Using a TCR approach to look at all the cost components of fleet repairs

When considering the cost of repairs for your fleet, it’s worthwhile to look past the mechanic's bill. In the realm of vehicle repairs, understanding the true overall cost paints a clearer picture than just the cost of the repair itself. The total cost of repairs (TCR) include the lost business benefits while the vehicle is off-road, repair handling costs, as well as the direct repair costs. While the weight of the TCR components may vary across different fleet types, adopting a holistic view of all elements contributing to repair costs is key for making informed decisions.

In this blog, we dive into the various facets that contribute to your TCR and the cost savings you can achieve for your fleet by leveraging digitalization to manage all the relevant cost components.

What makes up your total cost of repairs and why is it important?

When a vehicle in your fleet requires repair, the direct repair costs make up an important part  of your fleet’s TCR. However, there’s a wealth of opportunities when you explore the various cost components that go into your fleet’s TCR rather than solely looking at direct repair costs. This includes repair handling costs and vehicle off-road costs which when optimized, bring significant cost savings.

• Repair handling costs — Repair handling costs refer to the expenses involved in the administrative work of managing or facilitating your fleet repairs. This includes calling and emailing all the stakeholders involved in the repair process, damage intake and inspection, invoicing, etc.
  
  At an average of 3%, repair handling costs make up the smallest part of your total cost of repairs. However, this number could rise up to around 5% for fleets who still have a largely manual and inefficient repair process.
  

• Vehicle off-road costs — Vehicle off-road time is the period when a vehicle is unavailable for use in a fleet due to maintenance, repair or any other circumstance which renders it temporarily out of operation. The cost of vehicle off-road time depends heavily on the type of fleet you are operating.
  
  For rental and service fleets, every moment a fleet vehicle is off the road represents a potential loss in revenue, while vehicle holding costs (the expenses associated with owning and maintaining a vehicle while not in active use) continue to add to your TCR. A common challenge arises when repairers pick up vehicles, only to have them idling for an extended period until there's available capacity for repairs.
  
  Companies often make use of replacement vehicles to restore lost fleet utilization. However, the cost of hiring a replacement vehicle becomes an additional expense, contributing to an increase in the total cost of repairs.
  
  Vehicle off-road costs represent on average 1/3 of a fleet’s TCR. Here, selecting a repairer based on the right skills and availability will significantly contribute to the efficiency of your daily operations.
  

• Direct repair costs — Direct repair costs represent approximately 2/3 of your fleet’s TCR and it includes the cost of repairing or replacing damages with new or refurbished parts, paint and labor costs as well as possible transport costs.
  
  Strategies to mitigate direct repair costs include emphasizing repair over replacement and actively seeking competitive repair bids. However, rising parts and labor costs due to vehicle complexity and limited repair capacity complicates efforts to control direct repair costs.
  
  Furthermore, attempting to curb direct repair costs may have unintended consequences, potentially compromising repair quality and increased vehicle off-road time. Balancing these considerations becomes increasingly crucial for effective repair management.

How you can leverage digitalization to manage your total cost of repair and realize significant cost savings

Embracing digitalization in your repair process will contribute to operational efficiency, maximizing fleet utilization and reducing overall repair costs.

Through digitalizing the repair handling process, you can streamline workflows and eliminate redundant or non-value adding tasks on both a local and international scale. When doing this effectively, fleets can save between 40-60% on repair handling costs. For example, instead of spending time on back and forth phone calls or emails and unnecessary physical inspections, everything can be communicated quickly and efficiently through a digital platform.

Furthermore, digital solutions provide rich data insights such as information on costs, cycle times, and repairer performance. Leveraging data and the expertise in a repairer network is a great way to lower your TCR. By doing this, fleet and claims managers can make informed decisions and choose the repairers that best match their business’ needs. This leads to smarter repair allocation which minimizes vehicle off-road times and as a result, allows for potential savings between 20-40%.

Moreover, you can save on direct repair costs through leveraging data and the expertise in a repairer network. You’re able to make use of strategies such as prioritizing repairs instead of replacement and repair tendering without compromising on repair quality and minimizing vehicle off-road time. This approach enables savings of 10-30% on direct repair costs, contributing to a more cost-effective and streamlined repair process.

In conclusion, it pays off to take a total cost of repairs approach. By optimizing the repair handling and vehicle off-road cost components, you can achieve operational efficiency and maximize fleet utilization. This is possible all while saving on direct repair costs by applying data-driven digital solutions in your repair process.

Fixico’s solution

Fixico’s digital platform allows you to optimize your repairs and find the best repair solution for each unique damage. Would you like to know more about your fleet’s total cost of repairs? Get in touch for a quick scan and discover what you can save!