These Fleet Strategies Could Reduce Your TCO

Fleet professionals often put their skills to the test when finding ways to squeeze more savings out of the cost of running their operations. However, when bringing multiple fleet leaders together to discuss just this topic, they’ll often find a variety of new ideas that can reduce total cost of ownership. 

At the NAFA 2019 Institute & Expo, several fleet executives offered a variety of expense-reducing ideas during the session, Forget Magic: Use these Proven Strategies to Reduce TCO. 

Safety Savings: In fact, “safety” is a key area for growth that can significantly reduce costs from insurance to fuel usage.  Kris Peterinelli, Fleet/Supply Chain Manager of Jubilant Draximage Radiopharmacies, in Jacksonville, Fla., began using a safety analysis system tied to telematics, that was then scored weekly for employees by branch, so they could see their progress. “Gamification was great; however, we were then able to make safety part of our culture,” he said. “The only thing worse than not having telematics is having telematics but not using the data.”  The result was a five percent increase in fuel economy and a 12% decrease in preventable crashes.

Optimizing Company Cars: Brent Miller, Information Technology/Senior Financial Analyst at Heart to Heart Hospice, in Plano, Texas, worked with his organization to implement a personal use charge for company vehicles.

His organization was faced with business expansion and increasing reimbursement expenses, and the subsequent budget pressure created an environment for this strategy. As part of his evaluation of the existing program, Miller determined the personal use benefit and set a new policy for employees using company vehicles for personal travel.

The impact was a seven cents-per-mile operating cost reduction, which equaled a $30,800 per month reduction in cash flow.  Miller said his company is on track for $3 million in lifecycle savings through this program.

Finding Idle Assets: Henry Kayler, Senior Purchasing Manager of Vestas Wind Technologies, in Portland, Ore., launched “Project Idle Asset.” He wanted a more reliable way to measure his fleet utilization to determine its efficiency on a cost-per-mile basis and adjust usage. “We were measuring it through a fuel card system, but technicians (entered random numbers) that caused us to lose trust in that system,” he said.

He implemented telematics to measure odometers, fuel costs, lease expense, and more on a weekly basis. That led to the identification of idle vehicles and where he needed to focus to improve cost per mile performance.

He then categorized his vehicles into three groups:

• “Workhorses” – over 300 daily miles driven with more than three stops per day
• “Runners” – driven 200 to 300 miles daily with two or three stops per day, becoming classified as an “intermediate idle” asset and put on a watch list
• “Idle” – driven less than 200 miles per day and making less than two stops daily; these vehicles were immediately moved to other needs or sold

The result of this better fleet utilization was $7.7 million in cost savings over three years.

(Note: A video of this session, which includes more TCO reduction ideas, is available as part of NAFA’s Best of I&E 2019 instructional package. This five-video bundle is just $99. Click here to learn more and order today.)