The next step: 3 innovative and effective ways to lower fleet costs
The current financial and economic climate is continually requiring companies to look at ongoing cost cutting measures. Your fleet management efforts have already resulted in a cost-optimized fleet. But, corporate targets are once more pressuring you to lower the TCO of your fleet. If you recognize this, here are three effective, next step cost saving measures that will cut fleet costs, not service levels.
In my previous blog post I’ve given insight into cost savings for fleet in developing countries: such cost-saving measures have been adopted by fleets in mature markets. In fact, most fleets have in place a cost-efficient operating model, using any one or all of these best practices:
• Best-fit sourcing model with economies-of-scale advantages with OEMs, leasing companies, fuel providers and insurance companies.
• A harmonized and international approach, effective eligibility rules, optimal term and mileage, best method of car allocation and the right level of risk sharing with the driver.
• Optimal car choice with fit-for-purpose vehicles and ‘rightsizing’ of the fleet.
• Fleet management has the right level of outsourcing and the governance structure of the fleet category is well embedded in the organization.
Despite all these levers being in place, organizations are expecting further cost savings. At first glance, this may seem to be an impossible task, but we’ve taken a look at next-level optimization and found three measures that potentially offer the sought after cost reductions. Key to these three measures is their driver focus.
The 3 next-step cost saving measures
1. Smaller incremental savings
Smaller, incremental savings can, at the end of the day, add up to considerable savings. For example, if you have an optimal car choice in place, the car model offering might be the right choice, but have you considered a vehicle’s options and accessories? Not only are these changing fast as new technologies become available, but some options might already have become obsolete.
Or take the channeling of maintenance services. Now, driver apps provide real time information on car maintenance and point drivers to the best place for maintenance and repair services. Encouraging drivers in this way to use your preferred garages cuts back on your TCO.
2. Make all costs visible
OK, so you’re aware that cars that stand still cost you money. But, do you have full insight into the utilization of your fleet? For instance, are all available vehicles being put to good use? Optimizing your vehicle pool by focusing on the quickest re-allocation of vehicles can bring you considerable cost benefits, while cutting down on hassle for drivers and thereby benefiting them as well.
Another less visible cost is the taxation on smaller cost elements. Take reclaiming VAT or other taxes: regulations tend to vary so much that adopting a country-by-country approach could bring you unexpected cost benefits. In fact, even what may seen small alterations to the processing of invoices can already have a major beneficial impact on your VAT payments, and therefore your TCO.
3. Put your drivers first
Whatever cost-saving measures you take for fleet, it’s your drivers who, at the end of the day, can significantly impact your costs by their driving behavior. It’s drivers and driver satisfaction that also impacts vehicle and lease choice. We’ve noticed that companies with a clear-cut, fit-for-purpose offering have managed to boost driver satisfaction while, at the same time, reduce their TCO. The introduction of a private lease scheme for employees not eligible for full company car benefits, and car sharing schemes are just two of the successful measures that such companies have used to achieve their targets.
And, last but certainly not least: as telematics technology is getting more sophisticated and accepted – not merely as a recording tool for where vehicles are and how long their journey is, but as a tool to modify journeys and save time and money – it can be used to make intelligent fleet decisions about driver training, fuel consumption and accident reduction. And, importantly, it can be used to show insurers the levels of safety achieved, with the potential for reduced premiums.
When savings and safety go hand in hand
Achieving the next level of savings goals in a well-managed fleet is anybody’s challenge. But what, up until now, had been seen as less obvious elements of fleet, are pointing the way to the future of cost-effective fleet management. By focusing on your drivers you will be able to reduce costs even further. Pay attention to their needs, requirements and driving behavior, and provide them with the right training, technologies and apps. This will save costs and have the added benefit of improving driver satisfaction and safety.