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A pence per mile maintenance
Page 100
Page 101
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schemeby..,..yes IN the past few years there has been a quiet revolution in Fodens' service arrangements. Gradually the company has increased the number of its agents while, at the same time continuing to improve their standards. Latest development from Sandbach — with far-reaching potential benefits for operators — is a pence per mile maintenance scheme.
Before the company changed its policy to indirect selling (ie: through distributors), Fodens provided servicing facilities for its customers at nine depots throughout the country. Now there are only four of these, but in many cases the premises have been taken over by the company's agents. Before becoming a Foden service agent a distributor must be thoroughly vetted and have facilities of a required standard. On appointment, parts to the value of £5000 must be stocked and this must rise in proportion to the numbers of vehicles under the agent's wing.
Many operators, then, have all their servicing done at agent's premises or at the remaining company-owned depots, including the factory one in Sandbach. The wellequipped workshops there handle more than 80 vehicles a week. Other operators choose to do their own servicing in conjunction with the manual supplied with each vehicle.
By contract Many of these also take advantage of another scheme; that involving contract maintenance. This has the advantage of a fixed price for a specified level of service. There are • four levels of service, from a DoE standard wash up to a maintenance check and lubrication service every 5000 miles ranging in price from £15 to £20. Costs of spare parts are not included.
A logical extension of this facility now provides the fourth option for operators: the pence per mile system. In fact the company thought the idea
SO attractive that it first launched the system four years ago — only to discover that it was apparently an idea ahead of its time, since there were no takers; Now, after some modification, the scheme is being promoted again.
The important factor which encouraged Fodens to revive the scheme was the stream of requests the sales department was receiving for guidance on likely resale value of vehicles two and three years hence. Without any check on individual maintenance standards there was just no yardstick available. In fact in the scheme currently being offered Fodens has steered clear of actually entering the used vehicle market and offering guaranteed buy-back facilities at the end of the contract. Instead it has agreed to maintain vehicles to DoE standards for a fixed period at a fixed price per mile. There is nothing to prevent agents from agreeing to a buy-back clause, and in one case this is already the situation.
How it works The Fodens pence per mile maintenance scheme works like this the company guarantees a set level of maintenance standards in return for a set charge per mile, paid in monthly instalments. This figure is quoted in the contract and covers the whole life of the contract (normally three, but sometimes five, years). Thus the operator has the inestimable advantage of knowing, perhaps three years in advance, exactly what his vehicle will be costing him. At the same time he knows that evidence of the contract will undoubtedly enhance the vehicle's residual value when he decides to sell it.
I asked Mr Joe Wilson, Fodens' Joint assistant service manager and the man running the scheme, if there was not an awful lot of guesswork involved on the company's part. "Yes, it is a bit of a gamble," he admitted.
I asked him how it was possible to predict such complex castings so far in advance.
"Well, we know better than anybody how much our vehicles cost to run, provided they are serviced properly. In this scheme we know they will be — because we are doing it ourselves. We have built in a cost inflation figure (about 10 per cent per year — after the first year) and provided that we have done our sums right, we — and the operators — will be all right."
Several contracts have been signed now — involving some of the biggest and smallest names in British road transport. Hertz and Godfrey Davis are among these, together with some small, independent operators. No one is claiming that the new Fodens scheme is a charitable gesture but pperators appreciate the value of getting a difficult job done well and knowing in advance how much it is going to cost them.
As I have said, most contracts have a three-year life. Typical figures per mile are (at a minimum 50,000 miles per year): first year of 75,000 miles, 2p (£125 /month); second year of 75,000 miles, 2.6p (£162.5) and third year of 75,000 miles, 3.4p (£212.5). This is for a Cummins-engined maximum-weight tractive unit.
Mr Wilson reports that the typical cost per mile for a 32-ton tractive unit spread over threee years is 2.66p. On average there is about lip per mile difference between costs in the first year and those in the third year. In our example the contract would terminate at the end of three years or when the vehicle reached 225,000 miles, whichever is the sooner. If in any 12-month period the vehicle has covered more than 50,000 miles there would be a surcharge for additional mileage.
Flexible One of the advantages of the scheme is that it is completely flexible. Any type of road vehicle operation can easily be accommodated. But operators, large and small, receive the same standards of maintenance carried out at the nearest Foden service outlet. Operators are reminded in the contract that they still bear legal responsibility for the state of their vehicles. But they would presumably have redress if they did have trouble with the DoE because Fodens would have violated its part of the contract. Any faults found at a DoE test would be rectified free of charge, provided they were caused by due wear and tear.
Each vehicle in the scheme has a special log book in which dates of servicing are predetermined. In our example, maintenance inspections would take place every 10,000 miles, with a minimum of five a year. Operators are responsible for day to day maintenance and lubrication. Fodens look after any faults forcing the vehicle off the road. Fodens also point out that they are not liable for any loss-of-use claims.
Finally, the contract states that, in the event of any dispute, an Institution of Mechanical Engineers' arbitrator should be called upon to make a decision.
The Fodens scheme is obviously going to appeal principally to two types of operator. On the one hand there is the small man who maybe does not have adequate facilities of his own, while on the other there is the own-account fleet which regards transport purely as a service to further its own business. Such operators welcome the opportunity to hand over the detail responsibility for their fleet to the professionals. Those operators who have experience of predicting cash flows well in advance will welcome this way of guaranteeing their figures.
But all Paden customers will eventually benefit from the new scheme. The company intends to mount a major analysis programme of the results obtained. For the first time they will be able to get accurate castings for each component. This information can be fed direct to the design team and the lessons learnt incorporated in future designs.