If your business relies on a fleet of company vehicles to operate or if you’re considering acquiring one, it’s imperative to put carefully researched policies in place for managing fleet vehicles legally, efficiently, and profitably.
Whether your company operates large delivery trucks or small work vans and whether your fleet is five vehicles or a hundred, poor fleet management can cost your business both money and lost productivity.
In this article, we’ll provide a rundown of all of the key considerations involved in fleet management for business owners and prospective fleet managers.
Table of Contents
- Defining Fleet Management
- Choosing The Right Fleet For Your Business
- Important Factors In Managing Fleet Vehicles
- Managing Fleet Vehicles Efficiently
Defining Fleet Management
To understand what fleet management is, we first need to understand what it is not. A fleet manager is not simply someone who tells drivers of fleet vehicles where to go and when. In fact, managing fleet vehicles may not include dispatching and scheduling at all.
Rather, your role as the fleet manager is administering fleet vehicles as company assets so that your business gets the greatest possible value out of its fleet operations.
In practical terms, this includes everything from overseeing driver hiring to controlling fuel and maintenance expenses so that your company fleet operates safely, dependably, and profitably.
Choosing The Right Fleet For Your Business
As with any other business task, you need to have the right tool for the job. Effective fleet management begins with figuring out the right vehicle, the right number of vehicles, and the right vehicle acquisition strategy.
Type Of Vehicle
A company fleet includes any motorized, rolling, or moving vehicles your company uses to conduct business. However, the odds are that if you’re reading this, your company fleet probably consists of road-going vehicles, like work vans.
Within most fleet vehicle categories, there will be several different competing models from different companies. Choosing the right one requires careful research, and the most popular option might not necessarily be the best fit for your business.
Are the interior dimensions big enough to fit your typical cargo? What kind of gas mileage does the vehicle get? What are the projected maintenance costs? What about safety features and crash test ratings?
Finding out the answers to these questions before vehicle acquisition will ensure you have vehicles that meet your business’s practical and budgetary needs.
Acquiring an efficient company vehicle fleet isn’t just about finding the right vehicle. It’s also about accurately determining how large a fleet you need.
Having the wrong size vehicle fleet can sometimes result in costly inefficiencies. With too few vehicles, orders can be delayed and work can fall behind schedule, resulting in unhappy customers. On the other hand, vehicles sitting idle are a drag on company finances.
Don’t launch a company fleet or expand an existing fleet without thoroughly analyzing your vehicle needs. You want a fleet that’s lean and efficient, not one that just looks impressive in the company parking lot.
Owning Versus Leasing
Just like with a personal vehicle, purchasing and leasing fleet vehicles each come with their own advantages.
The benefits of leasing generally include lower initial costs, reduced tax burden, and lower labor costs because maintenance and repairs are handled by the dealer.
On the other hand, buying vehicles can bring the benefits of freedom from lease length or mileage limitations, flexibility in retiring vehicles, pricing leverage, certain tax benefits, and depreciation control.
Deciding whether leasing or purchasing is the better option depends on your company’s specific needs and financial considerations.
Important Factors In Managing Fleet Vehicles
Once you’ve picked the right fleet for your business, putting your fleet on the road means also picking the right people to drive your fleet and making sure they operate safely and legally.
Driver Hiring And Training
Your fleet vehicles are important company assets, and you can’t entrust them to just anyone.
Start with good hiring practices. Set specific qualification standards based on relevant criteria, like driving record, and screen candidates carefully. Consider asking prospective drivers to pass a road test.
Once you’ve hired quality candidates, implement a good training program to make them even better. Educate employees on the dangers of distracted, fatigued, and impaired driving. Ensure all employees know there will be real consequences for company policy violations.
To a large extent, your company vehicle fleet is only as good as the employees who sit behind the wheel — driver management is an essential part of fleet management no business can afford to neglect.
Robust safety policies protect your employees, your assets, and your company’s reputation.
