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Monday, September 9, 2013

How Effective Fleet Management can Reduce Costs

As reported by Smart Business Online: Fleet tracking and management, if correctly implemented, can provide a business with a number of procedural, safety and cost efficiencies, says Noah Goodwin, CPCU, a commercial risk manager at RiskSOURCE® Clark-Theders.

“Fleet management can improve driving safety habits, which can reduce auto and workers’ compensation claims, and subsequently lower insurance costs. Morale can also be improved through increased safety,” Goodwin says. “Fleet tracking can help reduce fuel costs by increasing route efficiency, reducing idling time and impermissible usage.”

Smart Business spoke with Goodwin about how to effectively manage your fleet.

What exactly is fleet tracking, and how does it work?
The industry term for fleet tracking is vehicle telematics. In most cases, the system plugs in to your vehicles’ computers and provides a company with real-time data regarding each vehicle’s usage. Not only does it provide satellite vehicle positioning, but also it can provide instant notices for excessive acceleration or braking, or if someone is speeding. The GPS system will route the drivers in the most efficient manner and alert the company — the owner of the company or whoever is deemed responsible for the system — if its drivers are going out of the acceptable routes. You can identify which alerts you want to receive and set the threshold limits.

If you have a driver who tends to drive too fast or brake too hard, you can require additional training for that driver. If the poor habits continue, you could move him or her into a nondriving position.

Illustrating the effectiveness of such a system, a company installed vehicle telematics in its fleet and discovered one of its senior operators was 20 miles away from the job site where he was supposed to be. It turned out he was doing a side job with the company’s equipment and vehicles. Making employees aware of your ability to monitor their use of company vehicles can prevent this sort of behavior.

What are the keys for effective fleet management?
While it’s important to have a written program, the key is enforcement. Many companies will develop the program and not enforce it. By not enforcing the program you are incurring costs without realizing the potential benefits.

It can also get sticky in a couple areas. First, for human resources purposes, if you don’t follow the disciplinary procedures for one person but try to enforce them for another, you’re going to have a lawsuit. You need to be consistent.

Second, if your procedures say a driver who gets two speeding tickets within three years must be moved to a non-driving position, but you let that driver back on the road and he or she has an accident in a company vehicle that results in someone’s death, the company is going to be held liable. That’s not going to look favorable for your company in the eyes of a jury because the driver shouldn't have been on the road per the company’s own procedures.

What are some common fleet management mistakes? 
One persistent fleet management mistake is not following a maintenance program. If a vehicle isn't being maintained properly, it’s more prone to loss. Without good brakes or tread on the tires, there’s an increased likelihood a driver could rear-end another vehicle.

Personal usage of company vehicles is a problem area because many contractors have a truck that is their main mode of transportation. Insurance rates and job bidding are based in part on how far your employees drive every day. Allowing extra driving increases your fuel and maintenance costs, as well as your liability exposure.

Pre-screen drivers before you hire them. It costs just a few dollars to run a motor vehicle report, but it’s not always done prior to hiring. If you've hired a driver then find out he or she doesn't have an acceptable driving record, you may need to find the person a different job in your organization or terminate his or her employment.