Fleet Management

[WHITEPAPER] FLEET SOLUTIONS DRIVE FLEET EFFICIENCIES & COST SAVINGS

By
FleetGuru
on
May 14, 2018

Feet managers, controllers, CFO’s, and company executives have discovered fleet solutions provided by third-party fleet management companies (FMCs) help free up time and allow them to focus on the strategic priorities.

Feet managers, controllers, CFO’s, and company executives have discovered fleet solutions provided by third-party fleet management companies (FMCs) help free up time and allow them to focus on the strategic priorities.

FMCs have professionals that work across industries and implement current technologies. They provide fleet management best practices and data to support the recommendations. FMCs provide continuity and the depth of team that reduces risk of staff being sick, on vacation, or leaving the organization

Every company deserves FMC experts with your best interests at heart. FMCs have proven strategies to preserve your fleet’s value, maximize resale profits, drive significant savings, and improve risk management.

This whitepaper highlights six fleet solutions offered by FMCs and what to key in on as you explore fleet management with the goal of getting it right the first time.

Fleet solutions include:

1. Improved operating efficiencies
2. Vehicle selection, acquisition, and upfitting
3. Fleet financing
4. Fleet replacement cycle strategies
5. Fleet remarketing
6. Executive fleet solutions

1. IMPROVED OPERATING EFFICIENCIES

Is your fleet operating as efficiently as possible? Do you gauge its performance against benchmarks and industry best practices? With the emergence of advanced data analysis and innovative technology, such as telematics, AI, and alternative energy sources, today’s managers must transition skills and develop new strategies to become the best in class, reduce costs, and improve safety.

Before jumping into solutions, it is important to benchmark your fleet’s performance in order to prioritize the improvement plan. Let’s take a look at some crucial measurements and tools to help strengthen your Fleet Wellness®, fleet efficiency, and fleet performance.

Repair & Maintenance Costs

Increasing repair costs could be a sign you are holding on to vehicles too long. Had you disposed of your vehicles earlier, expensive repairs could have been avoided. High maintenance costs could indicate that you are over-maintaining or over-using your vehicle. Ensuring both preventive maintenance is performed and ongoing repairs are tracked is critical to Fleet Wellness.

Fuel Costs

By tracking your fuel consumption, you can quickly identify a myriad of problems common to vehicle fleets, including maintenance issues, poor tires, improper grade of fuel purchased, improper driver behavior and inefficient driving routes. Fuel data can be used to confirm preventative maintenance work is done on time.

Fleet Availability

Several metrics can best help you measure and analyze the availability of your fleet; consider vehicle downtime, vehicle idle time, and the duration of time between repairs in comparison to your fleet’s total time available.

Driver Risk

Driver behavior and safety can be measured and tracked allowing management to address risky behavior, wasted time/fuel, and reduce accidents. There are several ways to measure the impact including the following:

– Total number of accidents per 100 hours of driving
– Insurance cost per vehicle
– Repair costs per vehicle

Improved Operating Efficiencies Solutions

After you’ve gathered and analyzed the data from measuring your fleet’s performance, identify inefficiencies and problems with your fleet. There are multiple fleet solutions available to optimize your fleet’s productivity and efficiency.

Reduce Repair and Maintenance Costs

Under a managed fleet maintenance program, companies pay for the actual cost of the repairs. Companies typically experience 25-40% net cost savings under a managed maintenance program versus a non-managed program. The components of a managed fleet maintenance program are listed below.

Preventative Maintenance

The best approach for vehicle repair is one that emphasizes prevention. Preventing problems before they appear not only drastically reduces repair costs over time but also significantly lengthens vehicle lifespan.

Preventative maintenance programs also manage factory warranties, ensuring a company will never pay for components that are already covered by warranty.

Vehicle Maintenance Schedule

Customized vehicle maintenance guides (VMGs) are prepared for every vehicle in the fleet. The vehicle maintenance schedule appears in graph format and illustrates different vehicle components that require routine maintenance and how often these parts should be addressed. Among the items on this list are oil, lubrication, filter changes, checking and adjusting brakes, transmission service, coolant service, tire rotation, tire pressure checks, fluid level checks, and fuel filter changes.

Established Vendor Network

Managed fleet maintenance provides access to an established nationwide vendor network. With more than 50,000 national account facilities and 7,000 independent repair facilities, service is never far away. Even more, a network rating system displays the top rated vendors and reviews on independent repair facilities.

