The operational fleet management costs are those that arise from day-to-day vehicle activity and the on-going business of running them. These associated costs include fuel, insurance and service, maintenance and repair.
We look at each and how you can reduce the costs.
This is a major expense of running a fleet, and it can fluctuate depending on a wide range of factors that are sometimes out of your control. That said, from a fleet management perspective, there are some actions you can take to best manage costs.
Firstly, we recommend understanding the performance of your vehicles – choosing those with the best fuel-efficiency is a good place to start.
Alongside this, it’s important to select the right type of fleet vehicles for the intended job. There is little point in picking a 4×4 vehicle to do short, urban commutes, for example. The tax, fuel and insurance costs alone will make it an expensive vehicle to run, let alone excessive wear and tear through start/ stop journeys.
For high mileage vehicle workloads, diesel has always come out the best in terms of value but with the recent changes to legislation and increases in taxes, this may no longer be the case.
Whichever fuel type you opt for, it goes without saying that it needs to be purchased at the best price possible. You have a number of options in this regard; for instance, have you looked at fuel cards?
There are other ways that you can influence fuel consumption, including changing the behavior of your drivers. Employees that are heavy on both the accelerator and brakes are going to have higher fuel consumption rates during each journey when compared to a driver that makes smoother gear changes and has more consideration for the vehicle.
If you suspect that your drivers are being over-demanding on your vehicles (telematics and fleet management can help evidence this) then it’s time to incorporate additional driver training and review company policy to help address this.
Also, the maintenance levels of vehicles can have a direct correlation to fuel consumption. A clear example of this is under-inflated tires that can, for example, increase fuel consumption by as much as 15%. See our four effective methods for more tips on how to reduce your fleet’s fuel costs.
We always recommend shopping around when your insurance premium is up for renewal. Whatever policy you currently have, you need to have an understanding of your risk to help reduce the costs of your next fleet insurance premium. Incorporating a risk assessment (usually with the support of your insurer and fleet management company) helps to analyze your claims history and highlight areas that need to be worked on.
Driver behavior, particularly those considered to be a risk, can have a significant effect on your premiums. Fleet driver training or fitting telematics into vehicles can help mitigate this.
Service, Maintenance and Repair (SMR)
Service, maintenance and repair (SMR) rates can have a big impact on your fleet management costs, but there are options to help reduce these costs.
There are both advantages and disadvantages to having an in-house workshop verses outsourcing the work. It’s not just about the costs though – thought needs to go into length of vehicle downtime, service level agreements and customer expectations. There’s no point using a cheap maintenance provider if the turnaround time is a week versus a couple of days for a more expensive provider. This could leave you without vehicles to fulfil orders and additional costs to hire in vehicles in the interim.
It goes without saying, always read the small print and agree on the service level agreements before outsourcing any work to avoid being tied into a contract that fails to meet expectations at the detriment of your business. With these sorts of contracts, it’s not always about cost but more overall value for money.
The importance of fleet management software
Having the tools in place to help you track and manage processes to enable informed decisions is paramount to any business. Fleet management software is a single depository for all fleet information including vehicles, fuel and drivers. By utilizing the information available, the reporting structures will provide an in-depth analysis of spend incurred, support the decision-making process and help control costs.