Fleet management is a job requiring professional attention. Ensuring you have a firm grip on all aspects can be difficult while running a business. In order to improve your fleet operations, consider what functions should be outsourced and what should be done in-house.
Fleet managers, controllers, CFO’s, and presidents leverage fleet services provided by third-party fleet management companies, allowing them to focus on the strategic challenges that occur and solve issues that arise. Fleet management companies provide additional insights and expertise to overcome challenges. They introduce continuity and a full team of experts that reduce the risk of staff being sick, on vacation, or leaving the organization.
Fleet management companies have seasoned professionals that work across industries, study and implement current technologies, and deliver new ideas that save time and money.
Fleet management companies advise on fleet strategy and best practices. They provide guidance on how long to keep vehicles, which vehicle options make sense, and can remarket vehicles to maximize sales prices. This drives down overall fleet costs and operating expenses, otherwise known as lifecycle costs.
Additionally, fleet management firms understand telematics and can interpret that data and construct rules. They also offer fuel and maintenance programs to reduce your operating expenses. Savings of 20-40% can be realized through a maintenance management program. Fleet management companies are experts in flexible leasing options and can show you how to save tax dollars and improve cash flow.
This guide highlights some of the primary fleet services available and explains why you should pay attention and how you will benefit.
What to expect:
1. Fleet services that minimize the administrative burden of managing a fleet
2. How fleet maintenance programs save time and money
3. Tips for decreasing your fleet’s fuel consumption
4. Tips to mitigate fleet [driver] risk
5. Tools and technology that will benefit your fleet
6. The most overlooked aspect of fleet management – disposition and remarketing fleet vehicles
7. Considerations for hiring third-party fleet management
Fleet Services that Minimize the Administrative Burden of Managing a Fleet
Buying and Selling
Fleet management companies perform the buying, selling, and negotiating for every transaction and drive down costs and improve efficiencies in the process.
One of the fleet services offered by fleet management companies is purchasing through large fleet buying programs with substantial rebates. Large fleet rebates exceed retail and standard fleet rebates. This typically holds true for out-of-stock purchases and factory ordered vehicles. It ensures you get what you need, how you need it, and when you need it, at the lowest cost possible. Acquisition timing is also something to consider. There are advantageous times to buy/lease and lousy times.
With an extensive customer base and management experience, fleet management companies generate higher net sales proceeds on used vehicle sales. Instead of organizing a private deal or posting your vehicle for sale online, the fleet management company 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.
Click here to learn more about vehicle leasing –>
Nationwide Title and Registration
Every state has its own vehicle registration requirements and many require annual renewals. Missing the deadlines for your vehicle registration causes unnecessary fees and administrative headaches. It’s vital to monitor your fleet’s registration details, insurance policies, and vehicle inspection regulations.
Fleet management companies help organize these tedious reminders, streamline regulatory compliance, and avoid unnecessary fines and fees. By providing comprehensive reporting options and digital reminders, keeping track of various deadlines is no longer is a stressful task.
Of Course Fleet Maintenance Programs Save Time and Money – But How?
Fleet Maintenance Programs
Operating a fleet internally means spending time and resources maintaining, tracking and administering the fleet. Issues faced while managing a fleet include costly repairs because drivers are not taking vehicles in for preventative maintenance, a driver authorizing an expensive repair on a vehicle that was going to be rotated out of the fleet, and increased downtime and lost revenues because of idle vehicles. If you can relate to any of these situations, now may be the time to take a serious look at a fleet service known as managed fleet maintenance program.
Read on to learn how this fleet service can save you time and money.
How do managed fleet maintenance programs work? Under a managed fleet maintenance program, companies pay a monthly subscription per vehicle to be part of a managed fleet maintenance platform. Actual expenses are billed through and administered, approved, and tracked by a team of mechanics working for you and on your behalf.
By contrast, many truck lessors use full fleet maintenance programs. Some auto lessors do as well. Companies pay a fixed monthly fee covering maintenance and repairs plus variable fees based on mileage. However, this type of maintenance program can cost 30-50% more than the actual repair cost over the term. It’s a stable way to pay but very expensive. We do not recommend it!
