Means To An End
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HE necessity of keeping a balance between the standard of service provided and its actual cost was discussed in this series last week. With few exceptions transport operators are as fully aware as academic experts of the economic value of full loading whenever practicable, including return loading. As stressed last week, however, both provider and user know from practical experience not available to the academic expert--however high his professional qualifications may be—that there are many occasions when there must be a clear-cut decision which cannot be avoided as to the relative priority of service or cost. In the last resort the basic fact remains that the provision of a service is a fundamental reason for the existence ofi a transport organization. On occasions when such a decision is made to maintain the service despite the higher cost than was originally anticipated, experienced operators will resolve to re-arrange any further working so that the need—or at least the probability—to make such necessary but uneconomic decisions does not arise.
But even this hypothetical choice between service or cost would be over-simplified in the majority of practical instances. The standard of a particular service can vary substantially, yet still remain a service in the sense that goods are collected and ultimately delivered. But in one case the repercussions from a delay in delivery may be limited to dissatisfaction rather than dislocation of business. In other circumstances, however, the same period of delay —for example, when carrying perishable foodstuffs to market—can be so disastrous to the extent that for all practical purposes no service had been provided, even though technically goods had been collected and delivered.
More important, relative to the quantity of overall traffic moved as compared with this admittedly exceptional example, is the wide range of goods which have an equally wide variation in their inherent urgency. Only the provider and user on the spot in each and every case can determine to their mutual satisfaction the balance between service and cost to be aimed at and, if possible, achieved.
Even in a more limited field of consideration, when only a particular flow of traffic is under review, changes in method of production or the emphasis on competitiveness within a trade at any particular time, could well compel a re-assessment of the standard of service already provided and the cost so far involved. It is just at this point that the change in the standard of service and cost is in no way a reflection on the correctness of previous decisions, but rather an emphasis that a transport service must always have regard to changes in trade and industry.
Operators would prefer, of course, to have readily definable factors on which to make many of their day-today decisions as to whether or not, for example, a particular vehicle should run a certain mileage empty in order to provide a better service than if the same job were done at lower cost, but at a later date. However, the very urgency of transport demands such on-the-spot decisions, uneconomic though they may apparently seem. It is this superficial indefiniteness which is the basis for some criticism of transport efficiency which, however, is seldom substantiated on examination unless one accepts nearmonopoly conditions when the user of a service is told what standard will be provided. Closely allied to the intangible factors related to the assessment of a particular service is the determining of a policy of vehicle maintenance and ultimate replacement. The reliability of vehicles comprising a transport fleet is closely related to the. levelof service which will be provided so that many of the factors are inter-related. .
Understandably there is a common request made by interests not experienced in practical transport operation for a formula by which to determine the critical points at whicha vehicle should be replaced. In making such a request at least two assumptions are made which in practice are seldom valid. The first is that on an engineering level a precise decision can bc made on the basis of either time or mileage beyond which the vehicle would be no longer fit to run. A second assumption would be that whatever traffic the particular vehicle carried the same standard of service would be adequate.
No matter how well qualified an engineer might be the precise moment at which any vehicle becomes unfit for service cannot accurately be determined beforehand. Moreover, in the last resort, it is an individual opinion, and although such decisions have to be made continually in transport, the solution is invariably tied up with an inbuilt insurance to provide a margin against breakdowns and consequent dislocation of the service being provided.
In this respect much of the reputation of not only the haulier but the road transport industry has been built up on the reliability of the service provided. It would therefore b'e a case of misplaced priorities if that very reputation were jeopardized in an endeavour to reduce the cost of depreciation to a minimum, no matter how important that might be in isolation.
Recent publicity given to the Ministry of Transport spot :hecks on commercial vehicles highlights the importance xf both maintenance and a reasonable policy of vehicle -eplacement. But to experienced operators the need for ;uch standards of maintenance and vehicle replacement ,as always been apparent. Repeated breakdowns with -esulting disruption of traffic could obviously play havoc Arith the haulier's business, and for this reason the ultimate ariority of providing a transport service must always There is admittedly much scope for disagreement as to ',that margin should be provided to ensure a reliable vehicle tnd so a continuous service for customers. Similarly, but tt a later stage, the decision on which to base a vehicle replacement policy is partly dependent on the choice of iuch a margin.
