A one-vehicle selector is a strategy that some fleets can implement, the idea is to leverage the single-vehicle fleet spend with a manufacturer for volume-based savings. Photo via Unsplash.
4 Cost Saving Initiatives Fleets Can Leverage
During a NAFA meeting, in a room filled with fleet industry professionals, LeasePlan’s Angela Gregorowicz and Altice Technical Services’ Arthur Kappel discussed steps that fleets could take to reduce operating costs.
The two offered a long list, but here are four that should be top of mind.
1. Reviewing Assigned Vehicles for Low Mileage on an Annual Basis
One of the first things that fleet managers should do is review the amount of miles that their drivers are putting on their vehicles.
Every fleet is different and the amount of miles that drivers are putting on vehicles may have changed over the years.
The question that should sprout after reviewing annual mileage is whether or not every driver that’s assigned a vehicle actually needs a vehicle, said Angela Gregorowicz, LeasePlan USA – fleet cooperative account manager.
Fleet managers can then work with their respective human resources partners to discuss other viable options for drivers whose annual mileage may not warrant a company vehicle. One viable alternative for these drivers would be switching them to a reimbursement program.
2. Offering One Vehicle Across the Board
For the drivers who will have a company vehicle, Gregorowicz suggests performing an analysis to determine if a one-vehicle selector would work for their company.
The idea would be to only offer a single vehicle, with multiple trim offerings, across the board for all drivers. The benefit of doing this would come from leveraging the single-vehicle fleet spend with the single manufacturer to receive increased volume-based savings, according to Gregorowicz.
This option also places a fleet manager in a favorable position to negotiate a multi-year strategy with a manufacturer for deeper discounts by locking in business with them for a few years.
“Consider a sign on bonus as well as tiered discounts,” said Gregorowicz. “For example: If I purchase between 100-300 vehicles my discount will be x per vehicle, if I purchase 400-600 my discount will be x plus. Be creative as it never hurts to inquire.”
3. Leveraging Fuel Hedging
One of the largest expenses for any fleet is buying the fuel that powers its vehicles.
A strategy that Kappel both recommended and personally leveraged was fuel hedging — locking in fuel pricing at low levels in order to guarantee that price for a certain time frame.
Kappel described this as a relatively low-risk strategy — as the price of fuel hitting historical lows in the latter part of 2018 led to opportunity — that can yield noticeable savings and budgetary predictability.
It isn’t always a favorable option and depends on your appetite for risk. But if you are ready to execute depending on market conditions and only do so on a portion of your fuel to minimize the risk, it can be a great way to add budgetary stability to your fuel spend.
4. Beefing Up Your Safety Program
All fleet managers should have a safety program where they review MVR’s and crashes on a regular basis, according to Gregorowicz. If they don’t, they should be implementing one immediately, she added.
Improving safety at a fleet not only yields a benefit to that fleet’s bottom line, but it also yields benefits for drivers, Gregorowicz explained.
A crash is accompanied by driver downtime, potential time out of work for injuries, vehicle repairs, and subrogation costs, all factors that hurt the bottom line.
“By reviewing MVR’s on a regularly scheduled basis or on demand you can coach a driver on a potential challenge in real time,” said Gregorowicz. “So if a driver gets cited for no seatbelt or running a red light this information would be readily available and a module on this topic could be assigned immediately.”
A safety review board could also be enacted in order to evaluate crashes and driver behavior.
This board could meet on a quarterly basis and review crashes for preventability. Usually, this type of board is comprised of a member from human resources, HS&E, legal, and fleet operations.
Rewarding good drivers could also be a way to foster better behaviors within a company. Good drivers could be presented with certificates, pins, or other nominal gifts at team, or national, meetings to recognize them for a job well done.
Lastly, implementing a telematics system within a fleet could yield a two-pronged benefit of improving safety and also reduce fuel costs.
A telematics tool can provide data on whether a driver is driving safely or idling too often.
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Fleet management is the use of a set of vehicles in order to provide services to a third-party, or to perform a task for our organization, in the most efficient and productive manner with a determined level of service and cost.
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Graph 1: fleet management activities
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José Miguel Fernández Gómez
I´m a Fleet Management expert, and the manager of Advanced Fleet Management Consulting, that provides Fleet Management Consultancy Services.