With tight fleet budgets, it’s key to relieve pressure on your bottom line as much as possible. Investing time to strategically rethink components of your fleet can have major payoffs.
In this post, we consider multiple best practices to reduce fleet costs per suggestions of Mercury Associates, Inc. during The Work Truck Show 2018 session Fleet Management 101.
As vehicles age, associated costs increase. Replacing your fleet vehicles periodically can help reduce overall costs, including downtime, maintenance and repairs, fuel and safety risk management.
Developing an effective vehicle replacement plan is a time investment but can provide long-term savings for your fleet. It involves creating a detailed inventory of your fleet, establishing parameters for when to replace vehicles and estimating associated costs. We outlined the full process for creating a vehicle replacement strategy in this blog post.
Fleet right sizing is important to purge your fleet inventory of vehicles that are highly specialized or underutilized. These vehicles are likely not crucial for fleet operations and shedding them can lower maintenance, fuel and administration costs.
The right sizing process involves the following steps:
- Identify major fleet vehicle classifications
- Calculate average annual utilization by class and identify vehicles with utilization rates in the bottom 50 percent
- Pinpoint special vehicle utilization circumstances
- Determine vehicle criticality
- Survey users to find average trips per day, number of people transported, typical use, result if vehicle is not available
- Dispose of the non-critical vehicles
Improve disposal practices
The more money you can get for a fleet vehicle you are selling, the better. Best practices to increase the going rate of vehicles include:
- Sell as soon as possible since the value of vehicles can depreciate by $6 a day
- Increase your potential buyer base through tools like online auctions
- Prepare vehicles for sale like cleaning, providing manuals and service records
When fleet management is centralized, it can provide efficiencies and cost savings that individual departments cannot realize.
Consolidating fleet management provides:
- Larger economies of scale
- Increased efficiency through fewer redundancies
- Greater flexibility through shared resources like tools, technicians, etc.
- Standardization of processes and outcomes
- More holistic perspective of the fleet
Maintenance vendor management
Outsourced maintenance can save fleets money, but costs can also get out of hand when maintenance vendors are not managed effectively.
In order to optimize costs with your maintenance providers:
- Require authorization for all repair tasks or tasks at a certain threshold
- Establish and schedule specific preventative maintenance tasks
- Develop performance standards including time and quality
- Conduct quality checks
- Review invoices for accuracy
All too often warranty management is a missed opportunity for fleets. It’s important to keep up with warranties so you can avoid paying for parts or services that are already covered. Otherwise, you are leaving money on the table!
If it is difficult to stay organized, one way to keep up with all this information is to store it in your fleet maintenance software.
While this may sound obvious, fleets may not be optimizing purchasing processes to pay less money for their goods and services initially. If you are not following these already, practices fleets can use to reduce initial fleet costs include:
- Utilizing cooperative purchasing agreements to reduce administrative effort and select better deals
- Establishing multi-year contracts
- Negotiating with vendors
- Developing purchase price assurances
Driver behavior improvement
Driver behavior can have an impact on fleet costs including fuel consumption and risk of accidents.
For example, poor driving behavior like rapid acceleration and harsh braking can reduce fuel economy by 10 to 40 percent. Also, texting while driving can increase the likelihood of an accident by 23 percent.
Vehicle accidents quickly increase fleet costs, especially when it involves litigation. According to the National Safety Council (NSC), one company had to pay $21 million in damages after a driver got into an accident while using his cell phone.
In order to reduce these avoidable costs, fleets should adopt driver monitoring systems to improve driver behavior. These monitoring systems have been found to help decrease fuel consumption by 10 percent and reduce accidents by 30 percent, which in some cases could save you millions.