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Specifying for profit

by Tony Wilding

employees should be considered as assets and that the asset value of human resources could ae incorporated into a quantilive structure.

The authors sought to devise a -nethod of valuing human resources which could be consis.ent with the valuation of physial resources. They went on to ;ontemplate setting up profit ;entres within an organisation, he valuation of employees and he consequence of their asset raluation as investment within he profit centres.

Heady stuff! The concept lever really caught on and has lot been developed. It did, iowever, emphasise the signifiance of the "people asset" and lave some added justification or more care and skill in man nanagement.

) This session of the Confernce will pose a number of chalanges to freight managers bout their personal approach to le management of the human ssets in business. It will particuirly, but not exclusively, con entrate on management repurees.

lt will highlight some of the )Ilowing issues and/or quesons: ) The changing structure of employment/unemployment. The impact of social change on employment.

) Is the freight industry undergoing fundamental change and are its employment needs changing?

What does new technology have to offer the industry, and what are the personnel implications of that?

The importance of organisation structure upon individual manager motivation and performance. MORE THAN 20 commercial vehicle manufacturers offer their products on the British market. Each has probably hundreds of individual models if you count the basics and multiply by the options.

Then there are the convertors — adding axles . and altering wheelbases, etc — and numerous bodybuilders where the theme is variety. The choice open to the operator when he gets involved with vehicle selection is virtually limitless.

But of course it is not really like that. When you get down to the job, great chunks of what is available get wiped off the board because the models are in the wrong weight category or have the wrong wheelbase. The body requirement can be well defined to reduce the permutations still further. Then there are other limitations on choice — the situation on local service for different makes, bad experience with a particular make or its service outlets and so on.

These can bring the numbers down to manageable propor tions, or so it may seem, for even if you settle on one make and one weight category there are still the questions of options which will most certainly include drive-axle ratios and perhaps also engines and gearboxes in the heavier classes.

How does the operator cope with all the variables? How does he get the best vehicle for the work he has to do? The answer to both questions is perhaps the same — "with some difficulty".

Vehicle selection can be a most complex and difficult task. Often the ideal vehicle does not exist, ideal that is in meeting all the operating requirements, with the right after-sales support and at the right price. Selection is very often a matter of compromise, of making decisions on which of the "essential" requirements will have to be adjusted in arriving at the final solution.

Books can be written on the subject of vehicle selection if it is intended to cover every aspect in adequate depth. So how can a meaningful presentation be made at an event like the CM Fleet Management Conference Perhaps only by setting dow the guidelines, the points to bez in mind, the main consideration relevant at this time.

The first thing that the trans port executive must bear i mind is that while one may go ti various points for help in MI vehicle selection task, most i not all the information neede4 exists within the operation. N4 one knows better than till operator — transport manage or engineer — what is needed Only people within the compan■ know, at the required depth, th4 whole aspect of the operation the loading pattern, driver idio syncrasies, cost parameters local situation on maintenancE and maker representation, tc name just a few of the point that must be considered wher establishing the selection equa. tions.

Help is readily available on thE subject of selection. Some of ii has to be paid for, some comes free — from manufacturers anc their dealers — but here the problem can be that the advice will be related to which option on which particular model of the make concerned will fit the bill.

The operator will be committed on make which is only satisfactory if this has been decided upon sensibly, for sound reasons, not just because firstclass advice may be provided by the particular maker.

Every manufacturer will help the operator either directly or through the dealer, to pick the optimum specification from the range of models and options he markets. In the majority of cases this is a fairly straightforward and simple study of the work to be done in all its facets in conjunction with appraisal of vehicles on offer. Others go in for more sophistication such as Mercedes-Benz with its Transport Consultancy Service which was, of course, featured at the last CM Fleet Management Conference and also at the Birmingham Show in 1978.

This is essentially applying computer technology to the selection job, of using the computer to work on the figures from the information fed into it and it is worth setting down briefly what can be done.

