What Is Fleet Management? Here's What You Should Know
Taken broadly, “fleet management” means managing all aspects of a company’s leased or owned vehicles. That could include everything from forklifts workers use in a warehouse to vehicles assigned to traveling sales staff.
In this post, however, we’re going to focus on the role fleet management plays in logistics and supply chain management. In other words, we’re going to talk about how effective fleet management helps get the right products to the right place at the right time.
What Does Fleet Management Do?
Fleet management means making sure that an organization is using its vehicles as efficiently as possible. It also involves keeping an eye open for any changes that may affect that goal. Adding onboard telemetric and GPS devices, for example, has recently made a big impact. These devices eliminate a lot of paperwork. They also record a myriad of data points and extract important insights from them. And those insights help fleet managers make smart decisions about optimizing vehicle usage, routes, and so on.
Let’s take a look at some of the most important tasks that fall under fleet management.
The most important part of fleet management is to develop policies about trucks and drivers. Such policies usually address aspects like these:
- Are drivers allowed to idle the truck when they stop to rest?
- Where can drivers refuel?
- How many speeding tickets can drivers get before facing disciplinary action?
Policy development helps fleet managers avoid making decisions on the fly. Documented policies also help protect the organization legally by showing proof of due diligence. Let’s say someone sues your organization over an accident, for example. If you have no documented proof of company policies, then you’re likely to be in a much weaker position in court.
Fleet managers purchase or lease the vehicles that workers use to get products from point A to point B. Managers consider a number of variables in this area:
- The initial cost of the vehicles: Many dealerships have a special division for fleet sales, and it’s up to fleet managers to negotiate the best deal possible.
- Lease or buy: Leasing has lower up-front costs but offers less flexibility for customization. Buying, on the other hand, requires a larger up-front capital investment but offers greater flexibility. The fleet manager investigates the options and makes a recommendation to upper management.
- Life cycle management: The fleet manager also has to decide when the company will sell old vehicles and buy new ones. To make the wisest decision possible, they analyze data related to routine maintenance, repairs, and delays due to breakdowns. Also, they consider possible damage to the brand by using trucks that look too old or shabby. Next, they add in the cost of buying new vehicles to determine the best point in a vehicle’s life cycle to trade it for a new one.
A fleet manager also tracks the expenses associated with operating the fleet. Let’s tackle those one by one.
Fuel ranks second on the list of biggest expenses for transportation companies, and managing fuel consumption is a top priority. Fleet management professionals try to minimize fuel consumption by addressing the factors that waste fuel:
- Speeding: The faster trucks go, the more fuel they burn. Research shows that laws restricting truck speeds to 65 mph would save 2.8 billion gallons of diesel fuel over a decade.
- Low tire pressure: Underinflated tires use more fuel.
- Idling: Idling is another fuel hog. Some of it is due to drivers keeping the engine running during their rest periods, usually for climate control. Some idling is unavoidable, such as when trucks are stuck in traffic. Either way, idling costs money.
Fleet managers usually address these issues through policy and driver training. They can also emphasize their importance by including them in performance appraisals.
Fleet management systems also help control maintenance costs in several ways:
- Maintaining an easily accessible record of each truck’s maintenance history
- Setting up push alerts for tasks such as tune-ups, oil changes, and filter changes
- Having onboard diagnostics send a push notification to the maintenance department when something in the truck’s performance changes so that staffers there can decide whether the repair can wait or should be completed immediately
- Use historical data on vehicle maintenance to predict when a particular part may fail; that way the part can be replaced on site, avoiding a breakdown on the road
In addition, pre- and post-trip inspections are an important part of fleet management. Drivers should have a checklist to work through before and after every trip.
Remember all those tedious administrative tasks you hate dealing with for your car? Those fall into the lap of the fleet manager:
- License renewal
- Insurance coverage
- Making sure drivers maintain their commercial licenses as well as any certifications needed for transporting hazardous materials.
- Getting the correct hazmat placards for trucks. These placards identify the contents of the truck and, in case of an accident, protect the safety of first responders and bystanders.
