An effective fleet management strategy can help fleet owners and managers optimize performance, ensure driver safety, and control the large cost center associated with fleet activities.
In this article, we discuss how to develop a fleet management strategy that takes into account the modern tools and technology that can make a manager’s job much easier.
How To Develop An Effective Fleet Management Strategy
1) Analyze The Current State Of The Fleet
The first step in developing a fleet management strategy is analyzing the current state of a fleet.
Include variables such as fleet size, vehicle use and age, fuel costs, compliance, mileage, expenses, driver performance and safety data, and maintenance schedules.
Fleet management tools and software can provide much of the detail necessary to make your analysis successful. For example:
- Fleet management software can help track parts and inventory, manage inspections, and maximize preventative maintenance.
- Telematics is extremely useful for optimizing driver behavior and dialing in route management.
- Fuel card software makes it possible to set rules for fleet spending, control expenses, and reduce the total cost of ownership (TCO).
We’ll discuss in detail tools that can help you effectively manage your fleet later on in this article.
2) Define Goals And Needs
Once you have analyzed the current state of your fleet and established a starting point for a fleet management strategy, it’s time to define the goals and needs of the operation.
Every business is different, but common goals include:
- Reducing costs
- Enhancing safety
- Boosting efficiency
- Managing fuel use
- Building preventative maintenance schedules
- Improving fleet compliance
- Developing good driving habits
- Optimizing routes
- Making better use of telematics
Since resources — whether time, personnel, or budget — are often limited, it’s crucial to prioritize the goals that will have the biggest impact on your business.
Start by identifying the most pressing challenges or areas where inefficiencies are costing the most. For example, if fuel costs are a major expense, focusing on fuel management and route optimization could yield immediate savings. If vehicle downtime is a recurring issue, preventative maintenance should take priority.
By addressing the most impactful areas first, businesses can build a strong foundation before expanding their strategy to additional improvements.
Use The SMART Process To Make Changes
Regardless of the size and type of fleet you run, setting goals and making changes to reach those goals should be done in an organized manner. That’s where the SMART process comes in.
SMART is an acronym for:
- Specific
- Measurable
- Attainable
- Relevant
- Timely
When getting ready to make a change in your operation, make sure that each aspect of the SMART process applies to the goal you’ve set. Is the goal specific? Is it measurable? Is it attainable? Is it relevant? And is it timely?
If you can’t answer yes to those five questions, go back and refine your goal until it does.
3) Invest In Technology And Analytics
Fleet activities are a major cost center for most businesses, but developing a fleet management strategy can help bring those expenses under control. As we mentioned, investing in the right tools and technology is the foundation of all fleet activities.
A good fleet management strategy involves implementing the essentials — fleet management software, telematics, and fuel card software — as well as other tools, including:
- GPS tracking and navigation
- Vehicle diagnostics and maintenance software
- Driver monitoring systems
- Electronic logging devices (ELDs)
When investigating these tools, managers should keep in mind that the secondary tools — GPS, maintenance, driver monitoring, and electronic logging — may be included in some of the primary software.
Equip Drivers With Mobile Apps
Information is vital for the successful operation of your business and driver success on a daily basis. One of the best ways to provide your drivers with all the information they need to do their jobs well is with a mobile app.
An advanced mobile app can give everyone in your organization access to:
- Routing information
- Real-time delivery updates
- Fuel management
- Global Positioning System (GPS)
- Pre-trip inspection checklists
- Post-trip inspection checklists
- Telematics
With some mobile apps, you even get access to deep fleet data, mileage tracking, and compliance tools that can help improve the way your fleet performs.
Monitor Key Performance Indicators
Key performance indicators (or KPIs for short) are measurements of a specific variable that you can use to evaluate how well an employee, process, program, or business meets certain objectives for performance.
Common KPIs include repair costs, safety compliance, driver productivity, vehicle utilization, and estimated time of arrival (ETA) just to name a few.
Monitoring these key performance indicators is like focusing on the smaller aspects of a larger process. By gaining control of the underlying influences, you can make positive changes to the way your operation runs.