The backbone of the Mercedes-Benz service is a computerised cost and performance analysis system called the Fleet Information System (FIS) which is Currently in use with 80 British operators. This provides transport cost information based on specific parameters and files are

Id on all Mercedes-Benz )dels. In addition, comparins can be made with other 3kes which enables informan related to vehicle selection be obtained.

On a recent comparison exer;e carried out on behalf of Park ikes of Oldham, a subsidiary of arthern Foods, three Merdes-Benz models were asssed against six competitors weight ranges from 3.5 to 7.5 ones gross. Information enred into the computer covered I aspects of running and fixed Isis based on actual experiice except in one or two cases here estimates had to be used. typical local-delivery opera)n was considered and the obctive was to obtain a bottomle figure of cost per carton to Tive at not only the most ecoamical vehicle but also the op-num vehicle capacity.

The result of this work was at the three biggest vehicles ime out as most effective — a ayland Terrier, Ford 0710 and lercedes-Benz 608 — with very ose figures. But this was not le end of the story — anticaated costs are only one side of le coin, admittedly an imporint one. To complete the picire, the operator obtained emonstration vehicles to try le models in service. He did lore than this though; he senibly also checked on after sales upport for the makes — spares, ervice and dealer back-up in the Iperating area and in the end 'ought the Mercedes 608.

All this confirms one imporant aspect. More than anything !Ise, the process for selection of

• ehicles must be systematic. he first task must be to set lown the objectives that the ,ehicle has to meet — not forjetting that the main objective the whole exercise is deciding n a vehicle that will enable oods to be moved in the most fficient and most economical ay, and with the least probms.

It is rare that the selection job done with a clean sheet of aper. The normal will be to deelop from an existing base, relacing a vehicle or extending e fleet without altering the way t is used, In such cases, veryone may be happy to stick the formula in use. However, here are times when it may not e wise to replace with exactly he same specification or to add vehicle identical to the others use. Even though it may seem be a good idea to repeat the revious order things may have hanged since the existing vehicles were purchased.

It may be perfectly correct to keep to the same make but there could be additional features that have been introduced as options and worthy of consideration. Changes in legislation may have been announced which could affect the picture quite dramatically.

All too often, vehicles are purchased in a casual way and without adequate assessment of the circumstances. It is a very sound idea to keep a continuous watch on the way vehicles in use play their part in keeping the operation efficient and economic.

If there are signs that improvement is possible, the vehicle replacement policy should be reappraised. This need not be an extensive study but, on the other hand, it is sensible to carry out a complete reappraisal from time to time.

The need for a full-scale reappraisal can be indicated by changes in business or legal areas, for example, and if a change is to be made it is important that the timing is right. Similarly, if the conclusion to a study that has been done thoroughly and correctly is that no changes should be made, this should not be looked on with suspicion just because it may give the feeling that the effort and cost will be wasted.

In setting down the objectives in a selection exercise, typical parameters which must be covered on the operating side will include payload required, types of load to be carried, any known physical characteristics of load, types of journey (distances and classes of road), driver requirements, terrain to be encountered and possibly limitations on manoeuvring or access at known loading and unloading points.

There are points of a general nature. There will be others peculiar to the operator's'own circumstances. For example, general routes may be over fairly easy terrain but the ramp out of one of the loading banks may be especially severe so the operator will have either to specify a lower axle ratio than needed or arrange to have vehicles helped out of the yard when loaded! This is obviously a rare peculiarity but it is the sort of thing that causes problems if not taken into account when deciding specifications.

It is usual for the fleet engineer, engineering manager or person fulfilling that function to co-ordinate building a vehicle specification in conjunction with the user or traffic department and the supplier. An essential part of this is the availability of sound records of the operation covering all cost areas. It really is quite pointless trying to evaluate a vehicle that has been operating in a fleet without having total operating costs.

Without such information it is not possible to say if there was justification for buying the quality, over-specified model be

cause of its minimal maintenance costs or conversely, that higher maintenance costs did not come about through choosing the cheaper, low-specification truck.

In general it is preferable to establish the specification needed and then study what is available to select the make. The operator often chooses the maker first, probably for valid reasons because there can be factors which give strong support to one make over the rest.

