Operations

11 Approaches to Right-Sizing Your Fleet

Traditional methods of determining the most cost-effective fleet size can be inefficient and inaccurate. Several alternative methods can be used individually or in combination.

November 2009, Government Fleet - Feature

by Gary Hatfield

As fleet managers know, a fleet’s cost is directly proportional to its vehicle total. Today, fleet professionals are under increasing pressure to reduce costs, and one of the most obvious ways to do this is to trim fleet size. Pressure from management wanting to eliminate vehicles on one side, and pressure from customers wanting to retain vehicles on the other usually puts the fleet manager in the seemingly unfair position as an “arbitrator” in this struggle. Thus, rightsizing methods must be fact-based, apolitical, rational, and defensible to all parties.

The traditional approach to fleet rightsizing has been utilization analysis, measured by miles driven or hours used, identifying vehicles and equipment that fall below a determined usage threshold. Such thresholds are often random, such as “3,000 miles per year,” usually ignore vehicle type, e.g., car versus a large truck, and don’t address the job to be performed.

This step is usually followed by attempts to remove and sell vehicles whose usage falls below the threshold. This process, for obvious reasons, is ineffective and frustrating because it fails to recognize valid business needs, even if utilization may be low.

Another problem with traditional fleet-size studies is they often focus only on “vehicles,” such as cars and trucks, because upper management fails to realize that “equipment,” such as tractor backhoes, loaders, portable air compressors, etc., comprise a significant portion of the fleet. (Upper management drives cars, so in many organizations, that’s what they know and what they invariably think of first.)

In fact, equipment is frequently underutilized because it is not shared among various operating departments and is usually very costly to own and operate. When downsizing a fleet, large pieces of equipment offer far more “bang for the buck” than do light-duty cars and trucks (and they offer far more significant reductions in petroleum consumption and greenhouse gas emissions than the light-duty portion of the fleet).

What can be expected of a fleet downsizing initiative? Experience shows an overall fleet-size reduction in the range of 5-10 percent is reasonable. For a fleet of 1,000 units, eliminating 100 units can not only save more than $300,000 per year, but can also yield a substantial cash infusion from the sale of eliminated units.

Thinking Differently
When times are tough, we need to toss aside the “business as usual,” status-quo ways of thinking and investigate ways to address fleet downsizing that achieve a transformation of behavior within the organization.

A variety of tools and methods are available for organizations to reduce costs by reducing their fleet size. In today’s economy, these efforts can help preserve people’s jobs and channel precious dollars to the organization’s mission. As we all know, an eliminated vehicle feels no pain, whereas an eliminated employee feels a great deal.

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