While a full fleet maintenance program is easy to budget due to the fixed monthly fee, it’s easy to see why many companies prefer the cost savings under a managed fleet maintenance program compared to the high fixed fee of the full fleet maintenance program. Managed fleet maintenance programs give your company access to national accounts, preferred labor rates, parts cost, warranty management, and reporting.
Preventative Maintenance
Under a managed vehicle maintenance program, customized vehicle maintenance guides (VMGs) are prepared for every vehicle in the fleet. Each vehicle’s preventative maintenance schedule is included. It visually illustrates required routine maintenance and when it should be performed. Among the items on this list are oil, lubrication, and filter changes, checking and adjustment of brakes, transmission service, coolant service, tire rotation, tire pressure checks, fuel filter changes, and fluid level checks.
The best vehicle repair strategies emphasize prevention. Staying ahead of problems before they appear dramatically reduces repair costs over time and in turn, extends the lifespan of the vehicles in your fleet and minimizes unplanned downtime.
Preventing costly repairs is key to maintaining the longevity of your fleet and fleet personnel productivity. With that in mind, it’s important that your drivers are aware of the responsibilities they have when operating your vehicles. Drivers should have a complete understanding of your company’s maintenance policies and should know what to do if the vehicle needs repair or is involved in an accident. Managed fleet maintenance programs trust but verify. Reports ensure drivers do what is required and follow preventative maintenance schedules.
Managed vehicle maintenance programs also manage factory vehicle warranties ensuring your company will never pay for component replacements covered under warranty. They also track third-party warranties so you and your staff do not need to.
Assistance and Convenience
Managed fleet maintenance revolves around convenience; fleet services provide access to a toll-free, 24/7 customer service line that offers drivers and companies immediate access to help. In most cases, an ASE certified mechanic on staff will direct your drivers-in-need to reputable repair shops. They can even help facilitate towing. They are a source of counsel if drivers do not know what to do, how to handle, or where to take a problem vehicle.
In addition to managing the entire repair process, operators will control vehicle authorization, scope of repairs, commodity pricing, and labor costs all with respect to prior maintenance history. They can even help with the seemingly small issues such as glass repair.
Management Reporting
Is your business tracking its maintenance schedules and history manually with spreadsheets and manila folders? The best-managed fleet maintenance programs include detailed reporting. You can select from monthly, quarterly, and annual reporting, and the reports you receive will have line item drill downs that show maintenance details. This data is critical for making fleet replacement decisions over time.
Fleet Services for Your Maintenance Needs
For leaders looking to properly maintain their vehicle fleet, a managed fleet maintenance program is the most cost-effective and time-saving option. Offering a multitude of services and benefits such as secure vendor networking, detailed reporting, certified technicians, timely repair processes, preventative maintenance, and a vehicle maintenance schedule, managed fleet maintenance is a fleet service that can work for fleets of 5 or 500. Try it. You will wonder how you ever lived without it.
Tips for Decreasing Your Fleet’s Fuel Consumption
Fuel is typically the third largest operating cost for fleets behind labor and vehicle investments. As the third highest cost factor, it is important to evaluate if your fuel costs are higher than standard and what inefficiencies are causing this.
Data-Driven Decisions
A fleet manager’s goal is to supervise, strategize, and enforce fleet fuel usage and decisions. By implementing data-driven changes, actionable steps are taken toward reducing fuel consumption while improving cost savings.
Many companies use telematics to track and record their fleet’s performance. After investing in telematics, a review of the reports generated over time will highlight areas needing improvement. By evaluating the miles per gallon of individual vehicles, you can understand and compare MPG across alternate routes, various drivers, and different vehicle models.
If your drivers are repeatedly, or unknowingly, committing infractions, such as excess idling, going off-route, or continually leaving their vehicles running, educate them on the financial and environmental repercussions. Curb spending among your team members by aligning your drivers with a fuel management plan. After addressing areas where you can save on fuel costs and maximize driver efficiencies, outline the new, standard procedures as well as the repercussions for violating the plan and benefits to the company (the greater good) for following the plan. Incentivize employees’ performance by encouraging the long-term adoption of the rules and rewarding drivers who adhere to the policies.
