2002 by The Association of Equipment Management Professionals

Transcription

1 2002 by All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording or by an information storage and retrieval system, without permission in writing from the publisher.

2 The Career Equipment Fleet Manager - Outsourcing - Page 1 Insource/Outsource - Why Do We Resist Change, For Example, Outsourcing? Complete in-house minor, major and specialized repair capacity satisfies a natural human emotion for control. However, building the huge infrastructure required to perform major and specialized repairs inhouse actually causes loss of financial and operational control. The risk vs. return of investing in major and specialized repair capacity cannot be justified in the early 21st century. Minimizing fixed investments in major and specialized repair capacities is an appropriate strategy. However, this type of change is very threatening to employees. Outsourcing represents change. Change presents risk. Most employees have natural human emotions which resist change and avoid risk. Employees successful under the old system will resist changing to a new system in which they may not be as successful. Most equipment, fleet and shop managers education and experience do not prepare them for effective outsourcing. The 1945 to 1979 period is considered the high-demand with high-profit era for U.S. companies. Iron skills, including who was the best firefighter were highly valued. There was a strong emphasis on production, and those managers who could repair vehicles and equipment the fastest were rewarded with pay increases and promotions. However, in today s globalizing markets with lower profits, business skills rather than iron skills are becoming more valuable to companies. Those managers seeking pay increases and promotions must also learn business skills that minimize high-cost fire ighting events. Previous unsuccessful outsourcing events are frequently presented by equipment, fleet and shop managers and technicians as reasons why not to change. Most managers resist outsourcing because they do not have the business skills training required to understand how and why effective outsourcing reduces costs and increases quality. Without business skills training, outsourcing appears as a threat vs. a cost reduction opportunity. Without business skills training, outsourcing appears as a loss in control vs. an increase in control. One major reason U.S. companies do not outsource non-core activities is their lack of expertise to recruit, select, train, manage, compensate, retain and terminate outside suppliers. This is a business skills training problem and not an inherent outsourcing problem. Managers may feel that if they outsource too many activities, they lose control over department functions and activities. If activities have been effectively outsourced to prequalified, lower-cost with high-quality suppliers, then management control actually increases over those activities. Why Does Outsourcing Increase Control? 1. Suppliers are experts in specific maintenance and repair activities. 2. If an outside supplier can perform activities for less, then this lower-cost provider status is an indicator that the supplier has a higher level of control over those activities. Therefore, if lower-cost with high-quality suppliers are applied, then the company s control over outsourced functions and activities actually increases. 3. It is easier to reprimand and terminate suppliers than full-time employees. 4. Overall levels of chaos, firefights and emergencies are reduced. 5. Management time previously allocated to overseeing major and specialized repair activities is freed up and can be allocated to more important activities, including reducing costs and increasing quality. There is a direct correlation between lower-cost with high-quality provider status and control over functions and activities performed. However, control over communications surrounding an outsourced activity may decrease.

3 The Career Equipment Fleet Manager - Outsourcing - Page 2 Some General Reasons Why Control Decreases Over Communcations. 1. Two (2) companies vs. one (1) company are involved in performing the activity. 2. Two (2) company cultures vs. one (1) company culture are involved. 3. Two (2) groups of managers, staff and workers vs. one (1) group are involved in performing the activity. 4. Two (2) sets of policies, practices and procedures vs. one (1) set are involved in performing the activity. Specific Reasons Why Control Decreases Over Communcations. 1. The company is forced to follow formal communication channels when dealing with outside suppliers. Frequently, formal communication channels are inefficient. 2. Many times, outsourced activities are performed on supplier worksites, which may be miles away from company worksites. This distance interrupts communications. 3. Communications flow is smoother intracompany rather than intercompany. 4. There are more layers of people. Therefore there are more distortions in communications. 5. Managers are less experienced in communicating with outside suppliers than inside employees. 6. Business skills are required and many managers lack business skills training. There is some loss of communications control with outsourcing. However, control over the activity actually increases given the suppliers proven expertise to perform the activity at lower cost with higher quality. 10 Natural Barriers Must Be Overcome. 1. Managers and employees do not believe change is required. 2. In general, people resist change. 3. There is a lack of available manpower and manhours to implement change. 4. There is insufficient technical subject knowledge to implement change. 5. There is insufficient computerized management information system expertise to implement change. 6. There is a lack of training. 7. There is a lack of available funds.

