Fleet Utilisation – Use It Or Lose It
When conducting fleet reviews for organisations at Fleet Advisory, we work through a
proprietary framework of core fleet management functions, policies and processes. Sounds
like boring stuff right?
Not really - fleet is a major cost of any organisation and represents one of its biggest risks.
So when undertaking a comprehensive fleet review it always initiates conversation with
multiple organisational stakeholders that have different accountabilities and views on fleet
management. It often brings out information not known or understood within the business.
As a result, the fleet review process generally uncovers significant opportunities for cost
savings, improved risk management and operational practices etc. Then there is the
opportunity to establish a customised fleet strategy to embed ‘best practice’, as well as
prepare for the future (including the transition to Battery Electric Vehicles).
It’s fair to say that there are common themes in the category of ‘areas for improvement’
when it comes to fleet management, and one of the biggest is often ignored….Fleet
Utilisation.
Fleet Utilisation
Lets be really clear here – understanding your fleet utilisation and then doing what you can
to optimise it is the most fundamental aspect of managing fleet costs. Unfortunately, far
too often it is the scene of organisational complacency!
It seems that organisations and individuals within them often set expectations as to how
many vehicles are needed and what type of vehicles they should be. However, in many
cases when we undertake data analysis we discover critical vehicle under-utilisation is ‘not
on the radar’.
Sometimes it’s staggering to see how few kilometres a vehicle travels each year, but
somehow remains justified as a business requirement/expense. This is even more
disconcerting when assessing Pool Vehicles – the whole idea of having pool vehicles is to
maximise utilisation through use by multiple drivers, rather than individual driver allocation.
In the world of Six Sigma you would identify under-utilisation as Waste and seek to
eliminate it!
Fleet Utilisation Considerations
We consider Fleet Utilisation as having three core elements:
1. Fleet Size – it’s a simple case of ‘Supply versus Demand’. An organisation needs to
align how many vehicles it actually needs to perform its functions with how many
vehicles it has.
Although employees may pitch for more vehicles for ‘convenience’, remember that
Excess Supply = Excess Costs. Conversely, Excess Demand = Lost Sales. So there is a
need to find the right balance.
2. Fleet Usage – do you know how often vehicles are used and what they are being
used for? Do vehicles spend a lot of time idle? What is the percentage of private
versus business use?
Aspects of fleet usage are incredibly varied and have a direct relationship to cost.
This is especially true when considering the Whole Of Life Cost (WOLC) of any vehicle
as usage directly impacts the vehicles’ depreciation, service and maintenance costs,
fuel costs etc. as you can calculate here.
3. Fleet Mix – in concert with fleet usage, it is important to understand whether the
vehicles in the fleet are ‘fit for purpose’ in meeting the requirements of the
organisation.
Are there vans being used when a small passenger vehicle is all that is required? Are
4WDs being purchased without the need to go off road?
Aligning good vehicle selection and the right fleet mix to meet with the
organisational needs is not only an important cost consideration but has implications
for driver safety etc.
For organisations that have multiple sites, we often note circumstances where there is a
considerable imbalance in utilisation and ‘fiefdoms’ that deny effective collaboration ie.
fleet optimisation.
Optimal utilisation of any asset is a major contributor to Return On Investment (ROI).
Data Is The Key
Measuring the performance of your vehicles is key to understanding and managing fleet
utilisation. Informed decisions should be made based on data, not ‘gut feel’ or internal
demands for more and/or different vehicles.
These days there are credible fleet management systems that provide insights relating to
vehicle utilisation through both the quantity and quality of data available.
The Goal - Fleet Optimisation
Ultimately, a good understanding of fleet utilisation should provide multiple opportunities
for optimisation. Options for optimising your fleet will of course be varied but perhaps the
baseline should be ‘Use It OR Lose It’.