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Fleet management systems have been around a while and have become so complex that it has evolved into Field Resource Management. This article explores 5 reasons why all fleets need at least a basic Field Resource Management system.
Have you heard about the 9th annual Fleet & Asset Management USA 2010 Conference & Expo on November 17-18 in Atlanta, GA? It is an important forum for the commercial Fleet and Telematics industry.
The program will have speakers from the Department of Transportation (DOT), NHTSA, John Deere and more.
Here is a list of topics that will be covered at the Fleet Management Show.
America’s HVAC Society (ASHRAE) and the US Energy Dept. Work Together to Enforce State Building Regulation for Energy Efficiency.
The U.S. Department of Energy (DOE) this week announced it is seeking proposals to support activities related to the state adoption and implementation of the most up-to-date building energy codes. As of June 2010, building codes in 14 states do not meet the requirements in current regulations, ANSI/ASHRAE/IESNA Standard 90.1-2007. Proposals must address activities to implement the target codes, which includes ANSI/ASHRAE/IESNA Standards, Energy Standard for Buildings Except Low-Rise Residential Buildings, training activities, or activities that advance each state’s level of compliance with state building codes. States are allowed to partner with consultants and organizations such as ASHRAE, which stands for American Society of Heating, Refrigeration and Air-Conditioning Engineers.
ASHRAE, the developer of the America’s first standard for energy efficiency in buildings, supports the U.S. Department of Energy’s recent announcement regarding funding for states to implement the most current energy codes. The call to meet current building codes comes as ASHRAE and IES celebrate the 35th anniversary of publication of Standard 90.1. Since being developed in response to the energy crisis in the 1970s, Standard 90.1 has become the basis for building codes, and the standard for building design and construction throughout the United States.
Currently a total of $5 million is available to be dispersed among up to 20 states (only one award per state). Award sizes will vary state to state and the maximum reward amount is of $250,000.
Fleet Cost-Reduction Strategies: Direct Expenses
Reduce fuel costs. Fleet operators should focus on miles per gallon. Fuel costs are a large direct operating expense, especially for fleets with high mileage each month. Many fleet managers approach fuel cost savings by looking for purchase discounts, which aren’t really feasible unless the fleet can fuel in volume at a single site. Fleet fuel cards can be used to direct driver purchases away from premium fuel, which offers some benefits, but the most significant fuel savings come from selecting more fuel-efficient vehicles. Moving away from heavy vehicles and larger engines can provide 30% to 50% fuel economy increases. Using a fleet tracking system to identify poor driving behavior that burns excessive fuel, such as speeding and unnecessary idling can reduce fleet fuel costs by approximately up to 12% per year. Also, a fleet fuel card will help move 8% of fuel purchases away from premium fuel.
Secure the best fleet financing. Proper vehicle financing should absolutely be considered. Leasing vs. ownership of fleet vehicles is a common funding decision for fleet managers, and the economic analysis often ends in a tie. The decision to lease or own frequently hinges simply on balance-sheet considerations.
Fleet Cost-Reduction Strategies: Direct Expenses
Sell used vehicles in competitive resale markets. Most fleets value their used vehicles based on market values published from various industry sources like KBB. Fleet managers are usually satisfied with the sale of an individual fleet vehicle if they realize close to the market average or, worse, an amount more than book value. This approach ignores that those published market values are the mean of a distribution of high and low prices. Far too often in a negotiated sale, the purchasing vehicle dealer or driver knows the condition of the vehicle better than the seller, and pricing it at market average gives the upside to the buyer. Only by pricing negotiated sales above the market average or by selling in a competitive bidding market with a larger population of buyers can sellers actually capture above-the-mean value for themselves. This approach can provide an additional 5% in average resale prices, up to $75,000 per year.
Reduce accidents and insurance costs. Typically most insurers will reduce your insurance premiums by over 30% if you install a GPS fleet tracking system. Moving beyond depreciation to other operating costs, fleet vehicle accidents require an average of $1,500 to $2,800 in repairs, but total accident costs are perhaps closer to $11,000 per incident when indirect costs such as injuries, liability, property damage, and workers’ compensation are included. Typical fleet annual accident rates range from 15% to 40% of all vehicles, so the savings opportunities by reducing accidents can be substantial. By mandating pre-employment and annual motor vehicle records checks, requiring safe-driver training, and enforcing a safety scoring system, your fleet can reduce its accident rate by over 15% and save up to $375,000 per year.
