Incidental charges – randomly-incurred, often unfixed costs, including car washes, parking charges, tolls and miscellaneous out-of-pocket expenses.
Define the cost drivers for each key measure.
What are the factors that influence depreciation, fuel and maintenance costs? Can you control them? Find out what influences the other costs that you want to measure and minimise.
Depreciation- robust strategies that maximize the resale value have a positive effect on reducing depreciation. Consider your replacement policy; vehicle type / size, and level of equipment provided; and regional economic and market factors that may impact resale conditions.
Keep track of vehicles with heavy use, reallocate them where feasible, and be aware of seasonal changes in resale values to get the best possible return.
Fuel costs – they can be controlled through careful selection of vehicles, management of purchased fuel, and using tools to prevent fraudulent fuel purchases.
The use of driver training and technologies such as telematics can also lead to significant savings as they will help to reduce idling and excessive driving speeds, and to eliminate unauthorised vehicle use.
Maintenance costs- consider routine inspections of vehicles in the fleet to ensure that body, glass or mechanical problems are resolved quickly before they lead to significant costs for repairs or loss of productivity through downtime. Be aware of the warranty coverage and examine all repair expenses for possible recovery guarantee.
Next, compare your measurements against two( or more) benchmarks:
1) Your overall budget- know at all times how your actual costs are comparing to your projections.
2) Divisional performance – drill down to how costs compare from year to year, from business unit to business unit and even down to individual drivers. Establish if cost items are stable or fluctuating, and take the right steps at the right time to influence the numbers.
Report on key information
Up to date, accurate information presented in an intuitive format will allow you to truly understand your costs, spot trends and ultimately exceed the expectations of your company.
It is important to find a reliable, efficient way of collating information from each department involved in either vehicle, driver or asset finance activities. Armed with your base data, the next step is to quickly and easily be able to blend and report on the results.
Spotting exceptions and identifying trends will help you to drill into excessive cost areas, and using technology as a framework will ensure nothing is hidden or overlooked.
Reports that provide KPIs will give stakeholders in the business a sound grasp on company performance, especially when looking at costs. Exception reporting can also help to detect theft, fraud or other illegal activities that may be occurring within the business.
Financial reports for the fleet should be produced regularly in order to help spot issues early, and they should be available to all managers with responsibility for vehicles and / or drivers. Safe driving and cost effective, compliant vehicle management are part of the company culture, and engagement from the whole organisation is crucial if you are to make positive, tangible changes.
Know the data sources available to you.
A great many areas of the business are connected to the fleet, and knowing where to find the optimum level of information is key to effective cost control.
Fleet related invoices are a crucial source of data; giving you vehicle mileage, information about dealer terms / discounts, and of course those all-important advisory repair guidelines. HR routines such as timesheet reporting can give crucial insights into driver working hours and effective use of time. And fuel purchasing data is of course vitally important for uncovering avoidable costs.
Consider the best way of collating and storing the data streams- a robust fleet management system is unquestionably the most efficient means of capturing the right data and enabling you to quickly spot( and resolve) areas of excessive spend. Don’ t forget to factor in the less visible but ongoing costs such as insurance – consult with others within the business to uncover every conceivable expense associated with the fleet. And consider‘ shopping around’… having a routine in place to periodically review and challenge your service providers can result in savings.
Finally, determine what will be the most effective method for you to capture mileage and odometer information, and implement controls to ensure that you get accurate readings. Vehicle mileage is not only a key factor in all your operating costs, but also has a direct impact on vehicle depreciation, which is arguably the most costly factor within your fleet. �
07