How many times have we heard it: “we need to cut costs”. I’m guessing you may have heard it at least once in the last month. If you’re a business owner you may have thought of it many more times than just the once. The simple fact is that the phrase is now a staple of almost every corporate yearly report or annual forecast.
Cutting cost has, in these globally unsettled times, become a business operation in itself. In this sense it should be bought into cautiously and care needs to be taken to cut the fat and not the meat. Like all other business divisions fleet management spending needs to be looked with a view towards reducing wasted spend.
Main cost areas (not including staff costs)
Maintenance and servicing – the costs for these depend heavily on labour costs. In many cases servicing does not include large parts upgrades. It can be tempting to avoid or skip these. However the cost and risk of disrepair can far outweigh the ongoing cost of servicing and maintenance.
Repairs and replacements – this cost will depend on labour and parts transit costs. The key to managing this bill is to appropriately manage the maintenance and servicing schedule. Some repairs and replacements, like timing belts, are unavoidable and need to be done at regular intervals.
Fuel – this bill can be managed in many different ways. From buying fuel efficient vehicles to training drivers to exercise acceleration restraint, there certainly are a lot of ways to save on fuel. The key here is to track, test and understand new ideas which offer savings.
Insurance – like a lot of other bills, insurance bills get smaller with good behaviour. These bills can be managed by listening to your provider’s advice and effectively communicating safety advice with drivers. Safe driving courses can also help in this area.
Finance costs – choosing the wrong finance package can cost fleet managers big. Good credit terms can mean additional funding for maintaining and managing vehicles. At the same time poor terms can lead to a hand to mouth existence. The advice here is to shop around and give yourself a large time window for the decision to be made.
Opportunities for savings
Fuel cards – yes, fuel is a commodity however that does not mean that discounts are unavailable. Fuel cards are one example of an area where small savings over long time periods can bring real benefits.
Fleet service providers – outsourcing can make some business people uneasy however an outsourced solution for difficult or menial administration can make sense. In most cases this is taking up the time of valued employees and can open the door to a more strategic internal approach. Using a fleet management provider can bring multiple discounts, higher grade reporting and higher quality fleet services to any firm.
Taking stock is a common catchphrase in business, but what does it mean? From a strictly literal approach it means counting what you have in your stores. From the less literal perspective it means thinking about all the tools and resources at your disposal. Fleet managers need to take account of both of these definitions. The discipline is all about understanding what resources, both physical and skill related, are available. In the end it is the most resourceful and strategic fleet manager who will deliver the most efficient business service.