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Understanding the hidden costs in fleet management is crucial for any business with a fleet. These costs, often unnoticed, can quickly escalate and become a significant drain on resources and finances. But by identifying and addressing these hidden costs, you can prevent them from spiraling out of control. Far from being magic, fleet management is the culmination of different actions that result in lowered costs and more efficient services.
Coming back to those small routine expenses. When viewed individually, they can seem insignificant. However, when these costs accumulate, they will significantly impact your bottom line.
The worst part is that these costs are usually hidden and creep up on you without you even realizing they exist. But the good news is that many of these costs can be prevented with the right knowledge and strategies.
The reality is that for every minute that your fleet is off the road or every extra dollar you spend on unexpected costs, you are losing money. Whether it’s a flat tire, a worn brake pad, an engine problem, or even a valet issue due to messy drivers, these costs, while small on their own, consume time and money and become a massive issue for you.
Let’s take a little look at some of the hidden costs that are making your fleet more expensive than it needs to be.
Unplanned downtime
Everyone is aware of unplanned downtime. Any time your vehicles are off the road unexpectedly, it’s unplanned downtime, and you are losing money; it’s as simple as that.
Unplanned downtime results in fewer deliveries, delayed services, unhappy customers, schedule clashes, increased staffing costs, and so much more.
Inefficient preventative maintenance
Efficient preventative maintenance is a key factor in reducing unplanned downtime. While you may have a maintenance schedule in place, it’s important to adhere to it strictly.
But why is this so important? Preventive maintenance is an effective way to prevent unexpected vehicle issues and the resulting downtime. It’s that simple.
However, preventive maintenance does not completely eliminate planned downtime; it does help you reduce it and plan for any repairs that can result in unplanned downtime. For example, regular tire checking and inspections can reduce worn or blown tires when on the road, regular vehicle servicing can identify any faults, and regular oil and water checks can spot low levels ahead of time.
It is essential that all maintenance tasks are carried out regularly. If left unattended, they will result in higher repair bills and bigger damage down the line, impacting you in many more ways than simply fixing the issue quickly.
Tire wear and tear
Tires are the only points of contact between your vehicle and the road. They are and will be one of fleet management’s most significant expenses and ongoing costs.
We all know tires wear down with use, but how do they get damaged? Poor road surfaces, improper inflation, poor driving, alignment, etc., can all compound and cause tires to wear out faster than they should. If your fleet spends extended periods on the roads, the last thing you want is worn-out tires on your vehicles.
Having high-quality tires in rotation, checking them regularly, and ensuring that even the slightest sign of wear results in them being replaced immediately means you can reduce the risks and costs associated with driving on tires unfit for use.
Driver impact
It’s crucial for your drivers to understand that their driving habits play a significant role in maintaining your fleet and keeping costs down. By making them aware of their impact, you can instill a sense of responsibility and importance in their job role.
What habits are increasing fleet costs?
- Harsh braking
- Failing to keep the vehicle clean
- Rapid acceleration
- Poor parking
- Speeding
The reality is that you need your drivers to understand the gravity of their job role and their part in maintaining your fleet. The easier it is for you to keep your staff on board with how they drive and care for their vehicles, the easier it will be to reduce the cost associated with maintaining them.
Depreciation and asset loss
Everyone knows that as soon as a brand-new vehicle is driven off a showroom floor, its value depreciates. This value will depreciate massively in the first three years of the vehicle’s lifespan, and also with every mile the vehicle covers on the road.
Slowly but surely, every action your fleet takes will chip away at its value, making it depreciate faster than standard vehicles.
While there is nothing you can do to reverse or eliminate depreciation entirely, caring for your fleet properly and keeping vehicles in good condition, keeping up with preventative maintenance schedules, correct driving, etc., can slow down the level of depreciation, so if you do trade them in, you can still get as much value from them as possible.
Not tracking KPIs
KPIs, or key performance indicators for your fleet, are crucial. They enable you to execute correct driving schedules, place the right drivers where they need to be, identify the best routes, and optimize the utilization of your fleet and your business operations. Tracking metrics can help you stay on top of the costs and make adjustments where needed to ensure that you’re not losing money.
You also need to track all aspects of fleet maintenance, including the health and condition of all the vehicles, their miles driven, which vehicles should currently be on site, and which ones are out on the road. You also need to look at KPIs such as scheduled arrival times, fuel consumption, driver mistakes, route tracking, and more.
There are many, many costs associated with fleet management that can eat into your bottom line. And no business wants this. The margins to make money when you own a fleet are incredibly low already, and it is your job to ensure that you do not increase these costs knowingly or unknowingly due to neglecting any of the points made in this post or being aware of their potential impact on your expenses.
