Containing fleet management costs critical
Proper management of an organisation’s fleet is critical to control fleet costs in today’s economic environment, Ashleigh Young, General Manager of Fleetcube, tells SmartProcurement.
The current vehicle market is an anomaly: new vehicle prices are rising while sales have fallen to their lowest since the 1990s. The second hand car market is also flooded, pushing vehicle resale values down. It is estimated that vehicle prices will rise on average by 15% in 2009, and that while we have had a respite in the first half of this year, we should expect and plan for a fuel price of close to R9/ litre by year end. All these factors combine to increase the total cost of running a fleet of vehicles, a cost that the organisation must ultimately bear.
“Vehicle costs usually form the second largest line item expense of any company after human resource costs, yet it is surprising how little most organisations, large and small, know about the proper management of their fleets, let alone how and where to start managing and controlling these costs properly”, says Young. What concerns him most is that given a fleet’s cost and potential impact on a company, many of the people assigned to manage the fleet have had little or no formal training on how to manage the fleet or what costs to look out for.
“Fleet costs can be managed to reduce their impact on the organisation’s expenses by following some basic steps in fleet management. The trick is to get organisations to see the importance of implementing proper controls,” says Young. A problem is that the control of fleets is often split over a number of departments. Control over the vehicle policy sometimes lies with Human Resources, purchasing is controlled by Procurement and day-to-day operational control by a fleet manager (or somebody in Administration), while Accounting controls the payments and how the vehicles are funded.
Young believes this loss of direct management control over a fleet is a recipe for disaster. Control of the fleet should be assigned to one department, preferably Procurement, to oversee the management of vehicles from cradle to grave.
“Only when you have a single point of control can you ensure that fleet costs are properly managed”, enthuses Young.
However, this is not to say that the other departments should not have input into the management of a fleet, but this should be on a structured basis and at regularly scheduled times in a properly constituted forum. “The fleet manager or person responsible for the daily operational management of the fleet should also report to the Procurement department/ manager and, most importantly, should be properly trained in fleet management”, concludes Young.
In this economic climate, organisations should be looking for every opportunity to control fleet costs and a starting point is knowing where to look, with education being the key factor to success.
Fleetcube offers a number of courses designed to provide comprehensive training to those people tasked with managing their organisation’s fleet. These courses range from basic fleet management through to advanced courses targeting specific issues such as vehicle utilization and fleet financing. Fleetcube can assist in a consultancy role where organisations find challenges too large to handle internally.
Ashleigh Young can be contacted on 011 782 9211 or at firstname.lastname@example.org