5 mins read

I recently published a blog about repurposing fleets during the COVID-19 pandemic and ensuring you are watching your costs during this unprecedented time. Within the blog, I touched upon the return on investment (ROI) from a fleet management solution. I also discussed how ensuring you are not wasting money unnecessarily in your daily business operation is crucial to remaining profitable in this very challenging environment.

NAB recently released a letter to the ASX, indicating it believed many businesses might fail during this time – as growth rates fall. Cost management and cost reduction will be crucial in ensuring business survival. There’ve even been cases where banks have required businesses to share their plans for reducing expenditure when seeking a bridging loan.

Finding the invisible leaks

While most business leaders understand and manage major expenses, it can be more challenging to break down some areas of accumulated costs. Managing these costs can be the difference between their success or failure.
Let me offer a short analogy to explore the accumulative effect. Imagine a bucket full of water. While there are no visible cracks in it, the ground around the bucket is always wet. Despite topping it up – the level keeps dropping because the accumulation of much minor wear and tear cracks causes constant leaking. Your business may well be suffering the same fate with its profit. The key is to have the visibility to find these cracks.

Gaining visibility across your fleet

A fleet management system is one way to get this visibility. If you can see the information, you can understand where the problems lie, and you can take action to rectify them. Throughout my career in the telematics industry, I have had countless business owners refute specific problems in their business, only to be very surprised when a fleet management system provides evidence that proves otherwise.

A standard ‘leak’ is staff management, as labour is often a company’s most significant single expense. 

When I explore this challenge with a client, I usually ask the following three questions:

  1. Are you happy with or do you understand how long your staff take for breaks?
  2. Do your employees start and finish work in accordance with the hours you pay them for?
  3. Do you believe you get fair value for the wages you pay?

If your answer to any of these simple questions is a ‘no’, or you ‘don’t know’ – then labour ‘leakage’ could be significantly impacting your profit.

Let’s say you have an employee who is 15 minutes late in the morning; takes an extra 10 minutes at both smokos; and has 10 minutes extra in the lunch break. We can then add leaving the job early to head home or back to the office – say another 15 minutes. All breaks add to an hour a day – and when you consider that there are 250 working days in the year, this adds up to 250 hours or 6.6 weeks of lost productivity.

Now, how much do you pay your staff? If we work on the minimum wage in Australia of $19.49, this equates to an annual loss of $4,872. A competitive fleet management solution costs about $350 per year per vehicle, including one-third of the device cost, which could be spread over three years of use. So, if you take away the cost of the fleet management system from the labour saving, you end up with a saving of $4,522 per year. Now if you have many staff members that exhibit similar behaviour and use your vehicles as a tool of trade, you could be looking at savings in the tens, or even hundreds of thousands each year.  

And, think about how much more your company could accomplish if you were getting an extra hour per day from an employee. What value would this bring into the business? More chargeable hours? Faster completion of jobs? Remember – you are paying for this labour already. If you don’t monitor, you don’t know – and it can then be difficult to roster staff to meet demand adequately.

This doesn’t need to be an employee vs management issues – it is solely about how you can work with your workforce to be as efficient as possible and get the best out of your staff. If your staff are not engaged, then it means there is a broader cultural issue that needs to be addressed. Either way at the end of the day you need to know there’s a problem before you can address it. 

Remember too, that a more profitable business provides better job security for all employees. You could even implement a “rewards” program to have the staff modify their behaviour voluntarily.

Converting leaks into opportunities

Having touched on labour, we should consider other potential “leaks”, but let’s now call them opportunities.  

Do you manage your vehicle leases well – maximising contracted kilometre use to avoid penalties?

If you could pinpoint where your vehicles are located at any given time, could you allocate work more efficiently?

If you use a fleet management system – will your insurer provide a premium discount?

If you could get live odometer readings, notifications from your vehicle about faults, and you could share it directly with a service provider ‘owning’ your service management process – would it reduce your workload while ensuring timely servicing that prevents unnecessary wear and tear? Think about how you could better spend your time.

Or if you could monitor the way your vehicles are being driven, would you modify behaviour to minimise unnecessary wear and tear; reduce fuel consumption; and mitigate at-fault accidents resulting in insurance payouts and repairs that take vehicles off the road? 

And if they are off the road unnecessarily – what does this cost you in lost jobs?

Do you believe your fuel transactions relate directly to the vehicles the fuel cards are allocated to? Some simple maths of purchases versus distance travelled between fills could bring peace of mind.

Do you have customers questioning the hours an employee has spent on the job? Or are required to show them proof that while your staff were away from the job – they were picking up materials for its completion?

Now, before you do anything drastic, it’s highly unlikely that your bucket has all of these leaks, but it will have some. Fleet management systems can be very affordable and create a wise return on investment, that not only help you to patch leaks, but rather seal them for good.

As Walt Disney rightly said, “The way we get started is to quit talking and begin doing”.

Does any of the above resonate with you? I’d love to know. Contact me here and tell me your story to receive a very favourable monthly licence fee for a term agreement.