Whether you have a couple of company vehicles, or a full-blown logistics business that operates dozens of vehicles, fleet management is a big issue for many small businesses.
Poor fleet management is often a problem that small business owners fall into. Usually the business has become a victim of its own success, and what was once a car for the odd salesman or two, quickly sprawled out into a few cars, then half a dozen, and before you know it the business has a bulging portfolio of vehicles on the road.
This will vary from business to business, with a local tradie outfit far more likely to need to be on the road from the get go, but even the smallest office-bound operation will eventually have the need for motorised transport.
Whether you are operating just a small number of cars, or you have several dozen on the books, the decision you have to make when it comes to fleet management is whether to outsource or not. Like all decisions for small businesses, there are cost implications as well as time constraints.
Even if you stand to save money by organising service checks yourself, and become the main point of contact for all the maintenance and fuel issues for the company, you have to weigh up the cost of your time. The question you need to ask is whether your time is worth more than the price you would pay to have someone else take care of your vehicle management for you.
Walter Scremin, general manger of Ontime Group, believes the biggest benefit to outsourcing is that it avoids the managment of your fleet becoming a headache.
“You let someone else deal with the risk that a vehicle will break down or that a driver will be absent,” he says. “You let someone else deal with the risk and cost of investing in vehicles such as vans or trucks that you need for deliveries. It removes hassles and frees up time to focus on your core business. It also delivers greater efficiencies. Outsourcing to a specialist means you benefit from their specialist processes, technology and knowledge from having done it so many times before.”
Scremin believes that in some industries, customer service and responsiveness will improve as the fleet performance improves. There are some businesses where this will be more obvious than others – such as for a small operation of delivery vans – but the principles still apply to fleet management on a smaller scale.
“In terms of logistical fleet management, it is cheaper to outsource,” continues Scremin. “This is mainly because you turn what is a fixed cost into a variable cost – a big problem when running your own vehicles is that during ‘downtime’ you don’t experience any relief in costs, and in peak times, you may need to lease a vehicle and driver at short notice at a premium rate.
“However with outsourcing you only pay for what you use – you can turn it on and off at short notice to match either a downtime or a peak period. The hourly outsourcing rate may be higher, but because you only pay for what you use, and don’t pay for things such as holidays and sick days, it works out significantly cheaper.”
For businesses with a logistical need for company vehicles, fleet management is a necessity that has to be planned for. But this also applies to small businesses with a few sedans given over to travelling sales people, or salary-sacrificed cars that the company pays the fuel and maintenance on.
According to Scremin, one of the biggest mistakes small businesses can make is not considering all the options available to you and trying to do too much by yourself.
“Too many companies make a massive investment in buying or leasing vans and trucks, employing drivers, and underestimate the huge amount of hidden costs inherent in running a fleet,” he says. “Things like work cover, staffing costs, servicing vehicles, fuel and tires.”
The important thing is to not rush into anything. There are lots of outsourcing providers out there, as well as numerous vendors just waiting to sign you up for everything from global positioning system (GPS) devices to entire fleet maintenance packages.
Like every decision in small business that directly affects the bottom line, it should only be made after careful consideration and the right amount of expert advice. Whether you do opt to outsource your vehicles or just keep it all in-house, it’s important to know all of the options out there and what the real costs associated with them are.
Fleet management tips
Tom Schahill, business area director for Trimble Navigation, shares his top five tips for small business owners managing a fleet of company cars.
1 Improve driving style – driving style is a key contributor to excessive fuel consumption, given that the most common aggressive driving behaviour – speeding – is responsible for the largest percentage of fuel wasted when your employees are out on the road.
2 Use appropriate driver routes – understandably, there are some detours which simply can’t be avoided due to construction or accidents en route. However, drivers who repeatedly deviate from pre-planned routes often drive longer distances and consequently use more fuel than is necessary.
3 Reduce idling time – whenever a vehicle is idling, it is reducing its average fuel economy and creating unnecessary CO2 emissions. While some idling time is normal, excessive engine idling generates a negative impact on fuel economy.
4 Vehicle maintenance – lack of proper vehicle maintenance can prove to be detrimental on the performance of a vehicle, decreasing the average distance travelled per litre. Improved vehicle maintenance scheduling and performance not only reduces the amount of fuel used by your fleet, it increases the amount of time vehicles are in productive use. By carrying out the appropriate vehicle maintenance in a timely manner, it is effectively reducing the ‘wear and tear’, reducing the risk of mechanical failure and increasing your company’s profits further.
5 Improving safety standards – investing in such a corporate culture has a threefold effect: it helps your mobile workers stay safe, it decreases crash costs, and also reduces risk to a business.
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