If your fleet operation is struggling with skyrocketing fuel costs, expensive maintenance, driver safety issues, or even difficulty procuring vehicles, it’s time to start thinking about ways to improve fleet efficiency and cut fleet-related costs where possible.
Even small changes like minimizing idle time (which we’ll talk about later in this article) can go a long way toward reducing the cost of sending your vehicles from job site to job site.
In this article, we’ll share the best ways to improve fleet efficiency and cut fleet costs.
Understanding Fleet Efficiency: Key Metrics And Indicators
The KPIs and inefficiency indicators in this section are concrete metrics that you can use as benchmarks to get an idea of how efficient your fleet is.
For example, once you’ve calculated your total cost of ownership (TCO), you can start looking for ways to reduce the variable and fixed costs that contribute to it. Will you shop for new, lower insurance? Clamp down on fuel use and expenses? Or renegotiate your lease payments?
In one way or another, each of those factors can help you lower your TCO, improve fleet efficiency, and control fleet-related costs.
And that’s just one KPI. Learning about all the variables that affect fleet efficiency can give you more control of the money you spend keeping your vehicles on the road.
Fleet Efficiency Key Performance Indicators (KPIs)
Total Cost Of Ownership (TCO)
Calculate total cost of ownership using data gathered from fleet management software, telematics, smart fuel card software, and the following formula:
Total Cost Of Ownership = Variable Vehicle Costs + Fixed Vehicle Costs
Variable vehicle costs include fuel, tolls, maintenance, repairs, and other expenses that fluctuate over time. Fixed vehicle costs include lease payments, insurance payments, permits, and other expenses that are roughly the same month after month and year after year.
Fuel Consumption And Efficiency
Fuel consumption and efficiency can be combined into a single metric: Vehicle Cost Per Mile (VCPM). This data point represents how much your business pays for each mile that a vehicle travels. The more efficient your fleet, the smaller this number will be.
You can calculate VCPM by taking the Total Cost Of Ownership for a single vehicle in a given month and dividing it by the total number of miles driven during that month.
Vehicle Utilization Rates
This fleet efficiency KPI helps you determine how large of a fleet your business needs to get the job done effectively without wasting resources.
You don’t want too many vehicles sitting idle or unused, but too few vehicles can cause delays that lead to unhappy customers. Strive to field a fleet that’s lean enough to meet your needs while still allowing for some flexibility.
Maintenance Costs And Frequency
Left unmonitored, vehicle maintenance costs can quickly add up and affect your business’s bottom line. And when vehicles aren’t maintained properly, you’re more likely to experience breakdowns that cost your fleet even more time and money.
By leveraging total cost of ownership data, fleet management software can give you a clear picture of what you’re spending to keep your fleet vehicles running.
Driver Performance And Safety Metrics
Evaluate driver safety and performance by using telematics data to analyze the following:
- Speeding
- Extreme variable miles per hour
- Harsh acceleration
- Heavy braking
- Seatbelt use
- ELD compliance
Do you see a pattern of harsh acceleration and heavy braking throughout your fleet that is affecting fuel use and MPG? Train your drivers to eliminate these behaviors and bring your fuel costs down.
Common Inefficiency Indicators
Now that you know what KPIs to monitor as part of your overall fleet management strategy, let’s talk about several factors that might indicate your fleet isn’t running as efficiently as it could.
Excessive Idling
Excessive idling is typically quantified as an engine running for five minutes or more without moving the vehicle forward or back. While some idling is normal, too much idling is a waste of fuel and can lead to excessive wear on the engine.
Inconsistent Fuel Usage
Using fleet management software and fuel card software, you can predict fuel use and costs for a particular trip. If you see inconsistent fuel usage for a particular vehicle, it can indicate there’s a problem with the vehicle, the route taken, or the driver’s behavior while on the road.
High Maintenance Costs
High maintenance costs can indicate that the end of a vehicle’s life is rapidly approaching or that there are problems with driver performance (e.g., inefficient vehicle operation).
Either way, you can use fleet management software data to identify the underlying issue and create a plan to retire the vehicle or train drivers to operate their vehicles more efficiently.
Fleet Efficiency Optimization Strategies
1) Analyze Total Cost Of Ownership (TCO)
After calculating the total cost of ownership for each vehicle and your fleet as a whole, analyze each cost included in the calculation to see if you can reduce it in some way to bring the TCO down.
If your drivers tell you they often have to divert long distances from planned routes to fill up at approved stations, you can switch to an open-loop fuel card. This will give them the freedom to use any station along the most fuel-efficient route.
