Fleet Management: Addressing Core Issues Minimizes Costs
Written by Seth Skydel on . Posted in Utility Industry News.
Many companies are facing their biggest budget challenges in their history, noted Bob Pitts, senior principal at Accenture. Additionally, companies that typically operate large, specialized fleets of vehicles in support of their operations face additional pressures to reduce costs to meet these budget challenges. These fleets inevitably require large commitments of scarce capital and are expensive to operate and maintain while complying with corporate and legislative mandates. A proper strategic focus can deliver exceptional value, enhance reliability of service and improve public perception.
Pitts explains that turning a fleet from a necessary evil into a strategic asset requires addressing several core issues:
• Fleets that are suboptimized will drive operational and capital expenses higher than needed.
• Suboptimized fleets have more vehicles than necessary and asset utilization is low.
• Fleets are treated as a cost of doing business rather than a strategic asset.
• Supplier management is not advanced and fleets do not leverage spending to drive savings.
• Full life-cycle management and planning are subpar and usually driven by budgetary constraints.
“Key issues in fleet management involve capital commitments and management, as well as operating effectiveness and cost,” stated Mike Reiss, associate principal at Accenture. “Fleet asset utilization is not typically tracked or measured at an appropriate level, which leads to unwanted outcomes, such as having more vehicles than necessary, additional operating and maintenance costs, and not always having the right vehicles for the jobs they are needed to do. Additionally, fleet costs are usually fragmented and are rarely captured in total, which leads to problems in trying to adequately and accurately assess operating efficiency and evaluate strategic opportunities.
“Fleet management and fleet operations are not generally viewed as core competencies by nontransportation companies,” Reiss continued, “so it’s not surprising that focusing the spotlight on key areas will illuminate opportunities for operational improvements. Much of these opportunities can be identified and acted upon through best practices benchmarking, implementing and employing the appropriate decision support technology, and generating and maintaining high-quality data for monitoring and measuring progress and results.”
Accenture’s integrated fleet management methodology can provide a set of strategies to minimize total cost of ownership:
• Buying smart: Strategic sourcing techniques drive some of the greatest value attainable in fleet management.
• Operating smart: Pay rigorous attention to core operating practices involving maintenance and repair, fuel management, parts management and inventory control.
• Selling smart: Disposing of vehicles at the appropriate time in their life cycle to maximize residual value.
An integrated fleet management program requires that all of these activities be analyzed, measured and managed as interdependent fleet management functions.
For more information, visit www.accenture.com.
About the Author: Seth Skydel has more than 27 years of truck- and automotive-related publication experience. In his career, he has held editorial roles at numerous national business-to-business publications focusing on fleet and transportation management, vehicle and information technology, and industry trends and issues.