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Making the outsourcing decision

When it comes to optimizing maintenance dollars, outsourcing maintenance may provide solutions for some fleets

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Editor-At-Large

When it comes to outsourcing maintenance, one approach does not fit all. Every fleet makes outsourcing determinations based on its own unique practices and needs. But, add in the unknowns of a poor economy and fleets may want to rethink their decisions. 

Economic factors
Vince DiSchino, director of business development for Regional International & Idealease, says, “I feel the economy should have little to do with maintenance procedures except how it effects fleet mileage and utilization. To further answer this, you must start with your maintenance philosophy. If your maintenance approach is preventive and ‘fleet ready’ you will continue to spend dollars effectively as the fleet needs it. This approach takes planning, asset managing, and maintenance support in place, whether internally or outsourced. To me this is a question of what is most cost effective and meets my needs. If your needs are ever changing it will be as challenging to make the necessary internal changes as it will be to find outsourcing providers that can keep pace with your changes and provide some sort of budget compliance. If your challenges are the difficulties of managing your internal operations, i.e. staffing, technology changes, etc. then outsourcing may be the direction. This is still more operational than fiscal.”

DiSchino goes on to say, “If your maintenance approach is reactionary and breakdown-initiated, your philosophy is to not spend any money until (not unless) you have to. To me this is a runaway program and very costly in the long run. Monday morning quarterbacking will blame the outsourcing provider, the economy or anyone else for the unexpected results. I have been involved in outsourcing, primarily as a provider. Those that understand what fleet maintenance is comprised of, know their true costs, have an asset management program in place that will keep their fleet balanced, and have a way to monitor and manage results can intelligently approach and consider outsourcing. Those that lack these factors usually are looking for someone to pass the responsibility to and blame when it doesn’t work.”

Some fleets are committed to doing their own work regardless of economic conditions. David Foster, vice president of field maintenance at Southeastern Freight Lines, says, “If anything we have tried to up the quantity of transitions completed by our own shops instead of outsourcing. I see no benefits in outsourcing if you can get the work completed yourself. It is required for part of our business where we do not have shops, or cannot get the equipment moved to one of our shop facilities.  We do a more efficient, quality repair in-house. That is not to say we do not have some quality vendors in some locations.”

Darry Stuart, president and CEO of DWS Fleet Management Service, says, “In my opinion and practice, you should always provide maintenance as if Chapter 11 was on the threshold. That does not mean that you do not spend money; it means you always spend your money wisely. Whether you outsource or provide in-house repairs and maintenance. Take the checkbook out of the hands of the technician and provide mechanical repair and business guidance. 

“I do not think that either doing maintenance in-house or outsourcing it has drawbacks. Both have benefits, and sometimes you have no choice, based of how many trucks and locations are in consideration. As an example: a small shop with two different technicians on first and second shifts is cost prohibitive for a fleet of two trucks. When you factor in salary and benefits –– it would be cheaper to outsource one of the shifts. It’s true that technicians are onsite to support the operation, but if an outsourcing agreement helps to cut cost, it’s worth it.”

Stuart goes on to remind fleets, “We are not in the maintenance business –– we are really in the asset management business, of which our process is fixing trucks. Outsourcing clearly costs more money, unless your maintenance program leaves much to be desired. If you factor in management and experience to manage that, outsourcing maybe the answer. That’s where full service leasing comes into play.” 
At the end of the day, you have to plug in all the costs, real costs and the burden costs, like building and utilities, downtime, efficiency, and so on. However, says Stuart, “Out-sourcing just may be easier, sort of like valet parking on a rainy day –– you know there’s an upfront cost, but the benefits of staying dry in a downpour may be worth the extra money. At the end of the day, it’s all about cost. Based on size, doing it yourself may put you in position to be the low-cost provider.”

Benefits, drawbacks
There are many things to consider when choosing to hire an outsource maintenance provider. When it comes to benefits, DiSchino believes that a fleet’s service provider has the responsibility for proper staffing and skill fulfillment as follows:

• It should be operating under some industry standards for time and labor charges.

• It is responsible for compliance with OSHA, EPA, DOT, etc.


• The work should be guaranteed. 

• The company should provide you the needed reports that you have requested in your negotiations.

• The outsourcer prepays all your maintenance expenses. 

