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Janet Mays, Group Procurement Manager, NorthPower Limited
If you’ve ever watched a new vehicle ad, you’ll understand why managing a vehicle fleet can be so emotive. We see images of shiny vehicles driving on pristine highways or climbing hilly terrain in perfect weather, complemented by a happy family enjoying the climate control or talking to grandma via the blue tooth. It’s so easy to fall in love with a vehicle and to want it in your company vehicle fleet!
Managing a vehicle fleet is however a far cry from that shiny, new vehicle being gently put through its paces. Fleet vehicles tend to be work horses and their suitability and cost of operation matters.
Fleet management is about the effective daily operation of a vehicle fleet. Vehicles in fleets are worked hard and sometimes driven to their absolute limits. Without a disciplined fleet management approach, cost blowouts will occur.
This article focuses on fleet management, not fleet leasing. The two terms are routinely interchanged implying they mean the same thing, but they do not. Fleet management deals with the daily operation of the fleet, whilst fleet leasing deals with vehicle funding and ownership.
Any business operating vehicles needs to manage their fleet and contain vehicle operating costs. It sounds simple, yet many organisations don’t know what their fleet is costing them. And for those fleets that have been hijacked by emotive decision making, the costs can be very high.
So how do you know what vehicles to operate?
There are 3 steps to determining make /model composition:
1. Understand the job role of the person who requires the vehicle. What do you need the vehicle to be able to do (fit for purpose), how often (utilisation) and how many km will it travel (changeover parameters).
2. Examine all manufacturers for a possible fit. Talk to a variety of manufacturers about their vehicles. Consider safety, reliability, parts supply, service intervals and warranty. Ask about the experience of other fleet operators using their vehicle(s) and then talk to those operators.
3. Complete whole of life costings on the possible contenders. Measure the cost of operation of each vehicle - buy price, life cycle operating costs, resale value and taxes (quantitative analysis).
Take your stakeholders for the ride
Once you have determined a suitable vehicle(s) and before you commit to purchase, engage with your stakeholders and gather a group to test drive the vehicle(s). Seek formal feedback, as this will often uncover issues such as seating comfort, visibility and ride handling (qualitative assessment).
Combine your quantitative and qualitative results and make a decision. Share the “why” frame with your drivers to gain buy in.
Fleet costs are often the second highest fixed cost to business after wages. It’s surprising then that many businesses either don’t know what their annual fleet operating costs are or don’t have them under control.
As fuel comprises 60-65 percent of the annual vehicle spend, it’s essential to get fuel under contract, with point of sale purchasing controls and regular reporting to manage usage.
Maintenance needs to be completed by the manufacturer. This preserves warranty and ensures that vehicles are correctly serviced. Don’t be wooed by non-manufacturer service offerings. Modern vehicles are computers on wheels, so it is the manufacturer who is best placed to complete servicing and repairs.
Without a disciplined fleet management approach, cost blowouts will occur
A full history of manufacturer servicing will also enhance resale values and develop manufacturer loyalty, which is important in recall and parts shortage situations.
Keep tyres as per the original manufacturer specification unless you need a specific off road tyre. Use tyre professionals to help guide this decision as tyre selection is also emotive! Tyres are expensive and kilometre life spans matter.
Of course you need GPS!
GPS is essential in a well-managed fleet. Not only will it inform you about fleet utilisation, optimal fleet size and total km travelled, it will enable you to manage individual driver behaviours and improve safety.
There are many offerings in the market and those systems that provide immediate driver feedback (in cabin coaching) are preferred over basic systems that simply track vehicle location. Safety based systems support good employee relationships and eliminates the “big brother” discourse sometimes associated with GPS.
Proactive management of driver behaviours saves money through a reduction in accident repair costs and insurance premiums. It also saves lives and that is the greatest reward.
Wrap it all up in a comprehensive vehicle policy!
Policy is important because it spells out expectations and accountabilities.
Your policy needs to include:
• make/model composition;
• vehicle changeover timeframes;
• how to information (i.e. buy fuel, maintain the vehicle);
• advice of 24/7 support in the event of breakdown or accident;
• driver obligations and vehicle care expectations;
• GPS overview and Privacy Act information.
The effective management of a fleet is a complex process. There are plenty of in-house experts influenced by glossy ads, vehicle reviews and lifestyle choices, but the above methodical approach will ensure enduring success and cost control.