22 Mar An Estimated 5-10% of Fleet Dollars Are Wasted Annually
Fleet management is all about money which is why all fleet managers are constantly embroiled in the struggles of cost management. It may seem like there is a shortage of money but one of the main talking points in fleet management is related to the money that ends up being wasted. The wastage of funds can be defined as consuming corporate resources and funds through non-essential and inefficient activities. The numbers reveal that an average fleet will end up wasting anywhere between 5% to 10% of its annual budget.
For instance, did you know the amount of money that is wasted by adding unnecessary specifications on vehicles, keeping assets that aren’t used, and not complying with scheduled preventive maintenance intervals that cause unproductive downtime? Most of the cost-reduction initiatives depend on operating expenses but the biggest expenditure every year for a fleet is depreciation. The question you must ask yourself is whether you are maximizing the potential for resale of all your assets, or have your remarketing efforts led to wasting even more money?
You should also think about overloading which is considered a safety problem. It results in the wastage of precious fleet dollars. The service life of a truck is shortened by overloading and this leads to an increase in the operating expenses of the vehicle. Most surveys on fleet maintenance show that the primary cause of unscheduled maintenance for trucks is overloading.
The frustrating thing is that this expense can be easily avoided because there is a connection between the fuel consumption and weight of the vehicle. Each extra pound of weight causes the engine to work harder and this leads to increased fuel consumption. On the other hand, the weight that is removed from the overall weight is transferred into payloads that generate revenue.
Proactive vs. Reactive Cost Management
When it comes to controlling waste, the best time is to do it is before it happens. You can only do this by creating procedures and policies that protect the assets of the company from preventable expenses and stop unnecessary spending. The fleet policy can stop money-wasting behavior, like needlessly spending money on fleet field operations. The fuel budget accounts for the most wastage in operating cost.
If driver behavior impacts nearly 30% of the fuel efficiency of a vehicle, you must try to reduce the way corporate assets are handled by drivers. Such behavior violates the fleet policy since it leads to unnecessary idling. This is different for every fleet but, for some, it is about 35% of the time. Fuel dollars are wasted in several other ways apart from idling unnecessarily. This includes negligence from drivers during refueling.
One method of saving precious fuel dollars is by ensuring that drivers inflate the tires properly and in accordance with the fleet policy. Driving vehicles with improperly inflated tires are not only dangerous but it also wastes valuable fuel dollars. Tires that are inflated properly enhance fuel efficiency by 3%. This is the most cost-effective and easiest method for avoiding wasting fuel and increasing fuel economy.
The priority for all fleet managers should be to stop wasting existing dollars, and the best way to put this into practice is by emphasizing on drivers’ compliance with the fleet policy.