He goes on, “Spend your time on planning and reviewing results. Note that the drawbacks of outsourcing may appear to be more costly and difficult to sell to upper management. Also, there may be difficulty keeping a provider in the loop when internal changes occur. Then there is the possibility that a supplier may cancel, leaving you with few options, or the supplier may not give you the priority you feel you deserve.”

Outsourcing with an OEM
Darcol International operates an all-Kenworth fleet of 35 trucks, including Kenworth T800s, W900s, and T660s. Paul Geiger, president and founder, says, “Our customers rely on our promise to deliver their shipments safely and on time. Having a good preventive maintenance program is absolutely critical to ensuring that our power units are in top shape and we don’t have delays due to equipment failure. That’s why we rely on the Kenworth PremierCare Preventive Maintenance Program to stay on top of truck maintenance.  

The maintenance program provides fleets of any size a customized preventive maintenance solution for trucks, regardless of manufacturer. Since maintenance is as close as the nearest participating Kenworth dealer, fleets like Darcol don’t have to run empty miles to get trucks back to the shop for regular PMs or rely on unfamiliar maintenance shops to complete the work.  

About three years ago, when Darcol moved its warehouse operations to a new 3 1/2-acre cross dock facility in Winnipeg, Geiger enrolled his company in the maintenance program through Custom Truck Sales, the local Kenworth dealer. While he expected results from the program, Geiger said he was surprised at just how much money it saved his company. Darcol reduced fleet maintenance costs by $55,000 in the company’s first year with the Kenworth program. Darcol realized the savings by outsourcing its maintenance needs. Before Kenworth PremierCare, the company operated a maintenance shop, supplying it with parts and its own technician. 

Plus, when Darcol’s trucks are out on the road, drivers can call 800-KW-ASSIST to reach the PremierCare Customer Center, which operates seven days a week, 24 hours a day. The program representative can make the necessary arrangements, authorize service and handle all of the financial matters. Darcol dispatchers no longer have to make calls to arrange service, and drivers do not have to worry about billing issues. 

The dispatchers also use the Kenworth PremierCare Maintenance Manager’s online service tracker to determine when repairs will be completed. That function is important to Darcol, which offers an online freight tracking and customer order feature on its website to provide customers the option to monitor freight while in transit or check the availability of Darcol trucks. Using the information from the maintenance manager, dispatchers can update the company’s freight tracking and order system on the Darcol website.  


Outsourcing tire maintenance

As the owners of a mid-size fleet, Doc Hyder, his brother and sister are “hands-on” when it comes to fleet operations. Located in Dade City, Fla., Rowland Transportation operates a fleet of 63 tractors and 80 trailers –– all refrigerated. Its Kenworth T600s and T660s deliver perishable food-stuffs throughout the lower 48, but concentrates more of its business in the southeast. “With time-sensitive food products, the onus is on us to deliver on-time, and that promise to customers is made easier thanks to our relationship with Goodyear and the fleetHQ program,” says Hyder. “If we have a problem with a tire, Goodyear has a network of dealers who can get us back up and running fast. And we don’t have to haggle over pricing –– what we pay for a tire on the road is what we pay for the tire at home.”

The corner on curbing costs and downtime was turned four years ago when Rowland developed a relationship with McGee Tire to provide a cradle-to-grave tire program. The company even began using retreads –– utilizing Goodyear’s UniCircle process. McGee also put the company’s 4-Tires-Now emergency roadside service into place for Rowland.  The program evolved into fleetHQ in 2008.

“When Rowland and other customers signed up for fleetHQ, we develop a tire list so that when fleetHQ is called, dispatchers know immediately what type of tires are needed for replacement,” says Duane Koscielski of McGee Tire. “And, our customers can track online the status of repairs and the history of using our emergency roadside program. Plus they don’t have to pay an incidence fee for using the service.  They just pay the service cost, and what they pay on the road for the tire is what they pay if they bought directly from us. And we provide the bill –– so our customers get just one invoice.”

“It doesn’t get much better than that,” says Hyder. “fleetHQ helps us tremendously. It allows us to control our costs and control what tires are going on our vehicles. It’s also allowing us to get back up and running faster than ever, which not only makes our drivers happy, but our customers as well.”

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