5 Ways to Reduce Fleet Management Costs!

Fleet Management Costs

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Fleet management costs article and permission to publish here provided by Bryan Christiansen.

In principle, it sounds simple. If an organization finds a way to reduce operational costs, it can lead to savings that apply directly to the bottom line. In virtually any business, there is usually more that can be done in an organization through a deeper dive into fleet operation.

Here are 5 ways that a company can reduce operational expenses for fleet management.

1. Maintain Capital Expenditures for Equipment Upgrades

If your business uses service vehicles with a cracked dashboard and torn upholstery, it may be time to consider an update. While considering, think about how much expense goes into keeping high mileage vehicles running with the cost of repair parts, additional fuel consumption and lost work time while vehicles are not operational. 

Many companies work on a regular cycle where they invest in new high ticket equipment, whether it’s air conditioning units, vehicles, generators or something else. Companies should consider doing a repair and replace analysis. At some point, the maintenance costs will exceed the value the vehicle can bring to the organization. The best long-term solution is to replace it with a new one.

Avoiding the compulsion to cut capital expenses is important for purposes of efficiency and long term gain. While appealing, the action provides only short term benefit at the expense of the overall effort. It also prevents efficiencies in operation that provide a much greater return over the span of years. Achieving high efficiency requires investment, and this initial cost more than pays for itself. 

2. Implement Effective Maintenance Management Software

In two words, organization and savings. That is what maintenance software can bring to your organization. As a company grows, logistics become increasingly bigger and more complex. 

Efficiency is key, and the advantages are significant. Maintenance software can improve data collection for staff monitoring to determine their progress and time investment on tasks and servicing. It can also assist in determining specific metrics that affect the business. The software simplifies administrative control, enabling managers to invest less time and resources on this effort through streamlining and delegation. Record keeping is paperless, making it more convenient and less space consuming. 

More often than not, the software can also be used for managing spare parts inventory, mechanic training purposes, and most importantly, creating and managing routine maintenance schedules. All of this equates to business savings, as fleet management system software can lead to improvements in all of the areas listed above. It makes the business more cost-effective by reducing expenses associated with each of those activities.

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Doubtful if this is a wise investment for your business? Don’t be. In many businesses, reactive maintenance is a common theme. Unplanned tasks (unexpected breakdowns) can outnumber those that are planned. And unexpected breakdowns are very expensive.

3. Seek Volume Discounts and Company Fleet Programs for Recurring Expenses

When repair work or fuel purchases are needed for fleet operations, some people make their decisions based on factors such as convenience or time investment. Doing so unfortunately circumvents another opportunity for saving through the usage of volume discounts for overall fleet purchases for many basic operational needs, such as the aforementioned repair and fuel consumption. 

Reaping the benefits of utilizing fleet cards and loyalty programs can earn additional perks and savings through consistent use. Among other advantages, utilization can provide cashless purchases, convenient use of comprehensive reports detailing loyalty program usage, reduced costs through percentage discounts, and greater fraud protection. There are many examples of fleet cards that offer good value, but it’s important to compare programs to find the one that offers the greatest benefit.

Though the perks vary from program to program, loyalty points offered are usually based on the amount of money that a given company invests into the program. The programs have generally increased in sophistication over time, offering a larger selection of benefits which provides the organization with many options to select from.

4. Determine Potential Operational Efficiencies in Your Business 

Effective fleet management often comes down to nickels and dimes. Establishing more cost-effective ways to use your fleets will help reduce overall operational costs. 

Route consolidation would be a good example of what businesses should utilize. This is especially true for businesses such as landscaping/lawn care, pest control, food delivery or similar residentially based businesses. Keeping routes highly concentrated where a maximum number of customers can receive their servicing in the shortest amount of distance saves wear and tear on vehicles and labor hours in conducting services.

An additional example relates to a shipping or delivery service, where consolidating shipments when possible could relay savings in fleet management costs in the number of shipments needed and potentially decrease the quantity of delivery vehicles that require. 

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In both examples, asset tracking could be key in determining amounts of savings. Modified routes can be compared to previous ones to calculate savings in both fuel consumption and time requirements. Additionally, maintenance software can be used to track repair expenses over a given period of time. This way the company can measure its effectiveness as they attempt to reach a higher level of efficiency.

5. Build a Fleet Based on Efficiency and Practicality

To purchase or lease equipment at the right price is advantageous, as is finding the right equipment based on features it offers, and how long it can be expected to last. Operational considerations come into play as well, such as how much cargo a vehicle can hold and whether a given option is best suited for short or long distance travel. 

For those requiring ample space in their fleet vehicles, cargo vans have become immensely popular. Many options are available, with most being highly reliable and maintaining an excellent resale value when the vehicle becomes aged. They also provide efficiencies in the amount of cargo space they can provide (up to 200 cubic feet) and fuel consumption (up to 25 MPG).

A significant benefit for fleet purchases is customization, where vehicles can modify to the needs of your specific business with many different options. Shelving options are plentiful, and for purposes such as catering businesses it is possible to transform vans into refrigerated units.

Fleet Management Costs in Conclusion

When it comes to asset management in general, managers have to have to think long-term and have the big picture in mind. Oftentimes, cutting costs on equipment maintenance today, will result in big expenditures down the line. Reducing operational fleet management costs is a continuous effort best done through incremental improvements and it should be approached that way.   

Bryan Christiansen is the founder and CEO of Limble CMMS. Limble is a modern, easy to use mobile CMMS software that takes the stress and chaos out of maintenance by helping managers organize, automate, and streamline their maintenance operations.

Originally written for Supply Chain Game Changer and published on March 26, 2021.

One thought on “5 Ways to Reduce Fleet Management Costs!”

  1. Hey team, great post.
    Managers must think long-term and keep the broad picture in mind when it comes to asset management in general. Cutting costs on equipment maintenance today might often result in large expenditures later. Reduced operational fleet management expenses should be treated as a continual effort best accomplished through incremental improvements.

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