What is good fleet management?
Having been in this industry for over thirty years, I have seen a lot of poorly managed vehicle fleets. This is generally because fleet responsibility falls into the hands of someone that has many other resposnsibilities. Although I understand why this is, it is unlikely that the person that the responsibility falls on either has the time or truly understands how to properly manage a fleet. This is no fault of their own so I figured I would give a little guidance as to how to manage a fleet.
The key to all great management begins and ends with the information. When a manager is empowered with the right information, they will be able to make the proper decisions, instead of guesses. The information that a fleet manager needs corresponds with the four costs areas associated with vehicles:
Acquisition: Most companies purchase their vehicles as a capital expenditure. By moving to a leasing option, the acquisition cost becomes an expense and is much easier to get approved. This keeps all of your vehicles on their optimal cycling points (link to last week) so that you maximize your trade-in value. Furthermore, a leasing program with a sound replacement plan, allows time to factory order a vehicle and get the exact features you need while paying less than what you would off a lot.
Depreciation: This is the largest expense associated with operating the vehicle. The key is to carefully capture the current operating costs for each vehicle so that you are able to plan for its exact optimal cycling point. Although this may seem like a pain, it will prevent any surprises that may come from diminished value or unexpected repairs.
Maintenance: If you carefully track maintenance costs you will be able to tell when acquisition of a new vehicle is less expensive than continual upkeep. Since we are in rough times many companies think that keeping their current vehicles will save them money. However, studies have shown that the money that goes into maintaining these vehicles could be applied to new vehicles for a cost savings.
Fuel: When fuel prices are low it is easy to forget how much of an expense this can really be. However, as gas prices continue to rise, it will be important to implement a good fuel management program. By carefully monitoring expenditures and mileage, it becomes easier to implement a program to save your company money. Many of our clients will see a savings of about 15% when they are willing to dedicate the time to this monitoring.
Although this may come off as a lot of time spent monitoring a fleet that you do not care about that much, the time will be well worth it. Once you are empowered with accurate information, you will be able to effectively manage your fleet.