The most effective business decisions derive from accurate and data-driven analysis. Having an in-depth overview of total operating costs coupled with a detailed record of expenses allows for strategic planning that can boost profitability and return on investment. For this reason, budgeting and fleet expense management are among the top priorities of fleet managers.
What is the Total Cost of Ownership (TCO)?
The total cost of ownership (TCO) is the cumulative price of all fixed asset purchases, plus the expenses incurred in their operation. The best way to track TCO accurately is to break down payments into fixed costs and operating costs, then apply a simple formula to calculate fleet operating costs-per-mile.
Fixed costs are sums that remain constant in overall fleet expenses, regardless of the volume of sales or the number of goods transported. Examples include:
Operating costs are variable and include all of the day-to-day expenses incurred in running a fleet. Examples include:
Fixed Costs + Variable Costs ÷ Miles Driven = Cost-Per-Mile
Cost-per-mile is generally assessed on either a monthly or yearly basis. Calculating an accurate figure can be difficult, especially if fleet managers rely on analog or handwritten records. However, with proper management software, fleet expense management and odometer tracking can be automated to provide an exact cost-per-mile at the touch of a button.
Reducing Fleet Operating Costs
Monitoring, controlling, and reducing variable expenses effectively can lead to significant fleet management cost savings. There are several strategies that can be used to achieve greater efficiencies.
Have a Maintenance Strategy
Reduce truck fleet maintenance costs and avoid costly repairs by tracking regular maintenance with fleet management software from Lytx. With detailed information at their fingertips, managers can set parameters for various vehicle types and forecast costs with accuracy.
Cut Down on Driving Time
The ability to check arrival and departure times, routes taken, and hours of service is essential in ensuring the fleet remains efficient and on task. Lytx fleet tracking solutions can help managers optimize driving routes and respond quickly to eliminate anomalies like unnecessary detours and unauthorized journeys that increase fleet operating costs.
Implement Safety Training
Accident-related expenses can have a significant impact on fleet maintenance costs. The vast majority of vehicle collisions are avoidable and caused by human error, so proper monitoring and safety training is essential. Lytx video telematics technology can help fleet managers detect and deter a range of driver distractions that have been proven to shift driver focus from the road and increase the risk of a collision.
Our industry-leading Driver Safety Program can help prevent collisions by detecting and alerting drivers so they can self-correct their own risky behaviors in the moment.‡ Simultaneously, the software provides fleet managers with detailed data that can be used to mentor drivers to curb dangerous habits like speed limit violations, unsafe following distances, harsh braking, and incomplete stops.
Reduce Fuel Costs
One of the biggest challenges faced by fleet managers is how to reduce fleet fuel costs. One solution is to reduce the size and weight of the vehicles in use, but this may not always be feasible or practical.
Driver performance can often be a factor in fuel consumption, so being proactive in maintaining a steady speed, accelerating gently, avoid idling your vehicle, and improving driver safety is a good starting point. However, in addition to providing data on routes, times, and driver behavior, Lytx fleet management software also provides detailed fuel metrics. By using engine control module (ECM) data to monitor consumption and efficiency, fleet managers can track idle time, miles per gallon, and any unauthorized mileage within seconds.
Utilize Asset Tracking Technology
With asset tracking services from Lytx, fleet managers can monitor the location, status, and maintenance schedules of all their vehicles and equipment. Efficient tracking techniques provide fleet managers with oversight into how effectively resources are being used. This information helps inform decisions on whether or not to purchase or divest your equipment and ensures fleets get the most out of their investments.
Calculating your overall fleet operating costs can feel like an overwhelming task. But it doesn’t need to be that way, our savings calculator can help you reduce costs in fleet management, safety, and maintenance.
Start optimizing your fleet with our all-in-one fleet technologies. Get started today!