Saving on fleet operations costs in these tough times has become vital to any company’s future success. Fleet cost savings are driven by having good and enforceable fleet policies in place that govern corporate safety, health, and risk issues.

 

Fleet costs are managed and reduced by following the internationally accepted principles that cover:
Policies and Procedures
Operations
Cost Management

Without having all three of these pillars in place a company will not be able to manage safety, risk mitigation and operational fleet costs. All the above are geared to focus on reducing and improving the cents per kilometer (cpk) cost of a fleet.

 

Policies and Procedures
Procurement rules and regulations: The fleet management committee made up of management, finance, HR, and fleet department will agree on all procurement procedures and regulations.
Vehicle selection and application: Fleet management committee will determine which manufacturer brand, dealer group and dealerships will be nominated to supply vehicles to the company. The correct vehicle will be selected for the correct application and usage.
Funding options from cash to operating rental: Finance will decide which method of funding the assets will be the most beneficial to the company. All options from cash to operating rentals will be evaluated. A method of determining this could be to use a discounted cash flow (DCF)
Company vehicle or Car Allowance: The fleet management committee can evaluate the options of supplying employees with a company car or a car allowance. There are pros and cons in either of the methods selected and must be carefully weighed up before selection.

HR – Disciplinary actions covering accidents and fines: All disciplinary actions regarding company car drivers or car allowance receivers must be clearly defined and circulated to all concerned. For disciplinary actions to be successfully implemented, all drivers inclusive of management must form part of the process.

 

Operations
Vehicle Acceptance: Acceptance of a new vehicle and additional vendor product suppliers must adhere to the specific rules agreed to and be signed off by the fleet management department.
Maintenance, tyre and fuel: The suppliers of a maintenance management or managed maintenance program must be selected and evaluated. These suppliers or vendors can be from banking institutions with bank cards or independent fleet management companies. Agreement must be reached as to how the information will be supplied to the company.
GPS/Tracking with routing and driver behaviour: The selection of a GPS/Tracking vendor is very important. The quality and nominated touch points supplied by the vendor must be critically evaluated, to enable the fleet department to influence and improve driver behaviour. The stated fact is that unless the behaviour of a driver can be changed, no fleet savings will be made.
Insurance: The fleet management committee will select and agree on the method used to insure all vehicles and assets of the company. There are various options available such as an aggregate excess option, individual vehicle insurance, a participative scheme for car allowance users and shared self-insurance with limits.
Accident procedures for repair or replacement: Service providers to repair any of the company vehicles should be selected and agreed to with the insurer. Strict accident procedures and repair instructions should be agreed to. The rules around repairing a vehicle or replacing same following an accident must be clearly defined. Accidents affect the depreciation, maintenance, and resale values of a vehicle.

Driver interaction: Drivers of company vehicles and car allowance must be advised of all the policies and procedures that will apply to them regarding accidents, fines received and feedback reports from the GPS/Tracing company. The newly revived AARTO regulations could have serious effects on company or car allowance driver relationships for the company going forward.

 

Cost Management
Fleet audits: Annual fleet audits must be conducted to ensure the correct fleet mix, vehicles required, correct service delivery, and managing replacement cycles. Keeping vehicles past correct replacement periods affects depreciation, maintenance, and resale values.
Structure of fleet department in a company: The rules and authorities of the fleet department must be such that they can operate and take responsibility for a budget accepted by the fleet management committee. The daily decisions and operational issues are their responsibility.
Fines management: The company must understand the responsibility for the receiving and management of issued/received fines. Both vehicles and drivers can receive fines. Not managing these correctly can have serious risk, safety, and consequential cost effects on the company. Disciplinary motivations regarding fines and subsequent actions with results should be clearly defined and understood by all.
Driver training: Taking the above into consideration it is important to have a driver training program in place with a well-recognized and experienced driver training service provider such as MasterDrive. Taking the cost of driver training into consideration, as a percentage of the vehicle’s lifetime operating cost, resulting in improved maintenance, tyre, fuel, fewer accidents, fines, and HR cost is a no-brainer.
Fleet Management Information System (FMIS): Companies need to have a FleetDomain Online Fleet Management Information System (FMIS) in place to generate centralized information reports. These reports cover all aspects of fleet management from vehicle selection, acquisition, procurement, and delivery to termination, GPS/Tracking, accidents, and fines.

Reports that manage and guide business: Report generation that is focused on fleet enables companies to manage costly vehicle expenses and driver activities. Developing reports and trendline that will influence future costs are paramount to future cost reductions and improvements regarding the return on investment (ROI)

To receive or experience any of the above-discussed and mentioned long-term benefits contact.

 

Johan van Niekerk
CEO Mobility Solutions

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