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Operating a cost-effective and efficient fleet often requires relying on the knowledge and expertise of fleet managers, but strategic direction from upper management also acts as a driving factor for such changes. Establishing key performance indicators derived from the fleet organization, vehicle assets, and vendors, permit effective fleet performance. This allows chief decision makers to observe trends as they evolve over time. This article provides 10 specific ways to reduce fleet costs along with ratings on each method’s potential to affect the organization’s overall profitability.
Traditional methods of determining the most cost-effective fleet size can be inefficient and inaccurate. Several alternative methods can be used to right-size your fleet without degrading the delivery of products, services, and transportation of employees and customers. As fleet managers know, a fleet’s cost is directly proportional to its vehicle total. Today, fleet professionals are under increasing pressure to reduce costs, and one of the most obvious ways to do this is to trim fleet size. Pressure from management wanting to eliminate vehicles on one side, and pressure from customers wanting to retain vehicles on the other usually puts the fleet manager in the seemingly unfair position as an “arbitrator” in this struggle. Thus, rightsizing methods must be fact-based, apolitical, rational, and defensible to all parties.
Through research, replacements, and preventive maintenance, fleet managers can get the biggest bang out of their fleet dollars. Fuel is one of the largest expenses associated with owning and operating a fleet, typically, second only to asset acquisition and depreciation. In the last decade, the average retail price of a gallon of unleaded gasoline has increased more than 126 percent, with average prices fluctuating as much as 39 percent from one year to the next. During this same period of time, the average retail price of a gallon of diesel fuel increased more than 160 percent, with the average price annually fluctuating as much as 33 percent.
When implementing a fleet system, fleets commonly focus on basic features to meet core needs, missing such valuable tools as warranty management, shop scheduling, flat-rate labor times, parts inventory stocking, and reporting. Fleet management software is much like the human brain, and we only use a fraction of its potential. The most underutilized fleet systems tend to be those in which initial software setup, training, and use were designed to meet the operation's basic business requirements (i.e., just enough effort and resources to get things back to business as usual). This common scenario occurs when, during a system's implementation, the organization focuses solely on getting the system up and running to meet core business needs, such as work orders, parts inventory management, and basic reporting. The system then tends to remain in a remedial state with little emphasis on rolling-out features such as warranty management, shop scheduling, flat-rate labor times, part kits, part catalogs, inventory stocking levels, accident management, motor pool scheduling and administration, and management reporting.
Current economic conditions require government fleet managers to seek alternatives to financing their fleets with ad-hoc, cash appropriations. Leasing is a practical financing solution, which in the past, was primarily utilized by the private sector. However, many government entities are looking at leasing as a way to stretch their dollar. This article discusses how leasing can serve as a practical financial mechanism for the public sector to meet their fleet replacement funding needs.
Most people no longer bat an eye when hearing about multimillion dollar damage awards to punish companies for an employee's negligent acts. However, what are the liability concerns for a public sector fleet manager? Important items fleet managers should be aware of in regards to negligent entrustment include: 1) Negligence, the most common tort, has the most risk for fleet managers, since negligence awards can be very large. 2) To bring a negligence case against the federal government, the claimant must have been damaged by the negligence or wrongful act of a federal employee acting within the scope of his or her employment in circumstances where a private person would be liable under the law of the state in which the negligence or wrongful act occurred. 3) Most states have adopted individual state tort claim acts. 4) Municipal and local government liability for negligence of their employees generally follows the law of the state in which the local entity is located.
Employees who operate their vehicles for business use are compensated under either taxable or non-taxable reimbursement plans, but employers and employees often overlook differences in tax consequences between the two types of reimbursement methods. Today's leading organizations are leveraging multiple modes of transportation to minimize their total cost of moving people and delivering goods and services. Well-run organizations are integrating both employer- and employee-provided vehicles in fleet programs as part of their vehicle allocation methodology.
Some companies are inclined to hire independent contractors based on the idea that they can carry out business without incurring risk on behalf of the company. Generally, this is true. An employer who hires an independent contractor (or contracts with a third party organization to provide drivers as subcontractors) is not liable for the torts of that person. The legal principle of respondeat superior does not apply to independent contractors, since the hiring company is not deemed to be in control of the contractor and, thus, is not vicariously liable. However, it is a misconception that the liability for negligence and respondeat superior never applies to independent contractors. The reality is, hiring an independent contractor is not a risk-free proposition and the hiring company may incur liability in several different ways.