Centralized data, benchmarking, and right-sizing: Best practices for containing fleet costs

Amid concerns of an impending recession, fleet managers across the U.S. are under increasing pressure from leadership to control costs and operate on tighter budgets. Striking the right balance between cutting costs and maintaining a productive fleet, however, can be a struggle for even the most seasoned fleet manager. This is especially so in a time of ongoing vehicle shortages and the increasing costs of vehicles, fuel, parts and labor.

Navigating this increasingly challenging environment is no easy task, but there are some best practices that today’s fleet managers can adopt. We spoke with Brent Pietroski, Director of Client Partnerships, to discuss how centralizing data and examining fleet makeup can help contain costs in today’s complex landscape.

Centralize your data

The first step to containing costs? Centralizing your data—which is Pietroski’s number one tip for containing costs, especially for companies that may have started out small in one area, but are now expanding into different regions. “As companies add new locations or even services, extra stress is placed on their fleet management,” Pietroski says. “No longer can fleet managers walk out onto their lot and see the vehicles to make sure they are in good operating condition; they have to rely on teams in different areas to do that, which makes managing a large fleet a challenge. Centralizing data can help compare fleet costs across all divisions and identify best practices that can be shared across all locations. Pietroski notes that this is where the services of a fleet management company (FMC) can be especially valuable.

Systemize where possible

Apart from aggregating all available data in one location, Pietroski also recommends systematically minimizing the number of vendors and services across the business—an approach that simplifies the collection of data. “Having all locations use the same maintenance and fuel programs, for example, makes it easy to ensure that the same data is being captured,” he notes—which, in turn, makes it easier to analyze and pinpoint key insights when information is loaded into your centralized system.

Benchmark your costs against historical data

After aggregating all your fleet data in one place, Pietroski suggests benchmarking your fleet’s performance against historical data. “I recommend breaking your costs down into significant categories—things like maintenance, fuel, leasing costs, and so on,” he says. “Then you can start asking yourself some key questions”—like what monthly costs should be based on past performance, and if rising costs are part of a trend or a one-off scenario. Then you can begin zeroing in on how to bring costs back in line.

Many companies analyze their data on an annual basis, and Pietroski notes that year-over-year comparisons should be the absolute minimum. It could also be worth looking into the data monthly based on the size of your fleet and the impact that significant market or industry fluctuations have on your business, as “you can find material savings by closely monitoring your fleet expenses monthly and making quick adjustments to your strategy and driver behaviors.”

Use data to right-size fleets

After analyzing their data, many fleet managers determine that the best way to control their costs is to reconfigure the number and type of vehicles in their arsenal (a process referred to as “right-sizing”). Pietroski notes that this is an extremely important undertaking, but not without its challenges. “Right-sizing your fleet can be very complicated, just because the right number of vehicles for your business is changing all the time,” he says. “There are so many variables that can push that number higher or lower.” And if you aren’t consistently monitoring your fleet and making adjustments, you could end up with unused vehicles, tying up valuable cash in depreciating assets.

His best advice for right-sizing? Ponder the needs of your business first, not the budget for your fleet. “Consider how many clients need to be served in a day, the number of clients each driver can serve, the impact of adding one more client to each driver’s day in terms of hours and the equipment needed on the vehicle,” says Pietroski. Once you have a strong understanding of what, exactly, it takes to serve your clients, you can determine how many vehicles you need. Pietroski recommends using your centralized data system to track vehicle utilization; if you identify vehicles that are being underused, those units can be moved to other locations or sold to free up cash for other areas of the business.

Predicting your business needs over the next six months can also help with right-sizing. Given the ongoing challenge of acquiring vehicles and the cost savings that can be had from factory-ordering. “Having a strong understanding of the demand for vehicles in the future will allow you to best right-size your fleet,” Pietroski says. “While having too many vehicles is an issue, having too few vehicles can be even more detrimental.” Consider what it will take to scale up your fleet size during high demand and how long that demand will be sustained; from there, you can determine whether ordering more vehicles or arranging a short-term rental makes sense.

Identify opportunities to leverage your scale

It’s a simple truth that as fleets grow, so do your associated costs—but you also have increased buying power in certain areas.

“I always recommend that fleet managers focus on how they can leverage their scale—because as your fleet grows, you automatically have more buying power,” says Pietroski. OEM incentive programs are one common example, in which ordering larger numbers of vehicles can get fleet owners better deals; there are also opportunities to earn rebates or other discounts from fuel providers and maintenance providers.

“We have one client that is centralizing their oil changes and other maintenance with a particular provider—and because of the number of vehicles they have in their fleet, that provider is offering a significant rebate as well as mobile maintenance services,” Pietroski says. By examining their spending categories within their centralized data platform, he adds, fleet managers can potentially identify areas that they can leverage for incentives and rebates.

Economic uncertainty won’t be disappearing anytime soon, and neither will the pressure to cut fleet costs. However, fleet managers who are proactive in collecting, centralizing, and properly analyzing their data will be well-equipped to manage an efficient, productive fleet on a tighter budget.