A comprehensive fleet safety program includes good driver hiring and training practices, but it also encompasses documented procedures, pre- and post-trip inspections, an accident response plan, and proper vehicle maintenance.
Full-time fleet managers should consider pursuing a fleet safety certification. Some of the more popular training programs include those offered by the National Association of Fleet Administrators (NAFA), National Traffic Safety Institute (NTSI), and the federal government’s Occupational Safety and Health Administration (OSHA).
Like any other vehicle on the road, your company fleet vehicles must be insured. The cost of ensuring your fleet depends on factors like the type of vehicles, their age and condition, and their intended use.
To save your company money on fleet insurance, make sure you shop around and consider using dash cams and telematics to protect the company in accidents and monitor the condition of your vehicles.
Fleet compliance includes everything that your company is required to do to ensure your fleet meets local laws and regulations. For trucks and vans, this usually means the standards set for commercial vehicles by the federal Department of Transportation (DOT) and the Federal Motor Carrier Safety Administration (FMCSA)
Failure to meet compliance standards can cost your business in fines and penalties—and cost even more in lost productivity if vehicles are unexpectedly removed from service to complete the necessary maintenance.
The most fundamental elements of compliance are monitoring your drivers’ hours-of-service (HOS) to ensure you comply with regulations for combatting dangerous driver fatigue and making sure drivers are filling out driver-vehicle inspection reports before and after every trip.
You should also be aware that most states abide by the International Fuel Tax Agreement (IFTA), which requires commercial vehicle drivers to record miles driven, the amount of fuel purchased, and the location where it was purchased.
Managing Fleet Vehicles Efficiently
It’s not enough that your vehicles simply get where they’re supposed to go more or less on time. Effective fleet management means optimizing every aspect of fleet operations to save your company money and minimize downtime.
Driver tracking allows your business to analyze its fleet operations so you can determine how to make the best use of your vehicles and control costs.
In the old days, tracking might have meant drivers simply checking in by phone at each stop or break. Modern technology allows for much more detailed and convenient tracking through telematics.
By tracking your vehicles with telematics, you’ll be able to optimize routes, predict when it’s time for vehicle maintenance or replacement, monitor driving behaviors to stop unsafe habits and wasted time, and simplify compliance reporting.
Fleet maintenance falls into two main categories: preventative maintenance (monitoring vehicle condition and servicing regularly to stop major problems before they can happen) and emergency maintenance (fixing the unexpected problems that inevitably come up).
Obviously, you want to do more preventative maintenance if it means less emergency maintenance.
Start by getting familiar with the service intervals recommended by the manufacturer of your specific vehicle. Then structure a preventative maintenance plan based on mileage, time since the last service, and telematic monitoring of each vehicle’s “vital statistics.”
Once you’ve made a plan, use maintenance metrics—like vehicle downtime, cost of downtime, and maintenance cost per unit—to see how effective your plan is and adjust accordingly. Optimizing may mean hiring your own fleet mechanic, or changing vehicles.
There’s no better illustration of the adage “You have to spend money to make money” than fleet vehicle fuel costs. Saving money on the fuel your fleet needs to run is therefore a key responsibility in managing fleet vehicles.
One way to reduce fuel costs is by using a fleet fuel card. These specialized cards can be used by drivers to fill up fleet vehicles as needed. Besides discounts and rewards, fuel cards can also save money by reducing administrative work such as receipt tracking and reimbursement.
Fleet Management Made Easier
The Coast fleet and fuel card can help simplify and optimize the work involved in managing fleet vehicles for businesses of any size.
You can centralize fleet gas and maintenance expenses on a fleet fuel card that’s accepted at any service station that accepts Visa. Real-time reporting, activity alerts, and advanced security features allow you to accurately track costs and protect your business against fraud.
For more information on how Coast can help you control fleet costs and streamline your fleet management program, visit CoastPay.com today.