There are numerous challenges involved with running and managing a fleet. One of the most important of them is controlling fleet costs. This is because not properly tracking your fleet costs could have a negative impact on profitability and might also harm your business as a whole.
Professionally managing fleet costs is one of the best ways to ensure that you make decisions that will boost the company’s profitability because they are based on reliable data. It also enables management to develop a clear understanding of how and where funds are being spent and thus determine areas where cost savings are possible. The easiest and most cost-effective way to do this is by using specialized software.
Let us examine in more detail how tracking your fleet costs can help your business.
Tracking Fleet Costs Is Necessary In Order To Calculate The TCO or Total Cost Of Ownership
The total cost of running a fleet consists of both a fixed and a variable element. Fixed costs include things such as lease payments or loan repayments, permits and licenses, depreciation, and taxes. Since there isn’t much the company can do to reduce these costs, we will instead focus on controlling the second element: variable costs.
Variable costs depend on the size of your fleet and what you use it for. Examples include expenses such as fuel, toll fees, replacing defective parts, and routine maintenance. Unless you know what these costs are, how they vary over time, and from vehicle to vehicle and driver to driver, you will not be able to make data-driven decisions on how to reduce them. While this can be done with the help of spreadsheets, it will most likely be more time- and cost-effective to use cloud-based fleet management software.
It Will Help You To Control Fuel Expenses
For many fleets, fuel is their biggest ongoing variable cost. Although you can do nothing about the price of fuel, there are many ways in which you can manage and reduce fuel costs. One of them is to track the total fuel consumption of every vehicle over time and to compare it with historical data and with other similar vehicles.
If the cost-per-mile of a vehicle suddenly starts to show a sharp increase, the reason has to be determined. It could be e.g. caused by a mechanical problem or a new driver might have a different (and costly) driving style.
You Will Have The Necessary Data To Draw Up A Sound Fleet Maintenance Plan
It might never be possible to prevent all unplanned breakdowns, but by following a preventative maintenance system they can be reduced to the minimum. Such a system will ensure that the vehicles in your fleet remain well-maintained at all times. Without properly tracking fleet costs, however, you will not even know when it’s time for a specific vehicle’s next regular oil change, service, or parts replacement.
You Will Know When It’s Time To Retire a Vehicle Or Retrain Its Driver
If you properly track fleet costs, you will know when it’s time to get rid of a particular vehicle. If despite regular maintenance, and ruling out other possible causes, the running costs of a vehicle start to increase significantly, the time might have arrived to retire it.
Of course, other factors can also play a role – and with proper data, you should be able to easily find the culprit. The firm might e.g. recently have appointed a new driver and he or she could have driving habits that place unnecessary strain on brakes, tires, the engine, the gearbox, etc. One or two training sessions might be all that is needed.
The Bottom Line
Not keeping track of fleet costs is a bit like driving without headlights on a treacherous mountain road in the middle of the night. Something unpredictable is likely to happen sooner or later. Let Efficiency Enterprises help keep your fleet running smoothly with our fleet management partnership. Contact us to learn more.