Other ways to reduce fuel costs include:
- Mandate the fuel card your drivers must use to purchase fuel. The best cards allow a wide variety of fuel providers.
- Consider fueling stations that offer the best pricing
- Encourage drivers to pay at the pump to get them back on the road faster
- Reduce the number of fuel purchases allowed per day
- Restrict non-fuel purchases such as merchandise. Fuel only!
EV Power Management
Are you considering instituting electric vehicles in your fleet? If you decide to make the jump and adopt EVs in your fleet, track and report your greenhouse gas reduction, fuel efficiency, and other coinciding data to ultimately calculate not only your carbon footprint but also your ROI. Electric vehicles are more efficient and less costly to operate.
Reducing Your Energy Consumption
The change needed to reduce your energy consumption is cultural to each company. Drivers must choose to adopt a greener lifestyle, minimize idling, and maximize everyday efficiency. Fleet managers lower gas consumption and increase cost savings by selecting fuel-efficient vehicles and communicating the corporate values of environmental stewardship.
Tips to Mitigate Fleet [Driver] Risk
Operating a fleet of vehicles carries risk. Companies rely on humans with various levels of experience to drive responsibly and safely. The reality is the drivers are human and make mistakes.
For businesses with a vehicle fleet and managers responsible for implementing risk management processes, here are a few simple steps that will help mitigate risk, improve driver safety, minimize repairs, and reduce accident rates.
It Starts at the Top
Establishing a company culture where safety is a priority requires a conscious effort by leadership. Team managers must verify driving habits align with company policies. A plan should include triggers for corrective action related to incidents, infractions, and preventable accidents. This plan should be followed consistently. As Adam Berger, Vice President of Sales at Doering Fleet Management says, “People behave differently when they know they’re being watched. They behave better.”
Consider Telematics
There are fleet services that can help you mitigate fleet driver risk. Telematics is the useful fleet management tool that can track and detect bad driver behavior. Why are so many companies deploying this tool and why has the usage of telematics become commonplace? When evaluating the management of your fleet, the most important issue is not cost. It is risk. Telematics is a tool that helps to manage and reduce risk. It’s also evolving and incorporating new devices, technologies, and metrics. Dashboard cameras, driver feedback in real time, and competition around driver safety are not the future. They are here today.
In the old world of telematics, it felt like big brother was watching. In the early years, productivity was the focus, not driver behavior or safety. Managers would get reports after the fact and conversations would occur with drivers about their performance. The discussions were around taking long breaks, inefficient routing, and wasted time. In the new world of telematics, the focus is behavior. Gamification has allowed drivers to monitor their own behavior in real-time and make corrections immediately. Additionally, not all feedback is negative. Positive reinforcement is also an important element.
Fleet management companies offer many fleet services. Driver safety policy guidance, driver testing, and telematics are just a few of the many fleet services they offer to help you mitigate your driver risk.
Fleet Driver Policy
Implement a written fleet policy to clearly and concisely explain what is expected of the drivers. The plan must be useful and easy to communicate across your organization to be followed. Keep it simple and only include what you plan to measure and enforce. It must be implemented and followed concisely to be enforceable. A fleet policy should include many topics including:
- Driver eligibility
- Vehicle selection options
- Maintenance guidelines and responsibilities
- Incident scoring
- Accident protocol
- Incident-based testing
- Loss of driving privilege
- Personal use
- Disposition guidelines
- Driver testing practices and triggers
Driver policy is a vital document and should be updated regularly. Consult internal departments such as Human Resources, Risk Management, and Finance to weigh in on and create the guidelines for your fleet policy.
Driving Testing
To create a safe team of professional drivers, it is important to screen staff before putting them on the road. Check for proper licensing and review their motor vehicle record (MVR) for multiple, or significant infractions that could be detrimental to the company.
