points that we have that you can tell regardless of what you look at. Now go into service. We have a lot more complicated receipts for our customers. We have to be able to distinguish which unit are we looking at, when did it come in, and what was mileage. These are legal requirements, by the way. We can’t just turn around and forego all this stuff.
We then have to state what is the repair description, what was the complaint that we were originally looking at?, There are so many facets to this. And so when you have it, let’s just say you have three locations and you have it where your receipts, your invoices are different across all three, your customers are going to come into one.
They may like the way it looks, and they may understand the data. They go into the next location, and suddenly they can’t read it so well. Well, I hate to say it, but you’ve now just started stealing business away from your own shop because your customer’s more satisfied with the result they get at one than the other.
David Sickels: Interesting. Yep. Yep.
Chris Micheal: Now let’s say… that, that’s internal. Now let’s say they’re going to a competitor. They really like the way their invoices are. They’re getting lots of valuable data they can plug directly into their system.
Well, even if they’re $5 more an hour, they can now justify that $5 an hour more because the value end, added on the back end is so dramatically increased. So with that said, FleetPride has 85 locations across the US, you can imagine what type of burden it would be if we didn’t have standardized information across all of our locations.
David Sickels: Sure.
Chris Micheal: So with that said, we’ve had to go back and look at how do we make sure that it is clear on every single invoice, which location they’re at. Is it in the same place? How do they easily discern which unit they’re actually looking at? How do we classify our repairs? Are we using that consistently across all of our locations?
I want it to be used that way when someone walks into our shop, it doesn’t matter if they’re down in Florida, up in New York, or out in Idaho, they’re looking at this exact same repair everywhere they go. Now suddenly the fleet gets that information back from three different locations. It reads the exact same, it looks the exact same, and they can plug in the exact same numbers. We pull a report for them, and that report reads the exact same all the way down.
That value added is immensely powerful. And that’s actually how you can justify the pricing on some of your contracts of, “Hey, I may not be the cheapest, but I’m actually going to be a partner with you. I’m going to grow with you. I’m going to provide you the data you need to be able to make decisions on the fly, and I’m going to make sure that you never have to question what it is we’re doing for you.”
David Sickels: Yeah. I’ve never really thought about how important the standardization of that invoice is. I feel like if I go to the grocery store and I come home and I can’t read that receipt, I get upset and I can’t imagine how much more upset I would be if I’m dealing with thousands of dollars perhaps in repairs for my truck.
So yeah, I totally see where you’re coming from with that. Now that being said, trucks are getting a lot older. We’re looking at somewhere around maybe an average of around 13 years old maybe for your average heavy-duty truck out there. So with that, how does that approach how you are approaching the service contract on your side?
Chris Micheal: So this is a point of understanding that everyone needs to take a look at, and most people actually don’t. So you have different classifications for trucks when they’re out on the road. You have the beginning of life, that first three to the five-year mark, they’re brand new, they still have their warranty or extended warranty.
They’re primarily being seen by the dealership, and most of your aftermarket service centers are not going to be seeing these trucks roll through the door. When truck health or truck life is young and healthy, this is not really a service-heavy portion of their life. And so when it comes to a service contract, you realize you’re only going to be dealing with preventative maintenance items.
The repairs are typically going to be covered, so you’re not going to see a lot of them. And so really all you’re doing is just making sure those oil changes are taken care of on a timely basis. You’re going to walk into that with a different negotiation standpoint than with your midlife truck. Now this is anywhere from five to about eight to 10 years.
And this midlife of the truck, that’s where a lot of your bread and butter are going to be. You’re typically going to see an engine overhaul or a rebuild during this lifespan. You’re going to have a lot of repairs, none, almost none of it’s covered by warranty. And so this is where you can really start figuring out and structuring your service contracts.
So no longer is it just about, “Okay, let me make sure I see you on timely intervals for a PM service.” Now it’s, “Okay. I want to make sure that I’m doing your annual inspections on a regular basis, or if you have to do 90-day BIT inspections, I’m doing that.
I want to make sure that I’m capturing everything possible during those inspections and planning it out with you.” I want to be documenting what failures I’m seeing on what type of trucks and what mileage, because hey, if I suddenly start seeing five trucks all around 450,000 miles with alternators that are going out, there’s a good chance that the rest of your fleet’s going to have that exact same issue very, very soon.
And if I can actually plan ahead of time and work with you and say, “Okay, look, we’re seeing this pattern evolve. These are the types of trucks that are involved, so let’s get ahead of this. Let’s order 15, 20 of them in. You bring me 10 trucks at a time as soon as you can spread the downtime, I’ll start replacing these for you.” Now suddenly you can plan your downtime instead of having an unexpected breakdown.
You can make sure the parts are on hand before the repair. And so once again, you’re going back into that value add. What are you providing to that fleet customer when you do this contract? And so thinking about the service contracts and how you actually want to plan this out, you want to make sure that you’re looking at it not only from the standpoint of, okay, I’m getting their PM work and I’m getting these inspections. I’m going to do a few upsells.
