THERE are many challenges affecting fleets today: Paul Fincham, motor fleet broker for Bluedrop Services, discusses a few of these that tend to be consistent across the board and offers his advice.
Managing costs is a number one priority facing all fleet managers today. There is a growing pressure on companies to control their delivery costs and staying competitive means focusing on reducing operating costs across the board in all business processes.
There is also more pressure to provide greater insight into the performance of the business. Fleet costs and more often than not, fuel costs, drag down a company’s profits.
Following the recession the pressure to reduce costs year on year is growing. Ultimately this will involve looking at whole-life costs of vehicles, analysing fuel costs, reducing risk of accident and improving the overall efficiency of your fleet.
Growing involvement of procurement in fleet management
The decision makers involved in fleet management have begun to make a shift. Due to the focus on keeping costs down, procurement now have a deeper involvement across the course of the year to ensure needs are met, as opposed to just taking responsibility for the initial sourcing task.
This is a positive move in that service level agreements are imposed and checked against carefully throughout the term. However, businesses need to be careful to ensure that the fleet manager and procurement expert work together and alongside other stakeholders such as HR, finance and the drivers themselves to ensure the vehicles are in the best interest of the business.
As procurement continue to have a greater involvement in the supplier decision-making process, there is more focus on cost and some suppliers that would have provided a better service may be discounted.
Impact of taxation and legislation
There has been an acceleration in taxation surrounding fleet vehicles, whether it be VAT, excise duty, benefit in kind tax, etc. All of which add to the administrative and financial burden. Higher fuel taxes have also increased operating expenses.
The impact of taxation is prompting fleets to downsize to smaller engines, as well as right-sizing their fleets, and more and more will be doing so to save costs.
Many companies are committed to achieving their sustainability targets and have implemented emissions baselines in order to select the right vehicles as a result of taxation and legislation.
It is wise for fleet managers to keep aware of upcoming changes in taxation and legislation to ensure they are making the right decisions for the business looking ahead.
Analysing ‘Big Data’
An increased focus on managing data streams in fleet from a variety of sources has recently come about for those larger corporations. Fleets generate mounds of data on a daily basis, yet very few were actually doing anything with this data.
As ‘Big Data’ is generating a higher profile, more businesses are becoming focused on using the information to their advantage. There is huge potential to be had from leveraging the valuable analytics tools in terms of maintaining profitability and making sound business decisions based on predictive modelling.
Predictive analytics can be a powerful decision-making tool. Whilst it is not possible to prevent all accidents, reducing the number through predictive modelling could make substantial cost savings as well as fewer injuries and fatalities on the road.
Modifying driver behaviour can, as a result, reduce risk and the associated costs such as maintenance and repair, fleet insurance, and vehicle off-road time. Companies are increasingly focusing on changing driver behaviour to improve fuel economy, reduce costs, and decrease emissions.
Fleet manager’s roles are expanding
With many businesses focused on reducing emissions, committing to sustainability and under pressure to evaluate overall travel costs and the effect on the environment, many fleet managers see their role expanding.
Fleet managers are now not just responsible for managing the company’s fleet but for also analysing when it is best to not use the fleet and maybe use public transport or hired vehicles to save costs and the environment instead.
This, of course, brings with it more administrative burdens and time spent looking into viable alternatives for different situations, but ultimately a holistic approach can be time well spent.
The recent drop in fuel prices has been a welcome relief to many fleet managers, but the real challenge is going to be when prices rise again and costs will be expected to be kept down somehow. However, for now expert forecasts indicate that prices are set to remain low for 2016.
As a result of this, it is more likely that fleet managers will select the vehicles that make most sense to their utilisation needs.
Many retailers have noticed a decreasing interest in hybrids and alternative fuel vehicles as a result of the reduced crude oil and diesel costs. Advice would be that fleets should maintain a consistent approach to their fuel consumption strategy regardless of where pricing is at, in order to make the best savings.
Many are in fact placing greater emphasis on the use of telematics to find additional fuel savings at a time when the market is relaxed.
- Paul Fincham has 24 years’ experience in the motor insurance industry and has a wealth of knowledge having started within regional broking as an account executive for ten years prior to moving into underwriting with AXA, LV & Andeva Underwriting Agency Ltd. As Motor Fleet Broker for Bluedrop Services, Paul specialises in Motor Fleet Insurance and offers advice and support to customers managing motor fleets.
Do you have a car leasing question?