4 The Career Equipment Fleet Manager - Outsourcing - Page 3 8. There is a lack of quantifiable benefits vs. identifiable costs. 9. There is a lack of senior management commitment. 10. There is a lack of department personnel commitment. Some of the Reasons Managers and Employees Resist Outsourcing. 1. It represents an admission of failure by management. 2. It indicates a loss of management power, prestige and status 3. It creates dependence on outsiders. 4. The risk of outsourcing failures scares managers. 5. There are numerous legal barriers 6. The displaced employees fight back. 7. There is opposition by labor unions 8. There is a lack of resources and expertise to prepare specifications and contracts and evaluate performance. 9. It requires dealing with new people from different organization cultures. 10. It requires new ideas to be learned and applied. 11. It requires managers to be more aggressive negotiators. 12. It may require business management skills that are not available in-house. In the short-term, outsourcing may cause some jobs to be lost. In long-term, most jobs are saved because the company achieves lower-cost with high-quality status and therefore has capacity to compete successfully in core business products and services. Most employees perceive outsourcing as a major threat. Therefore, they aggressively resist and undermine outsource feasibility studies and activities already outsourced. Employees will bad-mouth supplier prices, quality and turnaround times in efforts to bring in-house most outsourced activities. Nine Rules Regarding Employee Resisting and Undermining Behaviors. 1.There is a direct correlation between a company s previous track record of high profit performances and resistance to change. 2. If fleet and shop department managers and staff have technician and tradesmen backgrounds, then resistance to outsourcing will be higher and change will be slower.

5 The Career Equipment Fleet Manager - Outsourcing - Page 4 3. If changes are perceived to threaten jobs and kingdoms, increase work pace and change lifestyle, then changes will be resisted and undermined aggressively. 4. There is a direct correlation between a department s number of assets owned and number of full-time employees, and resistance to change. 5. If the fleet and shop department has excessive levels of assets, personnel and budgets, then the company s other departments will have excessive levels of assets, personnel and budgets. 5a. Why? Excessive levels of financial and personnel resources are the result of a company s general culture, policies, practices and procedures. 5b. Fleet and shop department excess is a symptom of company-wide problems. 5c. The higher the levels of excess, the higher the resistance levels to outsourcing. 5d. Departments with excess capacity have personnel man-hours and budgets available to fight outsourcing. 6. Frequently, managers do not want to change from their current preferred suppliers. 6a. Outsourcing reopens the invitation to bid process and invites three to five suppliers to bid. 6b. Frequentl, employees have a strong sense of loyalty to their preferred suppliers. 6c. Frequently preferred suppliers buy these employees loyalties using gifts, travel and entertainment, which employees do not want to give up. 7. Unions resist outsourcing activities. 7a. Unions consider outsourcing as membership reduction tactics. 7b. Unions practice featherbedding techniques which create labor overcapacity. 7c. Outsourcing reduces the company s cost exposure to featherbedding. 7d. Outsourcing reduces the company s risk exposure to unions. 8. Most major outsource decisions will be postponed until crisis cost reduction tactics must be implemented. 8a. When outsourcing does not work miracles in first 90 days, critics say it does not work. 8b. Outsource savings require a minimum of six (6) months to become visible on the company s financial statements. 9. The greater the resistance to outsourcing, the greater the probability outsourcing will fail.

6 8 Basic Types Of Labor Outsourcing The Career Equipment Fleet Manager - Outsourcing - Page 5 Outsource solutions range from outsourcing selected activities as needed to turnkey outsourcing the entire fleet and shop function to acting like a supplier and insourcing technician activities from outside customers. The following is a list of the eight (8) types of labor outsourcing. 1. Reverse outsourcing Fleet and shop departments perform selected activities for other companies. a. Instead of outsourcing activities to reduce costs, additional volumes of those activities are brought in-house. b. Cost reductions are achieved via increased economies of scale. c. Outsource some fixed, semi-fixed and variable expenses to other companies. d. Outsource idle man-hours to other companies. 2. Partial outsourcing Selected management and staff activities and technician, helper and runner activities are outsourced to suppliers. Equipment, fleet and shop managers and most staff and technicians remain as company employees. Examples: a. Supplier specialists perform selected outsourced activities offsite. b. Supplier specialists perform selected outsourced activities onsite. c. Supplier specialists perform selected outsourced activities both offsite and onsite. 3. Department consolidation outsourcing Fleet management and shop maintenance returns to user group departments. During severe downsizing and cost cutting, senior management may implement this fleet and shop department outsourcing solution. a. A return to the past where each user group owns, manages, operates, maintains, repairs and disposes of their own vehicles and equipment. b. Equipment, fleet and shop management and staff lose their jobs. c. Some technicians lose their jobs. 4. User group department outsourcing User group department activities are outsourced to one (1) or more suppliers. Suppliers provide all assets and personnel required. Examples: a. An industrial company outsources all inplant materials handling to a contractor. b. A company outsources all trucking to a logistics or trucking company. c. A government outsources all paving, mowing and snow removing activities to contractors. 5. Department and/or company consolidation outsourcing Shared services-caused and merger- and acquisition-caused fleet and shop turnkey outsourcing is a form of department and company consolidation. Two (2) or more separate departments, divisions or companies consolidate multiple fleet and shop departments into one (1). a. One (1) fleet and shop management team loses their jobs. b. Some technicians lose their jobs. c. Some fleet and shop facilities are closed.

