Truck profits on form...
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MANY operators dread working out their vehicle operating costs and some openly admit that they would not know how to do it even if they wanted to.
In today's harsh economic climate these reactions are tantamount to financial suicide. Low profits are common in the transport industry at the best of times, but during the present inflationary conditions and when vehicles may be under-utilized, running vehicles at a reasonable profit is an even harder job.
Ford sensed the need for an accurate informative cost analysis system in the early Seventies. Four years ago, after considerable discussion with Inbucon/AIC, a leading management consultant firm, the Ford Operating Cost Analysis System, or FOCAS for short, was set up.
The system is computer based, and operators on the system get a quarterly report which is compiled directly from the computer. However, Ford and Inbucon/AIC are quick to point out that the accuracy of the results depends entirely on the information or data that the computer is given in the first place. Both companies stress the need for a disciplined approach by the operator to providing this data.
In order to get the necessary input information in the most acceptable form the FOCAS user is asked to fill our four data collection sheets. These cover vehicle maintenance costs, vehicle operational costs, labour costs and fleet overheads. Most of this information is available from an operator's normal day to day records or those which are required in connection with 0-licensing so that the minimum amount of work is required.
The set of forms are filled out once a quarter and sent off to the computer centre where they are processed.
The benefit for the operator comes when the computer has completed its analysis of the figures and the quarterly report lands on his desk. A broad summary report analyses the operating costs for each classification within the fleet and a more detailed report gives an individual analysis of each of the company's vehicles on the FOCAS system.
Many operators' first reaction, when faced with reams of computer paper, is one of amazement if not shock, and they are naturally sceptical to say the least. However, a member of the Inbucon/AIC staff usually stands in on the first report and explains what everything means and, more importantly, teaches the operator how to interpret the form in detail.
Broadly, the FOCAS printout gives vehicle by vehicle the total operating costs and the on-the-road running costs by the mile or week, which gives valuable information when determining job rates. It gives mpg, down-time in days, an analysis of standing costs, running and workshop costs which are invaluable for budgeting and cost control.
It gives an analysis within mileage bands showing the average ages of the vehicles which can be used for vehicle replacement planning. The print-out also gives the cost for each classification of vehicle and individual vehicles against the national average cost, which makes comparison very easy and immedi ately highlights any "expensive" vehicles.
To find out how FOCAS has worked in practice for a typical operator I visited Lovell and Christmas (Southern) Ltd and talked to the company's transport manager, Bob Duncan.
Mr Duncan operates 75 vehicles on food distribution between six depots ranging from Bristol to Erith in South East London. Four 28-tongyvy artics and seven 16-tongross rigids are used for trunking and the remainder are 10/16-ton rigids engaged on local distribution.
Although a Ford system FOCAS is not restricted to Ford vehicles, and Mr Duncan's fleet is made up of mainly Leylands and Fords with some Bedfords and one Dodge. Mr Duncan explained that his main reason for joining the system was that food distribution is a keenly competitive field, consequently transport costs need to be closely monitored. Also he had always wanted to know—but never really had the time—to find out how the different makes of vehicles in the fleet compared.
I went through a typical quarterly report with Mr Duncan. He said that "the big advantage of the FOCAS system is that it gives him what he wants and does away with the mass of irrelevant information that most systems seem to produce". He found the report covering vehicle types more interesting than the one giving the performance of individual vehicles, but said that the latter was useful in that it enabled him to keep an eye on the optimum period of vehicle replacement.
Mr Duncan appreciated the help he got from the lnbucon/ AIC man and told me that he was particularly useful in confirming his own interpretation of the figures produced on independent check.
The FOCAS report, said Mr Duncan, had proved invaluable when making submissions to top management about the composition of the fleet or in making an alteration in operation. He found that the FOCAS report was seen to be unbiased and thus eliminated any suggestion that personal preferences had been angled to achieve a particular decision.
Although the system quotes a "national average" it is completely confidential. Each new operator is given a code number when he joins the scheme and this alone is used to identify his returns to the computer centre.
The cost of participating in the scheme is quite reasonable. There is a quarterly charge of El 0 for each company plus an additional charge of El for each vehicle; VAT is chargeable on this fee. The special FOCAS forms are supplied free and the overall fee also covers the cost of service visits by FOCAS staff.
Considering the cost of the FOCAS service and that some staff time is involved in filling out the forms, the type and amount of operating information that the operator gets as a result seems very worth while. The system is so flexible that it can cope with fleets of five or six vehicles to fleets of a couple of thousand operating from a number of regional centres and therefore must be worthy of consideration by any cost-conscious transport manager.
• Johnny Johnson