Fleet Strategy

Developing a clear Fleet Strategy allows our clients to focus on their core business

Fleet strategy covers several inter-related areas with a broad range of stakeholders, including representatives from Operations, Finance, HR, Procurement, Payroll and Health and Safety. Each business is unique and requires a fleet strategy to meet the organisation’s specific needs, and no one size fits all.

Working collaboratively with our customers, we understand the business, challenge where appropriate, and develop realistic and deliverable strategies that flex as circumstances change. The fleet management strategy process starts with getting a thorough understanding of our clients business by asking questions such as:

1. What is the purpose of the fleet, and how does it align to the overall business objectives both now and in the future?

2. How to operate the fleet effectively and safely?

3. How do I fund the fleet and operate it cost-effectively?

4. What are the risks associated with the fleet, and how do I effectively control them?

5. How do I ensure the fleet is optimised, covering operational requirements and employee benefits?

6. How do I incorporate ESG requirements?

Fleet Strategy Review Process

Our Fleet Strategy Framework uses a robust three-step methodology. Therefore, the output is comprehensive and measurable against the business objectives.

Phase 1 | Diagnostic

Diagnosis Phase

The diagnostic starts with engaging all stakeholders who are impacted directly or indirectly by fleet operations. It is important people engage with the process.

We then create a fleet baseline with all current costs and a map of current operational processes.

Analyse existing processes and supply chain to identify gaps in performance or opportunities for development or efficiency.

Review overall business strategy and align how this will impact the fleet in the short, medium and long term.

Review current costs, supply chain contracts and supplier performance measures.

Develop options for change reflecting the internal and external environments. Obtain senior management approval for the proposed strategy implementation.

Phase 2 | Change Management

Implement Fleet Strategy

Identify key stakeholders and ensure they have time to support the project at the correct times.

Speak with current suppliers communicating the strategy and identify how and when they can support the process.

Run a procurement process to identify alternative suppliers where gaps in capabilities are identified.

Communicate progress to stakeholders during the change, highlighting when the changes will impact different groups.

Implement process efficiencies through the new or existing supply chain to support the strategy.

Phase 3 | Ongoing Fleet Management

Fleet Strategy Management

Create a robust Supplier Management (SRM) process through effective Key Performance Indicators (KPI’s) and Service Level Agreements (SLA’s).

Gather driver feedback through surveys and forum discussions.

Track the benefits of the new strategy against the expected forecast.

Benchmark policy, process and price to ensure these elements continue to align with the strategy.

Provide comprehensive management information to stakeholders.

Why use us to create your Fleet Strategy?

Fleet Management Experience

Fleet Experience

30+ years of fleet strategy consultancy experience covering every different type of fleet you can think of. From London Zoo to B&Q we have worked with them all.

Fleet Strategy Process

Comprehensive Process

Robust and proven consultancy process coupled with exceptional knowledge of the market means you get the right answers for your fleet.

Fleet Return on Investment

High Returns

We always deliver a high return on your investment improving the efficiency of your fleet operation keeping your drivers and management happy.

Setting the right fleet management strategy can be a challenge for a lot of businesses we work with. Often, an independent viewpoint helps to provide direction and clarity through managing a wide range of internal perspectives.

Creating the right strategy significantly impacts how the fleet operates, creating efficiencies and better driver experiences.

If you need some help with your fleet management strategy, then please contact us.

Fleet Strategy Toolkit

Fleet Market PESTEL | How macro-environmental factors impact your business

PESTEL (Political, Economic, Social, Technological, Legal and Environmental) analysis is a business framework. The tool helps identify the various external factors that might affect a business and, specifically, the fleet’s running. The goal is to figure out just how the different factors influence business performance.

We look at how this is currently positioned for the Fleet Management companies in the UK, although the implications have a similar impact elsewhere within Europe and beyond.

Fleet Industry | Porter’s Five Competitive Forces Analysis

The competitive forces analysis examines those factors which influence competition within a particular industry.

Our analysis covers the full-service fleet management industry.

Competition (Med/High)

Fleet management services are commoditised, and hard to differentiate the overall proposition. In addition, many providers utilising the same IT platforms as in-house systems can be cost-prohibitive for all but the largest suppliers.

Many providers use very similar second-tier supply chains for in life services and use the same OEM and dealer networks. In addition, manufacturer discounts are “owned” by the end customer rather than the lessor, so the sale of suppliers is less of a competitive issue.

Pricing can vary according to different assumptions relating to forecasting residual values and maintenance requirements.

There is less competitive rivalry on specialist assets or more complex commercial vehicle requirements as many providers will cap their services at the level of light goods.

Bargaining power of buyers (High)

Wide range of different suppliers and brokers offering vehicle finance and associated services.

Headline pricing is relatively transparent.

Relatively low switching costs, although these can be more significant where services are fully outsourced.