Road testing the skills of new drivers should be standard practice. Years of on-road experience do not eliminate poor driving habits or prevent accidents. Risky driving behaviors are not always caught. Therefore, solely hiring based on a clean record and MVR will not signal the red flags that a behind-the-wheel analysis might.
Consider retesting seasoned veterans every couple of years. Ensure their visual acuity, response times, and sense of correct speed remains passable throughout the driver’s professional lifespan. If trouble areas are spotted, remedial driving courses are an excellent resource to help improve the skill level and safety habits of the drivers. Ultimately acknowledging bad driving habits from the beginning is a healthy alternative to addressing them after a costly or painful accident. Driver testing is a fleet service offered by fleet management companies and provides an independent voice managers can use to support tough decisions.
Driving Education
Fleet driver safety training is a cost-effective method to enhance company productivity and the safety of drivers and the general public. Tailor the training program to the driver based on their risk. Incentivize proper behind-the-wheel habits by rewarding drivers with exceptional records and those who stick to safety procedures. By rewarding appropriate behavior, staff is motivated, performance improves, and long-term safety techniques become a habit throughout the driving team.
Tools and Technology That Will Benefit Your Fleet
Instituting the latest fleet management technologies helps fleet managers reduce administrative and maintenance costs while also mitigating risks.
The most impactful of these fleet technologies is telematics. Telematics not only evaluates and records driver behavior, it enhances fleet safety by monitoring road conditions and vehicle upkeep. Telematics technology can improve driver performance and vehicle maintenance dramatically.
GPS/Telematics System
Telematics is the integration of telecommunications and information, and the process of sending and receiving information across mobile and remote devices. A perfect example many people recognize is the mobile GPS units in vehicles.
Telematics allows fleet managers to monitor routing and maximize the efficiency of maintenance schedules. By utilizing telematics, fleet managers can make confident, data-driven decisions that will directly influence the behavior, routes, and communication methods of company drivers. Information about common traffic patterns, including traffic jams, can translate into cost savings if the fleet manager utilizes the data to compose different route plans for the driver.
Routing
With telematics, drivers can find the fastest route to their destination in real-time because their vehicle’s location information is overlaid with current traffic reports. Drivers can save time by avoiding traffic jams and telematics enables fleet managers to monitor which routes their drivers actually took, and document speed and arrival times.
Speeding and Accidents
Telematics has proven to be a critical component in reducing vehicle accidents. The mere existence of devices and awareness of being watched has a direct impact on driver behavior. By providing real-time traffic information and monitoring driver behavior, fleet managers can directly capture reckless driving incidents and address them immediately. Fleet managers can use the behavioral data to create action plans and resolve any problematic habits before the risks culminate in an accident. Prevention strategies are vital. Telematics also allows for accident information, such as timeline and fault, to be recorded and analyzed. If you have the data and do nothing, you could be negligent. If you track it and monitor it, enforce it.
Safe Driving Gamification
Gamifying the driver experience can affect fleet behavior and does so in a positive and rewarding way. Telematic units can provide progressive scorecards about each driver and can also give in-cab feedback with audio and light warnings when drivers exceed nominal threshold behaviors.
Driver Training and Feedback
When monitoring driver behavior, the company can focus on rewarding drivers who comply with and exceed pre-determined safety thresholds. Rewarding positive behaviors will increase goodwill, cut unsafe practices, and, if reinforced, can turn incentivized behaviors into long-term habit patterns. Monitoring driver behavior through telematics can help fleet managers identify which drivers, new or seasoned, need additional driver training. If the problem stems from another reason such as lack of visual acuity or speed governing, fleet managers can likewise address the issue as is appropriate.
Geofencing
Similar to a physical fence, geofencing can be used to monitor and record exit and entry into a specific geographic location. In essence, a geofence is like a virtual perimeter on a map. You can create a square, circle, or irregular shaped fence. Geofencing offers several benefits to your company and, most importantly, can improve the overall productivity of your fleet. You can use geofencing to alert you when workers arrive on a job site, monitor the use of your fleets by the hour, or even use the tool to recover stolen equipment quickly.
