12
FLEET MANAGEMENT
Renegotiate with service suppliers
If the organisation that has not assessed the way it
buys and sells its vehicles for some time talk with your
service suppliers to see whether better service levels
or discounts might be available.
Organisations need to be aware that this approach brings
issues that can prove difficult for companies to manage.
Duty of care legislation places an onus on companies
such as ensuring that the vehicle is adequately insured,
correctly maintained and fit for the purpose used.
Think about fleet cycles
The process
As depreciation is the biggest single cost in vehicle
ownership one way by which fleet costs can be
lowered is by extending the vehicle retention period.
Smart operators will be looking at extending vehicle
retention periods up to four, five or six years. Many
vehicle suppliers are extending their warranties up
to five years as well as offering fixed service pricing
ensuring that vehicle reliability does not become a
financial problem.
So what is the best way to effectively and efficiently
manage what is usually the organisation largest
single expense; its fleet? While there is no one
simple answer there is a process that will provide the
organisation with visibility which is the first step in
the control process.
Do you really need the vehicle?
Utilisation is one of the simplest forms of efficiency
measurement. Vehicles doing less than 10,000
kilometres a year should be assessed to determine
whether the service it provides can be met by some
other means. This is especially true for ‘tool of
trade’ vehicles while vehicles assigned as part of a
remuneration package are usually subject to different
criteria. However, as FBT, a company tax, is applicable
at 20% when a vehicle is available for private use
it might be more cost competitive to investigate a
vehicle allowance scheme.
Tracking data and costs
A good fleet software system should provide visibility
and the ability for proactive management of key areas
such as static and overall running costs, emissions,
fuel use and duty of care. Without such data and
visibility you will be operating blind and will find
control difficult.
Identify and rationalise the transport tasks
A clear understanding of the transport needs along with
the identification of any specific utility requirements for
each vehicle is vital. This process will correctly categorise
your fleet into the relevant vehicle definitions.
In most cases when we talk about the fleet we are
actually referring to a collective number of distinct
vehicle groupings i.e. Tool of Trade, Salary Packaged,
Salary Sacrificed or Novated Leased.
Each of these categories has their own distinctive
needs and requirements which necessitate their own
set of management policies and procedures. Therefore
determining just what your transport needs are is the
very first step in the process.
Fit for purpose evaluation
Once the technical needs and specifications of a vehicle
have been identified you will need to identify all those
vehicles that adequately meet these requirements.
Whole of life costs
Grey fleet
Whole of life costs is one of the most important
steps of the vehicle selection process, regardless of
how an organisation chooses to obtain its vehicles.
In the decision making process careful consideration
is needed to ensure your analysis will encourage the
best purchasing decision. The loss from a poor buying
decision will be multiplied by the number of vehicles
you have in your fleet.
Grey fleet is a term used to describe privately owned
vehicles used by employees for company business.
Care should be taken not to de-spec a vehicle purely
in order to reduce its initial purchase cost. What
Some fleets also choose to integrate GPS and route
planning software into their operations. While this
can reduce mileage and decrease costs there is a
down side. Such systems tend to produce extreme
amounts of data that needs to be managed and more
importantly acted upon.
Govlink I Issue 1 2014