Reduce Your Costs with Fleet Management Software

Controlling costs continues to become increasingly important for private fleet operators.

Finding experienced personnel is difficult due to a nationwide shortage of drivers. At the same time a growing economy has dramatically increased the need for services. This leads to chronic understaffing and a need to pay top dollar to qualified drivers. These increased costs, on top of ever rising fuel prices, make it imperative that costs be managed as effectively as possible.

While most people recognize the need to control their transportation budget, many feel as if they have already tightened their belts as far as possible. They recognize that there needs to be another way to fix the problem. Fleet management may be the answer for those companies that operate on high volume local pickup and delivery. An integrated fleet management system may be just the answer to cost overruns and budget shortfalls.

Fleet management software will pay back its initial investment costs more quickly than you can imagine. The an average distributor with a 30 truck fleet will have each truck making about 18 stops a day, for a total of around 100 miles. The average fuel consumption per truck is seven miles per gallon and the average driver earns $15 an hour. The cost for overtime runs $22.50 an hour, and each day about one third of the trips will require that overtime be paid.

Just the fuel costs alone can be staggering, with the distributor spending more than $6,200 a week on fuel when diesel is at $2.90 a gallon. The distributor could save around $610 a week just by reducing mileage by ten percent. While this may not seem like much it could add up to over $30,000 a year. The distributor could save anther $1,690 a week by eliminating driver overtime costs. That is another $87,500 saved per year.

This amount of savings alone is enough to justify investigating a feet management software system. The best fleet management systems are able to save even more by eliminating some trucks from the road. Fewer trucks on at least some days will be required by a fully optimized plan. A distributor could see another $322 a week in savings just by taking one truck out of service twice a week. This adds up to additional annual savings of $16,700. All these savings can really add up, and these are just using conservative estimates. It is not out of the question to see a 30 truck fleet save around $150,000 a year.

The numbers mentioned above refer specifically to route planning, which is just one component of a total feet management software package. Even more savings can be seen when other system components are added to the mix. One example of such a component is GPS fleet tracking. There is defiantly a value to knowing where each and every vehicle in your fleet is at a given time and being able to determine if it is being operated correctly.

Fleet operators pay the bill when drivers leave engines idling during summer and winter months in an attempt to stay comfortable. When idling a diesel engine can burn up to one gallon of fuel per hour. Some companies have found that drivers leave their vehicles idling for as many as two hours per day. This could cost the company an additional $41,750 a year in wasted fuel. GPS fleet management systems can also report potentially dangerous behavior by drivers including harsh breaking and speeding. Using this information wisely can lower insurance rates and reduce risk.

Any fleet operator would love the opportunity to reduce their costs by around $175,000 a year. You could pay back your investment in the software in as little as six months with these types of savings. Many people, however, find the upfront investment of fleet management software cost prohibitive. The good news is that flexible payment options are now being offered by many fleet management software providers. Some of the choices include application hosting and subscription based pricing which worked on a fixed monthly fee. Application hosting can be a real cost saver for the company as they do not need to invest in additional hardware to host the applications.

Software delivered as a service is the best option for some organizations. In this scenario business processes such as routing and scheduling are managed by an outside vendor. The cost savings in this case can include both hardware and personnel expenses as employees can be assigned to new tasks or reduced.

The best part of any of these pricing options is that companies will realize savings from the fleet management software systems faster than they will experience the costs. Typically companies will see savings as early as the first month of implementation. They don’t have to wait six to twelve months to see a return on their investment, it is noticeable immediately.

It makes good financial sense for most distributors to implement a fleet management software system. They can offer a significant reduction in both transportation and personnel costs, as well as reduce risk. When bought outright these systems can pay for themselves in as little as six months, and companies can see almost instant returns when the right payment option is chosen.

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