For example, if your fleet wants to reduce costs (a very broad goal), it may analyze KPIs such as budget adherence, fuel costs, fuel usage, and vehicle cost per mile (more on this later in the article).
Making changes to these smaller KPIs —- e.g., reducing fuel usage and fuel costs —- makes it easier to have a very real effect over the larger goal of reducing costs.
Calculate Total Cost Of Ownership
One of the most important KPIs to track for your fleet is total cost of ownership (or TCO). Like the other KPIs mentioned above, total cost of ownership gives you insight into the smaller variables that can have a very large effect on fleet spending.
Here’s how to calculate TCO:
First, assemble all the fixed and variable costs for the vehicle(s) in question.
Fixed costs include things like insurance premiums, license and registration fees, permits, telematics, hardware costs, and subscriptions —- anything that occurs on a regular basis and that you can predict the cost of.
Variable costs include things like fuel purchases, fuel tax spending, and tolls —- anything that fluctuates based on vehicle activity level.
Once you have that information in hand, use this formula to calculate total cost of ownership:
Total Cost Of Ownership = Fixed Vehicle Costs + Variable Vehicle Costs
When using this formula, be sure to specify the time period you want to examine — one week, one month, six months, 12 months, or anywhere in between — and make sure that none of the fixed or variable costs fall outside that range.
Total cost of ownership gives you a snapshot of what you’re spending to keep a vehicle on the road within the timeframe under examination. Armed with that information, you can then make changes to the smaller variables in order to affect larger change throughout the fleet.
Calculate Vehicle Cost Per Mile
Once you have the TCO for a specific vehicle, divide that number by the total miles driven to see the vehicle cost per mile (VCPM).
Here’s the formula:
Cost Per Mile = Total Cost Of Ownership / Total Miles Driven
As with the TCO calculation, once you see what costs are affecting your VCPM, you can make changes in order to bring the numbers down, save money, and streamline your fleet activities.
4) Develop Policies
Once you’ve established your fleet management goals, the next step is to create clear policies that guide operations, ensure compliance, and promote efficiency. Well-defined policies help set expectations for drivers, administrators, and fleet managers, reducing the risk of inconsistencies or mismanagement.
Key areas to cover in your fleet policies include:
- Fuel Usage and Purchasing – Define where and how fuel purchases should be made, whether through a specific fuel card program or preferred vendors, and set limits to prevent excessive or unauthorized spending.
- Driver Behavior and Safety – Establish guidelines for safe driving practices, including speed limits, distracted driving policies, and protocols for accidents or violations. Consider leveraging telematics to monitor adherence.
- Maintenance and Vehicle Care – Outline preventative maintenance schedules, required vehicle inspections, and procedures for reporting mechanical issues to minimize downtime and extend vehicle lifespan.
- Expense Management and Receipts – Set clear rules on how purchases should be recorded, whether receipts are required, and how expenses are reconciled to prevent unauthorized spending.
- Compliance and Regulations – Ensure drivers follow industry regulations, including hours-of-service (HOS) requirements, emissions standards, and licensing mandates.
Policies should be easy to understand, consistently enforced, and regularly reviewed to adapt to business needs or regulatory changes.
Communicating policies clearly to drivers and fleet administrators — through training sessions, written manuals, or digital resources—helps ensure alignment and compliance.
5) Optimize Fleet Size And Composition
Optimizing fleet size and composition is another component of every good fleet management strategy.
In terms of fleet size, companies should strive to field only the necessary vehicles so they aren’t spending more on fuel and manpower than they have to.
For example, a fleet may maintain multiple vehicles for a single territory when it could do just as well with only one vehicle (analyzing the current state of the business may help reveal this fact).
Getting their fleets down to just the right size can help businesses save on everything from fuel costs, registration, and insurance to maintenance, repairs, and driver salaries.
Similarly, optimizing fleet composition — or stepping down to smaller, higher-fuel-mileage vehicles — can go a long way toward improving operations overall and helping management create an effective fleet management strategy.
