Fleet Domain, part of the Argility Technology Group, has announced best practices aimed at reducing fleet management costs and delivering a successful fleet management programme.
“Cost savings are fundamental to successful fleet management. They impact bottom line, operational efficiency, and the ability to remain competitive in the market,” says Johan Van Niekerk, Fleet Solutions Consultant, Fleet Domain. “Implementing strategies to control costs while maintaining high-quality services and safety standards is essential for any business that relies on a fleet of vehicles.”
Fleet cost savings are driven by having enforceable fleet policies in place that govern corporate safety, health, and risk issues. Fleet costs are recognised to be managed and reduced by following internationally accepted principles that cover:
• Policies and procedures.
• Operations.
• Cost management.
Van Niekerk confirms that without having all three of these pillars in place, a company will be unable to manage safety, risk mitigation and operational fleet costs. “All the above are geared to focus on reducing and improving the cents per kilometre (CPK) cost of a fleet.”
Fleet Domain recommends the following best practices
• Policies and procedures: Procurement rules and regulations – businesses need a fleet management committee comprised of the company’s executive, finance, HR, and the fleet department. All these entities must agree on pre-determined procurement procedures in keeping with regulatory requirements.
• Vehicle selection and application: Vehicles must be selected for appropriate application and usage.
• Funding options from cash to operating rental: All options from cash to operating rentals need to be evaluated. Using a discounted cash flow (DCF) approach is one way of addressing this.
• Company vehicle or car allowance: The fleet management committee can evaluate the options of supplying employees with a company car or an allowance. There are pros and cons attached to both scenarios, which must be carefully weighed up before choosing which method best suits the business.
• Disciplinary actions covering accidents and fines: Disciplinary policies/actions regarding company car drivers or car allowance receivers must be clearly defined and circulated to all concerned. If such policies are to be successfully implemented, all drivers – including 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 by the fleet management department.
• Maintenance, tyre, and fuel: The suppliers of a maintenance management programme must be evaluated and selected. Such vendors can hail from banking institutions with bank cards or independent fleet management companies. Moreover, the business needs to agree on how information from these vendors will be supplied.
• Tracking Integration – tracking with routing and driver behaviour: Selection of a tracking vendor is crucial. 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. It is generally agreed in the industry that unless driver behaviour can be changed, no fleet savings will be made.
• Insurance: The fleet management committee needs to agree on the insurance method for 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: Accidents affect the depreciation, maintenance, and resale values of a vehicle. The business needs to select – plus acquire upfront approval from insurers – service providers for company vehicle repairs. Strict accident procedures and repair instructions should be agreed upon. The rules around repairing a vehicle or replacing it following an accident must be clearly defined.
• Driver interaction: Drivers of company and car allowance vehicles must be advised of all the policies and procedures that will apply to them regarding accidents, fines received and feedback reports from the GPS/tracking company. The newly revived AARTO regulations could have serious effects on company or car allowance driver relationships.
Cost management is all important
• Fleet audits: Annual fleet audits must be conducted to ensure the correct fleet mix, service delivery, vehicles required and managing replacement cycles. Keeping vehicles past the recommended replacement dates 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. Not managing fines correctly can seriously impact safety and costs for the company. Disciplinary motivations regarding fines and subsequent actions should be clearly defined and understood by all.
• Driver training: It is important to have a driver training programme in place with a well-recognised and experienced service provider. Taking the cost of driver training into consideration as a percentage of the vehicle’s lifetime operating cost is a good approach, which results in improved maintenance, tyre, fuel, fewer accidents, fines, and HR costs.
• Reports that manage and guide business: Report generation focused on fleet enables companies to manage costly vehicle expenses and driver activities. Developing reports will influence future costs and must be deemed to be paramount to future cost reductions and improvements regarding the return on investment (ROI).
“FleetDomain’s Online Fleet Management Information System (FMIS) produces comprehensive centralised information reports. These encompass all facets of fleet management, spanning vehicle selection, acquisition, procurement, delivery, and termination, as well as tracking integration, accident records, and fines. Succinctly put, our FMIS provides the market with cost-effective, innovative, and dependable fleet management,” Van Niekerk concludes.
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