Justifying Maintenance Costs by Aligning with Productivity
With as much attention as forklift maintenance gets in industrial circles, there is no doubt that properly maintaining a warehouse’s lifts is a good thing.
While maintenance is universally described as a path to saving costs and time, this concept is not often spelled out in detail and simply left at face value. To be literal for a moment, forklift maintenance incurs cost and time to perform, and any resulting savings are inferred in comparison to a figurative condition where that maintenance did not occur.
This makes the process of selling maintenance budgets more a game of risk and fear, where the chance of failure or accidents become the real point being sold.
So then, how can warehouse fleet managers firmly quantify their maintenance costs in terms of true time and money savings?By introducing the managerial metric of Productivity.
Defining Forklift Productivity
Productivity in a warehouse environment is defined as how much beneficial work is completed successfully within a set amount of time by a set amount of input resources.
Productivity is often expressed as a ratio or a value per unit input as seen with this formula:
Total Output / Total Input = Productivity Factor
For example, Warehouse A may complete 500 pallet moves per hour using 10 forklifts, while Warehouse B may complete 480 pallet moves per hour using 8 forklifts.
Warehouse A: 500 pallets per hour / 10 forklifts = 50 pallets per forklift per hour productivity
Warehouse B: 480 pallets per hour / 8 forklifts = 60 pallets per forklift per hour productivity
From this example, we can see that Warehouse A moves slightly more pallets per hour than Warehouse B overall.
However, Warehouse B is not far behind while using fewer input resources (forklifts). In fact, Warehouse B is moving more pallets per forklift per hour than Warehouse A, making Warehouse B more productive in the use of its forklifts.
How to Quantify Forklift Maintenance in Productivity Terms
Now that we understand forklift productivity in concept, let’s connect this line of thinking with the value of forklift maintenance.
From this perspective, fleet managers can move away from justifying their maintenance practices in terms of figurative costs and instead now in terms of productivity.
- Uptime versus Downtime – since productivity measures work performed by each forklift, maximizing a forklift’s uptime (or time in operation) becomes the fundamental objective of forklift maintenance.When forklifts are maintained in strict compliance with OEM requirements, warehouses benefit by being able to complete the largest amount of work with the fewest resources.
- Operational Variance Reduction – as a warehouse adds forklifts and operators, it inherently declines in productivity because not all lifts and operators are created equal.Newer lift models and more experienced operators are naturally more productive than older lift models and inexperienced personnel.Maintenance plays an important role in reducing this variation by keeping lifts in the best operational condition possible while also reinforcing operator confidence.
- Safety Enhancement – it goes without saying that a safer environment is a more productive environment, but let’s say it anyway.Forklift maintenance directly bolsters a fleet’s level of safety by warding off impending equipment failures, ensuring reliability of braking and warning systems (IE lighting and horns), and catching indications of unsafe behavior ahead of time (IE uneven tire wear indicating aggressive driving).All safety-related accidents directly cause lost time and money (including fines), which in turn reduces productivity.
- Service Life Extension – going beyond mere downtime, taking a forklift completely out of service because it has reached the end of its useful service life delivers a large blow to a warehouse’s productivity.While most forklift replacements are planned and new forklifts purchased ahead of time such that the time disruption is minimal, let’s go back to our definition of productivity as reflecting any input resource (including cash).From this perspective, it would have been a more productive use of capital to better maintain our lifts over time than to have to purchase new lifts prematurely.In this way, maintenance costs that target extending a lift’s service life is another way to be more productive.
- Indirect Impacts – continuing with the above concept of viewing productivity in terms of all resource types involved in a warehouse, many more indirect links can be made between proper forklift maintenance and heightened productivity.For example, well maintained forklifts often have fewer leaks, consume less fuel, take less time to run through pre-shift checklists, charge faster, cause fewer damaged pallets and containers, generate less waste heat, and are favored amongst operators.All of these examples and more indirectly reduce resource loading and thus boost warehouse productivity overall.
Connecting Warehouse Forklift Maintenance with Productivity in Managerial Terms
Using the methods we’ve described above, fleet managers can now see many new avenues to justify their maintenance expenses in terms of total warehouse productivity.
These productivity metrics offer a great way to define the value of maintenance positively associated with accomplishing more work with fewer resources.
Going further, fleet managers can begin to wrap these ideas into larger organizational objectives that are most important to executives, such as:
- Resource Utilization – business leaders routinely compare their organization’s performance to their competition in terms of asset productivity, which in material handling spaces commonly takes the form of Revenue dollars by Warehouse Square Footage, or Net Earnings by Market Capitalization. While certainly not as glamorous, forklift maintenance benefits overall productivity in exactly the same ways that resource utilization metrics measure.
- Personnel Engagement– with as much attention as current labor market turbulence receives, representing forklift maintenance’s impact on personnel factors is a timely subject. Proper forklift maintenance normalizes and incentivizes good operator behavior while also broadcasting positive work culture values. As such, forklift maintenance boosts warehouse productivity in key employee-first ways. We would even go so far as to say that a proactive maintenance culture is both a competitive differentiator as well as a direct HR benefit to prospective employees.
- Predictive Performance-Based Cost Management – in business, nobody likes (bad) surprises. Forklift maintenance directly reduces the chances of such surprises by building reliability and level-setting performance directly into a warehouse’s forklift fleet. Over time, well-maintained fleets become the pinnacle of predictable performance, and this predictability can be translated into critical business costs such as overhead costs, insurance premium costs, contract cost margins, and scaling costs. As data is aggregated, the humble function of forklift maintenance can be used to build very robust predictive analytical models that can be used to forecast a warehouse’s cost profile into the future simply based on the highly reliable performance metrics that a well-maintained forklift fleet provides.