Fleet managers work hard to anticipate risks involving the organization’s fleet. They start by conducting an audit to find out whether stated or unstated company policies pose a risk (encouraging drivers to falsify logbooks and exceed their allowed hours, for example). Next, they determine how well employees comply with the policies. Finally, they take steps to correct the problem: revising existing policies, for instance, or retraining drivers who aren’t following the policies.
To sum it up, fleet managers have to think about all the things that could happen while their trucks are on the road and make sure the company’s doing everything it can to mitigate those possibilities.
An empty truck is a waste of money. The fleet manager has to figure out what to do with a truck after it’s delivered its load. If the warehouse or store has enough products to return to fill up the truck, that makes it easy. If not, the manager may look at other options. These include freight consolidation, which involves filling up a truck by adding partial loads from other companies.
How Is Technology Transforming Fleet Management?
Not too long ago, fleet management involved a lot of manual record keeping. Today, on-board telemetric devices capture much of that record keeping, and the data they produce drives real-time decisions. It’s a radical transformation that has, in turn, changed the job of fleet management.
Let’s take a look at some of the ways technology is helping fleet management deliver more value to the organization:
- Sensors in trucks send headquarters real-time information about speed, fuel consumption, tire pressure, temperature maintenance, and so on. If there’s a problem, the sensors notify the driver or headquarters so that they can address it right away.
- GPS units let headquarters employees see the location of every truck in the fleet, as well as surrounding conditions like weather, road construction, and traffic. If a truck is stuck in traffic or dangerous weather conditions, for instance, employees at headquarters can reroute the truck and send the new information to the driver in real time.
- Onboard sensors record the truck’s speed and send it back to headquarters. Artificial intelligence can analyze the data and flag drivers who speed, giving fleet management a chance to address the issue.
- Predictive analytics can forecast part failure so the manager can schedule repairs. This helps your drivers avoid breakdowns on the side of the road.
- Onboard sensors help fleet management make sure perishables (such as food or pharmaceutical products) stay at the ideal temperature. If temperatures stray outside of the safe zone, sensors send out an alert that another truck needs to pick up the load ASAP.
- Many organizations develop custom apps that provide a portal for quick communication.
- Custom dashboards can give headquarters employees all the information they need to see in one place.
What Else Should You Know?
Technology is an investment. You accept an up-front cost, hoping you’ll see a return on investment down the road. Considering current trends, however, not incorporating technology in your fleet management program really isn’t an option anymore. The real question is how to go about it.
There’s no single best fleet management solution. You can keep it in-house with your own fleet of trucks, outsource it entirely, or find something in between.
If you’re considering buying a fleet management solution, it’s important to get the answers to some key questions:
- Do you want to maintain some control, or would you rather outsource most or all responsibility?
- Do you want to be actively involved in making decisions, or would you be satisfied with looking at reports?
- How does the pricing work? Is it per vehicle?
- Does the pricing include the onboard telemetric devices?
- If the vendor provides the devices, then who owns the data? And what happens to that data if you end your contract with the provider?
- Does the agreement include the software that you need to collect and analyze the data? If so, will the vendor install it on your computers at headquarters? How many computers will need this software?
- Will you be able to see real-time data to perform your own analytics and react to on-the-ground situations? Or would you rather let your provider handle all of that?
These are strategic questions that the fleet manager should discuss with several people or departments, including IT, risk management, finance, and operations. Upper management will likely make the final decision with input from these departments.
Why Fleet Management Is So Important
Fleet management drives supply chain success. For any supply chain to be successful, it has to be able to deliver products on time and safely. And it has to do so in a way that’s both efficient and cost-effective. Effective fleet management makes that possible.
This post was written by Patti Podnar. Patti is a Copyblogger-certified content marketer experienced in writing for a variety of industries: logistics and supply chain, industrial internet of things, IoT, digital transformation, sourcing and procurement, retail, etc. The thing that enables her to write about such a wide variety of topics is a deep understanding of how content should drive business goals.