The annual LCT Operator of the Year Awards recognize the latest and most current in business achievement.
ATLANTIC CITY, N.J. — A fleet operation in the 2020s has unprecedented potential to maximize profits, thanks to the layers of tech-driven data available to company owners and managers.
The challenge is how to best choose, funnel, and analyze data so it can be accurately applied to daily decisions on operations. Mike McDonal, director of regulatory compliance and industry relations for Saucon Technologies, presented a ready checklist of data points to attendees at LCT East, held Nov. 3-5, 2019. McDonal combines his data expertise with previous experience as a motorcoach operator who ran a 140-vehicle fleet day-to-day.
When analyzing data, operators need to look at their daily challenges in the areas of assets, employees, customers, financials, insurance, maintenance, and social media, McDonal said.
This data comes from numerous sources, including vehicles, fleet management systems, reservation systems, payroll records, social media, and external reports. Much of this comes in second-by-second, especially from GPS-related sources.
“Most of the engines today are surrounded by a group of computers that make them run efficiently,” McDonal said. “We can also look at how we are using those assets. Are we using a certain class of assets more than others? Do we have a slower season or a busy season? You can go back and see if you have the right size fleet for your operation.”
Drawing on how data applies to operations, McDonal geared the session to what he’s learned from working with clients at Saucon Technologies and his years running a major motorcoach operation.
Financials/P&Ls: The No. 1 rule: Don’t judge your company finances by your checkbook. “Many companies are managing finances by their checkbooks,” McDonal said. “They’re not being forward-thinking and looking ahead. They don't have a five-year plan, a one-year plan, or even a “what are we doing next week plan?’”
To properly gauge financial conditions, an operator must look at assets, employee payroll, customers, debt-to-equity ratio, and sales, as well as anticipated new customers and/or segments. Driver payroll, for example, should never be above 20% of gross revenue.
All this information should comprise accurate quarterly and annual projections and hold regular financial reviews with the CFO and owners. Know when expenses and sales are up and down, he advised. “You don't need to be fully transparent with your management team, but at least give them a clue as to what you have going on.”
Cost per mile: This ranks as a key metric for a fleet operation. “When it came time to buy a new vehicle, we didn’t always sell the oldest vehicle in the fleet because some of them had a lower cost per mile to operate than some of the newer vehicles,” McDonal said. “So we would take and invest $10,000 to $20,000 to refurbish a bus interior and some on the engine to refresh the bus.”
Vehicle purchasing: Among the many questions that accurate data on financials taxes can answer: “Do we buy a new bus under the company? Do we buy one under the holding company? Do we trade or sell any assets when we're buying new? Do we need to keep what we have? Do we need to get rid of some? Which buses will we sell or trade? Minibuses or motorcoaches?”
Along with revenue per bus, operators should measure and track downtime, including how many days a bus is in the shop or sitting on the lot. “Where is my business going? What do I need to know about my business to keep it solvent and growing? You can't run your financials through your checkbook. Know where you've been and where you're going. Make sure you're on a track to get there.”
Insurance: For insurance, designate someone to manage claims and regularly look at loss run statements. Since just about every operation is seeing premium increases, it pays to track every detail. Question any reserve amounts your insurer is holding against your policy since that money may not be paid out for a long period of time or never.
Key to managing insurance and claims are police reports since they can document facts and ward off volatile accounts, McDonal said.
McDonal recommends shopping around among insurance policies every two to three years in trying to contain costs. “Make sure your coverages are right. As your company grows, are you growing the protection of your company at the same time?”
Maintenance technology: Familiarize yourself with engine codes for all vehicles and find a software program that tracks them so when an engine component fails, you have an electronic trail from diagnosis to replacement to billing. It also supplies data for predictive maintenance, so an operation can project and budget for costs.
For example, code data can determine if a driver depleted the battery because he watched a movie onboard while waiting. “You can be alerted that after five, 10, or 15 minutes this is happening. You reduce the chances of a potential breakdown or service failure,” he said.
Thermal events: More commonly known as bus fires, “thermal events” can be prevented through temperature measurements on key parts, such as wheel ends, the second most common source of onboard fires behind engine fires. “If we can tell you your tire or wheel end is getting hot, and there's vibration, we can tell you not only if you have the potential for a fire but also a wheel off.”
McDonal has handled two wheel-off events in his 35 years in ground transportation where the dual back wheels have flown off. “You can only imagine what about 800 pounds worth of projectile at 65, 70 miles an hour could do on a highway. It would not be pretty.”
Tire care: Technology now allows for accurate tire temperature and pressure monitoring that can warn about a flat well ahead of time. Tires are one of the highest running costs on coaches and also a leading source of accidents if blown out.
Driver Performance: Stats also come in handy for assessing employees, from hours worked, to speed, punctuality, idling time, stops, tailgating, and traffic violations. Not tracking such data and acting on it when necessary can run afoul of all types of regulatory codes and laws.
“I know of two company owners and two operations managers who are serving time in federal prison because they didn't pay attention to the data presented to them on a daily basis,” McDonal said. “So you really need to not only know the data but what is most important to your operation.”