It is certainly most important to consider local servicing arrangements in the case of the operator who does not do his own maintenance. And when parts stocks are held by a big fleet operator, the picture is affected by the benefits of standardising with vehicles already operated in the interests of keeping investment in spares stocks down. There are obvious advantages in standardisation when good contacts and relationships have been built up with manufacturers' and dealers' personnel, but some will say that if the relationship gets too close it can be a disadvantage.

Too much commitment to a particular make may make it difficult to change to an alternative that would improve efficiency, and this would obviously apply if the additional make brought the penalty of extra costs on parts stocks. Perhaps the desire to avoid having their hands tied in this way is one of the reasons why fewer and fewer operators keep anything but the most fastmoving minor parts in stock these days.

All too often an operator will forget about the need to replace a vehicle until the last minute and then there is no time to make a proper assessment of the replacements. Requirements must be planned and future needs set down well in advance.

When an operator has one or two vehicles he will be constantly reappraising the position due to the close contact with the vehicle. This also should be aimed at by the big fleets and checks on suitability made right from the beginning, when the vehicle is put into service.

It is difficult to see how vehicle operation can be controlled effi ciently, without establishing a vehicle replacement policy in respect to both vehicles to be purchased and the planned life. Unless business demands make for modifications, it is best not to keep chopping and changing, buying a different, model or make every time a replacement becomes due. Planning is vital and in a stable fleet evaluation of alternatives can be realistically undertaken.

Business changes will alter, purchase decisions and it is important to keep the situation flexible right up to the time of ordering — and even later if this is possible — to take account of both internal and external factors. Within the cpmpany, things may change 'through new contracts and new ideas for loading. Outside influences include proposals for changes in legislation which can come along quite suddenly. One thing that should be avoided is taking a gamble; it is expensive to be wrong and anticipating changes like higher weights which do not materialise is a gamble.

Many operators caught a big cold in this area not so long ago and carried a lot of extra unladen weight around on vehicles designed to run at gross weights which have still not been introduced. But then, on the other hand, many found that the extra specification they had bought for one reason turned out to be an advantage for quite another — the extra strength and additional engine power output generally gave greater reliability and longer life, often with improved fuel consumption and increased operational economy.

A valuable lesson can be learnt from this. It is obviously important to buy in accordance with the intended use, but it is not such a disadvantage to overspecify; it can be an advantage. There are many examples of operators who have bought themselves problems by not taking full account of the arduous nature of their particular operation. And more who have got into difficulties where the work has become more severe through a variety of unexpected and uncontrollable factors.

Taking as an example the operation of maximum-weight artics, the question is often one of deciding whether to select the light, low-power model or the heavier, high-power design.

Most manufacturers offer these alternatives and clearly the choice should be the tractor with minimum power — 192bhp (143kW) or just over — only if the work is relatively light, not if it is a mixture of motorway and tough hilly terrain on doubleshift working, always at or near, and sometimes over, the 32-ton limit. For such work, the choice must sensibly be the 250/280bhp (186/209kW) tractor which gives something in hand and will be working well inside its limits.

The supplier of the vehicle has a responsibility to ensure that the product is suitable for the purpose for which it is intended. This does not necessarily mean the use to which it is put. Frequently manufacturers and dealers are criticised for not indicating the design limits of specific models, but it is not unnatural to hold back talking about problems.

Similarly, the operator should not hold back information on how he will use (or misuse) the vehicle. Before they complain on the grounds of "fitness for purpose" he must be sure that "the purpose" has been defined clearly. And this cannot be an absolute responsibility of the supplier, because the purchaser must also be professional, able to assess the values of a truck against his knowledge of the requirements and not leave everything to the dealer.

In particular, the buyer should not expect the seller to be trying too hard to ensure everything is right for him when most of the deal rests on how much discount will be given.

