{"id":5599,"date":"2020-05-09T12:44:34","date_gmt":"2020-05-09T10:44:34","guid":{"rendered":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/?p=5599"},"modified":"2020-05-09T12:44:34","modified_gmt":"2020-05-09T10:44:34","slug":"fleet-costs","status":"publish","type":"post","link":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/2020\/05\/09\/fleet-costs\/","title":{"rendered":"Eliminating Soft & Hidden Truck Fleet Costs"},"content":{"rendered":"

In addition to driver behavior, tracking driver productivity can also reveal hidden costs. Establishing a benchmark for driver productivity can show spikes or lags.\u00a0<\/b><\/span><\/p>\n

Hard costs, such as fuel, parts, and labor, are straightforward. Soft costs, which often are also hidden costs, can be more difficult for fleets to put their finger on.\u00a0<\/span><\/p>\n

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But, just because soft costs are tricky doesn\u2019t mean they can\u2019t be managed. Six strategies can help fleets identify and control soft and hidden costs they may not even know about today.\u00a0<\/span><\/p>\n

What Are Soft and Hidden Costs?<\/strong><\/span><\/h5>\n

To identify soft and hidden costs, it helps first to define them. \u00a0<\/span><\/p>\n

Steven Saltzgiver, director \u2013 business development for Mercury Associates, said soft costs are primarily \u201cindirect costs\u201d that are difficult to quantify in dollar values.\u00a0<\/span><\/p>\n

\u201cAn example of soft costs would be vehicle and employee downtime associated with an out-of-service asset,\u201d he said.\u00a0<\/span><\/p>\n

Additionally, according to Ed Petersen, CEO for Wrench, soft costs are generally categorized as expenses incurred that create lost revenue opportunities.\u00a0<\/span><\/p>\n

\u201cThis can be driven by vehicle downtime for unscheduled maintenance or routine preventative maintenance and loss of employee productivity managing these processes,\u201d he said. \u201cSoft costs have a direct impact on revenue-generating opportunities for fleets.\u201d<\/span><\/p>\n

Often, soft costs are also hidden costs. But Petersen distinguished hidden costs as \u201cexpenses incurred by a business not directly attributed to a normal business operating process or procedure.\u201d\u00a0<\/span><\/p>\n

Saltzgiver also cited other examples of hidden costs, including costs related to excessive vehicle age and equipment abuse by drivers. But sometimes hidden costs are associated with actions fleets don\u2019t do, such as:<\/span><\/p>\n

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  • Failure to take advantage of improved technology.\u00a0<\/span><\/li>\n
  • Not training drivers, technicians, and other staff.<\/span><\/li>\n
  • Failure to monitor technician productivity.<\/span><\/li>\n
  • Failure to hold vendors accountable.<\/span><\/li>\n
  • Not negotiating with outsourced vendors.<\/span><\/li>\n<\/ul>\n

    Ultimately, the difference between soft and hidden costs is visibility.\u00a0<\/span><\/p>\n

    \u201cMost soft costs are hidden costs until they get quantified,\u201d said Thomas Burlington, technical sales for Command Alkon. \u201cThese costs can include safety, productivity, downtime, and much more. It is essential these costs get identified and controlled in a trucking company.\u201d<\/span><\/p>\n

    While there are many forms of soft and hidden costs for fleets, fortunately, there are practical strategies fleets can take to get them under control.<\/span><\/p>\n

    Reveal Costs Through\u00a0Documentation\u00a0<\/span><\/strong><\/h5>\n

    Saltzgiver of Mercury Associates noted the first thing to do is document costs to bring them to light.\u00a0<\/span><\/p>\n

    \u201cYou can\u2019t manage what you can\u2019t see,\u201d he said, recommending the following strategies:<\/span><\/p>\n