Tonnage is down, capacity is high and competition among carriers is as fierce as ever. Fleets constantly are looking at every aspect of the market and their businesses to cut costs and stay profitable. One of the most often asked questions is to what degree should maintenance and repairs be outsourced, if at all.
Keeping maintenance in-house means additional overhead such as the facility itself, parts inventory, tools and diagnostic equipment and additional personnel, including service technicians, if they can be found. But if these expenses can help ensure maximum vehicle uptime, many fleets are glad to make the investment.
If an outside service provider can deliver high-quality work quickly, though, they can make a case to win the fleet’s business. And as new truck technologies – such as diesel particulate filters – require new, costly equipment to maintain and well-trained technicians to operate, it’s becoming easier to make the case for outsourcing convincing.
Decisions, Decisions
What a fleet decides to outsource and what it chooses to keep in house depends on several factors. For trucks and components still within warranty, fleets typically turn to dealers for service.
Once a truck or component moves beyond warranty, though, the percentage of service outsourced to independents versus a dealership levels out. According to a 2007 outsourcing survey conducted by our sister publication CCJ, surveyed fleets responded that when brake components still are under warranty, they are sent to a dealer 29.7 percent of the time. Once those same brake components age beyond warranty, the number drops to 8.4 percent while a distributor or garage will pick up 10.4 percent of the work. While that still leaves in-house maintenance with the lion’s share of the out-of-warranty brake work at 76.8 percent, independent shops capture a foothold that could lead to more business, particularly if the job was done well and on-time.
“Several factors influence our decision to do work in house or to outsource it,” says Brent Larsen, CEO, Auto Transport Group, a niche carrier providing truckload service to 48 states. “The first thing we look at is how well qualified our personnel are to handle the problem. Secondly, we look at timing. How quickly can we have that piece of equipment returned to service if we work on it in house as opposed to sending it to another facility?
“A third determining factor is cost,” adds Larsen. “Often, we spend more money when we outsource, so the benefits of speed and qualification must justify the additional cost.”
For some fleets, size is the limiting issue for how much work they can handle internally. “Because of the size of our operation – we have 192 service center locations and 30 shop locations – we cannot get all of our equipment to our shops,” says Thomas Newby, director of field maintenance, Old Dominion Freight Lines. “For instance, we don’t do any major engine repairs or major component repairs internally. All of those repairs will go to a dealership or the engine facility.
“But for normal PM work and minor repairs, we frequently use independent facilities.” Old Dominion has a team of eight regional managers around the country who look at shop locations and interview service providers. The team often uses references from other fleets or providers to find quality facilities with which to partner. Networking helps a fleet learn quickly which facilities it can trust and which ones have provided sub par work.
Word of mouth travels quickly – both praise and criticism – so it’s essential a professional image be exhibited from the front office through to the shop floor.
“Our regional managers interview shop managers and take a look at their shops to gauge how neat and how well-equipped it is for today’s technology,” says Newby. “We consider the appearance in general.”
Relationships are valued highly in the aftermarket and an independent garage must use this culture to its full advantage. When fleets interview managers and evaluate facilities, they scrutinize them closely because they often are looking to strike a long-term relationship with the shop. Fleets do not like to bounce from provider to provider.
“When choosing a shop to outsource repairs, I try to review the facility and the people who operate it,” says Larsen. “I like to know what they know and to know what they’re capable of. I sometimes go by gut feel.”
Timely Matters
A top concern for fleets when it comes to outsourcing is turnaround time. According to the CCJ survey, 42.5 percent of fleets cited turnaround time as the most important factor (quality of work aside) when selecting an external service provider. The next closest factor was cost, which came in at 24.8 percent – a much smaller influence. Providing good turnaround time without comeback repairs goes a long way toward staying in a fleet’s good graces.
As long as the service provider keeps quality high and turnaround brief, many fleets will remain loyal. “We like to form a long-term relationship with a service provider,” says Newby. “If we have a provider in a particular region that we like, we won’t shop him around. We don’t bicker over prices. We like good prices, but we also like good service. We want to be repaired on time and we kind of like to be the group on top of the heap.”
Showing a fleet that has potential to become a large customer a little extra attention and giving it some priority is a smart move. Many fleets turn away from having work done at a dealership because of longer turnaround times. It doesn’t make a good impression on a fleet if it sends a truck out for service only to be told that it will be a few days before the truck even gets into a bay. If you can do better, prove it and get a fleet’s trucks repaired quickly and accurately.
The Technological Edge
While carriers may credit independent service providers as having a more personal touch, they often view OEM dealers as superior when it comes to technology, another important factor they consider when evaluating outsourcing.
“One factor that might increase outsourcing is new technology,” says Larsen. “Many in-house facilities are not capable of dealing with services like maintaining DPFs, for instance. It’s so expensive to bring your personnel up to speed on all the new emissions controls because of the lack of funding available from the manufacturers to train technicians from independent shops.”
“The biggest challenge for independents is to grow their technical abilities in the shops,” says Newby. “It’s a huge challenge for them because they don’t have the support from the manufacturers that the major fleets do. At this point, all of the electronic diagnostic work we need done has to go to an OE. There are very few non-OE shops that provide good diagnostics.”
While independents might be fighting an uphill battle to gain advanced technical training, it doesn’t mean that it’s not a fight worth fighting. Fleets want to avoid hassles; their main objective is to keep their trucks on the road. If your shop can provide a professional, efficient environment for a fleet’s outsourced business, you will gain market share. Trucking is a high-tech business and your own shop should reflect this change, so invest as much money as you can into training and retaining your technicians.
Don’t forget what it is that really gives independent facilities an edge; relationships are key in this industry. Distinguish yourself by staying true to your word. Let fleets know that you can provide quick, accurate service work in a professional environment and you’ll keep your service bays full.
Find a Niche and Fill It
Is your shop in the middle of the lumber industry? Are you in a boomtown surrounded by construction and landscaping? Sometimes finding a market segment and catering to it can greatly bolster your business.
“Independent repair facilities can increase their success by specializing,” says Brent Larsen, CEO, Auto Transport Group. “For example, we’re an auto carrier, so our equipment is different from other trucks on the road. I think that shops that specialize in areas such as welding, hydraulics and even framework and body shop repairs in addition to traditional maintenance probably will see an increase in work come their way because we can have more work done in one place rather than taking a truck to multiple locations to complete repairs.”
Larsen’s company, which operates one service center and mobile service trucks in two cities, provides specialized service work relating to his industry. As a result, his company performs service work for other fleets with increasing regularity.
“Fifty percent of the work we do in our service center is for other fleets,” says Larsen. Keep your eyes and ears open to the needs of other dominate industries in your region. Specialization could translate into an influx of business.