The operator will use his judgment — and the guidance available — to decide the weight range, whether a rigid or artic is best, how close to gross weight he will load, and therefore how important unladen weight is, how important weight tolerance is on plated axle weights. He will decide the sort of performance needed and will take note of manufacturers' claims in this respect. It is not wise to accept unauthenticated claims and, in any case, operators need to take into account possible need for adjustment to cater for a new or particular operation.

The only way to get a true picture of the way a vehicle will perform in service is to try it in

service. Tests with a dealer's demonstrator may be enough, but longer running may be needed, in which case an example will need to be hired. Even then, the whole truth about a vehicle will not be produced.

This cannot happen until the vehicle has been run a long time and the cost of maintenance and replacement parts are known exactly. It is just not possible to forecast such long-term costs, especially parts. And it is little use comparing price lists for different makes as the first-time purchaser can have little or no idea of which parts will be needed.

Some idea of the extent that the operator has to go to make valid comparisons in assessing the value of alternative models can be gauged from the report that appeared in CM on May 17, 1980, comparing operating costs of a Volvo artic and an eightwheeler. The report dealt with operation of the two vehicles in different fleets, hauling different types of material with different loading patterns, so a subjective evaluation of the fuel returns had to be made to establish a comparison. But all the factors of relevance to an operational assessment were covered including manoeuvrability, aerodynamics, tyre costs, drivers' hours regulations affecting the different categories and suitability for different loads.

It was largely a costing exercise which is what such comparisons usually are.

The use of computers has revolutionised the evaluation of vehicle performance, both physical and financial, in relation to varying specification options. A lot of work has been done in America in this respect, a system known in Britain is the Cummins VMS (meaning vehicle mission simulation). This involves a very comprehensive computi program including a "vehic performance model" whic simulates the operation of vehicle over specific routes, "vehicle operations model which simulates operation of vehicle for its useful life ow specified routes under specific operating conditions of loa■ speed and an "economi analysis model" which builds o these two models and generate an "economic report".

When a paper giving details ( VMS was presented to SAE i America by three Cummin executives in the early 1970s, was shown that every conceive ble route pattern and type c operation could be simulatec The paper stressed that whil VMS was a relatively sophie ticated tool, it could provide ni short cuts to replace fundamet1 tal competence. In other worde to be effective VMS had to 1;:t used properly. Clearly the sign are that such systems can i prove the efficiency of vehicl selection.

Bodywork selection for good vehicles is another wide fiel and perhaps more difficult fo the potential purchaser than th concerning the chassis. Th trend is to better quality in bod work although there is still wide gap between the best an the worst bodybuilders. T counter this, vehicle users hay to get more deeply involved i setting out body specification The practice has been to us relatively brief specifications se ting down the broad recibir ments but not the details an leaving the bodybuilder to in terpret and construct to his ow standards and practice. As a re stilt, the end product from tw bodybuilders can vary widel even though based on the sam "specification". The proble comes when alternative quote have to be considered. It is rarely possible to make direct comparisons.

In the absence of a comprehensive specification, and it is not easy to establish one, it makes a good deal of sense to do business only with the reputable bodybuilder who is concerned to keep his good name. The only alternative is to specify construction standards in considerable detail and spend a lot of time checking that these are maintained.

Having established a basic policy on body purchase, many aspects have to be considered in setting out the detail design required which will depend very much on the products to be carried. The haulier, involved with a variety of loads, needs to consider flexibility more than the own-account operator. Should it be a boxvan or flat or sided with tilt? What about a demountable design, and which type? What materials should be used: timber, light alloy, steel, reinforced plastics or composite? Does it need to be a very special design incorporating loading and unloading aids or load security equipment? And in such cases, should extra quality and strength be built in to provide extra durability and life to allow the body to be transferred to a second chassis?

These questions are just a few that need to be answered in the vehicle selection process. Quite clearly this is not a job to be completed in a casual way. A professional approach is vital in this area which plays such an important part in the overall efficiency of commercial vehicle operation. It says a good deal for the level of competence of transport management in this country that very few major errors are made, or that the operating industry is expert at getting out of difficulties. It is safe to say that the first reason is nearer the truth.