Fleet Management Policy: What guidelines must hold it.

Fleet management is the use of a set of vehicles in order to provide services to a third-party, or to perform a task for an organization, in the most efficient and productive manner with a determined level of service and cost.

Fleet management is a key aspect to the general strategy development in an organization, and for this reason it has to be designed and implemented based on its guidelines, and the characteristics and goals of said organization.

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FLEET MANAGEMENT GROUP

Fleet management is the use of a set of vehicles in order to provide services to a third-party, or to perform a task for an organization, in the most efficient and productive manner with a determined level of service and cost.

Fleet management is a key aspect to the general strategy development in an organization, and for this reason it has to be designed and implemented based on its guidelines, and the characteristics and goals of said organization.

For some organizations, their vehicle fleet management is the main activity in their value chain, and represents its major asset to provide a service. This would be the case for passenger transportation companies, ground shipping, car rentals, renting companies, taxicabs, mail services, or cleaning and trash collection services provided by city councils.

For other organizations, it’s a support activity to their main one, or a bonus such as a car, given to their executives for their personal use. This would be the case for companies with sales representatives (pharmaceutical industry, IT services, etc), airports, supermarkets, and non-governmental organizations (NGOs).

There are three vehicle fleet categories, and are the following: The ones that perform in planned routes, the ones that have an aleatory demand of vehicles, and the ones that have assigned a vehicle to one driver/user or to a permanent activity.

Each category has different operative strategies and characteristics. In the same way, there are several variables and factors involved in the management of a fleet, making each fleet unique and different, just like their best management solution, but all fleets has the following Fleet Management activities:

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Graph 1: Vehicle fleet management activities. Own source.

1st  Designing and implementing policies that should include the guidelines for vehicle fleet management.

2nd  Calculating the optimal number of vehicles, their capacity, and routes if available.

3rd  Choosing the vehicle’s type, brand, equipment, and how to acquire them.

4th Vehicles’ operation such as maintenance management, traffic accidents, etc.

5th  Designing policies for the disposal/replacement of vehicles and their sales options.

These five activities have three support activities.

1st Control and track to know the vehicles’ status, where they are and who is using them.

2nd Dashboard, data analysis and report chart, because during acquisition, operation and disposal activities is generated relevant information that must be analyzed in order to make decisions, know the status and the evolution of how the fleet is managed.

3rd  The auxiliary services that must be done in order to comply with any current laws and regulations in the country where the fleet operates such as traffic lines, technical inspection of the vehicles, accidents, etc.

Aside from the already mentioned activities, fleet management is made by the necessary processes, organizational structure, personnel, facilities, software and hardware.

 FLEET MANAGEMENT POLICY

The starting point for vehicle fleet management is to design and implement its policies, establishing its operational guidelines and long-term planning, in order to develop the organization’s general strategy, to achieve more efficiency and productiveness at a determined service and cost.

The company’s directives must design, develop and implement vehicle fleet management policies starting off from the general strategies policies. This policies must be supported, abided and known by every person involved in fleet management. Frequently, the absence of such policies or policies that are ambiguous or poorly developed are the origin of unsatisfactory fleet management.

The following premises are some vehicle fleet management policies for different types of organizations.

  • An organization that has an environmental friendly policy as part of their general strategy must have a fleet of vehicles that are the least harmful such as electric, hybrid and hydrogen vehicles.
  • An organization focused on low cost rentals has to have a low-end fleet, with very few models to choose from; to the contrary, an organization focused on clients with high acquisition levels must have a high-end vehicle fleet.
  • An organization that has its drivers and clients’ safety as part of their general strategy must have a fleet of vehicles with the best equipment and latest technology in safety.
  • A logistics company in charge of distributing commodities or passenger transportation, whose strategy is to be the company that takes the least time to perform the offered service in their market, has to have the adequate vehicles to do so.
  • An organization in which one of the guidelines of its strategy is to increase its brand image through their vehicles, must have a high-end fleet.
GENERAL GUIDELINES

Vehicle fleet management policies must have the following general guidelines, which need to be reviewed and updated on certain periods of time, and have to be adapted accordingly with the fleet’s characteristics, operations and goals.

1.Vehicle fleet management policies.

  • Establish who is responsible for designing and implementing the policies.
  • Communicate the policies to all the people involved in the fleet management.
  • Establish how often the policies must be reviewed and updated.

2.Budget and costs of the fleet.

