Cost management is a perpetual struggle for fleet managers across the board as almost every aspect of running a fleet has its fair share of expenses. Even though fleets continue to struggle with budgetary concerns and oversights, not enough attention is given to the budgetary dollars that get wasted each year due to poor fleet management.
This budget waste is defined as the consumption of corporate funds and resources by non-essential or inefficient activities. It’s estimated that an average fleet wastes anywhere from 5% to 10% of its yearly budget.
But what are the reasons behind this waste of a fleet’s budget, and how can you reduce the waste? Let’s explore!
Reasons for Wasted Fleet Budget
Poor fleet management is the primary cause of a wasted fleet budget. Many fleets often waste money on unnecessary upfitting of vehicles by overvaluing their use. Some companies keep underutilized assets on the books, and others fail to comply with scheduled preventative maintenance intervals, leading to unproductive downtime and avoidable costly repairs.
Moreover, most fleet companies create cost-reduction initiatives for their operating expenses, failing to realize that depreciation is a fleet’s biggest annual expenditure. You need to ask yourself if your company is maximizing its resale potential for all of its assets and if your remarketing practices are wastefully leaving money on the table.
You also need to keep an eye on overloading. You might make the mistake of viewing it as a safety issue solely. However, overloading is another way in which you might be wasting precious fleet dollars. How so? Well, overloading shortens a truck’s service life and increases your operating expenses. In fact, it’s one of the most overlooked yet consistent causes of unscheduled maintenance for fleet trucks.
The truth is that with appropriate fleet management, you can avoid this expense entirely. All you have to do is remain mindful of how much weight your fleet vehicles can carry based on their factory specifications. Also, you might benefit from studying the correlation between fuel consumption and vehicle weight. You will learn that every pound of extra weight needs the engine to work harder, increasing your overall fuel consumption.
Preemptive vs. Responsive Cost Management
The best time to reduce fleet waste is before it occurs, and the smartest way to do so is through waste reduction policies and procedures that restrict unnecessary spending. These policies need to protect your corporate assets from preventable expenses. A successful fleet policy will provide you with the strategic mechanism to keep a check on and reduce your money-wasting behaviors, such as unauthorized rogue spending that can occur in fleet field operations.
Keep a Check on Your Fuel Budget
The largest operating cost and resultant budgetary waste occur with a fleet’s fuel budget. If your vehicle’s fuel efficiency is heavily impacted by driver behavior, you need to minimize this wasteful use of corporate assets. Many behaviors that lead drivers to impact up to 30% of their vehicles’ fuel efficiency are in violation of fleet policies. For instance, the amount of unnecessary idling by drivers can severely impact your fuel efficiency.
Plus, drivers are also responsible for fuel wastage when they resort to inefficient routing and fail to be price conscious when refueling. Drivers that commandeer fleet vehicles with under-inflated tires also contribute to fuel waste while properly inflated tires increase fuel efficiency by 3%. It’s why your policy must include drivers checking their vehicle’s tires for proper inflation before heading out on a job. It’s an easy, cost-effective, and yet often neglected way to boost fuel economy and prevent wasteful fuel expenditure.
Maintain Proper Communication with Your Fleet Drivers
When it comes to driving responsibly, most fleet drivers want to do right by their vehicles and the companies that employ them. However, just because you have a written policy that mandates your drivers to follow specific instructions to ensure fleet safety and their own security while curbing fleet dollar waste, it doesn’t mean that they will remember these mandates or follow them religiously.
It falls under the preview of the fleet manager to ensure proper fleet management by increasing driver compliance with fleet policy. The best way to do that is to engage with your drivers directly whenever appropriate and practical. Also, make sure to ask the drivers for their feedback on the policy and take their suggestions into account to boost their compliance with it while making them feel heard and valued.
Always Update Your Policy Timely
Your fleet policy needs to be a living document that you update annually at the very least. As your company undergoes changes, you must revise your procedures and policies to reflect those changes. You will also need to eliminate parts of your policy that become outdated. After all, a policy that was ideal for your company yesterday might not be beneficial for it today.
When reevaluating and altering your fleet policy so that it aligns with your current objectives, make sure to solicit the suggestions and feedback of all affected departments, including sales, purchasing, administration, accounting, maintenance, customer service, and operations. When you involve them in the decision-making process, they will be more receptive to the new policy and offer you the support that you expect from them.
You can also create a driver focus group with changing members and hold regular meetings with them to solicit their feedback on the policy and fleet program. You can also solicit their advice and recommendation on how to eliminate waste.
The more you involve them in the process, the likelier it is that they will feel a sense of ownership toward your company and develop a sense of responsibility, enabling them to become more cautious of their spending habits. You must also conduct regular surveys to take their negative and positive feedback into account and readjust your policies if needed.
The Bottom Line
As a fleet manager, it’s your job to reduce your company’s annual fleet dollar waste. However, that is not always easy with avoidable fuel and maintenance costs, among other unnecessary costs. With that said, you can use your fleet management skills to devise a comprehensive fleet policy to reduce unnecessary expenses and reduce dollar waste.
You must also ensure driver compliance with the policy as it’s a powerful component that can help you create a successful overall cost-control strategy. Your policy should be one that benefits every department involved in the company. The best way to ensure that and to increase compliance is to make your employees feel heard, valued, and understood by involving them in the policy-creating and reevaluation processes. This way, you can rest assured that your employees will be more inclined to make the policy work and reduce your company’s overall wasteful spending.