You have to be able to track and plan, okay, what are these recognizable downtime events that we can actually start planning ahead for? So now you have your planned downtime, you have your preventative maintenance inspection downtime where you may have a couple of small or minor repairs, and then of course you have your breakdown events. And those breakdown events are what you’re trying to minimize.
The more you can minimize that, the more value adds you have to your contract. And then, of course, as you mentioned, the average age is around 13 years. As you started getting into that later-year lifespan of the truck, you are doing everything you can to try and keep it up on the road. That also means that you’re going to have a lot more unexpected failures.
And so when it comes to service contracts, it is really heavily driven around making sure you’re inspecting that unit from head to toe every single time it comes in, and that you have that on a regular consistent basis.
Because the moment you miss that inspection and the moment you miss that preventive maintenance item, that downtime is going to quadruple very easily from one to two days out to a week, especially with how the parts supplies have been dwindling, and we’ve been having issues while those stocking levels are starting to come back up. For several years now, we’ve had issues where when a truck goes down, it’s down.
David Sickels: Yeah. Yeah. Sure. Sure. It’s good to hear that the supply chain is starting to level out for you a little bit there in a lot of cases.
Chris Micheal: Oh, absolutely.
David Sickels: How do you feel about customization? With a lot of contracts just in general, a lot of contracts tend to be kind of standardized. There’s not a lot of wiggle room. Maintenance contracts, are they a little bit different, or do they tend to be a little more standardized?
Chris Micheal: So I would say you always have your baseline template. This is where you feel comfortable starting that conversation with that customer. And you might have a couple of different ones depending on the size of the customer. From there, everything gets customized. You have to realize every customer is different, every customer has different needs.
And so the question you have to ask yourself is, what is the need of that customer? I can guarantee you nine times out of 10, the service center is not going to know what that need is. But you want to know who does? The fleet. The easiest thing you can do is turn around and have that conversation early and ask them, “Hey, what need do you have?
In us trying to work this out, what is the biggest issue that you are facing today that I can try and solve for you?” One, that’s going to be your value proposition when you suggest this contract. And two, now you know how to customize that contract for that customer. Perhaps they’re absolutely fine on data. They’ve been getting tons of data.
They know how to process their invoices. And so really, it’s just a matter of making sure you hit those key points, but you don’t have to focus on that. Instead, their issue is, “Well, hey, my average downtime right now is five to seven days for a PM.” “Great. Let me see what I can do to try and get you prioritized so we can get that down to one to two days.”
Maybe they have an issue where, “Hey, I’ve got a hundred thousand trucks needing clutches right now.” “Great. Let’s see what we can do to start scheduling this out where we can knock out 10 a week for you or however many you can possibly do to get that caught up.” Recently, I had a customer come back and we hadn’t seen their business in a little bit.
We went out to talk to them just to find out, “Hey, what’s going on? What can we do for you?” And we found out they had a backlog of work that’s sitting about six months right now that other shops couldn’t do. They didn’t even think to ask us if we could do it for them. So we just talked to them, and now we’ve gotten that backlog from six months down to two.
David Sickels: Wow.
Chris Micheal: I can’t tell you how much value add that is for the customer and now how much more business we’re going to gain. So the customization of these contracts is going to be critical and key because every customer has a different need. You want to make sure you meet that need. Sometimes it is in the pricing. You have to be careful about how low you go. You want to make sure your margins and GP are good.
Sometimes it’s a matter of them being more concerned about time, and so you want to make sure you can address that constraint inside of your shops. But of course, you don’t want to negate your other customers. So be very careful whenever you’re talking about prioritizing customers. And then of course, some of them are strictly around the data and you can actually charge more money because you’re going to be doing more administrative work, and you have to be able to recoup that somehow.
David Sickels: Sure. Sure. And that’s a big deal. I mean, administrative work, it sounds like it’s not that big of a deal, but when you’re talking about hours in the day, a lot of these fleets they’re working with crews that aren’t very large. And if you’re able to take some of that from them, that’s a huge value add in my eyes.
Chris Micheal: Yeah. A strange little thing is back when I worked with the WheelTime network, I did a case study just to find out how much administrative time went into these Ros. And I found for a typical six-hour RO, six hours of labor billed to the customer, we were putting anywhere from six to eight hours of administrator work into that RO.
David Sickels: Wow.
Chris Micheal: Between opening up the RO, writing it up, getting the information, getting the quote, finding the parts, buying them, shipping them, whatever else, prepping the invoice, communicating with the customer, all the time spent inside that office added up very, very quickly. So you got to realize, that’s a hundred percent cost.
That’s not made up for anywhere except in that labor dollar. So now you’re having to pay for two employees at six to eight hours a day. So 16 hours into an RO that you’re only billing eight hours for. So administrative work really can add up, and that’s where it’s really going to be critical for people to find an efficient means to be able to deal with these, to drive that administrative time down and really recuperate that cost.
David Sickels: Wow. I think that’s the first time that I’ve heard somebody actually spell it out that way. That’s pretty incredible. Well, Chris, thank you so much for joining us today. I learned a lot today. This is really, really interesting stuff. Just thank you again for your expertise here.
Chris Micheal: I appreciate you having me on the show, and I’ll be more than happy to come on anytime.