Examples of this include transitioning from a three-quarter-ton pickup to a half-ton pickup or from a full-size van to a minivan or SUV.
If management is unsure whether stepping down vehicles is feasible, they may choose to rent a smaller option and have drivers test it out to see if it’s a good fit for the fleet.
6) Prioritize Safety
Prioritizing safety is an essential component of even the most basic fleet management strategy.
Drivers should know — or know where to find — business policies on:
- Distracted driving
- Seat belt use
- Impaired driving
- Pre-trip inspections
- Post-trip inspections
- Approved routes
They should also be aware of what to do in the case of an accident and where their responsibilities regarding vehicle maintenance begin and end.
All of these topics contribute to the safe operation of a company’s fleet vehicles, and setting up a program that prioritizes them is a great way to get everyone on board and moving in the right direction.
Promote Compliance
If your fleet fails to meet compliance standards, your business could be subject to fines and even have vehicles removed from service.
To avoid issues that could affect your fleet’s ability to function smoothly, be sure to adhere to the rules and regulations set forth by local, state, and federal oversight agencies such as the Federal Motor Carrier Safety Administration (FMCSA) and the Commercial Vehicle Safety Alliance (CVSA).
Encourage Fuel-Efficient Driving Techniques
Safety and fuel efficiency often go hand in hand. To keep your drivers as safe as possible (and to conserve fuel), encourage your drivers to adhere to fuel-efficient driving techniques, such as:
- Smoothly accelerating and braking
- Setting the cruise control and maintaining the posted speed limit
- Reducing weight carried in the vehicle
7) Cut Costs
Design A Preventative Maintenance Program
A detailed preventative maintenance program can go a long way toward reducing the fuel management issues that each vehicle faces and contributing to the overall fleet management strategy.
If even a single part of a fleet vehicle isn’t functioning properly, the engine of that vehicle will have to work harder — and use more fuel — to keep things moving.
Older vehicles are especially susceptible to this pitfall, but even simple systems on newer vehicles may malfunction once in a while.
Regardless of the age of a vehicle or how long it’s been in service, management should use fleet management software and data from vehicle telematics to create a regular maintenance program and ensure that drivers and fleet mechanics stick to it at all times.
Basic preventative maintenance includes:
- Oil levels
- Oil weight
- Tire inflation
- Wheel alignment
- Fluid levels
- Air filters
- Fuel filters
Even if the program doesn’t include all of these items right away, one or two can have a significant impact on fuel use, vehicle lifespan, and the success of the overall fleet management strategy.
Create A Lifecycle Plan For All Vehicles
Every vehicle has a finite useful lifespan, and you want to be ready when the end-of-life stage arrives.
Create a plan to remarket or otherwise dispose of vehicles based on mileage, depreciation, or other factors so that you can minimize spending and maximize savings throughout the fleet.
Investigate Leasing Vs. Purchasing For New Vehicles
Adding new vehicles to a fleet typically involves one of two activities: leasing or purchasing.
Leasing is similar to renting but is structured more toward the long term rather than the short term. For example, a lease contract may last a year or longer, while a rental contract may only last a week or two.
Purchasing, on the other hand, involves paying for the vehicle yourself and taking on the responsibility of keeping everything in good working order, maintaining government-mandated paperwork, and ensuring compliance.
Choose the method that makes the most sense for your business’s method of operation and bottom line.
8) Continuously Monitor And Adapt
No fleet management strategy should be set in stone. Instead, leadership will need to continuously monitor, evaluate, and adapt the policies and procedures they’ve put in place to ensure their fleet is still moving toward the goals set at the beginning of the process.
One of the best ways to do this is with the technology we mentioned earlier. For example, fuel cards (and the software that comes with them) can be used to track and control fuel use and expenditures throughout a fleet.
With that data in hand, owners and managers can adapt their fleet management strategy as the business’s needs change over time.
Essential Technology For An Effective Fleet Management Strategy
A fleet management strategy is a large-scale plan that establishes how fleet activities contribute to a business’s overarching goals and defines how management will build, run, and optimize daily operations in order to maximize efficiency and profitability.
