Many decisions need to be taken and implemented when planning a fleet. Along with a fleet comes other expenses such as procurement, maintenance, insurance, fuel management, background checks for drivers, vehicle tracking, and the list continues. Whether you choose to own your own fleet or offload all these headaches, you will need to consider all of the possible outcomes and circumstances of this scenario.
Questions such as, Who manages the fleet? and How much money are we willing to spend? should be at the forefront of your decision-making strategy. Many companies will undertake the financial work needed to make these decisions, but forget to factor in the operational nature of the business, future expansion plans, and the expertise needed to efficiently manage a fleet.
This article lists the pros and cons that come with each available option and aims to help business owners make an informed decision. Although it may be difficult to trust other companies with your operations, partnering with those whose core business objectives revolve around efficient logistics and fleet management may prove to be beneficial over time.
Why Own a Fleet?
Most of the time, the nature of a company demands a fleet at hand, and other times fleet programs serve as an employee perk more than a business-related need. Other times fleet vehicles are needed to transport goods from one place to another. Additionally, advertising your brand becomes easier and can also be influenced through the make and type of the fleet.
Options in Fleet Management
Fleets can be purchased as a part of the current business or they can be outsourced to other companies that provide transportation and delivery as a service. Recently, these companies have begun offering delivery services as a way to help other businesses provide efficient delivery and diversify from their competitors. For companies that do not want to outsource, owning their own fleets and setting up departments to run them effectively is an option. However, this alternative will likely cost more than a logistics company would.
Before looking up manufacturers and fleet programs that offer you the best dollar value, sit down with your accounting department and draw up an estimated comparison between owning and leasing. You should base the comparison on:
- The difference in outsourcing and insourcing costs
- The monthly running costs of each option (e.g. payments, maintenance, insurance, gas salaries)
- Possible hiring of fleet manager/ setting up a department focused on fleet management
- And, the nature of the fleet’s function
Since the financial aspect reigns over all components, companies tend to overlook features other than pricing. The decision to lease or own should tie into your business culture and its long-term objectives.
Companies that choose to own their own fleet have greater control over their expense sheet. Their costs are more transparent as everything is under their management. Outsourcing leads to a higher rate of dependency and companies have no control over how much is spent on their fleet and where the majority amount goes.
By owning and managing your own fleet, you have the ultimate say. You can select your drivers, the types of vehicles on the road, and when and where they deliver.
For every car in your fleet, you must have insurance to help cover liability costs such as equipment breakdowns or accidents. Quality insurance takes a toll on the pocketbook, and procuring insurance for an entire fleet is not only a financial burden but also a mental one. Fleet insurance comes in many types and forms, and you'll need to have a thorough understanding of them to be able to choose the best option. Another component you'll have to consider is workers' compensation. In case of injuries, you'll want to ensure that both your business and your employees are covered.
Operating inefficiently opens up companies to a multitude of risks from legal entities to employee safety. Due to the ever-evolving nature of technology and legal requirements, it is easy to miss out on the fine print.
If you are thinking of owning a fleet, we sincerely hope you have considered and allotted space for them. Some companies with storage restrictions send their vehicles home with their employees. Employees may end up using the corporate vehicles for personal use, adding mileage and wear and tear that you will have to account for.
Lack of Control
Managing a fleet requires efficient route planning as well as job rotation and employee satisfaction, among others. A lack of the correct expertise needed can drive up costs and result in delivery chaos. By outsourcing, you can simply tell the logistics company of your wishes and they will implement it.
Decreased Cash Flow/Increased Overheads
Due to the additional purchasing, recruiting, and operating of the fleet, companies that own their fleets will experience a decrease in cash flow. This can be especially problematic when there are bills to pay and the company is not liquid enough. Outsourcing can help drive down costs and do not blow a hole through your accounts, making them more appealing to stakeholders and your company’s monetary position.
Fleet Management Technology
Opting to collaborate with a company that deals with delivery allows you to make use of all the technology they apply to their management system. Owning a fleet will require you to invest in a transportation management system. Not only is such software expensive but you also need to learn how to navigate through them.
Increase in Capital Investment
Companies end up paying direct and indirect costs; pouring resources into a department that is far from their core competency. The capital investment is only apparent once the in-house fleet costs are separated from the other expenses. Outsourcing your fleet and all of its add-on responsibilities can visibly reduce your expenses. This frees up capital and precious resources which can be employed towards the firm’s long-term objectives.
Dispatch makes use of data analysis to create customized experiences for your customers through their screens, allowing effective communication channels and optimized satisfaction. Our easy-to-use interface ensures that businesses can navigate and order same-day delivery for their products with ease. With Dispatch, you and your customers can essentially have all the pros of owning a fleet of vehicles without any of the cons.
To learn more, visit Dispatch!