Asset Simplification vs. Asset Standardization – Market Trends


 - Photo: GETTYIMAGES/ welcomia

Photo: GETTYIMAGES/ welcomia

If you want to get immediate pushback from field operations, telegraph the suggestion that you are considering standardization of equipment and assets that are used in the field. In the context of fleet management, standardization refers to the process of setting common standards and specs for fleet assets.

However, a better strategy would be to approach the opportunity as a simplification initiative aimed at minimizing unnecessary diversity of products.

“When talking about standardization, fleet managers are using the wrong term. I truly believe the correct term is simplification,” said Jonathan Kamanns, fleet program manager for CTE. “When you simplify an asset, it is more than semantics. It is identifying those functions that the assets have to perform and seeing how you can find commonality among the equipment and assets you are spec’ing. When you instead talk about simplification and its value to the business, you don’t get the same pushback from operators, it changes the discussion.” 

A specification simplification strategy identifies the most common vehicle specs that can meet the requirements of the widest range of fleet applications required by the company. The idea is to identify core specifications for specific fleet applications, while still allowing for minor variations based on the specific needs of each business unit, location, geographic terrain, and customer needs.

Simplifying a fleet by narrowing the number of chassis, bodies, equipment, and major components will reduce fleet diversity and eliminate or minimize many of the problems created by a diverse asset base. Sometimes it is best to launch these initiatives in stages. Consider simplification of one segment of the fleet at a time. Simplification should be determined by demonstrable lifecycle cost saving. 

Most complex fleets are comprised of diverse asset types based on the specialized functions they must perform. Also, many of these assets have long service lives and can become obsolescent with changing customer needs, evolving business strategies, and even ongoing OEM technological and safety evolutions. Even when standardization is based on same make and model of vehicle, over the years, you will end up with numerous variations as newer models are acquired. It is expensive to run a diverse fleet and simplification can produce significant cost savings and productivity improvements.

Conversely, if not done properly, standardization can increase costs. There is also a risk of simplifying your fleet around a “lemon.” Plus, there is a risk to “putting all your eggs in one basket,” which could result in excessive downtime if there is a model-wide service issue that results in a lengthy factory recall.

Reframing the Discussion

Depending on how you frame a simplification initiative will determine whether or not it will be a successful program. Simplification increases operational efficiency as end-users become accustomed to the controls, displays, and operation of less diverse units.

Eliminating asset variability allows greater flexibility in making employee assignments without a loss of productivity or the increased safety risk of end-users switching between dissimilar units. The most critical aspect is to achieve “buy-in” at the local level by the end-user operators. If you begin a standardization or simplification initiative at the management level, the initiative invariably results in end-user pushback. You need to pay attention and consider the downstream effect on end-users. This is especially true when you manage a decentralized fleet, where each field location orders vehicles on its own terms, using its own specs, and from its preferred providers.

A decentralized fleet structure is probably one of the biggest “minefields” that can derail spec simplification. Your discussions need to first start with the end-users who are operating the vehicles and equipment. It is critical to get feedback and buy-in from the actual end-users.

“Take the time to better understand the challenges of internal stakeholders,” said Kamanns. “Specifically seek out those stakeholders who aren’t easily convinced and often take the approach that their needs aren’t like everyone else’s needs. Use this feedback to design spec simplification that solves those challenges.”

Advantages to Spec Simplification

One end-result to simplifying specifications will be simplified factory ordering. When there are diverse specs, it creates the opportunity for mistakes to occur during the asset acquisition process. In addition, there is increased buying power if a fleet can bring more orders to one vehicle manufacturer and upfitter. It increases the company’s leverage to negotiate greater incentives. 

In addition, by focusing on core specifications, it will provide the flexibility to shift assets across the organization. Developing common specs expands a fleet’s opportunities to move resources around the business as needs might dictate and provides more flexibility in terms of asset redeployment.

If you operate an in-house maintenance facility, then there are  additional benefits of asset simplification. An ongoing problem for fleets operating in-house maintenance operations is finding qualified technicians. Spec simplification will help expand your talent pool because there will be less need for technician specializations. By focusing on core specifications, it will create maintenance efficiencies.

The complexity of vehicle systems is increasing with the proliferation of electronic sensors and controls, emissions technology, and advanced driver-assistance safety (ADAS) components. This steep learning curve for new technicians can be reduced by narrowing the diversity of systems that need to be maintained.

The key to reducing asset variability is to involve user groups early on and to gain their buy-in by framing the asset simplification discussion as ways to enhance user productivity and safety, and creating cost efficiencies that contribute to P&L objectives.

Let me know what you think.

mike.antich [at] bobit [dot] com



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