7 The Career Equipment Fleet Manager - Outsourcing - Page 6 6. Management services outsourcing Fleet and shop management activities and some staff activities are outsourced to suppliers. Supplier provides equipment, fleet and shop managers and some staff. Some staff and most technicians remain as company employees. Examples: a. Labor contractors perform management and administrative activities onsite. b. Full-service lessors perform management and administrative activities offsite. c. A mix of suppliers perform management and administrative activities both onsite and offsite. 7. Fleet and/or shop department turnkey outsourcing All activities are outsourced to one (1) or more suppliers. Suppliers provide all equipment, fleet and shop managers, staff and technicians. Examples: a. Labor contractors perform management, administrative and technician activities onsite. b. Full-service lessors perform management, administrative and technician activities offsite. c. A mix of suppliers perform management, administrative and technician activities both onsite and offsite. 8. Spin-off corporation or enterprise outsourcing Assets and liabilities, revenues and costs, employees, etc., are outsourced into a separate stand-alone corporation. a. Some assets transfer to corporation. b. Some employees transfer to corporation. c. Fleet and shop corporation sells products and services to parent company and others. d. The governmental version is called enterprise. Five (5) criteria can be applied to measure the effectiveness of outsourcing fleet and shop functions and activities. One (1) or more of the following criteria should be met before outsource options are implemented. 1. Reduces total cost of a given function or activity; and/or Increases quality of a given function or activity; and/or Reduces full-time employees associated with a given function or activity; and/or Reduces assets owned which are associated with a given function or activity; and/or Reduces liabilities and risks associated with a given function or activity. Some fleets and shops staff to the peaks and make work for the valleys. World-class fleets and shops outsource at least 25 percente of labor activities measured in man-hours and/or labor dollars. The first step is to continue to outsource fleet and shop activities until management, staff and technicians have the required time to perform their respective scopes and volumes of work at world-class financial and operational performance levels. If department employees do not have the time to perform activities correctly, then world-class financial and operational performances are impossible. If the fleet and shop department has the man-hours to focus on preventive and predictive maintenance activities, then with effective planning and scheduling, a significant reduction in baseline employee man-hours can be achieved. In general, the fleet and shop department staffing model should result in 75 percent of activities being insourced and 25 percent of activities being outsourced. If the shop has the man-hours to perform in-house major repairs, rebuilds and remanufactures, then the shop has too many technicians. Therefore, the shop cannot be a low-cost provider

