How to Optimize Your Vehicle Fleet ROI
Whether you own a couple of fleet cars or a whole team of transit vans, vehicle fleet management can be challenging. Some companies require the full-time services of an employee to deal with purchasing, sales, service and cost tracking. Others choose to outsource the duties to a dedicated fleet management company. Whichever choice you make in the handling of day-to-day fleet issues, an understanding of cost-cutting measures is essential.
ROI vs. COI
Most business owners are familiar with the term “ROI,” which tracks how much return you’ll get on your investment in any assets, including a vehicle fleet. But there’s another term that is just as important to consider here: COI. “Cost of inaction” describes the value of risk, missed opportunities and possible negative consequences from failing to make changes to your processes. Avoiding replacement of your transit van’s tires, for example, may cause your driver to have an accident, resulting in expensive repairs or even personal injury.
While COI can be challenging to put into dollar values, it’s easy to see how investing in an $800 set of tires can offset millions in liability damages. COI can measure risk and adverse outcomes, but it can also weigh opportunity cost, such as missing out on a new client due to not having enough fleet vehicles available on a popular delivery day.
There are hundreds of expenses and opportunities for fleet owners to save on in this broad budgetary category, so focusing on one or two at a time is the most natural. Here are some of the simplest ways to cut costs with your fleet.
Teaching drivers how to operate vehicles for optimal fuel efficiency can trim the budget by hundreds or even thousands a month. Understand the vehicles’ efficiency settings, the best fuel type for your model and how changes in driving behavior (such as obeying posted speed limits) can positively impact fuel costs.
2. Driver Liability
Insurance costs can eat up a big part of the budget, and keeping accidents to a minimum is the best way to lower premiums and deductibles. Hiring drivers with clean records is only part of the equation. Installing monitoring tech or optional safety equipment may help secure insurance discounts and discourage risky behavior from your fleet teams.
3. Miles Driven
Simply, more miles means more money. Using updated GPS tech and modern mapping programs can get your fleet teams to their destinations quickly and safely. Mileage isn’t the only way to address costs, however. Overall drive time (including hours stuck in traffic) can suck up resources and add to a bloated transportation budget.
Idle time on the road doesn’t just cost money in fuel or missed opportunities; fleet workers have an hourly wage or salary cost to consider. Tracking driver behavior can identify productivity losses and help with overall labor management. Know how many of the minutes on the road are spent working and producing, and be proactive about addressing gaps.
Tracking Is Vital
All of the savings categories identified above require having data. Spotting trends can be difficult at first, which is why fleet management software may be a wise investment for your company. If you can’t justify outsourcing fleet data to an outside vendor, do your best to track every expense associated with your vehicle fleet. Real-time tracking, through modern apps and credit card integration, can help you identify your most significant opportunities to save.