José Elías Ramos del Mazo
Fleet Manager
View from the Top

In-House Fleet Management Allows Far Tighter Control

Mon, 09/01/2014 - 11:47

Q: How extensive is Bonafont’s fleet division?

A: The fleet division at Bonafont is responsible for the maintenance, availability, and purchasing strategy for the company’s fleet portfolio. We now have 2,000 home and office delivery units and almost 900 units for traditional market delivery, which covers all small local shops. Our primary logistics division, which covers our deliveries to big retailing chains such as Walmart, OXXO, and Comex, is supplied by third-party logistics (3PL) providers. Therefore, we do not own a fleet for that segment of our operations. Everything related to secondary distribution is dealt with inhouse but all the rest is outsourced, with the outsourced segment making up roughly 30% of our distribution.

Q: What are the most common characteristics that drive your purchasing decisions?

A: Our most pressing concern is safety, and our fleets all have ABS, air bags, and speed control. Our trucks are also installed with GPS and other telematics. This allows us to monitor the behavior of both the vehicle and the driver, enabling us to constantly improve and safeguard our operations. We have a regional structure with different managers in each area who are responsible for collecting and reading the data from the telematics. If they identify a problem with suspensions, for example, we will devise an action plan to solve that problem. If an issue is a driver-related problem, then we can address that directly. The analysis of this information is a crucial part of improving our operations. We currently use the collected information by telematics for our own purposes, but in the future it could be interesting to share this information. The use of telematics is not that prevalent in Mexico yet, and we faced some challenges early on in finding the right suppliers. We had some problems reading information from the units and a number of suppliers were only able to read certain truck models. For that reason, we worked with vendors to develop technology and create a common package that could read the data from all units. Today, this allows us to read data from Hino, Freightliner, and Sterling, whose units we use. It has really helped us track fuel consumption and driving patterns by allowing us to identify which routes are more complicated and design our operational strategy accordingly. Within the Danone Group, Bonafont is the only company using telematics as a control system for its fleets.

Q: When choosing a heavy vehicle product line, have your brand preferences been changing as more truck producers enter the Mexican market?

A: We first looked at the country’s major fleet operators to work out what vehicles had proved successful for them. We immediately saw that the most commonly used line was Freightliner, and we opted for that brand. Last year, we bought 52 units, all of which were Freightliner. However, one element we have been searching for is a better price point. Freightliner trucks are fantastic, but they are not cheap. That is why we decided to try Hino trucks, but we encountered problems sourcing spare parts for the trucks. Sterling has the same issues. Their trucks are strong and reliable, but you can spend a lot of time waiting for components. Bonafont’s home delivery trucks are from Foton, a low-cost Chinese brand. Each of these costs around US$30,000 on average, but again, there is a problem with spare parts. For example, it can take up to two months to receive a transmission as these parts are brought from China. We have also tried Isuzu trucks, which are reasonably priced and have a performance similar to Hino trucks. The parts for Isuzu trucks are also easier to source. During our fleet renewal process in 2015, 90% of the fleet will still be made up of Freightliner units, but 10% could be made up of Isuzu trucks.

Q: How important is the TCO in terms of fleet purchasing strategies in Mexico?

A: TCO is Bonafont’s main KPI. We evaluate fleet performance each month to constantly be aware of how much money is going into leasing, fuel, spare parts and so on. We are not the owners of the fleet, so we pay a leasing fee each month, which is a decision taken by the Danone Group. Every month, we know exactly how much each fleet is costing us. As soon as we see that one truck is costing more than another, we start the process of phasing it out and implementing the change of that unit. The first financial contract we signed to lease vehicles was for six years, but because of better maintenance and care efforts, we now believe we can take on a leasing cycle lasting up to nine years. We will be performing a renewal of our nine-year old fleet next year, representing around 90 vehicles. This incorporates just the city trucks, but in 2016 we will consider the renewal of our nationwide trucks, which will represent around 200 vehicles.