8 The Career Equipment Fleet Manager - Outsourcing - Page 7 of technician services. In order to recruit and retain scarce technicians, some interesting and challenging work, including major and specialized repairs, must be performed in-house. Outsourcing is a relatively new business management skill in which few managers have received training. Most managers have had negative experiences with outsourcing repairs. Given long-term technician shortages, all equipment, fleet and shop managers must become experts in outsourcing asset ownership and technician labor. The following illustration provides thirteen (13) reasons why outsourcing fails, and most reasons are caused by managers untrained in the outsource process. 1. Equipment, fleet and shop managers develop incomplete written work specifications, scope of work and volume of work. 2. Equipment, fleet and shop managers develop vague contract language, including incomplete lists of cost responsibilities. 3. Specifications and contracts do not include supplier warranties and performance guarantees required to ensure price, quality and service performance. 4. Specifications and contracts do not include quality standards, performance measures, rewards and financial punishments. 5. Equipment, fleet and shop managers do not know how to recruit, select, train, compensate and terminate outside suppliers. 6. Equipment, fleet and shop managers do not require suppliers to provide lists of outsource contracts which have been in place more than three (3) years and more than five (5) years. Call them! 7. Equipment, fleet and shop managers do not require suppliers to provide lists of outsource contracts which were not renewed or have been cancelled or lost. Call them! 8. Equipment, fleet and shop managers do not know how to evaluate suppliers on price, quality and service. 9. Equipment, fleet and shop managers are poor negotiators primarily due to incomplete subject knowledge on activities being outsourced. 10. Equipment, fleet and shop managers do not make random and unannounced visits to supplier worksites to observe work in process. These visits are a prerequisite for effective outsourcing. 11. Equipment, fleet and shop managers do not hold weekly, monthly and quarterly performance and problem review meetings with suppliers. 12. Equipment, fleet and shop managers do not plan and schedule effectively and thereby keep outside suppliers in perpetual crisis-mode, which eventually causes supplier burnout. 13. Users of fleet assets and shop services do not plan and schedule effectively, thereby keeping equipment, fleet and shop managers and suppliers in perpetual crisis-mode, which eventually causes burnout.

9 The Career Equipment Fleet Manager - Outsourcing - Page 8 To Build The Optimum Supplier Team, Outsource Candidates Need to Be Matched to Supplier Core Businesses. Each fleet and shop supplier should be a specialist in performing one (1) or more activities and not a geeralist performing many activities. When outsource candidates are well matched to suppliers core businesses, then the probability of successful outsourcing increases. In general, fleet and shop supplier core businesses fall into one (1) or more of the following seven (7) categories. 1. Financial services Suppliers with financial services core businesses include vehicle and equipment lessors, credit card services and others. 2. Asset-based services Suppliers with asset-based services core businesses include vehicle, equipment and tool renters, trucking companies and others. 3. Product-based services Suppliers with product-based services core businesses include parts, lubricants and fuel distributors and others. 4. Information-based services Suppliers with information-based services core businesses include consultants, trainers, management and administration services, oil/fluid trend analysis services, appraisers, pre-employment screening and testing services, computer services, GPS and on-board monitoring services and others. 5. Labor-based services Suppliers with labor-based services core businesses include fleet and equipment management and maintenance contractors, compliance inspectors, upfitters, auctioneers, driveaway and shuttle services, janitorial services, dealer shops, engine rebuilders and others. 6. Combos Combination suppliers with two (2) interrelated core businesses. Examples: a. Full-service lessors offer financial services (i.e., leases) with labor services (i.e., maintenance, repairs, disposal). b. Trucking companies offer asset-based services (i.e., tractor/trailers) with labor services (i.e., drivers, technicians). 7. Jumbos Suppliers with three (3) or more core businesses which may or may not be interrelated. Examples: a. Companies which offer full-service leases, onsite fleet management and maintenance, and plant/industrial management and maintenance. b. Companies which offer plant/industrial management and maintenance, in-plant materials handling and facility management and maintenance. c. Companies which offer truck rent/lease, mass transit services and logistics services. There is a 20-step insource-outsource feasibility process that can help managers make optimum insource outsource decisions. Conducting insource-outsource feasibility studies is becoming daily routine for most managers. The 20-step process forces managers to identify the problem in detail and identify a wide range of possible solutions. The process structures in optimum insource outsource decision-making. Perhaps, the greatest value of the process is as managers work through the 20-step process, many cost reduction opportunities are identified. The processes are listed below.

