Small businesses work hard to succeed in competitive industries. They often survive with razor-thin profit margins. That’s why small businesses need to get the most out of their vehicles while controlling costs wherever possible.
No matter how many vehicles you operate, using them efficiently as possible will bolster your bottom line.
In this blog, we explore tips for promoting effective vehicle use while eliminating costly waste.
What is Fleet Optimization? Fleet Optimization Definition
Fleet optimization is simply making use of your vehicles as effectively as possible. This goal requires both controlling costs and encouraging efficient vehicle use.
Large organizations may hire full-time employees to manage their vehicle fleet. For small businesses, an owner or office manager takes on these responsibilities. But the right tools can still empower small businesses to optimize vehicle usage.
For fleets of any size, understanding the factors affecting vehicle performance is the key to managing vehicles more effectively.
Fleet Performance: Key Factors
Optimizing fleet performance is a common-sense goal. Any business vehicle should generate as much revenue as possible while limiting unnecessary costs. But pinpointing opportunities for savings can be tricky. These best practices are a great starting point.
Smart Route Management: Keep Vehicles Full and Rolling
Efficient routing helps maximize vehicle performance. Examples of routing choices that are not cost-effective include:
- One-way trips.
- Long-distance trips.
- Trips with deadhead..
A recent Forbes article offers some useful insight. According to Forbes, the most efficient fleets will only see 20-30 percent of their total miles driven empty. The most desirable routes tend to be short hauls. Forbes notes that “sweet spot” routes will be “multi-pickup, multi-drop, nonstop and highly repeatable.”
Software can help calculate the best possible routing option. Routing software can even offer the ability to avoid traffic!
Improving efficiency doesn’t always require complex re-routing. For example, assigning a larger vehicle than necessary to a delivery route can drastically reduce its profitability over the course of a year by creating deadhead. Simply assigning a vehicle with a load capacity matched to the task at hand can generate real savings.
Smart Roster Management: Taking Advantage of Your Most Efficient Vehicles
Sometimes, a certain vehicle runs a particular route simply out of habit. It’s important to ensure that your most efficient vehicles are assigned to the most demanding routes. Simply assigning the most fuel-efficient vehicles to the highest-mileage cargo deliveries can immediately lower fuel costs for many small businesses.
Tracking fuel efficiency has broader benefits as well. A vehicle performing below mileage expectations often has a maintenance issue. Some fuel cards, for example, offer the ability to send alerts when vehicles are not performing efficiently. More timely maintenance not only helps vehicles stay efficient, but helps prevent more costly catastrophic breakdowns in the future.
Efficient Driver Behavior: Controls and Incentives
Driver behavior is one of the most important factors behind vehicle performance. Small inefficiencies can add up to real costs over a long period of time.
- Unnecessarily stopping at favorite fuel stations that are not directly on a route.
- Fueling up at stations that don’t offer the best price.
- Taking inefficient routes.
- Failing to adequately perform vehicle maintenance. ‘
A combination of education and proactive controls can help cut down on these behaviors. For instance, GPS tracking features can help determine which drivers are taking efficient routes. Paired with a fuel card, businesses can even see which stations a driver chose between when fueling up.
Incentives can also be helpful. Michael Cote, vice president of sales for Novatel Wireless, told Forbes that the carrot is far more effective than the stick for encouraging efficient driving habits: “a system of rewards can accelerate the improvement of drivers, lowering fuel costs, maintenance costs, accidents, and insurance.”
How to Measure Fleet Performance: Why Fuel Tracking Matters
Data is a small business’ best friend when it comes to optimizing vehicle performance. Tracking fuel costs is a business necessity for expense and tax reporting. It’s also the foundation for optimizing your vehicle fleet.
Tracking even simple data points can provide valuable insights. Simply by tracking mileage data alongside fuel costs, a small business gets a much more detailed view of vehicle performance. This information allows small businesses to analyze per-mile costs. Per-mile data are the easiest way to pinpoint the roots of excess costs, from inefficient drivers to poorly maintained vehicles.
But timely, detailed fuel expense tracking can be a real challenge for small business owners. Many small businesses rely on drivers manually collecting receipts. From there, an owner or office manager has to spend hours doing manual data entry just to record fuel expenses in a spreadsheet.
Once this information is in a spreadsheet, however, it still needs to be analyzed. This process is not only time consuming but means small businesses can’t easily monitor performance in real-time.
Automated Fuel Tracking: A Powerful Alternative
Solutions like fleet fuel cards offer small businesses a method to automatically track fuel use, mileage, and spending. Fuel cards are scalable to businesses of any size. They allow for real-time fuel tracking without:
- Forcing drivers to collect receipts.
- Forcing owners or office managers to perform manual data entry.
- Making drivers learn complex new habits (with a fuel card, a driver simply enters a personal PIN and odometer reading as they fuel up).
Simply by automatically tracking fuel consumption, a fuel card gives a small business a powerful tool for cutting down on waste. But the best fuel cards will also include proactive controls, like spending limits and geographic restrictions. These can bolster a small business’s bottom even more but cutting down on fraud and misuse.
For the most impactful fuel cards, however, that’s only the beginning. Additional options like telemetry let businesses track vehicle location, speed, engine diagnostic codes, and more. These capabilities are available at subscription rates that are accessible to small businesses.
The most important takeaway for small businesses? The same powerful tools that help large enterprises are available to help you maximize the value of your rolling assets.