Should It Stay or Should It Go: The Benefits of Right-Sizing Your Fleet
Fleets are actively aiming to reduce costs. Ask any fleet manager today, and the odds are they’ll agree. This could be for a variety of reasons – external (like economic fluctuation) or internal (such as an interest to outsource or improve operations). Fleet growth and decline is something to be expected, as economies are always changing and there will always be ways to better optimize your fleet. The key here, is to understand the benefits of right-sizing your fleet, and how in doing so, you will be better equipped to deal with any factors that may affect your annual budget or operational strategy.
In this article, we will cover the benefits of right-sizing your fleet, as well as the importance of better-optimizing your fleet now.
What is right-sizing?
“Fleet right-sizing is a management practice that can help vehicle fleet managers build and maintain sustainable, fuel-efficient fleets.”– Alternative Fuels Data Center, U.S. Department of Energy
Do you want to lower your operations costs while still maximizing profitability? Rhetorical question – but still, if you answered ‘yes’, then right-sizing is your one-way ticket.
When one speaks of right-sizing your fleet, they’re often speaking of determining the correct size of your fleet mix to fulfill your needs. Too many assets, it could cause a monetary and less-sustainable burden. Too little, and you could experience service shortages and unhappy customers.
Why should fleets right-size their assets?
We know that efficiency begins with the optimization of assets and costs. Right-sizing efforts can assist all levels of management in creating an efficient fleet. When people refer to the right-sizing of fleets, they’re not just speaking to cost reduction. Rather, it’s about creating the fleet that is most cost-effective for your current and future needs.
Right-sizing can allow for major cost-cutting measures to be put in place; from reducing maintenance costs to lowering that of fuel. It can also be a huge driver for bettering fleet sustainability – by allowing fleet managers to reduce their emissions that their asset mix puts out.
However, the core reason as to why right-sizing is an effective management strategy is quite simple.
When 40-50 per cent of many fleets’ budgets goes simply to owning vehicles, and the standard cost of bucket trucks averaging between $150,000-300,000 and rising, there becomes a very clear return on investment entering the spotlight.
But don’t just take my word for it – the benefits are more than you’d originally think.
The benefits of right-sizing your fleet:
Though these are not the only benefits to right-sizing your fleet, we decided to round up our top six:
- Cost reductions in fuel and maintenance
When you can correctly identify the right amount of assets for your fleet mix, you’ll no longer be accidentally spending more on fuel and maintenance than is actually necessary.
- Optimized vehicle usage
The more that fleet managers are aware of how many vehicles they really need, they’re able to more effectively use the vehicles that they currently posses. This means – better return on investment per vehicle, and less upfront asset purchase costs.
- Fuel conservation
Similarly to the cost of fuel and maintenance, the right size fleet can use as much fuel is as necessary – and become more sustainable in the process.
- Reduce emissions
Sustainability is a hot topic – and for good reason. Because of growing societal pressure – fleet managers are beginning to evaluate whether or not they need as many vehicles as they currently possess, or whether they should pursue fleet electrification. If they can right-size their fleet, potentially decreasing their unnecessary vehicle count, they can reduce the amount of emissions that their fleet creates.
- Capital budget savings
When most of your budget is tied up in the actual purchasing of vehicles – imagine how your budget could be redistributed if you were able to identify that you only need to purchase a certain amount of assets? Or replace them? Especially if the number is fewer than you originally thought. A right-sizing evaluation can give you a little bit more wiggle-room in your budget that you may not have previously had.
- Efficiency metrics are utilized
A utilized fleet is an efficient fleet, right? When you’re able to leverage your telematics data, fleet managers are also able to identify exactly what the downtime and availability each vehicle has. They can see exactly how many days each vehicle and fleet asset is being used. Knowing these numbers can help management decide how many assets are really needed for their fleets.
How often should you right-size?
Right-sizing your fleet is not a one-and-done tactic. Rather, it’s a facet of your fleet management strategy that should be evaluated frequently, as the needs of your fleet will change over time. As you add or subtract assets to your fleet mix, or when you change your levels of staffing – that could be a good time to consider re-evaluating whether or not your fleet is the right size.
But the question remains, should it be done annually? Every five years? Utility Fleet Professional argues for every five – only if you’re right-sizing your fleet from an enterprise level. But what’s the starting point?
One way to evaluate your fleet for right-sizing efforts is to speak to the people that are actually working on, and in, the vehicles. Maintenance technicians and drivers can very knowledgeable about the assets that they work with – especially on the topic of how they are being used to support the organization.
Another way, is understanding your telematics data and fleet analytics.
Fleet managers should understand the daily usage rate and needs of the vehicles and assets within their fleet. One question that we hear quite often from upper-level fleet management is:
“How are you optimizing your fleet assets right now?”
When you focus on optimizing your fleet mix for the ‘right now’ as well as looking into the future – you’ll be able to future-proof your fleet for pretty much anything that comes your way.
If you would like to learn more about how Utilimarc can help you right-size your fleet, you can schedule a demo with one of our analysts to learn more.