Customer Contact Center

Managed fleet maintenance includes access to a toll-free, 24/7 customer service line. You can use this amenity to receive immediate attention from an on-staff ASE certified mechanic who can offer counsel on the best available repair shops near you.

Repair Process

The repair management process with managed fleet maintenance is straightforward. The driver who experiences a problem contacts the customer care center, where a certified technician captures detailed information about the vehicle and locates a nearby repair facility.

Once in the shop, they contact network specialists to see if the repair is necessary. The driver never has to deal with the stress of determining repairs on behalf of the company, nor has to negotiate the repair cost. The specialist takes care of both for them.

Detailed Reporting

No more manila folders and manual tracking via spreadsheet; managed fleet maintenance programs include detailed reporting. You can choose the timeline and format of these reports as well, with options including online, monthly, quarterly, and annual reporting. It also features line item detail, which allows for a drill down from summary reports.

Reduce Fuel Costs

A proactive fuel management program helps control cost, improve driver productivity, meet regulatory requirements, and provide for the collection of essential data used for management reports. With tools such as exception reporting and fleet fuel cards, you can quickly identify problem areas in your fleet and non-compliant drivers.

Minimize Driver Risk

Telematics is vehicle-tracking technology used to address driver risk, fuel usage, driving efficiencies and more. With telematics, you receive a variety of notifications such as maintenance alerts and driver behavior to ensure safety and manage costs.

To learn more about telematics read this blog

2. VEHICLE SELECTION, ACQUISITION, AND UPFITTING

FMCs are your advocate and can provide advice on company fleet strategy and fleet solutions. They provide companies with important guidance on topics like how long to keep vehicles, which vehicle options make sense, and how to remarket vehicles to maximize sale prices.

This is the essence of the total cost of ownership mindset that reduces fleet costs immediately and makes a major impact on the business bottom line.

The FMC representative works with you to determine which vehicle(s) suit your needs, what equipment and features are required, and how the vehicle will be used. FMC’s offer all brands so if your business fleet requires multiple brands; you work with one person at one company across all brands. The same holds true for upfitting. If your vehicles require aftermarket equipment, the FMC handles it.

FMCs find the right vehicle for your needs. If you plan properly, you can spec the exact vehicle you need and factory order it. If you have immediate needs for a vehicle, FMCs search the country to find the vehicle that best matches your specs. FMCs are not tied to any brand and if used vehicles are the best options for you, FMCs have access to many used vehicle channels including auctions, off lease vehicles, and wholesalers.

FMCs can help you purchase vehicles through large fleet buying programs with substantial rebates, making it more cost-effective. This usually holds true for out-of-stock purchases and ensures you get what you need, how you want it, when you want it, and at the lowest cost possible.

Providing turnkey vehicles is core to the FMCs service offerings. Fleet vehicles are regularly upfitted with necessary equipment including tool storage, ladders, safety equipment, lifts, accessories, decals, and wraps. FMCs will lend advice on upfitting that satisfies the needs, preserves resale value, and is repeatable for years to come.

3. FLEET FINANCING

FMCs rely on multiple funding sources to finance all your vehicle needs and hold them in their portfolio. The same company that you call on to source vehicles also provides the financing. You can avoid tapping into your line of credit for vehicle acquisition and save it for core business needs or strategic business opportunities by leasing through an FMC. Many companies purchase vehicles because they don’t understand how they can benefit by leasing their vehicle.

Once leasing is explained, the majority of companies choose leasing over purchasing.

Leasing is a financing alternative with a built-in exit strategy. Leasing is a perfect option to finance a vehicle even if you intend to use your vehicle for many years. Also, leasing provides protection from the risk of market value fluctuations. Traditional financing puts the entire risk of resale value on the vehicle owner.

Bypass a dealership and choose to lease through an expert FMC who understands the difference between fleet leasing and consumer leasing. Consumer leasing can be punitive and it is not flexible. Fleet leasing is much more flexible and can work for most business scenarios.

Open-end leases are written for the anticipated use of the vehicle without limiting miles or imposing charges for damage. Leases can be written for up to 100,000 miles annually. This is by far the most common misconception of business leasing.

Both open and closed-end fleet leases can be configured with high mileage where dealer/OEM leases cannot be configured for high miles or damage.

