While it may seem simple from the outside perspective, we completely understand that there is nothing easy about fleet management. Your job as a fleet manager requires a deft touch both as an organizer and problem-solver, all while managing both employees and your fleet vehicles in a productive manner so that your company turns a profit.
Plenty of fleet companies with great service and people fail for no other reason than they didn’t have the planning and organization in place to effectively support their mission. Don’t be one of these businesses or fleet managers! Most fleet companies are vehicle-centric businesses, meaning their primary source of activity and revenue comes from long-haul transportation of goods, therefore, vehicles are the main tool of the business. Having a professional fleet management system to paramount to success — or failure.
Other businesses might have fleets that function outside their main focus, such as restaurants, banks, or gardening companies, so they’re not as familiar or knowledgeable when it comes to fleet management. In either case, there are many factors that can make or break the bottom line, so we here at Reeder Distributors Inc. in the Dallas/Fort Worth area put together some helpful tips to fleet management. While these tips don’t necessarily guarantee success, following them will significantly increase your company’s odds at thriving through effective fleet management!
1) Fuel-Efficient Vehicles
One of the biggest costs a fleet has — beyond labor — is the price of fuel. Gas prices are constantly in flux, but generally sit much higher than they used to be, especially when filling up a semi-truck, which costs hundreds of dollars to fill up with diesel fuel. Typically, the cost of fuel makes up around 12-20 percent of a fleet’s operating costs. In 2016 alone, a little more than $154 billion worth of fuel was spent filling up trucks in the United States.
It’s important to take fuel economy into account as much as possible when purchasing vehicles for your fleet, because even a few miles per gallon of difference adds up over time. Just think, if your vehicles average 5,000 miles per month (for easy math) at the current average cost of diesel fuel in the country at $3.17, you’ll spend $15,850 on fuel per vehicle (assuming they are all the same and driven the same). If you opt for a truck that does three miles per gallon better, you significantly reduce your yearly fuel costs, which then compound year over year — and vehicle after vehicle. That can be the difference between your business having the revenue to grow and stagnating or losing money!
2) Provide Company Vehicles
In some instances, a fleet may involve the option of employees to own the vehicle they drive and then are reimbursed by the company for mileage and other costs associated with the use of their vehicle for work-related activities. Usually, the cost of owning and operating a vehicle as an individual owner is more expensive than company-owned vehicles, which includes acquisition, insurance, financing, and repair costs. Why reimburse for all those expenses when you can cut down expenses and provide the vehicles to your drivers?
Tying in with our first tip, you have less control over other factors such as fuel efficiency, not to mention the added administrative costs involving the time-consuming process of having payroll process all the receipts and materials for reimbursement. A final benefit is your ability to maintain the safety of your vehicles, which you can’t really do with an employee-owned vehicle. Maintenance and testing can be monitored, both for safety and elimination of repair costs!
3) Regular Vehicle Service
As we just touched on above, vehicle maintenance is another huge factor for fleet management, both when it comes to employee safety and the significant cost of maintaining a fleet of vehicles. It can be extremely tempting to push routine maintenance to the back burner or sweep minor repairs under the rug altogether for the sake of saving upfront costs. However, those tactics will only ever come back to haunt you in the end and be exponentially more expensive than addressing them up front would have cost.
Well-maintained vehicles stay on the road longer and with fewer downtime in the shop for serious repair. The more your fleet stays on the road, the better chance you have of actually making a profit! If that wasn’t enough, vehicles that are regularly serviced typically run with better fuel efficiency, which as we’ve already established, is critical to your success as a fleet manager.
4) Correct Fleet Dimensions
Similar to other businesses out there, you can’t waste plenty of money by having your stock all wrong. Having too many vehicles can be just as detrimental to your bottom line as having too few vehicles. It’s well worth your time to do the appropriate research to figure out the optimal amount of vehicles your fleet requires to service your company’s needs while keeping associated costs of fuel, maintenance, and labor down — because they will add up quick!
5) Pick Appropriate Vehicles
As tempting as it can be to put out the finest looking fleet of vehicles out on the road, that is rarely the best use of your money as a fleet manager. Having the newest, biggest, nicest vehicles out there generally involves huge upfront costs that don’t necessarily save you any money over the long term. It’s important as a fleet manager that you figure out which type of vehicle you need to fit your core business priorities. This applies from the top down. Remain realistic on what you can afford and require and use the money you save to grow your business!
6) Reduce Mileage Where Possible
We’re going to hammer away at fuel economy once again because as you’re probably noticing, this is an absolutely key component to any effective fleet management! Utilize any tool you can to accurately track and report fuel usage from the driver level all the way through the entire fleet overview. Analyze and use that data to identify areas in which mileage can be optimized or fuel can be more efficiently used. The price of gas is not huge on an individual, one-time basis, but those costs all add up quickly and the final total can be staggering!
7) Lease or Buy?
For many fleet managers, they’re presented with the option of buying the vehicles outright or leasing them just like you would individually. For the most part, the factors you weigh are similar to daily life with your car, but when it comes to a fleet, we’re talking the same cost differences multiplied possibly hundreds of times over!
Obviously, buying vehicles means dealing with immediate depreciation, which is costly. But you want to do some in-depth research to see what you can afford upfront to buy and when the depreciation levels out over the lifetime of the vehicle and at what point the cost of leasing catches up and passes that of owning. Vehicles have a lifespan, meaning eventually the cost of repair and downtime will stack up quickly compared to their value. Whichever you choose, make sure you have a plan in place for replacing the vehicles to keep the cost of ownership/leasing at economically-sensible levels!
8) Pick Right Vehicle Lifecycle
Building on the previous tip, once you’ve decided whether you will buy or lease your vehicles, you need to identify the optimal life cycle of your fleet vehicles so that you don’t take on additional costs by holding onto them too long or eat the money you spent on them by selling or leasing new vehicles too quickly. We can’t provide you a simple answer here because there are just too many variables, but a little research and basic math can provide you a sensible answer!
9) Encourage Proper Driver Behavior
Fleet management does come down to you overall, but each employee out on the road can contribute to the eventual success or failure of the business overall. Most significantly, this comes from the driving behavior they exhibit day to day. Spending too much time idling, for example, wastes fuel when it isn’t needed. Driving aggressively or with poor technique can also rack up fuel and maintenance costs as well. It’s well worth your time and investment to require your drivers to take defensive driving courses and initial training before hitting the roads. Ongoing training is also a strong idea to ensure consistent driving behaviors you want to see!
10) Use Fleet Cards
An amazing tool for your fleet management is the use of fleet cards. We dove into fleet cards and why you should implement them in another post, which we highly recommend you read. Without covering the same ground again, essentially this gives you unparalleled control and information on spending by your drivers, simultaneously providing them the tools they need on the road and the information you require as a manager to facilitate spending across the entire fleet. Our Reeder fleet cards are accepted by 90 percent of fuel stations and maintenance locations in the country!
We hope you found all these tips to be helpful and enlightening! Again, simply following these tips will not guarantee any level of success necessarily, however, sticking to these principles vastly increases your odds at smooth and lucrative fleet management. It’s always important to remember that every situation is unique, so don’t be afraid to tailor these tips to your specific needs and circumstances!
Reeder Distributors Inc. understands the trucking industry is more complicated and larger than it seems on the surface and that as a fleet manager, you’re going to encounter unique problems. We’re here to provide solutions and aid where possible by providing you the essential tools you need to stay organized, efficient, and profitable! Contact us today to ensure your fleet is taken care of!