But companies that simply cut investment may find that in the long run this is actually costing them money through increased inefficiency in fleet practices and procedures.
One sure way to keep costs in check and manage cost control more effectively and efficiently is through the use of fleet management technology, which has been the proven to produce results in this respect.
Luke Hicks, business executive at Mycompanyfleet, said 2011 would be a tough year for most organisations, due in part to financial cut-backs across the public sector as a result of the Government Spending Review, plus fiscal measures such as the increase in VAT to 20% which takes effect from and the January 4, 2011 and rising fuel Excise Duty.
However, that did not mean that businesses, local authorities and other organisations should turn-off the investment tap, as investing in the right software could pay handsome dividends at a comparatively low cost.
He said: “If investment is axed, organisations may well find they become less efficient and costs actually escalate. During 2010, we have seen many organisations invest in our fleet management technology to improve their operating efficiencies, manage and reduce fuel expenditure and ensure they are compliant with the latest health and safety legislation.
“Typically, the decision to invest comes when realization dawns that current practices are in fact costing money due to their inefficiencies. Investment in the correct fleet management software systems can pay handsome dividends, not just in the long run and not based on any particular fleet size.
“Size of fleet should be neither barrier nor guide to the decision to invest in fleet software. Flexibility is the key. To give you an example in another area of our business, companies with a few as 10 employees definitely benefit from employing software to run their payroll and HR systems.
“The same principle certainly applies to organisations running as few as 25 company vehicles, or even less, and there are some real cost saving advantages from employing fleet management software on a fleet of even that size.
“A fleet of 25 vehicles typically generates operating costs of around £500,000 per annum, but for an investment of as little as £25 per month, or £1 per month per car, it should be possible to generate cost savings of 5%, an impressive £25,000!
“And if you opt for payment terms on a pay-as-you-go basis, as you can with our own software solutions, there is no lump sum down-payment and no negative effect on your business’s cash flow – an important consideration in these tough economic times.
“While budgets across the public sector are being cut and money remains tight in the private segment, organisations should continue to invest. If investment is axed, inefficiencies creep in and costs actually escalate.
“One of the key areas for closer management attention is the ‘grey fleet’ comprising those employees who are permitted to drive personally owned vehicles on company business.
“If left unchecked, this side of the operation can not only increase in costs but can also increase the business’s risk through inadequate management of duty of care.
“At Mycompanyfleet, we launched our Driver Self-Serve grey fleet solution to address the duty of care issues around vehicle condition, mileages driven and driver licence checking involving grey fleet vehicles and their drivers.
“This gives fleet managers the perfect system to accurately manage their grey fleet costs, and to quickly and accurately identify those areas of overspend against budgeted costs.”
Fuel cost management is likely to be another key area of focus for many fleets in 2011, with the impact of rises in Excise Duty and VAT likely to have a further inflationary effect on near-record prices at the pumps.
Mycompanyfleet’s FleetAcumen visually displays key cost centres to show expenditure against budget, and to highlight any areas of potential or actual overspend.
For key areas such as fuel costs, the system can be easily configured to show league tables of the top ten most fuel efficient drivers and vehicles on the fleet and those which are the worst, so that fleet managers can take decisions quickly and effectively to remedy the situation.
“If necessary, fleet managers can use our system to name and shame the worst offenders and to highlight the least fuel efficient vehicles on the fleet. Tough times sometimes require tough measures,” said Luke Hicks.
”This ability gives managers the ammunition to challenge driver behaviours and to consider introducing other initiatives such as eco-driver training, as in the current climate no manager is likely to want to be the winner in the fuel cost race,” he said.
Mycompanyfleet systems use dashboard technology and exception reports to identify the worst offenders in terms of fuel consumption for both drivers and vehicles. These can also be configured to show the best performers and the most fuel efficient vehicles on company choice lists.
By selecting the most fuel efficient and ‘steering’ company car drivers towards them, perhaps with the use of cash incentives, fleet managers can play a key role in helping keep fuel costs in check and make a serious contribution to the corporate profit performance.
“Fleet managers are empowered by our dashboard methodology and exception reporting to take rapid and effective business decisions as soon as an event, such as a cost centre exceeding its fuel budget, occurs,” said Luke Hicks.
“The use of exception reports allows fleet managers and other system users to go straight to the key management information required, allowing rapid and effective business decisions to be made,” he added.