Limited competition for global suppliers

Bargaining power of suppliers (Low/Med)

Many suppliers offering similar services gives a limited chance for differentiation.

Digital enablement offering some opportunities to reduce customer services costs and improve service offerings.

Niche areas such as specialist vehicles or new services linked to mobility as a service (MaaS) offerings can offer advantages where customer requirements exist.

Threat of new entrants (Low/Med)

High capital requirements mean banks, vehicle manufacturers, and private equity are the main players.

Government legislation and FCA regulations can make compliance an onerous and costly activity.

Competitive market for skilled employees

High cost of obtaining new customers in a cost effective manner

Threat of substitute products & services (Low/Med)

Fleet management services are commoditised, and hard to differentiate the overall proposition. In addition, many providers utilising the same IT platforms as in-house systems can be cost-prohibitive for all but the largest suppliers.

Many providers use very similar second-tier supply chains for in life services and use the same OEM and dealer networks. In addition, manufacturer discounts are “owned” by the end customer rather than the lessor, so the sale of suppliers is less of a competitive issue.

Pricing can vary according to different assumptions relating to forecasting residual values and maintenance requirements.

There is less competitive rivalry on specialist assets or more complex commercial vehicle requirements as many providers will cap their services at the level of light goods.

Fleet Cost Savings | 15 Tips To Make Efficiencies In Your Vehicle Fleet Operations

Fleet cost savings are significant for most organisations as they can be one of the highest costs to hit the profit and loss account.

Managing fleet costs is not always easy, as they tend to be in different accounts. But, typically, the cost for each vehicle on fleet ranges from £5,000 to £10,000 per annum.

The starting point for fleet cost reduction is the existing cost. It is crucial to establish a cost baseline incorporating all costs associated with the running of the fleet. Then, measure any savings from this baseline to ensure any changes to fleet strategy have the desired effect. Often changes may save cost in one area only to increase expenditure in other areas.

When looking to reduce costs, it is essential to look at the different stages of a vehicle lifecycle: acquisition, in-life and disposal.

Vehicle lifecycle: Acquisition

The selection of the vehicle forms an element of fleet cost reduction.  There are several key considerations for the acquisition stage, which are detailed below:

Method 1 | Vehicle Funding

A wide variety of options exist for the funding of a fleet vehicle. Therefore, it is vital to assess which option is financially most efficient. Options include outright purchase, contract hire, contract purchase, finance lease, employee car ownership and salary sacrifice. The best choice often depends on the individual characteristics of both the business and fleet concerned.

For organisations that are happy to risk the vehicle’s residual value, then outright purchase or finance lease could be the best option. However, if you wish to pass the risk to a lessor, contract hire is the most suitable funding method.

Method 2 | Manufacturer and Dealer Discounts

Discounts for vehicle purchases are commonplace. They can be obtainable from both manufacturer and supplying dealer. Discounts reduce the price paid for the vehicle or are taken as a rebate.

Discounts usually scale up according to volume (or volume commitments).  However, special offers become available at certain times of the year, especially on stock vehicles or where model changes are due.

Method 3 | Vehicle Policy

There are several areas concerning vehicle policy that can yield cost savings. For example, vehicle replacement cycles, fleet vehicle cost of ownership, levels of allowances, fuel reimbursement methods, vehicles offered, and the value of any cash allowance can all impact the cost of providing the fleet.

It is best to restrict choice for individuals who require vehicles for their business role. For those who receive vehicles as part of a benefits package, a broader selection of cars should be made available to employees. However, limit options to certain manufacturers to increase the potential discounts.

Method 4 | Fleet Management Company

Many organisations choose to lease vehicles predominantly through bank or manufacturer owned leasing companies. However, businesses can choose to put some or all of their business through a particular supplier. Where sole supply arrangements are in place, the firm should secure some contractual concessions from the leasing company such as pooled mileage, damage waivers or signing on bonus.

Under a multi-supply arrangement, these contractual concessions are more challenging to achieve. However, vehicle leases will likely be cheaper due to the ability to benchmark the market price for most purchases.  Administratively, this may be more difficult to manage multiple suppliers, but the cost difference can be significant.

Whichever solution you select, it is crucial to managing the suppliers to minimise potential cost leakage.

Method 5 | Cash Allowances

Some organisations offer cash allowances as an alternative to a company car. In addition, some businesses provide cash for job needs and perk driver populations, although it is more popular for perk grades.

Set cash allowances at a cost-neutral position to that of the company car, so it doesn’t cost the company more should the employee opt for cash or the company car.

Method 6 | Pool Vehicles

Some businesses would benefit from running a pool vehicle fleet, especially with large offices with large casual driver populations.

Pool vehicles rely on high levels of utilisation to make them cost-effective. Use pool vehicles to replace grey fleet mileage, helping reduce risk and cost.

