How to Minimize the Cost of Fleet Management
Logistics and transportation themselves are very costly. However, add the expenses of managing a logistical fleet and their consecutive employees, and the numbers only get higher. Sometimes, transportation and fleet management costs can make the entire consignment cost shoot up; isn’t that an unfavorable scenario? After all, neither do manufacturers want to reduce their profit margin nor do customers want to pay higher for the same product, right?The only solution to save fleet managers from this imbalance in the economy is to somehow reduce the cost of fleet management systems. As someone who might be new to fleet management, reducing costs will come across as a huge challenge. However, don’t worry! Helping you is what we are here for!
Continue reading this article to learn about different ways in which you can minimize the cost of fleet management.
Total Fleet Management Cost Analysis
Understanding where the problem lies is the first step to efficient fleet management. After all, only when you know where your money is going can you decipher the places where you’d like to cut down on the expenses.
Cost of Ownership
Real-time visibility and calculation of your total cost of ownership (TCO) will help you analyze expenses minutely and forecast stipulated costs in the future. Therefore, let us look into what the total cost of ownership and fleet management might look like.
When it comes to fleet operation, you might want to look into the total costs that you anyway have to fulfill. These costs can be divided into fixed and operating costs with the latter being dynamic according to usage.
Fixed Costs Include:
- Total vehicle cost
- Depreciation cost
- Loans and lease payments
- Permits and licences
Operating or Variable Costs Include:
- Vehicle part replacement
- Parking tickets
- Tolls on highways
- Detailed running costs
One of the biggest factors that utilize the fleet budget is fuel. It is an ongoing expense that is difficult to control without a proper fuel monitoring and control system at hand.
The variable costs of fuel causes even more confusion regarding how much money should be set aside for fuel in the total fleet management system. Moreover, fuel consumption of each vehicle in your fleet will different according to the engine’s mileage and the driver’s performance. Pilferage is also something to be careful about.
Without comprehensive insights and control, fuel expenses can go completely out of hand.
If you’ve been following the manual fleet management system for long, you’ll know the amount of paperwork that goes into it. Unfortunately, paperwork requires a lot of natural resources, time, efforts, and organization skills. However, those very resources can be put into a much better place if paperwork could be completely eliminated.
Manual fleet management cannot go without paperwork since it is the first step to analyzing fleet performance. The cost of paperwork, however, is too much to ignore.
Time Vs. Productivity
Fleet management comes with several roles and operations requiring maximum productivity at all times for smooth functioning. However, when managing your fleet manually, operations such as tracking consignment through calls and maintaining data records can be extremely time consuming.
Through manual operations, productivity with respect to time falls exponentially. This is especially the case when you could be taking client calls instead of constantly calling your drivers to check their status.
Time is money and many fleet managers struggle to find time for ROI generating tasks instead of conducting operational ones. This obviously causes indirect losses.
Fleet managers can find themselves acquiring more vehicles or hiring more employees than necessary. This is mostly done because of the unwillingness to exploit existing resources and the difficulty in checking productivity served by each of them.
However, if you have extra vehicles in your fleet or extra employees in your team, you will be spending much more money than required. Your investment and TCO will be higher than necessary which will obviously lead to low profits.
Several fleet management assets can be put to several uses. For example, if you own a vehicle, you do not need to assign it only one task; instead, it can run on several routes whenever free. However, keeping track of where all your assets are being utilized can be difficult, especially while managing a large fleet offline.
Not fully utilizing your assets will definitely lead to overhead expenses that can easily be done away with.
Managing Fleet Expenses Smartly Through Fleet Management Software
Now that we know exactly where most of your fleet management money goes, you can figure out ways to reduce expenses.
How? By using fleet management software that aids automation and provides data insights!
Here are a few ways in which with the help of technology, you can save up on your fleet budget.
Real-Time Vehicle tracking to Reduce Management Load
When you use a digital fleet management system, the primary purpose of the software will be to track your vehicles. Through GPS or Sim-based tracking, a fleet management software will give you real-time status of all your vehicles or assets. Therefore, you will not have to constantly call to check each person’s status and whereabouts.
Real-time tracking saves you time spent on supervision. However, it also increases team efficiency by allowing them to conduct their tasks without interruptions.
Digital Data Collection Means No Paperwork
With all the real-time tracking data stored in one place, the need for paperwork obviates. No more do you or your team have to spend hours creating reports that might not even be accurate.
Fleet management software collects all the data you have programmed it to collect from vehicles. Therefore, instead of pouring yourself over paperwork, you can simply head on to the software, choose the data report you want to see, and everything will be organized for you effortlessly, massively saving you time and money.
Analyzing Fleet Efficiency Means No Extra Hiring or Buying
Through real-time tracking and massive data collection, fleet management software will help you analyze how much work each of your assets are doing. Therefore, you can analyze their performance and see how much more resources you need to fulfill your business goals.
Through this analysis, you can massively cut down on fleet expenses by getting rid of assets you no longer need or are only languishing under your expenses.
Proper Asset Management Means No Wastage
While using digital fleet management, you get to enter all your assets and their activities in one place. Therefore, it is the software that will keep track of what each asset is producing.
With the help of insightful reports produced by the software, you can see:
- If you have extra assets you no longer require
- If and what more assets you need in your management system
- Where all you assets are being used
By having all the above information, you can streamline your expenses by getting the most out of your assets.
Driver Behaviour Analysis
How a driver operates your vehicles makes a huge difference in vehicle productivity. Most important things that drivers behaviour influences are:
- Vehicle health
- Engine strength
- Maintenance tally
- Time consumed for specific tasks
- Fuel consumption through route planning and optimum driving
With all the data that your fleet management software can collect, you can visualize driver performance. In a manual system, that is hardly ever possible.
When you know which drivers offer the best and worst productivity, you can train them accordingly to reduce expenses.
Fuel monitoring is mostly done through IoT sensors integrated with the software. Through the right sensors, your software can see fuel addition and consumption reports.
This insight can help you create a monthly aggregate fuel budget that your fleet needs to abide by.
Moreover, by knowing how your fleet is consuming fuel, you will also get to know which drivers, routes, and patterns work best for your business.
Automation at its Best to Save Time and Energy
Last but certainly not the least, your fleet management software will make several functions automatic to save you a lot of time. The more time you have, the more you can work on expanding your operations and saving money on manual work.
Automating functions such as safety alerts, maintenance alerts, temperature regulation in cold-chain supply, and automatic vehicle locking are crucial in today’s fleet management environment.
The higher up you go on the technological front, the more money you can eventually save on fleet management through smarter solutions.
Fleet management can be as complicated and as simple as you allow it to be. After all, it all boils down to what managerial tools and talents you are using. Minimizing fleet expenses allows you to focus on acquiring new business opportunities that will help you make the most out of your assets and resources.
Using high-end white label fleet management software such as TrackoBit will allow you to increase fleet efficiency by cutting down on monetary waste. So, what are you waiting for? Choose the fleet management software that best suits your requirements and get started with smart fleet management!