The Most Overlooked Aspect of Fleet Management – Disposition and Remarketing Fleet Vehicles
We touched on vehicle disposition earlier but feel this topic deserves more attention. Why? Because disposition is really more than the sale of the vehicle. Maximizing the value of the vehicle at disposition is a mindset. It starts years earlier with vehicle selection and continues with proper maintenance.
Selecting the proper options, colors, and features when acquiring vehicles yields greater returns when selling vehicles at the end of their holding periods. For example, an extended cargo van costs $900 more initially. It will yield a $1,500 premium over a traditional van at resale. Picking the right model, color, and options are paramount. Maintenance, condition, and cleanliness have meaningful impact on resale as well. Properly maintaining a vehicle throughout the lifecycle will make your vehicle stand out from its peers and command a premium.
When to Sell
When it comes to selling a vehicle, timing is everything. The value of vehicles steadily decrease but not at an even rate through the holding period. There are certain triggers during the lifecycle of a vehicle that cause a steeper decline in value, also known as a value cliff.
The vehicle should be sold before it hits specific “cliffs” where the value will drop significantly. If not, it must be kept for quite a while to recover from the step down in value. Value cliffs include mileage benchmarks (for example, when certain vehicles hit 100,000 miles) or a change in body style.
The fleet management plan should include the expected holding periods for all categories of vehicles in your fleet. This is defined in years and miles. It is not an absolute but is a guide. Certain vehicles retain their values better than others and have lower repair costs as they age. Therefore, these vehicles can be kept longer to minimize the total cost of ownership. In the example above, 100k was a value cliff for some vehicles. The mileage value cliff is different depending on the class of vehicle. Your fleet program should also evaluate the number of actual miles put on a vehicle each year versus the plan. If you have outliers that are incurring significantly more or less than the average, you should consider “fleet rebalancingTM.” This allows you to hold onto the vehicles for the maximum amount of years per your plan vs. running into excessive miles, which decreases the value when you want to sell.
Seasonality also plays a factor. In certain regions of the country, sports cars will fetch a much higher price in the spring than in the fall. If your fleet vehicles are attractive to the retail buyer, tax return time typically will drive up demand because buyers have their tax refunds and are ready to buy. Four-wheel drive vehicles are more in demand in fall than they are in spring.
Where to Sell
Many companies work with professional fleet management companies to remarket their vehicles, saving them time, money, and minimizing risk. Fleet management companies have access to many resale channels including physical and online auctions all over the country, wholesalers, and used vehicle dealers. They can select the best channel to get top dollar and can sell vehicles much faster than those who do not have access to multiple channels.
Reconditioning
Reconditioning your fleet can enhance demand and show potential buyers the vehicles were properly cared for and maintained. Taking time to make a final investment in your fleet can net you the most money at resale. Most fleet management companies have a list of preferred vendors who recondition vehicles for the most competitive price.
Maximizing Resale Value
Whether you are in the purchasing period, ownership period, or preparing to sell, there are fleet services that can pay off for you. Select a fleet management company that knows the market and can help position the vehicles for sale for the highest return saving you time, effort, and money.
Click here to learn more about how new models lead to better resale values –>
Considerations for Hiring Third Party Fleet Management
You may think only companies with large fleets can benefit from hiring a fleet management company. The truth is, many small fleets choose to outsource their duties to fleet management companies. While it is also true that the number of companies using fleet management companies increases dramatically as company and fleet size increase, fleet services have proven beneficial to a range of businesses large and small.
A fleet management company can help you benchmark the performance of your fleet. From the moment you purchase a vehicle to its later disposition, FLEET MANAGEMENT COMPANIES have proven strategies to help preserve the value of your fleet, and maximize resale profits.
A good fleet management company’s services are fully customized to each business’s needs. The specific benefits vary from industry to industry. Business owners benefit from streamlined quality service designed to support their business in every case.
Everyone needs and deserves fleet management company experts. Everyone needs a team with their best interests at heart and bottom line in mind.
