08/05/09

A cost-cutting action plan embracing fleet funding, vehicle choice lists, fuel use, temporary vehicles, road safety and vehicle servicing has been compiled by a leading fleet consultant to help businesses beat the recession.

Ross Jackson, managing director of consultancy Fleet Operations, says businesses must adopt a back-to-basics approach to their fleet operations and analyse every aspect of policy and procedures to maximise financial savings.

“Cost management should be the number one priority for fleet decision-makers, but too many fleets fail to challenge existing practices to see if savings can be made,” he said.

“The banking crisis and now the worst recession for decades mean that all current policies and procedures should be challenged. There is no doubt that in many cases pre-recession policies and procedures may not now be the way forward. It is not about making fleet management more complex; it is about optimising value and recalculating how money can be saved.”

Fleet Operations’ top 10 recession-induced cost saving fleet tips are:

1. Challenge the status quo. What was the right decision six months ago may not now be the most cost effective solution. Go out to the market and check and analyse.

2. A sole supply vehicle policy is almost certainly not cost effective. Multi-supplier arrangements can deliver 5-10% operational savings over a three or four-year replacement cycle, and more in some cases

3. Unbundle services. Too many fleets look to one organisation – for example, a contract hire and leasing company – to provide vehicles and a full range of services. It can often be cheaper, and just as efficient, to deal direct with suppliers – for example a windscreen repairer or a fast-fit company – and not through a one-stop shop third party provider.
4. Analyse how many car rentals are running into two days instead of one day due to poor organisation by employees. In many cases there is no need to have a hire car for two days. Additionally, ensure rental cars are refuelled before they are returned.

5. Use fuel cards as they provide comprehensive management information that can be used to cut costs; some providers will deliver discounts on fuel purchases that can be significant across a fleet over a year. Ensure employees buy the cheapest fuel at the cheapest locations – not motorway service stations.

6. Implement a comprehensive occupational road risk management strategy and review each accident. Numerous benefits will accrue as a result of fleet vehicles being involved in fewer crashes – notably insurance premium savings.

7. Optimise company car vehicle choice lists around the recent corporation tax changes. For the majority of organisations and drivers it should be possible to only operate vehicles with CO2 emissions levels of 160 g/km and below. The exceptions might be at senior management and board level, although even then there are ‘status’ models available that will prove tax-efficient.

8. Where is vehicle servicing carried out? Using recognised independent garages instead of franchise garages will save money with no impact on warranty cover. Additionally, ensure that employees maintain their vehicles in accordance with manufacturer schedules and, crucially, have them serviced at the appointed mileage/age.

9. Introduce a culture of care that ensures drivers regularly check fluid levels and tyre wear and tear and pressures. Poorly maintained tyres are not only a danger to road safety, but fuel use is increased. Additionally, a failure to check oil levels can result in a blown engine and a bill running into thousands of pounds.

10. Ensure that fleet policies make drivers accountable for their actions. A failure to maintain company cars, non-payment of the London congestion charge, and parking fines all translate into costs. Drivers should ‘feel the pain’ of their irresponsibility with financial penalties.

Mr Jackson concluded: “With internal fleet management resources stretched or fleet responsibility resting with HR, finance or procurement departments or a combination of all three, many areas of obvious cost savings can go unnoticed. Indeed, often businesses simply “accept” costs without challenge, due to a lack of time, visibility or sufficient knowledge about the subject area.

“Strategic consultancy, managed multi-supplier solutions and ‘light touch’ supply coupled with a good employee communications policy explaining decision-making and what will happen if procedures are not closely followed, is the way to cutting fleet bills.”