Drilling into Fleet Costs can Yield a Well of Financial Success

As your business needs change, so should your fleet focus. This type of due diligence can slip out of reach, however, as meeting client demands and every day work expectations become priority. Looking past today is critical to avoid compromising your business services, otherwise costs and downtime can pile up and become difficult to tackle in the future.

What could you accomplish with a fleet that is more efficient, more affordable and still able to meet the needs of your customer? I’d like to share a real-world example that demonstrates the possibilities.

 

Drowning in Expenses

An ARI client in the water management industry was becoming bogged down vehicle expenses. Their 1,800 vehicles—ranging from small vehicles to medium and heavy-duty trucks with upfitting—were not driving the amount of profit they needed for financial success. With a corporate sourcing initiative calling for cost optimization within the current fiscal year, they needed a new approach, fast.

We set to work identifying possible savings, conducting a full fleet assessment to find any and all opportunities for change.

Draining Unnecessary Costs

We needed to act aggressively to meet the needs of this client, as time was of the essence. Once we got our results and met with stakeholders, we moved forward with the goals of:

-Increasing fuel efficiency

-Decreasing maintenance costs

-Eliminating underutilized vehicles for good

First, we remarketed the vehicles that were not serving enough of a purpose to be valuable to create profit right away. From there we revisited the client’s annual replacement strategy, replacing 25 percent of their fleet right away and doubling the annual replacements for the fleet across the board.

We were also able to determine that the client could service their customers just as effectively with smaller vehicles. This reduced acquisition costs upfront and maintenance costs down the line, and the client was able to operate a more fuel efficient and environmentally friendly fleet, which made their customers happy.

 

A New Tide

Since making these changes, the client measured more than $1.5 million in savings across the entire fleet. That number will only grow, as they are now operating a newer and more fuel efficient fleet. And since they doubled the number of annual vehicle replacements, the fleet will stay younger and require less maintenance, leading to less downtime. The client and their senior leadership team have worked with us continuously to contribute more to this project, and the client continues to see a positive return on their investment.

Considering evolving your approach to spec’ing and replacing vehicles to improve both your asset and operating costs? Download our whitepaper on maximizing your fleet supply chain.