Vehicle fleet management is increasingly a strategic and complex area of business requiring specialised skills and focused administration. Gone are the days when the responsibility for managing a company's vehicle fleet could be left in the hands of the warehouse supervisor or dispatch manager.
The reasons for this include the high cost of vehicles and related operating costs coupled with a need to satisfy escalating service demands from customers.
WHAT IT MEANS
 Companies purchase 85% of new vehicles
Too little invested in fleet management
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However, according to FleetAfrica GM Brian Roos, addressing a recent fleet management conference in Johannesburg, many companies operating vehicle fleets do not invest as much capital or time on fleet management as they do in other areas of the business.
"Incredible as it may sound, they are still asking the question: who can we get to manage the company fleet?'
"Fleet management encompasses everything from vehicle selection, usage, maintenance and ultimately the disposal and replacement of the individual vehicles," Roos says. "Add to this the management and control of fuel, tyres, drivers and their assistants as well as the company's operational logistics and it is evident this is not a task for the faint-hearted or the uninformed.
"Fleet management can make or break a company and in this respect it is imperative the right people are chosen to do the job."
Bearing in mind the word "fleet" is often a generic term covering all the vehicles operating in a company environment, it must be remembered there are two essentially different categories - the tool-of-trade vehicle and the perk!
In the SA scenario more than 85% of all new vehicles sold each year are purchased with company money either as fleet pool vehicles, company cars or through car allowance schemes - from the most exotic for the chairman to the pure workhorse. Within this, the two categories apply across all levels of vehicle.
The current legislation relating to "perks tax" has been designed to make the use of a company-provided vehicle a costly privilege unless the user can show it is a tool-of-trade. Deciding whether to opt for a company car or a car allowance will depend on the actual use to which the vehicle will be put.
A rule of thumb seems to indicate high mileage members of staff will be better off with a car allowance - providing they keep meticulous records of all journeys and kilometres covered.
Calculating the best option is a task that should be handled by the fleet manager, as one of the essentials in any growing company is to ensure the vehicles in the fleet match and meet the needs of the users. It is all too easy with a "loose" fleet policy for a company to end up with a plethora of vehicles totally unsuited to user needs or job descriptions.
As Roos says: "There is no substitute for proper planning. Fleet managers must communicate with their customers, analyse their needs and assemble a fleet to meet them."
This is a mistake made by many young entrepreneurial companies in the first flush of growth, where vehicles are bought on a lifestyle premise rather than business approach - often with expensive consequences when it comes to trying to dispose of those vehicles.
Vehicle selection and operational management requires a cradle-to-grave approach. Purchase price is the starting point and not the deciding factor.
"When you acquire a vehicle you are buying availability, far more important than the initial cost. Life-cost includes parts availability, vehicle efficiency, productivity and estimated downtime. Equally important are value-added services provided by the vehicle manufacturer and the dealer network, such as driver and technical staff training," says Roos.
For any company operating with a national footprint, the dealer network must be located where it is of use to the operator. It is no use operating a specific fleet of vehicles if the nearest dealer and accompanying technical assistance is not easily accessible.
Latitude Fleet Services CEO Nigel Webb notes fleet management incorporates handling a variety of responsibilities including licensing and registration, maintenance, tyres, fuel, accidents and fines, all the way to vehicle disposal.
Fleet managers are responsible for identification and management of fleet costing, and overseeing the company's fleet utilisation policies.
With cost reduction sitting at the top of the fleet manager's daily agenda, Webb suggested the following be taken into consideration when formulating an effective fleet policy:
- Spending less and avoiding waste through cost management;
- Knowing where and how your money is being spent;
- Buying better - vehicles, insurance, consumables and services;
- Optimised supplier agreements;
- Utilising appropriate funding methods to reduce cash-flow requirements, tax benefits and balance sheet performance;
- Improving vehicle utilisation;
- Measuring vehicle utilisation - time on the road, distance travelled, revenue earned and suitability of a vehicle to do the job; and
- Management of driver behaviour, skills, training and general on-road discipline.
Webb says full-maintenance leasing (FML) remains a popular choice among fleet buyers. Though it is a sound option it requires careful management. The main concerns are: exceeding the total distance stipulated in the contract; inadequate attention paid to the lease period; and the addition of ancillary equipment such as expensive sound and other equipment that has no value at all at the end of the lease period.
"When negotiating any FML contract make sure allowances for restructuring certain aspects of the contract are included in the original document," Webb says. "Also remember high-value vehicles contracted under FML depreciate rapidly - so be careful what you buy."