Not only does leasing preserve your capital, but also it provides savings through tax benefits, and it improves your cash flow through lower monthly payments. This allows you to turn vehicles more frequently and run your operations using newer vehicles. Operating with newer vehicles will reduce repair and maintenance costs as well as fuel costs. Newer vehicles are equipped with the newest safety features and technology. You will have less administrative tasks to manage since all of the work to spec, acquire, upfit, and finance the vehicles is completed by the leasing company. FMC offer the full range of fleet solutions.

In many cases, fleet leasing is the most financially sound option and provides the most benefits.

4. FLEET REPLACEMENT CYCLE STRATEGY

A key variable in total cost management (and most often overlooked) is knowing when to dispose of your vehicles. It impacts the total depreciation (purchase cost less resale value) of your vehicle as well as repair and maintenance costs.

Many factors play into the ideal time frame to cycle vehicles, including new and used vehicle market dynamics and annual mileage. They all play into the value of the vehicles as well as repair and maintenance experience.

The ideal time to sell a vehicle is when the depreciation cost tapers off and the repair and maintenance costs begin to increase. This is based on a cost per mile (“CPM”) calculation. The CPM equals the annual cost to operate a vehicle divided by annual miles. The target is to cycle vehicles at the point at which CPM has trended down and begins to uptick. It’s true. Older vehicles typically cost more than new vehicles at some point. Identifying that point drives the replacement cycle timing. The necessity for uptime and the opportunity costs of downtime can accelerate or decelerate cycle timing.

A fleet replacement cycle strategy should include expected holding periods for all categories of vehicles in your fleet, defined by years and miles. This is not an absolute, but a guide.

FMCs are experts at fleet replacement strategies and understand the market and all factors that impact cost. These factors change dynamically as the market forces and prices change.

5. VEHICLE REMARKETING

Remarketing vehicles is a fleet solution offered by FMCs. This can be the least appreciated service offered but the most important in terms of dollars and cents. Fleet management companies are adept at reselling vehicles at the end of the lease, resulting in 10-30% higher sales proceeds. This equity will be returned to your company in open-ended leases. Fleet management firms work with many sources, versus the one or two dealers with whom your business may have a relationship. These sources can include auctions where twenty plus bidders bid on each vehicle and drive prices up.

Instead of organizing a private deal or posting your vehicle for sale online, the FMC will position your vehicle in a highly sellable market and recondition it to have the best opportunity to sell at top dollar. This simplifies the administrative tasks creating a far less time-consuming experience. The typical vehicle sold by an FMC receives at least ten to twenty bids/offers.

6. EXECUTIVE FLEET SOLUTIONS

A solid executive fleet program helps to attract and retain key employees. It is imperative to structure a program that demonstrates the value the company places on key employees. An executive fleet program can focus on VIPs such as those in the C-suite, owners, directors, and key employees in sales, marketing, HR, operations, and finance. An executive fleet program must deliver a positive experience for the driver.

A key to retention is staff feeling as though they matter – as though they are important. What shows key staff they matter to a business? A corporate vehicle, compensation, responsibilities, and the company demonstrating they trust and care for their future. It’s also hard to leave a job where your compensation is acceptable and your employer demonstrably values you. It’s also hard to quit if you don’t have a ride home.

If a company vehicle is provided as an executive benefit, it needs to feel like a benefit and the executive needs to see value in it. This white glove service starts with vehicle selection and continues through to delivery. Many FMCs offer executive fleet solutions with white glove service.

As part of their executive fleet solution offering, FMCs work closely with the executive to select the vehicle that suits their needs. When the vehicle arrives it can be delivered to their home or office complete with a personal walk-through of its options and features. If a vehicle is being replaced, FMCs can handle the remarketing and disposition of the vehicle and get top dollar for the company or executive.

A well designed and executed program helps attract, retain, and endear executives to the company. This has long-term meaningful and quantifiable value to the business.

SELECT THE RIGHT FMC PARTNER AND BUILD A LONG TERM RELATIONSHIP YOU VALUE

The best FMCs value long-term relationships with customers and employees and are independent of dealerships/brands. The best FMCs also make the investment in helping clients learning the business, building relationships with their clients’ employees, and building a long-term fleet management program customized for each fleet.

Doering Fleet Management can turn the stress of running a fleet into a clear, organized process and guide you towards better, more informed decisions for your fleet. Whether you’re searching for vehicle financing, comprehensive fleet management, maintenance management, or a combination of services, Doering Fleet Management has the fleet solutions to meet your needs, exceed your expectations, and offer affordable solutions for fleets of all sizes across the United States and Canadian Provinces.