By Graham Smith, strategic account director, Gophr
For the past few years, the cost of parts, fuel, servicing, inspection and maintenance of your fleet have all irreversibly increased. Operating a large in-house fleet of delivery vehicles has never come with such a large financial burden as it does now.
And the worst part? During off-peak periods, the majority of the fleet may not even be on the road. Instead, it’s standing idle, delivering zero value.
Some companies view this inefficiency as a necessary evil to keep pace with customer delivery expectations during peak demand. But there’s a more modern, agile and flexible alternative. One that allows you to provide an optimal customer experience while keeping costs down.
It’s time to implement a ‘fleet lite’ strategy.
Smart fleet streamlining
The first step towards rolling out a fleet lite model involves identifying opportunities for streamlining in-house operations. It makes sense to begin with downsizing where possible.
While it might initially seem difficult to know where to start (particularly with large multi-function fleets) last-mile delivery is usually a safe bet. It’s the most unpredictable element because of its susceptibility to peaks and troughs in demand, and therefore the most likely to harbour inefficiencies.
Other key areas where costs can mount up include repairs/maintenance, lease and vehicle damage. The relatively random nature of damage makes it difficult to account for, but lease, repairs and maintenance harbour the potential for cost cutting.
One of the best ways to reduce expense across all of these areas is by partnering with a third party. Doing so alleviates not only the expense, but also the logistical and administrative headaches associated with fleet management for the areas you choose to delegate.
Of course, to optimise the benefits of downsizing, it’s essential that you choose the right strategic partner.
Cost-effective outsourcing
It’s important to acknowledge that outsourcing represents a cost in itself. But it’s a cost that can be offset by identifying partners that are able to bring additional value and expertise to the table.
For example, with a trusted partner on board and taking care of a resource-heavy element of operations such as last mile delivery, it frees up capacity within the business to approach core activities with renewed focus.
Every organisation is different, with a number of factors affecting where outsourcing is most likely to deliver results and ROI. Density should be considered, as well as existing experience and knowledge within the company.
It’s important to avoid creating a talent or knowledge gap by replacing internal expertise with inferior third parties. So choosing a partner with a demonstrable track record of success is paramount. And to reduce the risk and associated barrier to entry, it’s a good idea to start small.
Beginning with something simple such as minor driver training can help you to ascertain how much value a particular partner is able to add without overcommitting too soon.
A strong indicator of an outsourcing partner’s ability to add value is how good they are at analysing costs and challenging them. So be on the lookout for proactive suggestions from your partners as to how you can make additional savings.
Other important attributes to consider include quality, safety, efficiency, presentation, image, professionalism, accuracy, legal compliance, innovation, resilience, ST rental support, suitable leasing options, reporting and systems.
Taking a greener approach
The next milestone on the road to ‘fleet lite’ is making sure that your operations are as sustainable as possible. Not only can this pay dividends from a CSR perspective by improving sustainable outcomes, it can also have a tangible impact on expenditure. For instance, researching and introducing alternative fuels where appropriate can help with reducing empty running and overall waste.
Fleet sharing is also a suggestion that is sometimes raised when identifying steps that can be taken to protect the environment and eradicate as much waste as possible. However, this comes with its own set of challenges in terms of maintaining a free market. So for the foreseeable future, outsourcing remains the most effective way to develop a more sustainable delivery model.
As costs for in-house fleet management are on a seemingly permanent upward trajectory, the majority of organisations are likely to find themselves in a position where they have to explore alternatives. So it makes sense to start now.
The sooner companies begin to make strategic moves towards a fleet lite model by downsizing, outsourcing and implementing green initiatives, the sooner they will be able to reap the benefits. What are you waiting for?