The surge in production of oil and natural gas from shale formations in the United States led to dramatic growth of the domestic energy industry, and the ancillary industries that support it. With this boom in production, some companies were growing so quickly, that not a lot of forethought was able to be put into how much was being spent on equipment. Domestic energy companies grew rapidly and simply did what they had to in order to meet their needs: more employees, more equipment, more vehicles, and more technology.
Now that this surge has begun to slow down, it’s time for these companies to step back and take a look at where they are now. To sustain their business they’ll need to make some changes to elements that grew too quickly, including right-sizing their fleet of vehicles. So what can companies do to start this potentially overwhelming task?
Don’t Go it Alone
A great place to start is finding a partner to keep an eye on fleet expenses, analyze patterns, and help your company be aware of the true costs of their vehicle fleet. A full-service fleet management company can help manage everything from vehicle acquisition to scheduled maintenance and more. This is vital because being on top of preventative maintenance and routine safety checks will drastically reduce unnecessary expenses from your fleet. A fleet management partner can help further reduce costs by providing bulk pricing on preventative maintenance services and parts if they are part of a national account agreement with a maintenance vendor.
Reduce Lifecycle Costs
One of the best ways to optimize your fleet is to reduce lifecycle costs. This means not keeping vehicles past their optimum lifespan, which can result in excessive repairs, decreased fuel economy, breakdowns and more. Vehicles kept too long are usually a result of a failure to communicate the costs and benefits of timely vehicle replacement. A fleet management company can help with this as well by helping you advocate for appropriate vehicle replacement at the proper times to cut costs.
Start Tracking Everything
Fleet telematics can increase efficiency in fleets and help reduce risk, reduce fuel costs, avoid speeding violations and more. When you’re able to track specifics of your fleet’s behavior such as peak times or trends in fuel consumption, you’re able to spot areas for improvement easily. This may even include managing driver behavior, enforcing your fleet policy, and training your employees on more efficient driving habits. There are a lot of telematics solutions on the market, and partnering with a fleet management company can help you find the best solution for your fleet.
Owning vs. Leasing Your Fleet
For companies that currently own vehicles, utilizing monthly payments over the term of a lease instead of paying all costs up front can optimize cash flow. Additionally, a company is able to remove the depreciating assets from the balance sheet and expense the monthly lease payments. Leasing can also help with budgeting and planning by consolidating vehicle expenses into regular, predictable lease payments. Furthermore, leasing can greatly reduce administrative tasks when you add fuel and maintenance management programs.
Leasing and Fuel Programs
Most fleet fuel programs have built in controls to limit use of credit cards to specific items, such as fuel only. This helps hold employees accountable for their expenses and reduce administrative duties such as managing reimbursement. Plus, this consolidates billing for maintenance and fuel expenses into regular, predictable monthly payments, which reduces administrative tasks including driver expense reporting and internal accounting tasks.
Vehicle Acquisition Costs
When a fleet management company purchases thousands of vehicles every year they are able to purchase vehicles at a lower cost than an individual company. They can advise on vehicle selection to take advantage of any available manufacturer incentives. Vehicles can be factory-ordered or sourced from dealer stock, and they can even purchase vehicles through a specific dealer if there is an existing relationship between the company and a local dealer. This helps reduce fleet costs from the get-go. Partnering with a fleet management company to acquire new vehicles can optimize your fleet from day one.
Right-Sizing Your Existing Fleet
There’s a lot you can do to optimize your fleet’s performance, but what about making sure you have the right vehicles in your fleet for your current needs? Some companies may need fewer vehicles in their permanent fleet, and can add flexibility by using a commercial rental provider to meet short-term or project-based vehicle needs. Strategically right-sizing your fleet helps you achieve more efficient operations while saving you costly vehicle depreciation. However, this can come with a lot of guesswork and assumptions being made. By partnering with a fleet management company you can remove the guess work and know you have the right vehicles for your needs: nothing more and nothing less.