  • Establish and control fleet’s budget.
  • Identify and qualify fleet’s costs.
  • Establish an information system to control fleet’s costs.

3.Calculating the optimal number of vehicles in the fleet.

  • Establish the service’s level in which the fleet will perform.
  • Establish the maximum distance limit that the vehicles should travel.
  • Establish the maximum operational costs’ limit.
  • Establish how to calculate the optimal number of vehicles in the fleet (using the needed software or through other means), the variables that should be minimized (fuel, travelled distance, or service time), the vehicles’ capacity, and routes if available.

4.Acquisition of vehicles.

  • Establish how to acquire the vehicles: Buying, renting/leasing, car sharing, or mixing both.
  • Establish what type of vehicles to acquire: fossil fuel, hybrids, electric, hydrogen, natural gas, or a combination.
  • Establish the age or mileage limit for used vehicles acquisition.
  • Establish if the vehicles to acquire are premium or low end.
  • Establish and standardize what brands, vehicle’s model and equipment to acquire.
  • Establish the insurance car: Full coverage, franchised, or third parties.
  • Establish the vehicles suppliers.
  • Establish through what means the vehicles will be acquired.
  • Establish a buying center.

5.Vehicles Operation.

  • Write down and establish the fleet’s operations manual.
  • Design and establish the maintenance program.
  • Establish what vehicles have priority for maintenance and repairing.
  • Design and establish the analysis program of breakdowns
  • Establish what kind of spare parts to use: official or alternative.
  • Design and establish a system to reduce and control fuel consumption.
  • Design and establish a system to select, control and check up tires.
  • Establish what kind of tires to acquire: Premium or low cost.
  • Design and establish policies to lower and prevent traffic accidents, and how often they should be reviewed and updated.
  • Design and establish audits for reducing and preventing traffic accidents, and in what period of time to do it.
  • Design and establish the criteria needed to transfer a vehicle from one operation center to another.
  • Establish if the organization will own the workshops or they’ll be outsourced.
  • Establish the suppliers for spare parts, tires, or external workshops.
  • Establish a specific software for vehicles operation.

6.Disposal of vehicles.

  • Establish when to disposal/replace a vehicle from the service: age, mileage or whichever comes first.
  • Establish priority rules to disposal/replace thr vehicles.
  • Establish means to disposal the vehicles.
  • Establish the suppliers to sell the vehicles.
  • Establish a deadline to sell the vehicles once disposal from the service.
  • Establish a selling center for said vehicles.
  • Establish an specific software for selling the vehicles.

7.Information system.

  • Establish what information needs to be gathered.
  • Design and establish indicators and in what activities
  • Establish how often data will be gathered and analyzed.
  • Establish a period of time to write a general report about the fleet’s management.

8.Measurement of fleet management.

  • Establish frequency of data gathering and how to measure how the fleet is being managed.
  • Establish what variables have higher priority to increase service quality, and to lower production costs.
  • Establish what the priority time, if long is or short time periods, to increase service quality and lower production costs.
  • Establish margins for service quality and production costs.

9.Control and truck of the vehicles.

  • Establish what type of information and what degree must be recorded.
  • Establish the specific software needed for control and track of the vehicles.

10.Auxiliary services.

  • Establish the insurance company for the vehicles.
  • Design and establish the plan for the vehicles’ technical inspections.
  • Design and establish the fuel cards management.
  • Design and establish the traffic fines/tickets management.
  • Establishing what auxiliary services activities are performed by third-parties.
  • Establish the suppliers of auxiliary services activities performed by third-parties.
  • Establish the specific software for some or all of the auxiliary services activities.

11.Outsourcing and organizational structure.

  • Establish the criteria and guidelines for any outsourcing activities the fleet may need, and how often must this criteria and guidelines need to be reviewed.
  • Establish what fleet management activities are performed by third-parties, and which are done by company itself.
  • Design and establish an organizational structure, the main organizational processes, and what activities to perform.
  • Establish the criteria for choosing external suppliers.
  • Design and establish the personnel’s profile

12.Fleet management software.

  • Establish the criteria for choosing the best fleet management software.
  • Establish what activities need the software.
  • Establish what information the software needs to register.

13.Telematics services.

  • Establish the criteria for choosing the telematics services.
  • Establish what information the telematics services need to report

Tell me your opinión:

info@advancedfleetmanagementconsulting.com

JMFI´m a Fleet Management expert, and the manager of Advanced Fleet Management Consulting, that provides Fleet Management Consultancy Services.

 

 

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