Fleet Management considerations after the Corona Virus

9 months ago we published an article commenting on a prediction that Business travel set to decline by 25% in next five years. It made sense then!

Today we have the corona virus, 3 weeks of lockdown, WFH (work from home) and the Automobile Association (UK) suggesting “a permanent reduction in demand for travel because people have learned during the crisis to use home working technology”.

How could it impact us in South Africa and how will it affect fleet management? The consequences of the lockdown may be significant for business viability and staff wellbeing. An immediate reaction will surely be a focus on cost reduction and with fleet being No 2 or 3 in the hierarchy of costs; it should get a lot of attention.

Historically fleet management has not received its fair share of management attention so going forward what strategic options are available to you?

  • Right size you fleet. Make sure that you have the right type and quantity of vehicles to do the job efficiently. However, to do this properly you need to measure utilisation. Do you have a telematics system to record utilisation and importantly do you measure and manage this activity.
  • Measure and manage operating expenses. Your accounting / ERP system is not enough. You need to analyse and compare expenditure, using cpk as one benchmark, between vehicles and their application. Ultimately identify and get rid of the most expensive, but to do this effectively you need a Fleet Management Information System.
  • Focus procurement. The cost benefits of focussed operating policies, be it consumables (e.g. fuel management) or limited vehicle types and their replacement timing is significant. Engagement with vehicle suppliers could result in reduced depreciation costs by adopting a revised replacement program.
  • WFH (work from home) may have some constraints in the hands-on fleet office but it may be applied to the customer service side of the business, resulting in fewer vehicles to manage. Alternatively consider outsourcing. It is no longer limited to finance but can be applied to operating cost management and vehicle disposal.

No doubt all business executives are giving serious thought to the future. Now is a great time to update fleet management strategies that focus on cost reduction and operating efficiency. There are many beneficial options to be explored and ultimately the prediction that “Business travel set to decline by 25% in next five years” may prove to be true. Remember the cheapest vehicle in your fleet is the one you don’t have.

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