10 20-Step Insource-Outsource Process The Career Equipment Fleet Manager - Outsourcing - Page 9 Process 1 - Compute in-house cost and productivity levels vs. outside suppliers, competitors and other benchmark candidates. 1. Identify cost reduction target levels required to achieve objectives. 2. Identify potential outsource candidates to achieve cost reduction levels. 3. Compute the in-house, 12-step, fully-loaded man-hour rate for each outsource candidate. 4. Compute the in-house, hands-on productivity levels associated with each outsource candidate. 5. Use 11 financial and operational benchmarks with 48 measures to compare inhouse vs. world-class supplier performances. 6. Identify all cost drivers which increase and decrease outsource candidate costs. 7. Compute the company s effective man-hour cost per hands-on minute worked. Cost per hands-on minute worked is the acid test for comparing in-house costs vs. supplier costs. The acid test formula: (Step 3) fully-loaded man-hour rate divided by (Step 4) hands-on productivity level achieved. Processes Explore lower-cost with high-quality integrated labor and asset solutions. 8. Consider more than 100 integrated labor and asset funding option solutions available. 9. Consider purchasing world-class fleet and shop management software which is a prerequisite for lowcost with high-quality performances. 10. Consider implementing more than 100 labor and asset cost reduction tips available. 11. Consider whether outsourcing will reduce costs 10 percent to 30 percent while retaining quality and control. 12. Identify suppliers which perform the outsource candidate(s) using world-class practices and which achieve lower cost with high quality. Processes Implement outsource feasibility study findings. 13.Write scope of work, request for proposal and boiler plate contract terms and conditions. 14. Invite prequalified bidders to bid on Step 13. Invite supplier input into Step Evaluate bids. 16. Make go, no go decisions. That is make outsource or keep in-house decisions. 17. Company and winning supplier(s) write contract. 18. Sign contracts. 19. Phase-in. 20. Company manages supplier(s) using Total Quality Management (TQM) and Continuous Improvement Processes (CIP). The company s and suppliers focuses should be on reducing cost and risk and increasing productivity and quality.

11 The Career Equipment Fleet Manager - Outsourcing - Page 10 There is lots of politics associated with computing fully-loaded technician man-hour rates. (Step 3) There are lots of incompetencies associated with computing accurate rates. Labor contractors and suppliers use a 12-step formula to compute true-cost, fully-loaded labor rates. The 12-step is provided below. Employer- Expressed 12-Step Wage Paid Dollars As Percent Formula Per Man-hour of Step 1 1. Plus: weighted-adjusted-average Base Man-hour rate $ % 2. Plus: Total employer-paid, government-mandated payroll taxes per man-hour $ % 3. Plus: Total employer contributions to optional/ fringe benefits per man-hour $ % 4. Equals: Weighted-adjusted-average man-hour rate with payroll taxes and optional/fringe benefits ( = 4) $ % 5. Plus: Total general liability and bond insurance per man-hour $ % 6. Plus: Total non-labor inputs required to perform the work per man-hour (ex: tools) $ % 7. Plus: Total per diem expenses required to perform the work per man-hour $ % 8. Equals: Loaded, weighted-adjusted-average man-hour rate ( = 8) $ % 9. Plus: Total direct overhead cost with profit and fees per man-hour $ % 10. Plus: Total indirect overhad cost with profit and fees per man-hour $ % 11. Equals: Fully-loaded, weighted-adjusted-average man-hour rate to compare with outside supplier man-hour rates (Before taxes and credits) $ % 12. Equals: Fully-loaded, weighted-adjusted-average man-hour rate (after taxes + credits) (11 +/- adjustments = 12) Note: A fully-loaded technician man-hour rate computation rule of thumb follows. 3 x $ hourly wage = $ fully-loaded wage. 1. If the average technician wage is $15 per hour, then the fully-loaded wage is approximately $45 per hour. 2. If the average technician wage is $20 per hour, then the fully-loaded wage is approximately $60 per hour. Most companies do not know their net-net, hands-on productivity levels for performing in-house maintenance and repair activities. Computing accurate productivity levels requires completing the 7-Step, Net-Net, Hands-On Productivity Formula (Step 4). In general, companies pay for sixty (60) minutes of work but receive only about twenty-two (22) minutes of hands-on productivity. The formula follows.

12 7-Step Productivity Formula The Career Equipment Fleet Manager - Outsourcing - Page 11 Percentages Hours 1. Plus: Annual hours paid 100.0% 2, Less: Structural lost-time hours caused by employment contract Equals: Annual hours available for work , Less: Non-productive time caused by management worksite design Equals: Maximum hands-on productive time caused by management Less: Non-productive time caused by workers NA NA 7. Equals: Net-net, hands-on productive time or labor utilization rate 37.3 % Those functions and activities the fleet and shop can perform at lower cost and risk with high quality when compared with outside suppliers should be insourced. All other fleet and shop activities are outsource candidates. Computing the acid test ratios provided below can help shop managers make optimum decisions. Compute Acid Test Ratios. Shop $$$ per Hour Turnkey Labor Contractors $$$ per Hour 1. vs. Minutes Worked per Hour Minutes Worked per Hour Shop $$$ per Hour Partial/Specialist Suppliers $$$ per Hour 2. vs. Minutes Worked per Hour Minutes Worked per Hour Function, activity and asset ownership avoidance is the most effective outsource strategy available. Applying labor-saving devices and practices is the second most effective strategy. Shifting/outsourcing technician man-hours to others is the third most effective outsource strategy available. Similar levels of technician man-hours and costs are incurred. However, technician employer of record and associated costs and risks are shifted to suppliers. 12 Tips to Shift Maintenance and Repairs to Others 1. Rent as needed, then return Shifts maintenance and repairs to renters. 2. Dispose of equipment at optimum points Shifts major repairs to next owner. 3. Maximize warranties Shifts some repairs to dealers. 4. Maximize performance guarantees Shifts some repairs to dealers.

