Fleet management strategy — Your guide to reducing costs, optimising productivity and increasing the safety of your drivers and vehicles

Putting together a strategic document for your business or a business unit you manage can often seem like a cumbersome administrative task for many managers. It is not an easy ask, to put down into one document all that goes into running your business operations smoothly on a day-to-day basis. To evaluate the past, analyse the present and forecast the future.

A management strategy document plays a crucial role in setting goals for your business, unit/team. It aligns your unit/team’s management strategy to the wider business goals, helps you nail down the key drivers impacting your unit’s performance, and helps you prioritise operations and functions that need improvement. It also allows you to clearly define the roles, responsibilities and KPIs for every resource available to you and used by your unit/team.

As Benjamin Franklin famously said, “If you fail to plan, you are planning to fail.” Without a strategy, everyone within the organisation is playing a guessing game leading to misalignments.

What is a fleet management strategy?

A fleet management strategy is a strategic document that demonstrates how a fleet aligns to an organisation’s overarching objective, strategy and plans. The strategy is used to build, run, manage and optimise a fleet that is owned or leased. It defines the organisation’s approach to the day-to-day management of its fleet.

To develop a genuinely effective vision for your fleet, the fleet management strategy must link in with your organisation’s strategic priorities. The strategy must be considered as part of your organisation’s overall approach to asset management and should also link in with your environmental aims.

For the purpose of this article, a fleet refers to an organisation’s light passenger vehicles, vans, trucks, machinery and heavy equipment.

What is involved in preparing a fleet management strategy?

There are a few key elements to consider when putting together your organisations fleet management strategy.

Consulting the business to identify objectives

A key part of the strategy is defining the purpose of the fleet. A good fleet management strategy should outline how the fleet fits in with the objectives of the business as a whole. The what, how and why. What is the business doing? How is it doing it? Why is it doing it that way?

To answer these questions, a fleet manager should work across the business to understand the needs, requirements, uses and other factors that play a role in how the business and its different departments use the fleet. If different stakeholders are not consulted when putting together the fleet strategy getting buy-in on how to procure, manage and dispose of the assets might become a cost-deficient and ineffective task. Similarly, if the strategy is developed without user input, your fleet may not meet the needs of users in terms of fleet size, vehicle type, legislative changes and training requirements.

For example, a CEO may view the fleet as an asset to be optimised. A Fleet Manager may view the fleet as a group of vehicles that need to be efficiently used, managed and maintained. An Occupational Health and Safety (OH&S) Manager may view the fleet as a potential workplace hazard and must ensure that both vehicles and drivers adhere to safety protocol and meet compliance requirements. An Operational Manager may view the fleet as a vital part of the supply chain that is critical for ferrying goods and services from point A to B.

Each business unit will have policies in relation to many — if not most — of these factors. A fleet management strategy should outline what these policies are; how to find them; and how the fleet will adhere to such policies.

Examine the context and mitigate risk

It’s also worth noting future factors and possible interruptions. Future factors could include the possibility of technological advances throughout the life of the strategy that may interrupt or improve established operations. Your fleet management strategy should be flexible enough to accommodate these changes and should set out the approval protocol in advance, should the need for review or change in strategic directions arise.

Other interruptions could include risk factors that may disrupt operations such as a supplier issue, product recall (think Takata airbags) or an employee injury while using a vehicle. Some organisations choose to note this as a formal risk matrix, where an issue can be identified and matched with mitigation actions or preparedness policies to demonstrate that resilience.

Structuring a fleet lifecycle plan

A fleet management strategy should also include a fleet lifecycle plan. A fleet lifecycle plan looks at the entire life of the asset — from procurement to disposal. It outlines how a vehicle will be procured, how the asset will be ‘sweated’ (i.e. how to get the most out of it for the purpose that it holds); how maintenance will be undertaken and how the fleet will be managed day-to-day. A lifecycle plan acts out your strategy, in the same way, that a business’ structure follows strategy.

There are many ways that a life cycle plan can be set out. Some organisations use a plan, build, run, manage model which lays out the procedures for each stage, accompanied by supporting documentation within the business to match each stage, key accountability information as well as who approves what within the business. Irrespective of how you may choose to structure your fleet life cycle plan, it should, at a minimum, include procurement stages, day to day management responsibilities and maintenance protocols.

On the procurement side, a fleet lifecycle plan should look at how the vehicle is being procured (for example, owning vs leasing vehicles) as well as auxiliary procurement items such as tyres, fuel, insurance, chassis and parts as well as support services such as maintenance provision, breakdown, recovery and vehicle hire.

A servicing and maintenance plan can also be built directly into the fleet lifecycle plan. This would include details such as whether maintenance occurs at regular intervals or by employing a predictive maintenance system that detects problems on the run, reducing the spacing between set intervals.

