Five Ways Fleet Managers Are Minimizing Costs this Winter
It is an understatement to say that cost control in the fleet industry is important: fleet managers are under continuous pressure to operate a cost-effective fleet business. And with Winter soon upon us, there’s no better time than to keep up to date on new ways to save money.
Effective fleet cost management allows managers to understand the financial aspects of the business. That enables a fleet manager to know where and how company’s monetary resources are being spent and specific expenses that need to be reduced. Below are five key to help ways in which fleet managers can minimize costs this summer.
Reducing the Acquisition Cost
The most significant component of the total cost of ownership (TCO) is always the depreciation of any given asset. Nonetheless, fuel costs may surpass the TCO value where there is a case of low-acquisition fleets. Achieving the lowest vehicle acquisition cost is essential to reducing fleet costs. Even fleet beginners comprehend that the resale value of a vehicle affects the TCO. For instance, a subcompact vehicle may initially cost less than a midsize one. However, the sub-compact may depreciate more and thus resulting in a higher TCO.
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Lowering Fuel Cost
Any fleet manager worth their salt can attest that fuel costs are a major expense for their business – sometimes as high as 10%!
And as temperatures drop, the cost of keeping your vehicles running can rise even higher if the proper precautions aren’t taken.
This means taking a long look at: idling and logistics.
For idling, we recommend looking into installing affordable telematics devices in-vehicles to help find drivers who waste fuel idling on job-sites. With these devices, we’ve helped dozens of customers save up to 15% in fuel in their first month!
These devices can also help you plan more efficient routes to ensure you’re maximizing your fleet to its full potential.
Cut down Lifecycle Costs
Reducing vehicle lifecycle cost is all about optimizing the replacement cycles and conforming to the correct replacement routines. Most of the world-class fleet organizations use economic-based replacement planning tools to establish the proper lifecycles for vehicle replacement empirically. Some of the factors a fleet manager should consider in determining an appropriate sequence of replacement include planned maintenance and projected repair. After considering all relevant factors, the fleet manager should prepare short and long-term replacement plans that will help in reducing lifecycle costs.
Lower Maintenance Costs
A fleet manager can realize measurable cost savings if effective parts inventory management practices are part of a fleet’s maintenance program. Having the right parts where and when they are needed enables technicians to complete service and repair work more efficiently. In turn, that lowers labor costs. On the other hand, maintenance costs will rise if needed parts are not available for maintenance or repairs. Repairing your fleet on time means that you avoid loss of customers by making deliveries on time.
Decrease Overhead Costs
Overhead costs are also commonly known as indirect costs. Primarily, overhead costs include the cost of management and administrative staff, buildings, and facilities. Additionally, the costs may consist of fuel sites, computer systems, utilities, tools, taxes, and many other factors that are not directly attributable to a vehicle. It is vital for a fleet manager to identify the sources of the overhead costs and work towards reducing them.