Taking a holistic approach to fleet management will go a long way to managing costs more effectively
The challenges and complexities that fleet owners currently face in their efforts to optimise fleet operations and ensure continuity of services should not be taken lightly. At this point in time it is critical that these companies partner with the right fleet management service provider. This is according to John Loxton, WesBank Head of Fleet Management & Leasing.
According to Loxton, professional fleet management providers enable fleet owners time to focus on their core business, while the fleet management team provides structure, pro-actively plans on their behalf and provides discipline to fleet operations as well as the benefits of economies of scale.
“Our local fleet management industry, when measured against global standards, can justifiably be regarded as being among the best in the world,” says Loxton. “Over the past decade, the industry has seen a considerable increase in knowledge and skill levels. An increase in sophisticated telemetry and the improvement in information management have been the most important contributing factors, helping our industry stay in tune with international fleet management.”
According to Loxton, an effective approach to fleet management should include the following cost considerations:
- Vehicle selection based on the Total Cost of Ownership (TCO) principles
- Procurement management
- Repairs, maintenance and tyre management (including service and tyres)
- Fuel management
- Managing fleet utilisation
- Funding and the most effective use of capital
- The optimal vehicle replacement policy
- The remarketing of off-fleet vehicles
A professional fleet management service provider should manage each of these cost factors in order to unlock optimal value for its client. Fleet owners also don’t necessarily have the required skill and systems to do this effectively in order to lower the total costs of fleet operations.
Loxton stresses the importance of managing each vehicle individually with the aim of optimising the total cost of ownership of every vehicle in a fleet. “A focus on optimising costs makes it clear that fleet management requires a very complex and analytical approach,” adds Loxton.
There are some companies in South Africa that refer to their services as fleet management, however this can be misleading. The owner of a workshop cannot possibly claim to be delivering comprehensive fleet management services as much as a telemetry provider in isolation cannot claim to either. Yet these services are advertised as such, adding to the incorrect perceptions as to what fleet management actually entails.
“The maintenance, management and telemetry of a fleet are merely components of fleet management which, in isolation, cannot offer the same advantages as the holistic approach of professional fleet management. Complete fleet management should in fact be an example of where the whole is more than the sum of the parts,” says Loxton.
Due to current circumstances, some fleet owners might turn to managing their own maintenance facilities. In some of these cases there may well be a logical reason for this, for example in the case of a transport company with the need to maintain vehicle uptime in order to deliver goods or services. However, in other cases, when the primary reason is not the productivity of the fleet but cost, there is a very real likelihood that over time it will have the opposite effect on costs. In such instances, the allocation of overhead and labour costs can become a challenge, i.e. to calculate the accurate cost per kilometer of a fleet. This may unfortunately lead to the perception that fleet owners can maintain their fleet at a cheaper rate than a fleet management company.
“By reducing fleet management simply to a matter of comparing costs creates a false perception of effective fleet management. A holistic approach, combined with the right fleet management partner, should lead to considerable savings. As a rule, we aim to achieve savings in the region of 10-20%,” Says Loxton.
“My advice to any fleet owner is to select a fleet management service provider based on the company’s experience and reputation, form a strong partnership with the service provider and ensure both partners enjoy the benefits of such a relationship where their interests and objectives are aligned,” he concludes.