Do you know what is fleet management?
It is the act of keeping your cars in a state that allows them to be safe, dependable, and stay on the road for an extended period. Among other advantages, creating a preventative maintenance programme assists firms in lowering operational expenses and improving the results of vehicle inspections.
Nearly all facets of a car fleet management business are closely related to a safe and dependable fleet. This includes everything from keeping employees safe from legal issues and following all applicable rules and regulations to customer satisfaction and a company’s bottom line. Everything fits into the bigger picture. Of course, cutting expenses and improving efficiency might be the distinction between a fleet business that is profitable and prospering and one that is worthless.
The Importance of Calculating your Fleet Maintenance Costs
Any asset with mechanical parts, whether it be a car, truck, or system component, needs routine maintenance or auto care services to ensure proper operation and lengthen its lifespan.
A property that is not in use is expensive. Each day spent on maintenance or servicing an asset is a day of liability as it doesn’t generate income for you. If unplanned downtime lasts for weeks as opposed to days, possibly as a result of waiting for components or a lack of manpower to complete duties, these costs can add up rapidly. Similar circumstances over the whole fleet and this “waste” will quickly have a detrimental effect on a company’s profitability.
How to Calculate your Fleet Cost of Ownership?
Since your fleet’s total cost of ownership is the total of the separate costs of owning each vehicle, you must first compute the individual costs of owning each vehicle in your fleet to get your fleet’s total cost of ownership. However, you must first estimate the duration of service for each vehicle in your fleet before you can compute their individual cost of ownership. Both time and miles travelled can be used to calculate a vehicle’s service life. Once the term of operation for a vehicle has been established, you can use this information to estimate the vehicle’s remaining value at the end of the operation.
Residual Value = Initial Cost – Depreciation
The cost of ownership for any individual item may be calculated using the following equation once all relevant expenses and value measurements have been established:
Initial Cost + Operating Costs + Maintenance Cost – Residual Value = Individual Cost of Ownership
7 Tips to Reduce Fleet Costs
1. Analysis the cost
It is no secret that your budget figures will fast exceed your targeted levels if you are not properly monitoring your fleet expenditures. One statistic, in particular, the total cost of ownership, should be your primary emphasis if you’re struggling to stay inside your budget (TCO).
You can accurately gauge the total cost of managing your fleet and determine which assets are cost-burdens by determining the TCO for all of your assets. Without knowing that figure, you won’t be able to establish what your fleet’s set point is, making it almost hard to develop methods that genuinely cut your cost.
2. Replacement and disposal of fleet
Associated costs rise with the age of the car. Your fleet’s total expenditures, such as downtime, maintenance and repair, fuel, and safety risk management, can be decreased by regularly replacing your fleet’s cars.
Although it takes effort, creating a successful vehicle replacement strategy may save your fleet money in the long run. It entails compiling an exhaustive inventory of your fleet, setting guidelines for when you should replace cars, and calculating related expenses.
3. Paying less
Although it might seem intuitive, the fleet may not be optimising their buying procedures to initially pay less for their products and services. Fleets can employ the following procedures to lower initial fleet costs if you are not already doing so:
a) Using cooperative buying agreements to choose better offers and save administrative work
b) Establishing long-term agreements
c) Conversing with suppliers
d) Creating buy-price guarantees
4. Optimizing the routes for the driver
One of the best methods to reduce fuel costs and fleet maintenance expenses is route optimization. Many cutting-edge fleet scheduling and management solutions come with features that help managers choose the most efficient route for each task.
The system uses data analysis to dynamically plan trips so that drivers may reach their destinations as fast as possible while consuming the minimum amount of gasoline. This information includes fuel economy, traffic, and even temperature fluctuations. Over time, savings from better routes can add up and help teams reduce fleet costs.
5. Streamlined Outsourced Maintenance
Fleets can save money by outsourcing their maintenance, but if maintenance suppliers are not properly monitored, expenses can spiral out of control.
When working with your maintenance suppliers to reduce costs, follow the below points:
a) All repair jobs or actions that reach a specific level should require authorisation.
b) Organize a specified preventive maintenance programme
c) Establish performance benchmarks for time and quality
d) Verify the quality
e) Check the correctness of the invoices.
A new method for monitoring the work being carried out with your external providers should also be considered. Some fleet management solutions, such as Fleetio, allow you to link with specific third-party suppliers so that you can monitor and approve repair orders and bills on the same platform that you handle other fleet budget items. This gives you greater visibility into the precise work that is being done to your resources in the workshop and the associated costs.
6. Cheap fuel
The majority of gasoline cost-cutting measures concentrate on lowering usage, but there is also room for reductions just at the point of purchase. First and foremost, logistics companies must compare prices on gasoline cards with possible additional savings.
Better route planning may also make a big impact; for example, paths that allow for fueling in the most affordable places may be substantially more economical. Long-term savings can be enormous when drivers are assisted in avoiding more expensive highway or petrol station refueling spots.
7. Washing solution
Cost-saving potential related to the wash cycle is rarely taken into account for something so important to the efficient operation of a fleet of heavy trucks. Costs for fleets that rely on outside car washes can skyrocket as your business expands and more cars are added. Not to mention the expensive downtime brought on by having to move vehicles to a different location to be cleaned.
Your firm will undoubtedly save money if you purchase an automated wash solution for your fleet. The initial expense of an autonomous wash system will quickly be compensated by a significantly lower cost-per-wash as your fleet will no longer be subject to the significant markups imposed by washing suppliers.
Read More: How Much Fuel Is Consumed When AC Is On?
The advantages of GPS fleet monitoring go well beyond keeping track of drivers’ work and rest hours or assisting managers with route planning; a full telematics system also includes engine analytics, which is essential for remaining current with fleet maintenance.
They may assist keep a record of service and diagnostic reports in addition to tracking automotive parameters like wheel loads and tyre pressures, giving insights from information that would be hard to handle manually. Additionally, to make sure you don’t miss a service, they notify you when maintenance is necessary by either automatically tracking maintenance intervals based on the date or odometer.