This has been very effective for some council fleets who operate within confined geographies and have locations with ample parking.

Vehicle lifecycle: In life

When you acquire a vehicle, it moves into its in-life phase. Here, you’ll need to think about the cost of fleet maintenance. It is possible to make fleet cost savings through several areas and initiatives highlighted below. 

Method 7 | Fuel

After lease costs, fuel represents the highest cost to the running of a vehicle fleet. Therefore, it is essential to procure fuel well in addition to managing its use. Businesses have the options of fuel cards, bunkered sites, corporate cards and pay & reclaim.

Monitoring a drivers fuel economy is vital. There should be a follow up if there are discrepancies. Managing fuel is central to effective business mileage management. Without this, it is challenging to know what is happening within the fleet.

Speed limiters are now commonplace on light commercial vehicles and can lead to fuel and maintenance savings.

Free private fuel can be a costly benefit to provide and, in many cases, is not beneficial for the driver. Increasingly organisations are moving away from the provision of free fuel due to the cost to the organisation.

Method 8 | Vehicle Maintenance

Maintaining vehicles correctly is important to minimise downtime.

Closely monitor and adhere to service intervals to make sure vehicles remain in warranty and out of contract charges are not levied by the fleet management company. Some organisations, particularly if running “mission critical” assets, will adopt a more proactive maintenance schedule or out of hours servicing to ensure assets are available for the maximum time possible.

Drivers should undertake regular vehicle checks for items such as fluids and lights. In addition, ensure you check any remedial mechanical repair work against the manufacturer’s warranty, avoiding unnecessary costs.

Method 9 | Vehicle Policy and Procedures

Organisations should enforce vehicle policy and procedure at all times.

Where employees leave, fleet managers should reallocate vehicles in the first instance instead of terminating a lease early.

Many organisations charge drivers for misuse of company vehicles or damage charges incurred when handing the vehicle back to the fleet management company.

Method 10 | Fleet Risk Management

Effective risk management can help bring down costs by reducing maintenance, damage, insurance and accident costs.

Risk assess drivers and take remedial interventions where appropriate. This may involve some form of training or the removal of a vehicle altogether.

Method 11 | Daily Hire and Minilease

Daily hire provides a helpful service for short term transport needs. However, the daily rental can also be a considerable cost to a business.

Periodically review daily rental costs to ensure it offers the best value for money solution. In addition, where pool vehicles are in operation, cross-check daily hire records to help avoid any unnecessary hires.

Method 12 | The Grey Fleet

Grey fleet is both a risk and a cost to a business. Monitoring and understanding the grey fleet is critical to identifying and managing associated risks.

An alternative to using grey fleet is using pool vehicles or hired vehicles, particularly for longer journeys.

Vehicle lifecycle: Vehicle disposal

Once the vehicle has come to the end of its useful economic life, it will need to be disposed of. We have highlighted some considerations regarding the disposal process below:

Method 13 | Disposal Channel

The lessor is responsible for disposing of vehicles under a contract hire agreement.

Fleets who own their vehicles will need to select an appropriate route for disposal. This will range from selling via a local dealer, auction, online sale or sale direct to an employee.

The best sale channel will depend on the type, age and mileage of the vehicle. Employee sales generally offer the best sale price as well as reducing disposal fees.

Method 14 | Vehicle Damage

Assess and if necessary, repair any vehicle damage before returning vehicles to the lease company. Leasing companies will charge for vehicles with damage (as assessed under BVRLA standards) and this is usually more than the cost of remedial action.  It is worthwhile using mobile repair services to address any minor damage before the vehicle is returned to save on any unwanted invoices.

For owned vehicles the residual value of a vehicle will suffer if it is sold in a damaged condition.

Method 15 | End of Contract Mileage

Leased vehicles come with a contracted mileage as part of the contract. Exceeding this mileage will incur an excess mileage charge at the point of return.

Excess mileage should in the first instance be offset against a mileage pool where it exists. Failing that vehicles can have their contracts re-written in-life but fleets need to be aware that leasing companies will seek to add more profit into a contract where this occurs.

Alternatively, re-allocate vehicles to different drivers based on their anticipated mileage, reducing the impact of excess mileage.

Summary | Fleet Cost Savings

There are several ways to achieve fleet cost savings. First, fleets should establish the cost baseline and look to make adjustments against this baseline.

Evaluating cost-saving initiatives against the baseline will avoid unwanted consequences. Generally, change will impact numerous areas.

Looking for more information on fleet management?

EVP Solutions has years of experience offering expert support for companies looking to outsource their fleet management and finance solutions.

Get in touch with a member of our team today on 0161 973 8579 or send a short introductory email to hello@evpsolutions.co.uk to find out more. Our fleet glossary and blog section offers more useful information and free resources on the world of fleet.