Question

What are the key items a firm should consider with respect to controlling a private fleet?

Answer 1

The key to private fleet management deals with controlling cost and performance. To understand costs they must be gathered by function and at the source. For instance fuel per vehicle and trip in order to understand fuel cost by differing types of vehicles and routes to predict and control contribution to cost and therefore impact on profit. There is no way to understand these variables if these costs are aggregated at a fleet level.

Collection of cost by driver, vehicle, route, load, etc., will allow identification and root cause analysis of problem areas within the fleet.

Firms need to understand performance in terms of labor hours, asset utilization, tonnage hauled, vehicle operating hours, number of stops, etc. By understanding and analyzing such data the fleet manager is able to measure utilization and make effective decisions on what should be changed. Understanding total transportation cost per for items allows better pricing strategy and understanding of what individual items contribute to profitability once their distinct logistics burden has been accounted for.