Talk to a fleet manager today, and you'll get an earful about the ever spiraling cost of fuel.
In recent years, fuel expenses have more than doubled and continue to rise. Diesel has risen at a faster rate than gasoline with an average nationwide price of well over $4 per gallon.
There is no doubt that fuel prices are a significant challenge for companies that own and manage fleets. However, there are many other factors that are driving up the cost of fleet management and utilization. The high cost of fuel is having a domino effect on the prices of other fleet-related goods and services. For example, tire prices are rising, as well as the costs associated with shipping parts and other commodities.
The key to reducing fleet cost is getting a detailed understanding of all of the different factors that affect cost. These factors include fuel, depreciation, service labor, parts inventory and turn, failure analysis and prediction and management/administrative labor. The challenge for most fleet managers is a lack of accurate and timely data upon which to make cost-cutting or preventive decisions.
In order to identify ways to reduce costs, many fleet managers are turning to new fleet management tools. Known as fleet intelligence platforms, these next generation systems combine on-board hardware and software to track everything from driver location and performance to collecting detailed telemetric data to continuously measure fuel consumption, idle times, speed, performance and monitor engine diagnostics. In addition to telematics (GPS), the best of these systems offer complete maintenance management that includes work orders, purchase orders and alerts, as well as inventory control and automation.
Three Key Cost Reduction Areas
Excessive Maintenance Expenses-Average Reduction: 15 Percent
Ranging from maintenance performed too early to too late and excessive data entry labor, inaccurate repair logs and incorrect job cost tracking, a fleet intelligence platform can increase accuracy of records and reduce labor required to manage the administrative duties of the typical fleet. A fleet intelligence system can automate much of this data management, eliminate mathematical errors and streamline administrative processes.
Inefficient Inventory Management-Average Reduction: 30 Percent
The right software can help fleets accurately predict inventory requirements for future maintenance. This leads to shortened repair times and decreased overnight shipping expenses for parts not in stock and eliminates orders for duplicate parts.
Excessive Service Scheduling-Average Decrease 52 Percent
Preventive maintenance service agreements and equipment rentals can be a significant source of revenue for many companies. However, these same companies sometimes lack a true proactive maintenance process. This can lead to excessive service scheduling because of breakdowns. This, in turn, can reduce margins and damage customer relationships. A complete management solution assures that the right maintenance is done at the right time.
To achieve these levels of cost reduction, fleet managers need more than basic telematics (GPS). The critical missing link for serious cost cutting is managing maintenance and inventory. Some fleet intelligence platforms go farther-integrating with existing accounting and project management systems.
Now more than ever, fleet managers must rise to the challenge of operating in an efficient manner. The biggest barrier is a fear that a technology solution will be too complex to be easily adopted. While this may have been true with earlier systems, the new systems are well engineered to be simple to use. Most of the best in breed solutions don't even require computer hardware - they are served up over the Internet (by what is known as a Saas "Software as a Service") and are available for a low monthly fee.
Construction Business Owner, October 2008