Lastly, a fleet lifecycle plan needs to identify how long a fleet will operate for and how the fleet will be disposed of. A fleet’s operating life will be set based on the procurement option taken (such as a vehicle lease or outright purchase), how the vehicle is maintained, legalities around roadworthiness, depreciation factors, and of course, how it is used.

When a fleet comes to the end of its life, its disposal will need to be planned. If a vehicle is leased, it will need to be returned to the leasing company at the end of its contractual life. If the organisation owns the vehicle, options for vehicle disposal such as selling it to neighbouring organisations or at an auction will have to be considered and planned for. Many organisations prefer to dispose of their used vehicles in auctions as this method provides them with the opportunity to gain a fair price and save time on advertising, storing vehicles, hosting open days and managing bids.

It may also be possible to remove parts and equipment from the vehicle which can be used elsewhere (e.g. winches, roof racks or internal racking).

How is a fleet management strategy measured?

Having a strategy is only productive if it is followed, and its action measured. That’s where setting fleet performance indicators and having methods to measure them are paramount.

Fleet performance indicators can vary from business to business; however, some key KPIs you can measure are:

• Vehicle utilisation rate: Are you maximising the utilisation of your vehicles or are vehicles sitting idle and unused? You can set a rate that works for your fleet based on actionable telematics data and insights.
• Vehicle downtime: The number of days lost due to maintenance and repairs, or off-road due to other issues (for example, missed drivers licence renewals).
• Fleet Productivity: Time spent on jobs and travel time can measure productivity and be optimised with telematics job scheduling and routing.
• Fuel economy and efficiency — Do differing fuels impact cost? Does driving behaviour such as speeding and idling impact cost? Are you measuring fuel economy parameters with a telematics solution?
• Driver behaviour — Braking, idling, speeding, incidents, infringements and accidents; anything that impact fleet and occupant safety, and saves lives is crucial
• Fleet safety — The number of accidents/incidents involving the fleet can be managed and mitigated with the right strategy and tools in place.

Setting out the key performance indicators, you will measure your fleet strategy and fleet performance against helps to identify whether the size of your fleet is optimum. It will also highlight any underlying issues like the right vehicle types, improper scheduling and routing that could be impacting your fleet’s performance and return on investment (ROI).

Compliance indicators are important in ensuring your fleet is meeting key policies. This includes monitoring accidents, vehicle defects and failures.

It also makes good business sense to manage operational and cost factors, such as:

• Fuel usage to identify inappropriate fuel use and help with future vehicle type selection and employee training
• Maintenance cost per vehicle which can be used to investigate whether certain vehicles are costing more and haven’t met the requirements set out in your fleet management strategy.

There are other factors to consider too:

• Can trips be grouped together or merged? Doing so cuts costs and reduces risk, as the less time spent on the road, the less wear and tear on the vehicle, and the less risk of collisions or OH&S issues
• What about fringe benefits tax — how is this monitored?

A system should be identified to collect data and assist in managing these considerations. Many organisations rely on fleet management systems to help them with the data to track their KPIs. Having real data and insight into the many factors that impact the performance of a fleet allows fleet managers to create realistic fleet strategy plans.

Allowing your fleet to be in harmony with your business

It’s also important to consider is the fleet management strategy agile enough to respond and pivot when required, especially when managing critical business issues or unprecedented circumstances? For example, in a pandemic such as COVID-19, how can the strategy be quickly altered to ensure it is providing the best framework for the fleet assets to be both managed and used?

This is where data shines. Thanks to the proliferation of connected telematics devices, the status of fleet vehicles can be monitored in real-time. Key information such as vehicle use time, average trip times, geolocation information, vehicle breakdown information and lifecycle system changes can all be managed by cost-effective digital fleet management systems.

This means that if a business has to change course, it’s fleet management system can act as a two-way system. It can feed into the overarching strategy by showing the clear costs and revenue generated by the vehicles. This data can be modelled to show the effect of variation without the hassle of going through bundles of daily paperwork. All that is required is for a strong strategy that outlines the objectives, considerations and use of the fleet vehicles, and a fleet management system that monitors the key performance indicators.

Remember: planning is key

A solid, up to date and measurable strategy remains the key. Everything else — from the procurement to the monitoring — comes from what is outlined in the strategy. Get that right, and you’re planning to succeed.

A fleet management strategy checklist:

1. Preparation — What will the strategy achieve?
2. Context — How does it align with the business’ objectives?
3. Fleet lifecycle plan — How will the fleet be managed from procurement to disposal?
4. Performance — How will the strategy be measured? What key performance indicators will the strategy be measured against?
5. Relevance — Keep it relevant and up-to-date. Use the data to continuously streamline and optimise.

Without the right tools, planning for and managing a fleet of vehicles can be a complex and overwhelming task. That’s why we’ve created a free 16-page Fleet Management Strategy Template, just for you. Download it today!