Fuel prices in Southern California reached beyond their 2010 peak levels of early May in most zip codes last week, according to the Automobile Club of Southern California’s Weekend Gas Watch. According to AAA and the Oil Price Information Service, the average price of self-serve regular gasoline in San Diego is $3.16, $2.9 cents higher than the week before’s price, $2.6 cents above last month, and 19 cents higher than last year. In the LA and Long Beach area, the price is $3.15 per gallon, which is 2.4 cents above last week, $3.8 cents more than last month, and $10.3 cents higher than last year. On the Central Coast, the average price is $3.22, up $3.5 cents from last week, $4.2 cents higher than a month ago, and $11 cents above last year. In the Inland Empire, the average per gallon price is $3.13, which is $2.5 cents higher than last week, $3.4 cents higher than last month, and 11 cents more than last year.
The average retail price of gasoline in the United States is $2.75 a gallon. Drivers in big cities saw a range of prices at the pump — from an average $2.54 in Houston to $3.20 in San Francisco. In Chicago it cost $2.88 a gallon to fill up, while New York City motorists topped off the tank for $2.73 a gallon. Seattle gas stations averaged $3.10 for regular. Denver drivers paid $2.67 a gallon.
With gas prices this high, it makes sense for fleets to invest in a GPS fleet tracking system. Tracking fleet vehicles can significantly reduce fuel expenses. Lower fleet fuel bills equal higher net profits. For a fleet of 25 vehicles, idling time reduced by only 15 minutes per day can result in fuel savings of 562.5 gallons at a cost of about $1,783 per year at current gas prices. If you reduce idling time by 60 minutes, it would result in a fuel savings of 2,250 gallons at a cost of over $6,000 per year!
Fleet Cost-Reduction Strategies: Direct Expenses
Use the right vehicle with the right equipment for the job. Feature and model creep are common causes of excess fleet vehicle depreciation. Drivers love four-wheel drive, extended cabs, plush leather seats, V-8 engines, and all kinds of other features. While providing fleet vehicles with those options may be good for morale and can be a good business decision, it will add to the depreciation cost. Trading in older vehicles for more fuel efficient fleet vehicles is also a good decision and this will be discussed further. Also, choosing fleet vehicles without regard to expected resale value can result in higher depreciation. For example, if you convert fleet vehicles from SUVs to sedans and remove some unnecessary amenities you can save up to hundreds of thousands of dollars in fleet expenses.
Negotiate well with vehicle manufacturers. After selecting the right vehicle, acquire it for the best possible price. Vehicle manufacturers compete aggressively for market share and have significantly increased purchase incentives for fleet customers who buy new vehicles. By sourcing with only one manufacturer, your fleet can improve net discounts by approximately 5%, reducing depreciation by up to $225,000 per year.
Does your company have mobile employees such as sales reps or field service technicians who routinely need vehicle transportation to do their work? If so, managing your mobile employees and fleet vehicles effectively is an important part of maximizing revenue generation and customer satisfaction. Most executives understand the importance of keeping these employees productive, but they are often not aware of the significant productivity and cost-savings benefits that come from efficiently supporting employees’ transportation needs.
The Challenges of Managing Fleet Costs
Vehicle-centric companies, such as trucking and distribution companies, are experts in fleet management and usually have the in-house resources to do it quite well. However, for the rest of us in other industries, executives are primarily focused on managing the core of the business – whether it’s building high rises, manufacturing computers, or servicing HVAC equipment. Fleet managers simply don’t have the expertise or the inclination to invest much time or energy in improving fleet operations. Unless you are an expert in fleet management, vehicle expenses by their very nature are decentralized–usually occurring in small transactions spread across numerous locations and employees. On the surface, fleet management costs seem very difficult or control.
Contrarily, taking the time to focus on fleet management issues via basic operational policies and a little centralized control can significantly enhance worker productivity and result in major cost savings. Optimizing fleet management can ensure that mobile workers get the transportation their job requires while simultaneously yielding up to $1 million in cost savings for a typical mid- to large-size enterprise. Whether your company’s fleet is large or small, the same concepts apply.
GPS vehicle tracking systems are a worthwhile investment for many fleets. Here’s a few reasons why fleets like using fleet GPS tracking systems:
1. Fleet tracking systems reduce business operating costs and increase fleet safety by targeting poor drivers that speed excessively, resulting in wasted fuel, excessive engine wear, drive up insurance rates and cause accidents.
2. Many fleet managers like using the system’s automatic mileage reminder to reduce downtime and enhances vehicle resale values by encouraging scheduled, preventative maintenance. Vehicle tracking systems can remind you when it’s time to rotate tires, change oil or perform other scheduled maintenance. Conversely, fleet management systems also can tell you if a vehicle is not in need of scheduled service which helps keep maintenance costs under control.
GPS vehicle tracking devices are a popular tool for thousands of business owners. Fleets with only one vehicle all the way to original equipment manufacturers like Ford, GM or John Deere are including GPS tracking devices in their vehicles. GPS tracking software is most frequently used by businesses in the service, transportation and manufacturing industries. Companies with fleets of one to to fleets of 10,000, such as FedEx, rely upon their tracking systems to improve their profitability.