13 The Career Equipment Fleet Manager - Outsourcing - Page Use preventive maintenance contracts Shifts periodic maintenance to suppliers. 6. Use maintenance and repair contracts Shifts periodic maintenance and repairs to suppliers. 7. Use component exchange Shifts major repairs to suppliers. 8. Outsource as needed preventive maintenance Shifts PMs to suppliers. 9. Outsource as needed minor repairs Shifts minor repairs to suppliers. 10. Outsource as needed major repairs Shifts major repairs to suppliers. 11. Outsource as needed specialized repairs Shifts specialized repairs to suppliers. 12. Outsource as needed compliance inspections Shifts compliance inspections to suppliers. Never give up overall fleet and shop management activities to suppliers. Only company employees have the perspective, experience and motivation to perform overall management activities with the company s best interests in mind. Five Management Activities Which Should Always be Performed In-house. 1. Overall fleet management. 2. Overall shop management. 3. Overall administration management. 4. Overall risk and liability management. 5. Overall user group interface with fleet and shop department. Six Critical fleet and Shop Management Decisions Should be Kept In-house. 1. All fleet management model decisions. 2. All shop management model decisions. 3. All other management model decisions. 4. All fleet asset categories and classes decisions. 5. All asset locations decisions. 6. All shop locations decisions. There are Several Reasons Why Overall Management Should be Kept In-house. 1. Outside suppliers do not have required company insights to manage effectively the overall fleet and shop function. 2. If given opportunities, profit-driven suppliers will maximize profits at company expense. 3. Few suppliers have the expertise to optimally integrate the fleet asset and shop labor system into the company s other systems.

14 The Career Equipment Fleet Manager - Outsourcing - Page 13 Daily, Weekly, Monthly and Scheduled Inspection, Maintenance and Repair Activities Which Should be Kept In-house. 1. Keep in-house daily-to-weekly maintenance and minor repair activities. 2. Keep in-house weekly-to-monthly maintenance and minor repair activities. 3. Keep in-house scheduled maintenance and repair activities. A List of Reasons Why Most Repetitive and Low-value-added Activities Should be Kept In-house. 1. Maximizes vehicles and equipment days, shifts and hours available to rent, which maximizes utilization and return on investment rates. 2. Copes with technician shortage because these are lower-skill activities. 3. Practical because lost time waiting on suppliers to perform lower-skill activities cannot be justified. 4. Practical because these activities are lower-cost, lower-value-added activities and supplier travel time costs cannot be justified. 5. Maximizes production of core business products and services by keeping assets onsite and available to work. 6. The following illustration lists those activities which should be outsourced. Outsource Most Non-repetitive and High-value-added Activities and Administrative-intensive Activities 1. Outsource all major repair activities. 2. Outsource all specialized repair activities. 3. Outsource all annual compliance activities. 4. Outsource all administrative-intensive activities. 5. Others 7. The following illustration lists reasons why most non-repetitive and high-value-added activities and administrative-intensive activities should be outsourced. Reasons for Outsourcing Non-repetitive and High-value-added Activities and Administrative-intensive Activities. 1. Maximizes vehicles and equipment days, shifts and hours available to rent, which maximizes utilization and return on investment rates. 2. Copes with technician shortage because these are high-skill activities. 3. Practical because lost time waiting on suppliers to perform higher-skill activities can be justified.

15 The Career Equipment Fleet Manager - Outsourcing - Page14 4. Practical because these activities are higher-cost, higher-value-added activities and supplier travel time costs can be justified. 5. Maximizes production of core business products and services by keeping assets onsite and available to work. 6. Redos are covered by supplier parts and labor warranties. 7. Reduces risk and liability exposures. 8. Others For questions, comments, criticisms and additional information: Call Kelly Walker, author, at (214) Purchase the complete training manual on this subject from AEMP's training library: