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Fleet Management vs Transport Management

The life-blood of South Africa's economy, the road transport industry, is slowly haemorrhaging under the weakness of old age. In 1996, all trucks over 3,5 ton gross vehicle mass (GVM) had reached an average age of 10,5 years. By 1997, this had become 11,1 years and by January 1999 this stood at 11,9 years. The disastrous decline in sales of new trucks in 1999 means that we will start the new millennium with a geriatric national fleet. Dave Scott, technical correspondent for FleetWatch, reckons one of the reasons for this decline is the lack of understanding of fleet management as opposed to transport management. With a plethora of fleet management systems being offered to the market, it is very necessary to understand the difference between the two.

Top management tends to view road transport as only operational and in not understanding the strategic needs of the fleet, they tend to gloss over strategic issues. The very nature of transport is operational, with a built-in chaos factor that demands up-to-date-minute attention. Consequently the transport manager is dominated by the daily crisis of operational thinking and misses the opportunity to affect strategic decisions.

In a nutshell, road transport only survived because it is operationally competent while suffering from strategic incompetence. Those transport operations that are both operationally and strategically incompetent have gone, or are being wiped out every day.

What is fleet management?

Fleet management has to do with the strategic decisions that impact upon the company fleet asset base. Strategic thinking is the process of planning what the fleet will consist of - how and where it will operate - to meet a future business environment in chosen market segments and geographic markets.

Fleet management is the stuff of board level agendas. It would typically be involved in some of the following questions:

• Is road transport a core activity of the business?
• Does our organisation have a policy of contracting our services? If so, should we consider contracting out our transport operation?
• Is the fleet strategy expressed in terms of policy documents that are subject to regular review?
• Are we taking advantage of the changes in Road Traffic legislation, while incorporating this into the latest wave of vehicle technology to enhance productivity?
• Is our transport operation complimentary to our corporate image?
• Can our fleet stand upon to scrutiny in terms of environmental and road safety issues?
• Are we making the right long term choices concerning new vehicles and equipment flooding the South African market?
• Would we use our transport operations as an opportunity to empower employees in an owner-driver scheme?
  Many advertising claims offering a total fleet management solution are, in reality, just transport operating systems that cannot possibly answer the strategic question of fleet management. Much of road transport bumbles along that is the yardstick for planned maintenance. It is the strategic intent of the fleet that drives the operating systems - not the other way around.

What is transport management

Transport management is highly operational as the structural and systems driven side of road transport. Transport management is concerned with real-time information, incident control and daily disciplines. Transport management summarises data for fleet management to interpret in terms of strategic fleet policies. Transport management handles the daily crises of trucking via technical staff, drivers, crews and accountants. Typically questions that concern transport management are:

• Do our accounting and operating systems close all loopholes that allow for fraud wastage and corruption?
• Does the transport operation run within the parameters of a well-defined budget?
• Are our systems and software providing us with useful information in real-time frames?
• Are we consistently monitoring the quality of our transport people through effective new employee screening procedures, health and eye checks?
• Does our staff have all special tools and equipment and are they trained in the use of this equipment to be fully productive?
• Are we monitoring fuel consumption per vehicle against standards set for the specific operational conditions?
• Are our vehicle start-up procedures and defect reports effective in extending preventative maintenance?
• Are we measuring and controlling the incidents of road transport that give rise to operational costs?

Unpopular strategic decisions

Transport managers are often forced to implement strategic decisions that impact on the efficiency and safety of a fleet. A good example I know of is that of a fleet of heavy trucks involved in solid waste management where vehicle replacement policies had established a six-year life for equipment subjected to the harshness of waste disposal. It was decided, for strategic financial reasons, to extend the life of vehicles due for replacement in that year to a seven-year replacement cycle.

• Health services actually declined due to excessive maintenance downtime.
• The attention of maintenance crews became very stretched as these old solid waste trucks absorbed too much time in the battle of keeping them on the road.
• The extra maintenance costs were not considered in the decision to extend vehicle life. On the contrary, maintenance budgets were set at previous levels.

The strategic option of delaying vehicle replacements and cutting back on vehicle maintenance has often been used in the past to pad the image of a healthy trading account, just prior to the sale of a company. Shortly thereafter the wheels fall off, both literally and financially. Transport managers - who are not well represented at the board of directors - can become the victims of poor strategic thinking by a group of directors who think they understand fleet management.

Strategic thinking, as the core driver of effective fleet management, relies on informed decisions being taken from validated research. The transport manager has little time for research - in fact it is usually the historic data from the transport manager's files that is used in making decisions that impact on the future of the fleet.

Historic data is only a portion of the equation in the task of fleet management. It is a benchmark, but cannot substitute for market knowledge and the intuitive insight that a fleet manager should possess. "There is no such thing as an informed decision without information" - Tom Peters

Fleet management is connected to the Internet - it explores information on a global scale. Fleet managers are always looking for local and international benchmarks and how to balance advancing technology to balance advancing technology against local conditions. This is even more so as we leave the local content laws of the past and move into a great variety of trucks with many different design philosophies.

Fleet management is prepared to think of trucks as essential component of the logistical chain - it adapts trucking to the demands of the interfaces that trucks must match for efficient logistics. This type of thinking and information is much broader than the focused disciplines of transport operations.

Fleet management is driven by Information Technology (IT) - software is becoming the driving force of any business and even more so in transport. The transport manager leans towards diesel and how it is used, while the fleet manager is primarily concerned with the meaning of the information that flows from the many incidents that make up transport operations.

An item much overlooked is how transport IT will seamlessly fit in with the IT systems of the business. Most IT systems grow like the tax act in organisations, lacking in standardisation, capacity and real usefulness to the users - the transport division is usually the last section to benefit from powerful IT software.

Can transport and fleet management wear the same hat?

This question is about the same as asking whether sales and marketing can wear the same hat. The answer in no. In large organisation, placing sales and marketing under one job description is deleterious to corporate health. Similarly, in large fleets, fleet management should be recognised in a separate role to that of transport management. Small fleets cannot afford the luxury of all chiefs so the role of the transport manager is indispensable to any fleet, as operational incompetence is the kiss of death for any business.

Fleets that cannot afford structures to employ fleet managers must at least recognise the absence of the strategic element in their businesses when it comes to fleet planning. It is just a fact of life that excellent transport managers do not necessarily make good strategic thinkers - the dominant mindset of operating road transport simply works against the thought processes of road transport strategy.

A board of directors must not also kid themselves that they really understand road transport. This is why the transport function is being contracted out of the business in an ever-increasing trend.

Whatever name is given to the functions of fleet and transport management, it is not tittles that count but what can be achieved through these function in both the short and long term. Call it what you like but the goal must be to become strategically and operationally competent - that is sound business practice in any language!

Reference: Strategy Pure & Simply - Michel Robert; Published by McGraw-Hill