Why Smart Fleets Do Trials (Part 1)
Trials should be a vital part of any logistics company’s hardware procurement process. The aim of a trial is to quantify the performance of vehicle hardware, within a fleet’s unique operation, on a small subset of vehicles, before making a large-scale procurement decision.
Trials are required for two reasons. Firstly, due to the complexity of real-world vehicle performance, both logistics companies and vehicle hardware providers cannot predict or guarantee performance in a given operation. Secondly, logistics companies do not believe the claims being made by vehicle hardware providers and they wish to collect their own data.
A common reason to trial a vehicle solution is to measure fuel consumption – the single largest cost and environmental impactor in the industry. This may be to assess a vehicle itself, or retrofit hardware solutions such as trailers, tyres, or aerodynamic devices. A careful scientific trial design is vital to ensuring logistics companies can identify the best procurement decisions to minimise both the cost and environmental impact of operating their vehicles. Unfortunately, good design is rarely achieved, and trials quite often lead to either inconclusive or negative outcomes; whilst also consuming a lot of resources for both logistics companies and solution providers.
This article will discuss the importance of trialling vehicle hardware, why trials often fail or worse provide misleading information, and explore good trial practice to ensure that logistics companies can draw accurate conclusions to make smarter purchasing decisions.
The opportunity of smart purchasing
When a logistics company makes a purchasing decision, the main criteria should be to achieve minimum total-cost-of-ownership (TCO). Of course, achieving this is complicated and must take into account many additional factors, such as the cost of finance or the available budget. However, when making purchases for a fleet of vehicles, this basically means minimising the sum of both capital expenditure and operational expenditure over the life of the fleet.
If a logistics company can identify procurement decisions that achieve this, they gain a significant competitive advantage over logistics companies who do not. A logistics company that operates a fleet with minimum total cost of ownership will have significantly lower costs, potentially win more business, make greater margins, and enjoy a higher share price. This is good for employees, shareholders, customers, and the environment.
How do I make smart purchasing decisions?
When considering the basic total-cost-of-ownership formula of capital expenditure plus operational expenditure, both of these need to be accurately understood before making a purchasing decision. Since capital expenditure is based on the purchase price, this is easily quantified. For an average UK heavy goods vehicle fleet, operational expenditure is 3 times capital expenditure, and is dominated by fuel cost – Freight Transport Association (FTA). The FTA’s data also states that for a 44 tonne 6×2 axle tractor unit and semi-trailer operation, fuel costs account for 73% of operational expenditure and 56% of total vehicle costs. As Dynamon has reported previously, most vehicle hardware purchasing decisions influence fuel consumption (in some cases drastically); which must be accounted for when calculating TCO. Whilst other costs such as maintenance are important, fuel consumption is the number-one priority when calculating operating expenditure – and when taken into account will lead to smart purchasing decisions that minimise TCO.
Therefore, before making purchasing decisions many fleets correctly choose to perform real-world fuel consumption trials. The most common trial method is to put a new piece of hardware into the fleet and compare its performance to other vehicles. If it is a new tractor unit being trialled, its performance must be compared to other tractor units. If it is anything other than a tractor unit, (such as trailers, tyres, aerodynamics, driver aids, or any aftermarket fuel saving solutions) these must be coupled with existing tractor units and compared to other tractor units not using these new solutions.
Measuring fuel consumption accurately in the real-world is very difficult. A trial must make a comparison between the new hardware being trialled and the existing baseline hardware. However, the existing baseline hardware has a fuel consumption that varies significantly both between vehicles and over time. The causes of this variation come from two sources: operational variation (vehicles doing different things) and vehicle mechanical variation (the vehicles themselves being different). Data that Dynamon has collected from many large HGV fleets shows this can cause fuel consumption to vary by up to 30% between different vehicles and by up to 25% for an individual vehicle from one month to the next. The graphs below display example data for a 150 vehicle operation analysed by Dynamon, identifying both the fuel consumption variation within a week and across the seasons.
Average monthly MPG – displaying seasonal variation.
Average daily MPG – displaying variation throughout a week.
When fuel consumption is varying this much before making any modifications to vehicles, how can you accurately compare a new piece of hardware with existing hardware? The answer is: without very careful trial design and precise data handling, you simply cannot. This is where the logistics industry often encounters problems…
Many fleets conduct trials without knowledge of all the variables that influence fuel consumption, and don’t use the necessary statistical analysis to draw accurate conclusions. A badly designed trial will not work – you will not be able to measure the effect of the hardware you are trialling. A common problem for fleets is the inability to isolate the effect of the trial hardware from the general fuel consumption variability. This leads to fleets thinking they have measured the effect of the hardware being trialled, when actually they are measuring the underlying operational variability, leading to wrong conclusions and potentially to poor purchasing decisions.
The second half of this article will identify how a trial should be conducted to accurately assess the performance of vehicle hardware within a complex fleet operation. The next half will also look at the most common trial mistakes and how they can be avoided. Remember, well-executed trials are the key to knowing what vehicle hardware to buy to achieve that all important minimum TCO.
Dr Angus Webb
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