Fleet management is defined as the management of the transportation fleet of a company, which includes the trucks, vans, ships and planes that they use to transport its goods to and from the place of business. A vehicle full of goods faces risks of many kinds – robbery, traffic accidents, natural disasters and loss of goods. A big part of fleet management involves minimizing those risks. There is of course much more involved, including improving the efficiency and productivity of the fleet and making sure that each vehicle is in compliance with federal and state regulations.
Many people opt to hire a fleet management outsourcing company so that they can concentrate more on their businesses’ “core competencies.” Here are seven questions that you should ask your outsourcing company should you choose to hire one.
1. What prices do you charge?
Obviously you do not want to hire a company unless the rates it charges are well within your company budget. You also want to investigate why a given company charges the prices that it does – it may be because they perform at least some of their services at a quality that few or no other companies in your area do. The higher price may therefore be worth the benefits that you get.
2. What is the range of services that you provide?
Not every outsourcing company provides the exact same range of services for its clients. Some perform the whole spectrum of outsourcing work while others have chosen to specialize in some service; they may, for instance, work for specific types of businesses or perform mainly asset management or consulting. Find out exactly what they do before you decide to enter into a business relationship with them.
3. What is their approach regarding risk management?
About twenty percent of all vehicles that form part of a fleet are involved in an accident of some kind each year. Ask your fleet management outsourcing company how much they can reduce the accident rate and what they do to reduce your exposure to risk. Some of the ways in which outsourcers do so include:
- Identifying high-risk drivers – this can be done by obtaining a basic motor vehicle report, by classifying drivers according to the amount of risk that they are perceived to pose by the company, or through Driver Profile® Reporting, a system which creates an overall risk score for every driver by compiling records of traffic accidents and citations
- training their drivers to drive more safely
- managing accidents when they do occur.
4. How do they manage fuel expenses?
Fuel prices form a large part of a company’s costs and they are currently at an all-time high, so it is imperative for any company to monitor how much fuel is being consumed by all the vehicles of its fleet. Find out if your outsource business has a computerized method of preventing fraud and abuse; an example of a system is used by PHH, which is also the only such business that provides its clients with the kinds of online tools that they need to find the best prices for fuel and locate convenient stations.
5. What is their approach regarding asset management?
Asset management is a major element of a fleet management outsourcing company’s activity. Within this category includes items such as:
- title and registration services – making sure that each vehicle in the fleet can legally be used for road purposes
- vehicle financing, acquisition and delivery – establishing a lease structure to fit each client’s unique needs
- used vehicle marketing – This practice can greatly reduce depreciation expenses.
- violations management – The expenses resulting from fleet traffic violations total $15,000 each year, which is more than many businesses make in the same period. Outsourcing companies should have policies in place to reduce these costs, such as assessing violation statistics and maintaining violations recovery programs.
6. How much money could be saved by hiring this company?
By hiring an outsourcing company you may be able to pay less than you would had you decided to keep fleet management “in house.” The many services mentioned above, including fuel management and title registration, can save more money in many areas than you have to pay the company. As with any business venture, the benefits should outweigh the costs.
7. Whom should we contact when we need to arrange a service?
Ideally, the outsourcing company will have an account manager assigned to each driver, on whose requirements he or she is briefed.
Here are five fleet management outsourcers based in Australia:
About the Author: Jessica Noonan writes on the fleet management topic, specialising in the Australian market.