Six Ways to Cut Costs and Preserve Profits from Vehicle Operations
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- August 8, 2012
When volatile fuel prices, intense competition, and rising inventory costs put the squeeze on profit margins, where can field service organizations turn to find some relief?
Well, start by taking a closer look at your vehicle fleet operations — it’s a potential gold mine of cost-savings, offering opportunities to preserve profit in the face of even the stiffest economic headwinds.
Consider these six strategies to improve efficiencies and reduce costs in your fleet operations:
1. Match the Vehicle to the Job
How well do the vehicle’s specifications match the job? On one hand, if the truck is underpowered or too easily overloaded, this increases safety concerns and the likelihood of premature maintenance and costly repairs. On the other hand, if the vehicle is bigger than the job requires, you could be paying several thousand dollars more upfront to purchase the vehicle, while dealing with higher-than-necessary fuel costs.
Strike the right balance between engine power, payload capacity (the maximum weight a vehicle can haul), and cargo room by selecting a truck or van that offers no more and no less than what you really need.
(For more information, visit the U.S. Department of Energy’s Alternative Fuels Data Center resource page on “Rightsizing Your Vehicle Fleet to Conserve Fuel.”)
2. Identify Under-Utilized Vehicles
Do you have vehicles that aren’t being used enough to justify the cost of keeping them, such as annual tag renewal fees, maintenance expenses, and insurance premiums? What if you could remove those vehicles without diminishing service to customers? The savings would go straight to your bottom line, and selling those assets would free up cash to reinvest in your business.
3. Extend Oil-Change Cycles
The conventional wisdom is to change oil every 3,000 miles or three months. However, most trucks and vans today can go as high as 5,000 miles between oil changes, depending on the vehicle’s operating conditions.
Consider installing a GPS system on your vehicles, either factory-installed (such as GM’s On-Star] or an aftermarket one that offers remote engine diagnostics, including engine oil life monitoring. It’s designed to alert you to precisely when the oil needs to be changed. This way, you pay for oil changes only when they’re needed, not on a preset schedule.
4. Review Insurance Coverage
Consult with your insurance agent to identify areas of potential cost savings in your fleet policy. You might be able to lower coverage amounts and/or increase deductibles, both of which would reduce insurance premiums.
5. Track, Correct Driver Behavior
Poor driving behaviors like excessive idling, accelerating too rapidly, and braking too hard all hurt your truck or van’s fuel economy and affect other fleet costs. Deploy GPS systems that can track driver behavior and equip you with the data you need to hold drivers accountable for operating their vehicles more safely and efficiently.
6. Optimize Routes (Seriously)
In this video by Fortune magazine, Bob Stoffel, senior VP for United Parcel Service (UPS), explains “Why UPS Trucks Never Turn Left.” The key takeaway: Left turns, especially on busy commercial roads, require having to cross traffic, which increases safety concerns and delays. But also consider the extra engine idle time (and fuel consumption) required when waiting to make a left turn.
The more efficient routes you can plan for your service techs, the more you’ll cut engine idle time and improve overall fuel economy. And that savings goes straight to your company’s bottom line.
Image used under Creative Commons by Flickr user MSVG.