How to contain or reduce your fleet costs?
Due to growing economic uncertainty and future market conditions, cost reduction is an increasing concern for fleet managers.
Since fleets are often the companies' most considerable expense (fleet costs are frequently in the top 10 corporate expenses), they are usually the first place considered to reduce costs. As a fleet manager, it is thus crucial to implement some cost reduction strategies that do not compromise your fleet performance.
Discover some cost-reduction strategies to tackle financial uncertainty and restricted OEM allocation, ensuring optimal fleet performance at reduced costs.
First, consider the strategy of right-sizing your fleet. Reducing the size of your fleet allows you to reduce total costs such as fuel, maintenance, tire expenses, depreciation, and accident repair costs, which are directly related to the size of your fleet. However, be aware that downsizing your fleet presents challenges, such as variable utilization rates within the fleet due to high turnover or switching tasks.
Second, reduce the number of underutilized vehicles in your fleet. The backlog of vehicles, i.e., unused vehicles held in the company as "spares," hampers cost-reduction efforts. Therefore, discarding these vehicles may be a strategic step when aiming to cut costs in your fleet.
Third, get actively involved in fleet inventory management. For example, suppose a driver consistently drives less than break-even mileage. The restricted volume of replacement vehicles available from Original Equipment Manufacturers (OEMs) calls into question the merits of assigning a company vehicle to employees who only meet the eligibility threshold of annual miles driven on the job. In this case, reassigning the vehicle and moving the driver to a monthly allowance or penny-per-mile reimbursement program would be a good cost-reduction strategy. To effectively manage your inventory, you can also conduct frequent exception reports to assess the company's monthly mileage and decide if drivers still qualify for company-provided vehicles.
To summarize, fleet managers are unquestionably essential for driving cost-reduction strategies and ensuring ongoing optimization of fleet usage. Moreover, it is critical to implement innovative strategies to reduce costs so that companies can navigate the complexities of today's environment of supply constraints and restricted OEM allocation while effectively containing their expenses and not compromising fleet performance.
- Cost reduction strategies
- Fleet inventory management
- Restricted OEM allocation
- Reduce fleet costs
- Fleet right-sizing
- Fleet costs
- Fleet manager