Attack Fuel Costs Through Analytics
From sales performance to Web site page views, from delivery routes to manufacturing processes: the prevailing wisdom in business these days is "if you can't measure it, you can't improve it." Fleet fuel costs are no exception. However, this large fleet expense - second only to depreciation - is often overlooked by small fleets.
A comprehensive fuel management program is designed to track, measure and control your fleet's fuel use. Commonly referred to as a fuel card program, this is a bit of a misnomer as the card itself represents only a fraction of the tools available to reduce fuel expense, such as reports, alerts, authorization parameters, fraud control, purchase limits and consolidated billing.
Surveys reveal that, on average, fleets that move from a no-fuel program to a managed-fuel program realize savings of 10-15 percent of their overall fuel management costs.
How a Fuel Management Program Works
The basis of a fuel management program is a fuel card that is issued for each fleet vehicle or driver. The driver enters a driver ID number and the vehicle's odometer reading at the pump. Labeling each transaction with vehicle and driver identifiers allows the company to closely monitor purchasing activity for inadvertent misuse or unauthorized transactions, as well as monitor fuel efficiency.
Programs vary greatly in terms of acceptance, controls and cost. Some cards can be used only at a particular fuel brand; others have multiple brand partners. Some are tied to a major credit card such as MasterCard, which can be used wherever it is accepted.
Card controls can be customized so different vehicles and drivers can have different purchasing allowances. Parameters include days and times fuel can be purchased, amount of fuel dispensed per vehicle per day, transactions per day, dollars per day or gallons per day. The goal is to eliminate "exceptions" or purchases outside the boundaries set by the fleet manager.
Many fleet operators don't even realize they have a spending problem until they see the resulting drop in fuel expense when they implement purchasing restrictions. When the card controls are set up appropriately, a fleet manager can eliminate fueling theft from non-employees (the obvious expense) as well as unauthorized fueling by employees who carry the card for business (the hidden costs), says Pamela Bartz, vice president of marketing for Fuelman, a fuel management company serving commercial and government fleets through a fueling network and fuel and maintenance expense programs.
Robust programs store detailed vehicle and driver information online, which is accessible anytime. This information is collected in vehicle management reports that detail spending by merchant category, fuel type and grade, card, vehicle or employee. Some programs allow purchase data to be downloaded into accounting and fleet management applications.
These consolidated reports simplify work processes and speed up operations by making it easier to reconcile purchases and by eliminating paper receipts.
Reports detail what grade of fuel a driver is using and identify "who's filling up on burritos in the mini mart." Fleet administrators can track miles per gallon and pinpoint stations with the cheapest gas.
Some programs require a minimal fee upfront. Some have a nominal transaction fee; others cost nothing. Some programs offer standardized national account program pricing from selected merchants. Check with each program provider regarding volume rebates, which can be as much as 5 cents per gallon.