The terminology used for describing the 10 items which go to make up the total operating cost of a commercial vehicle have stood the test of time and are readily understood by all concerned. Nevertheless, some of the terms used are to some extent arbitrary. For example, "standing :osts are in fact incurred whether the vehicle is operating ar not, and for this reason are calculated on a time basis. Included in the live items of running costs is the one of " maintenance ". In its literal sense this would imply that the vehicle was in fact maintained in its original condition. But, once again, because transport is a practical industry, there is a clear distinction here between theory and practice. Accordingly, in addition to the item of maintenance, one must also provide for depreciation, although superficially this might appear to be a contradictory term.
Because of this it could be claimed to be established that there is, in fact, no finality in maintenance. However well and comprehensively this may be carried out, ultimately there must be depreciation and with it vehicle replacement, however long thiS may be delayed. Having established this point it must also be accepted that although other factors may have considerable bearing on the ultimate decision, inevitably there is room for a personal decision in the last resort.
Some of these other factors would be the type of work being undertaken, the geographical area in which the vehicle was being operated and the urgency of the traffic carried. The existence of these factors is demonstrated in the policy of some large fleet operators who find it expedient to demote vehicles from more important to less important jobs towards the end of their working life. Similarly, the existence of a large used-vehicle market confirms the fact that vehicles can no longer be acceptable to one operator but still have useful life for another type of work, if this were not so—which is hardly conceivable because of the large amount of business involved—either seller or buyer would be involved in a bad bargain.
Therefore, it follows that the maintenance costs of a particular vehicle, or group of vehicles, cannot be compared to useful purpose with those of another, unless a very considerable amount ofknowledge is known about the type of operation on which both are involved. Even then there may be some special factor which would invalidate such a comparison. For example, in these days of frequent take-overs of companies, however much standardization might be desirable as a long-term policy, obviously this cannot be achieved overnight with resulting immediate, if temporary, complications in maintenance and stores procedure and cost.
The importance of adequately maintained vehicles nevertheless remains, and for some operators the decision may still have to be made (or reconsidered) as to whether he should undertake his own maintenance or make other arrangements. Factors to be considered here are not only the outlay involved in providing maintenance facilities both as regards the premises in which such maintenance would be undertaken, but also the service equipment required. But even if the financing of such provision does not provide an insuperable obstacle, the decision has still to be made as to whether such maintenance facilities will be economically utilized. It is unfortunate in this respect that some of the relatively minor servicing tasks which are undertaken relatively spasmodically —for example. weekly—require
equipment costing -£100 or more regardless of whether one or 51 vehicles are concerned.
It is on this question of adequate utilization of equipment that some operators may find it more economic to contract out their maintenance to a local garage, despite the incurrence thereby of profit margin and overhead cost.
In this age of near-full employment, a more important factor even than the provision of premises and equipment for maintenance would be the possibility of recruitment and retaining of skilled staff. Because of the ever-increasing claims of the manufacturing industry, coupled with the relatively high wages which they are able to offer employees, the supply of skilled maintenance staff is undoubtedly limited, and until the effects of any possible industrial training scheme for this type of labour take effect, it seems unlikely that the present position will improve.
Whilst it would be disappointing to an operator who had originally decided to do his own maintenance to find on examination that suitable labour was not available so that he therefore had to change his policy, this at least would be preferable to having laid out a considerable sum on maintenance facilities, and provided initially the necessary staff, only to find that when such staff left for other jobs they could not be replaced. Particularly where a small or even medium-sized fleet is concerned, the amount of skilled work involved is limited and, accordingly, the number of skilled men required. In many cases this would in fact be one only, so that a resignation could prove a serious
matter indeed for the fleet as a whole.
For those not previously experienced in operating a maintenance depot in addition to running a transport department, the amount of time involved in administrative work can be easily underestimated. Whilst in any well-organized department brealdowns and other unscheduled eventualities will be reduced to a minimum, ngvertheless they will occur. When they do the subsequent repercussions can involve already busy members of the staff for considerable periods. Similarly, the obtaining and maintaining of spare parts is far from the simple matter it might appear when so stated.
Overall, therefore, whilst many operators may consider that the urgency of their work makes it imperative that they should have direct control of their maintenance facilities and, moreover, do it efficiently, those considering venturing into their own maintenance for the first time should make due allowance for all the claims thereby involved on their financial resources, skilled labour and administrative time. Specialization is recognized as a prerequisite to efficiency in many aspects of employment, and maintenance is no exception. Even if skilled staff are available and can be retained, the illusion of being fully employed can be mistakenly created if, in fact, for a good part of their time they are engaged on semi-skilled or even unskilled work. This is all too possible where the urgency of the work virtually compels a policy of ".all hands on deck " unless deliberate steps are made to avoid such uneconomic working.