"Soft costs are actually more significant than hard costs and addressing them can have a greater impact on the success
of a fleet program, both directly and indirectly."*
Jim Frank, President; Wheels, Inc.
2006 Fleet Manager
of the Year Award Ceremony
Every business needs accurate and quantifiable
data to make profitable decisions and long-term plans. Measuring hard costs like fuel, vehicle purchases, equipment expenses,
etc. is a well defined way fleet managers track their progress. But identifying soft costs such as the bottom line impact
of fleet downtime and driver safety is just as important!.
Downtime
Is Critical
One of the most important responsibilities in fleet management is ensuring the dependability and productivity
of a company's vehicles so that employees can effectively serve customers and produce revenue. Consequently, preventive vehicle
maintenance is key. Lost business due to out-of-service vehicles can be a significant drain on your budget.
For example:
A company with a fleet of 20 vehicles can typically have
one vehicle out of service for unscheduled repairs at least twice every month at an average cost of $750 a day (the cost may
vary according to your industry). A simple 25% reduction in this unscheduled soft cost can result in an annual savings of
nearly $5,000 based on the following formula:
COST = SAVINGS =
$750 x 2 days =$1,500 per month 25% savings
X $18,000 (year) =
$1,500 x 12 months = $18,000 per year $4,500
Fleet managers and drivers in companies
both large or small have realized an average savings of nearly 25 percent in reduced downtime costs due to maintenance management
programs using GPS Fleet Management solutions. No fleet maintenance program can afford to be without this technology. Our
solutions notify fleet managers of maintenance due issues at their earliest stage. It automatically notifies fleet owners
of these issues via email so that efficient action can be taken before any serious problem arises.
Safe
Driving Equals Serious Savings
Safe driving is a major factor in keeping your workforce protected and productive.
But as Jim Frank, President of Wheels, Inc. explains, "Many fleet managers have a difficult time implementing effective safe
driving programs, because the benefits are considered soft and unquantifiable."*
Speeding by company drivers is
a primary cause of accidents and corporate liability issues. Excessive speeds can lead to soft costs like vehicle downtime,
driver absenteeism and legal liability as well as a serious expense in the form of wasted fuel. Monitoring and controlling
driving speeds is something companies are powerless to do without a quality GPS system.
Industry estimates put the
business costs of one fleet vehicle accident at between $6,000 and $12,000. * By tracking and controlling driver speeding
behavior, a company can reduce accidents by a significant percentage. An accident reduction of only 5% for a 50-vehicle fleet
amounts to almost 3 fewer accidents each year. The total savings available is between $18,000 and $36,000 annually.
*SOURCE:
"Fleet 'Soft Costs' Can Be Measured and Addressed," in Automotive Fleet magazine, June 2006.