In the worst-case scenario of a bus accident, the National Transportation Safety Board will look at speed and driver fatigue as part of its investigation, he said.
“You can see who is speeding and pushing their hours,” he said, based on lots of data. “If you do not do something about it, you can be held criminally responsible for the actions.” In the cases of operators who went to prison, plaintiffs’ attorneys discovered they did not act upon the data to prevent accidents. Their companies eventually went out of business because they became uninsurable, McDonal said.
Driver scheduling: Data on reservations and customer demand can help accurately schedule drivers and buses based on seasonal cycles, broken down by weeks and months throughout the calendar year. Operators can also advise drivers of what their workloads and paychecks may look like at different times of the year, allowing them to plan their personal finances. Such data also helps operators determine when and how many contracted drivers they may need at various times.
McDonal underscored the importance of thorough driver recruitment efforts, which should be ongoing, and then constant monitoring of driver performance.
“When you're hiring a chauffeur or a driver, you have a resume, which is probably 80% true, an application which is probably 80% true, a driving record that is hopefully 100% true, and a 20-minute conversation you hope is true and what they’re telling you is just not what you want to hear,” McDonal said. “You're going to base a decision on that to entrust them with a half a million-dollar vehicle and 55 souls onboard? That's risk. Make sure you manage it.”
Maintain the right combination of full- and part-time drivers. Some operations pay by the hour, by the mile, or a percentage of revenue. Make sure to keep drivers busy. Balance costs against annual revenue per bus or vehicle.
Idling control: Idling is another potential money and gas waster that strains engines over time. “Most companies don't monitor their idling. That's bad because about every hour you idle the vehicle, you're putting a gallon of fuel out of your tailpipe,” McDonal said. One company cut idling time from 50% to 25% and saved about $40,000 per year. “That doesn’t cost you a thing. You just have to change some driver behavior.”
Operators can score and reward drivers with performance bonuses based on how well they avoid idling, speeding, and hard stops. Some of the money saved from reduced fuel and wear and tear on fleet vehicles can fund the bonuses.
Driver compliance: GPS also tracks whether chauffeurs and drivers are doing extra service or jobs on the side for money, McDonal said. “Know every move a driver makes. If a driver was due back at 9 p.m., why didn’t he get back until 11 p.m.? You may be owed two hours of additional service. The driver got paid for it, you didn't, potentially.”
Customers: Leading sources of customer data relate to bookings, online surveys, accounts receivables, and customer spend over a period. “If any of you work with athletic or college teams, you know when your busy seasons will be with them. How do you expand that business? Or do you know that ahead of time? When was the last time you did a customer review?”
Customer data can help an operator determine which clients to visit and upsell. “Going on-site to visit your customers is invaluable,” given the data and feedback they could provide, McDonald said. “It's harder to say no to you face-to-face than it is over the phone or through an email. Know your business cycle with your customers and make time to go out and visit with them.”
Social media: Monitoring social media can help an operator spot potential driver recruits, especially employees who announce they are moving to another part of the country and are looking for good companies to work for.
“Social media is where you will get drivers and where you could lose them,” he said. “Get involved and see what your people are talking about with your company.” He suggested using data to determine performance and pay increases.
“Remember our chauffeurs and drivers are the only faces our customers ever get to see,” McDonal said. “Their willingness to do business with us will depend on that experience they have with that person.”
Likewise, check Yelp to see what passengers and customers are saying. “Do you have anybody managing your social media to do damage control when somebody says, ‘this went wrong. I'll never use this person again?’”
Also monitor requests from employees of coach operations, since free revenue could be there for the taking. “There was a company in Florida two days ago that said, ‘I need 90 buses for the Super Bowl.’ And in 29 minutes, they had enough replies that they fulfilled all 90 buses. So there was business you may or may not have known was there unless you monitor social media and use it as a sales tool.”
Real estate values: Own your company real estate, since it is a long-term investment underlying company financial performance and profits. “Everyone I know in the larger transportation business invested in real estate. That's where they're making a huge gain in. Are you investing in your employees? In your technology? Your facility? How many of you own onsite garages? How many of you rely on other people to do your maintenance?”
Finally, none of the reams of data will do an operation any good if owners and managers don’t know how to analyze it, or at least find someone who does.
“If you don't know what it means, you can't act on it. How often do you review it?” McCann asked the attendees. “How many of you have camera systems in your vehicles? That’s a huge database. Do you review it every day? Or only when something happens are you going to look and see what happened? Review your data often. If your chauffeurs and operators know you're reviewing the data, their behavior will remain constant. When they realize you're not looking anymore, guess what happens? Remember when we had the substitute teacher in school, we were all a bunch of fools, weren't we? Use your data to the fullest extent.”
Related Topics: 2019 LCT East, chauffeur behavior, driver behavior, employee management, finance, financial planning, fleet management, Fleet Vehicles, GPS, GPS Fleet Tracking, hiring, industry education, Information Technology, LCT Events Education Series, maintenance, management, motorcoach operators, motorcoaches, preventive maintenance, profits, reducing fleet idle time, vehicle performance, vehicle purchasing
The annual LCT Operator of the Year Awards recognize the latest and most current in business achievement.
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