Three essential components of that overarching concept are:
Fleet Management Software
Fleet management software is a suite of tools that allows fleet administrators to monitor and organize the important details about the vehicles and drivers in their fleet.
Fleet managers can use the tools to track vehicles, monitor compliance, organize maintenance schedules, and improve driver safety — as well as a long list of other uses including expense tracking, cost analysis, and driver assignments.
Telematics
Telematics are installed applications and services that provide near real-time data about vehicle activity, location, and condition.
Fleet managers can use the data provided by telematics to help better monitor the wear and tear on vehicles, create preventative maintenance schedules, track driver behavior behind the wheel, and a variety of other tasks that can benefit the fleet as a whole.
Fuel Cards
Fuel card software (and the fuel cards that go with it) is technology that helps to streamline fuel purchases while drivers are on the road.
Fleet managers can use the advanced features to set up spending limits, control purchases, reduce spending, and a wide variety of other cost-cutting activities that can help bring one of the major fleet cost centers under control.
GPS
The Global Positioning System (or GPS) uses satellites in orbit, control stations on the ground, and receivers in vehicles to provide the real-time location of fleet assets — wherever they may be in the world.
Not only can fleet managers and dispatchers use GPS to monitor the location of their trucks, vans, and semis on the road, they can also use the technology to optimize routes, avoid traffic, and redirect vehicles according to customer and business needs.
Curious about GPS, how it can help your operation, and what to look for in the technology? Read these articles from the Coast blog:
Electronic Logging Devices
Electronic logging devices (or ELDs) are the digital equivalent of a driver’s logbook where they track hours of service (HOS), driving time, rest breaks, and off-duty hours.
ELDs make it easier for your drivers to maintain their necessary records while at the same time reducing the occurrence of errors.
An ELD in combination with installed telematics (and other essential technology on this list) can give you a detailed look at your drivers’ activities while also helping you stay compliant with all Federal Motor Carrier Safety Administration (FMCSA) rules and regulations.
With such real-time data in hand, you’ll be able to make better decisions when it comes to route planning, dispatching, and maintenance scheduling as well as improve efficiency and productivity across the board.
To learn more about electronic logging devices, take a few minutes to read this article from the Coast blog: Electronic Logging Devices (ELD) | A Guide For Fleet Owners.
Dash Cams
Dash cams — and other body-mounted camera systems — can help you monitor what’s going on around and inside the cabs of your vehicles.
One of the main benefits of vehicle camera systems is their ability to help you reduce accidents and improve driver accountability.
Some dash cams come with advanced safety features, such as lane monitoring, rear object detection, and even alerts, that can warn drivers of a potential hazard that can cause an accident.
The video that you capture with dash cams can also be used to train drivers to exhibit fuel-efficient and safe driving techniques that can help them prevent accidents in the future.
Vehicle Diagnostic And Maintenance Software
Vehicle diagnostic and maintenance software can help fleet mechanics, administrators, dispatchers, and drivers care for and extend the life of your most valuable assets —- your vehicles.
Some of the best software suites include features that can assist your operation with record-keeping, maintenance tracking, preventative maintenance checklists, vehicle health monitoring, inventory management, technician performance, and much more.
For more information on this essential technology, check out this article from the Coast blog: What To Look For In A Fleet Maintenance Tracker.
Manage Your Fleet Efficiently With Coast
With the right fleet management strategy in place, owners and managers will be better positioned to optimize fuel use, fuel costs, and driver expenses while they’re on the road.
That, in turn, can help fleet businesses control, and even reduce, the cost center associated with fleet activities.
The Coast fleet and fuel card leverages modern technology to provide wide acceptance, real-time expense tracking, and a powerful online management platform that gives managers the transparency and visibility they need to control every dollar spent.
Paired with a robust fleet management strategy, these tools can help simplify the work involved in managing fleet vehicles for businesses of all sizes and types.
For more information on how Coast can help owners control fleet costs and streamline their fleet management programs, visit CoastPay.com today.
