Justifying the Fleet’s Existence
The Changing Role of the Private Fleets
Historically, Fleet management consisted of properly specing and maintaining vehicles and equipment. The fleet manager was simply expected to keep vehicles on the road at a reasonable cost. Today’s Fleet manager has expanded responsibilities and is accountable for all logistics management: supply chain management, physical distribution and fleet management; warehousing; order processing; forecasting; inventory control; material handling; production planning; customer service. A private fleet manager must determine the best delivery system a company should employ to obtain the lowest possible cost and highest level of service: owned or leased private fleet; for hire transportation (dedicated contract); combination of both.
The National Private Truck Council identified five challenges a fleet manger faces. All also have opportunities associated with them.
Doing more with less: Challenge: Fleet Manager (F/M) are expected to provide better customer service and increased productivity at a lower cost. Opportunity: F/M can take on increased operations and logistic responsibility by broadening their management scope to include warehousing, purchasing, inventory control, etc. It is not uncommon for the best fleets to have a 10% cost advantage over the competition.
Governmental Regulation: Challenge: F/M must stay abreast the ever-changing government regulations, Alternative Fuel mandates, energy taxes, increased permits and road use fees, hours of service, and deregulation have increased cost pressures making it more difficult to reduce the cost of owning and operating a private fleet. Opportunity: F/M implement quality improvement programs and benchmarking programs to offset increased costs. They stay on top of regulatory changes and are not surprised by regulatory actions. It can also affect costs and health by properly analyzing optimal alternative fuel.
More accurate Fleet Costing Methods: Challenge: Many companies are demanding sophisticated costing methods to ensure private fleet is cost-effective. Life cycle analysis and lease verses buy questions continue to arise. Opportunity: The best F/M properly identify true costs of operation. They capture all costs, including admin costs and fixed costs, and strive to reduce costs. Progressive F/M incorporate a three-year strategic plan to ensure operational success.
Better Customer Service and Quality: Challenge: Customers insist on good service, on-time delivery and quality in every transaction. Opportunity: A private fleet can usually outperform for hire when it comes to on-time delivery and quality. Quality needs to be an integral part of the strategic plan.
Continued Cost and service justification: Challenge: As pressures for off balance sheet financing arises along with alternative uses of capital, the pressure mounts against a private fleet. More and more companies are opting for hire as an alternative. This has placed pressure on F/M to improve service, on-time delivery, company image and cost structures. Opportunity: The F/M who implements qual. Improvement processes, benchmarking, a strategic plan and best use of company capital can dramatically increase company profits. The changes also improve employee morale, increase safety and improve overall efficiency of the operation.
Understanding fleet value
- Fleet Management is considered secondary to accomplishing the overall company mission. - A private fleet is an expensive cost center
- Fleet performance is transparent and expected
- The fleet is a necessary evil.
- Fleet management positions are not considered professional. - Private fleets are capital intensive because of increased equipment costs.
Management Hot Buttons:
Fleet Managers and Senior Managers think differently. F/M think...