Effective fleet management and cost savings can be achieved when the vehicle life cycle is well planned from start/selection to end/remarketing.
The lifecycle of a fleet follows a logical process that encapsulates all the events that have a bearing on costs. It covers vehicle selection; purchasing; financing; operations; replacement, and re-marketing. All of the foregoing form part of a total business programme that involves vehicles and drivers.
The lowest and most efficient fleet Total Cost of Ownership (TCO) are achieved, when all these elements are synchronised to work in harmony.
Vehicle selection: Choosing the correct vehicle must be based on several matters including: work environment; area of use; application and the all-important question – is it fit for purpose? A total cost of ownership (TCO) exercise needs to be performed to determine the most competitive vehicle in terms of cents per kilometre usage over lifespan in the fleet.
Purchasing: The brand and dealer group that you consider purchasing from must have a good understanding of your business and requirements. Dealer groups spend money on training and developing fleet sales consultants to deliver the required service and support to fleet owners. Discount is not everything. The TCO expectation of any model selected must meet the criteria.
Financing: The different options for financing a vehicle must be taken in account and in a manner that is to the best advantage of the company. Businesses can purchase for: cash; hire purchase; financial lease; lease with a balloon or an operating rental. Companies can perform a discounted cashflow exercise on all options to determine which works best for them.
Operations: This covers all of the variable costs attached to the ownership of a vehicle. There are many options available to manage maintenance, tyres, fuel, insurance, accidents, and fines. The challenge is that all the expenditure information received is not available on one platform. Fleet managers and companies must work through reams of paper to get a clear picture of all variable expenses. The use of a reputable GPS/tracking device in each vehicle is also very much a part of the operations exercise. Management of driver behaviour, over and above vehicle tracking, is an even more important feature.
Replacement: Fleet operating companies should have a very clearly defined vehicle replacement policy that ensures vehicles are removed from the fleet at the precise time indicated by the life span and usage curve. Extending the life of vehicles beyond this calculated time can result in excessive repair costs, expensive maintenance, loss of resale value, risk to drivers/operators, tarnishing of company image, increased down-time and out of line replacement costs.
Re-marketing: Vehicles that are replaced when they still have some calculated useful life in them, attract a better resale value. A re-marketing strategy should be in place that will result in the best sale value. The market value of the vehicle, linked to time and kilometres, should be known to the company selling or trading-in the vehicle. There are various methods of selling end of term company vehicles – e.g., staff purchase, independent auctions, selling to trader groups or own online selling.
Being able to manage a fleet effectively, taking all these matters into consideration, is not an easy task.
All the foregoing processes and requirements can be managed by well developed and tested fleet management information system which is available on the market.
FleetDomain Online Business Systems (Pty) Ltd have specifically designed and developed Fleet Management Information Systems (FMIS) available that can cater for the different levels of fleet management required.
Kindly contact me so we can determine what your specific requirements will be.
Johan van Niekerk
CEO – Mobility Solutions Consultant