2) Implement Fleet Management Software For Better Oversight And Control
As we’ve mentioned, fleet management software gives you better oversight and control over even the smallest details about your vehicles and equipment, including:
- Acquisition
- Operation
- Vehicle lifecycle management
- Tire management
- VIH decoding
- Driver assignment
- Recall alerts
- Warranty management
- And much more
Paired with telematics and smart fuel card technology, fleet management software can give you a 360° view of your operation and help you identify new ways to improve fleet efficiency and cut fleet-related costs.
For example, are you seeing higher average fuel costs every Wednesday? What’s causing that spike in expenses? Maybe one of your drivers is using a fleet vehicle to go to a standing personal appointment between jobs.
Fleet management software can help you get to the bottom of what’s happening and bring spending back under control.
3) Improve Fuel Management With Smart Fuel Cards
While fleet management software may offer some fuel monitoring features, you can dramatically improve control of gas and diesel expenses by including a smart fuel card in your workflow.
Coast, for example, integrates seamlessly with fleet management software like Fleetio to give you a better, more comprehensive understanding of one of the largest regular business expenses — fuel use.
For instance, are your drivers filling up at the first station they see and paying more for fuel as a result? With integrated fuel and fleet management systems, you can redirect vehicles to stations on their route with the lowest prices to reduce fuel costs.
4) Use Telematics To Monitor Driver Behavior
Telematics can help you identify detrimental driving habits such as excessive acceleration, heavy braking, inconsistent speed, unsafe cornering, and inattention at the wheel.
Once you know that these things are going on, you can design training programs to address and eliminate behaviors that reduce fleet efficiency.
5) Optimize Route Efficiency With GPS-Based Dynamic Routing
Dynamic routing allows you to analyze GPS data and provide real-time instructions to your drivers to help them avoid slow-downs and take the most efficient route to their destination.
For example, if an accident occurs along your driver’s assigned route and causes traffic to stop, you can quickly find a way around the jam so that the vehicle doesn’t lose time or get stuck and have to idle any more than necessary.
6) Perform Preventive Maintenance To Maximize Vehicle Uptime
With data from fleet management software, telematics, and fuel card software, set up a preventative maintenance plan for each vehicle in your operation and stick to it.
That means implementing a lot of small checkups to keep your vehicles in good working order rather than waiting for something big to break that takes a vehicle out of commission for days, weeks, or months.
It also means telling drivers and mechanics exactly what they need to do — and when they need to do it — to maintain the safety and integrity of your fleet vehicles.
7) Use Predictive Fleet Analytics To Reduce Costs And Optimize Vehicle Utilization
The predictive analytics built into your preferred fleet management software and smart fuel card technology can help you optimize vehicle utilization, which leads to lower costs.
How can you take advantage of this? One strategy is to schedule certain vehicles for long-haul routes and others for local routes. Doing so gives you more control over which vehicles accumulate the most miles and wear and tear.
8) Invest In Fuel-Efficient And Sustainable Vehicles
While the majority of your vehicles may have internal combustion engines, there’s no time like the present to improve fleet efficiency by investigating how your operation can implement fuel-efficient and sustainable vehicles.
For example, hybrid vehicles can significantly reduce fuel costs in just the first few months of operation when compared to vehicles with internal combustion engines.
Similarly, consider adding an electric vehicle or two to your fleet to see how they perform under the day-to-day rigors of your business.
Improve Fleet Efficiency With Coast
Fleet management software can help you improve vehicle uptime by providing the data you need to determine when and how to perform preventative maintenance, while telematics allows for advanced vehicle and driver behavior tracking so you can gain valuable insights into vehicle use and fuel consumption.
Bridging the gap between those two solutions with the Coast smart fuel card is one of the best things you can do to improve fleet efficiency and control fleet-related costs.
Communications Unlimited in Birmingham, Alabama, saved $22,000 month over month after switching from their old fuel card thanks to Coast rebates, spend controls, and other advanced features.
Ed Keeley, Director of Business Intelligence and Analytics, said this:
“The biggest control that helped us is the integration with One Step GPS and the fact that we get notifications if the vehicle is not actually at the gas station at the time it’s being fueled. We now have the ability to integrate GPS with a fuel card and have control over our fuel spend and over which vehicles that fuel is going into.”
The Coast fleet and fuel card gives you all the tools and features you need to monitor and control fleet KPIs, inefficiency indicators, and the total cost of ownership for both individual vehicles and the entire fleet, including:
- Open-loop capability
- Fuel discounts
- Rebates
- Secondary security verification
- Card-level controls
- Automated receipt collection
- Customizable spending rules
- Integrations
To learn more about how Coast can help you improve fleet efficiency and control fleet-related costs, visit CoastPay.com today.
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