Nov

ERM advises how to reduce fleet costs

2015-11-19 09:28
Murray Price, managing director of Eqstra Fleet Management: “Experience has taught us that the three most important elements of a Dashboard include reducing fleet operational expenses, improving driver productivity and reducing vehicle depreciation.”

Optimising fleet performance while minimizing costs remains the single biggest challenge facing fleet operators. To do this effectively, operators need to measure fleet performance on an on-going basis.

In a recent white paper aimed at guiding fleet managers to manage costs, Eqstra Fleet Consulting, part of Eqstra Fleet Management (EFM), suggests that the most efficient way to do this is to set up an Operational Dashboard. This gathers pertinent information on a daily basis and allows the fleet manager to analyse costs over time to get an accurate picture of his fleet expenditure.

“It is important he looks at the bigger picture rather than focusing on daily operational transactions as they can give a skewed picture of his fleet” explains Murray Price, managing director of EFM.

The Dashboard is compiled according to customized fleet needs and is mainly composed of data collected from vehicles. This data is then summarized and consolidated into a dashboard file and usually gathers information such as fleet utilization, maintenance management, accident reports, fuel reports, driver behaviour reports, vehicle condition reports, and financial status (depreciation schedules, annual cost per units, etc.)

“Experience has taught us that the three most important elements of a Dashboard include reducing fleet operational expenses, improving driver productivity and reducing vehicle depreciation,” says Price, offering the following tips to fleet managers:

Reducing fleet expenses
Carry out a quarterly analysis of performance and progress reports to spot trends in vehicle performance and driver behaviour. Quarterly or same quarter year on year analysis of the  summarised fleet expense report looks at the progress of all fixed fleet expenses such as depreciation, taxes, and administration fees, as well as variable expenses such as vehicle maintenance costs, vehicle accident repairs, fuel expenses, etc.

With fuel contributing up to 48% of fleet costs, fuel cards are a particularly useful tool in this regard. Information supplied from the fuel card will indicate which vehicles are correctly utilised. Swopping routes and improving driver behaviour can make a significant impact on fuel consumption.

Driver productivity
Driver productivity and behaviour play an important role contributing as they do to vehicle usage maximization and vehicle performance. Quarterly monitoring of vehicle statistics will highlight those drivers who have developed bad driving habits – regular speeding, excessive braking, excessive idling, fines, etc. This allows the fleet manager to institute a program of driver training thereby improving driver behaviour and reducing fuel and fleet costs.

Vehicle depreciation
Vehicle depreciation plays a significant part in fleet costs and since it impacts on the vehicle resale value, must be correctly calculated. When managing vehicle depreciation, fleet managers should consider two elements, these being:

  • Replacement cycle – consult with the manufacturer to understand and therefore avoid that period where normal wear and tear could cause some form of failure. To allow for good replacement planning, manage replacement reports that monitor service scheduling. Accurate mileage analysis impacts on a number of factors such as the vehicle replacement period, contract restructure, vehicle swap, tyre replacement cycles, scheduled maintenance, etc.)
  • Total depreciation – Fleet managers also need a report outlining the total depreciation of the vehicle, including the operational cost accumulated throughout the vehicle’s life. A summary of all such costs helps to determine the full selling unit expenses.  It is also vital to ensure that the resale market can absorb the price of the vehicle.

 

“An appropriate fleet operational dashboard reporting system will show the status of the fleet at any given moment,” concludes Price. “It is important, however, to focus on the correct data and analyse it carefully to obtain the information required. A properly developed report scheduling system will simplify processes and allow the manager to maximize his fleet performance”.

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