Aspects of business operations can disrupt your cash flow management as much and as unexpectedly as inefficient fleet operations. Small business owners have to know how to improve fleet management to be successful.
This is especially the case in South Africa, where roads are riddled with potholes and fuel prices fluctuate. In this challenging environment, inefficient fleet management means facing:
- Skyrocketing operational costs from poor vehicle management and fuel waste.
- Lost business opportunities due to unreliable delivery times and vehicle downtime.
- Driver safety risks due to bad vehicle maintenance.
But here’s the good news: every challenge the road throws at your fleet vehicles can be solved. With the right approach, you can streamline fleet operations, save on fuel costs, and increase your SME’s profitability.
But no more idling. Find out how to improve fleet management by looking at total cost of ownership (TCO) and delving into the five biggest challenges fleet operators face to understand how successful South African SMEs solve these fleet inefficiencies.
Read on to gain insights into actionable fleet management practices.
Total Cost of Ownership and How to Improve Fleet Management
Before we get into how to improve fleet management, let’s talk about cost. The first step towards effective fleet management is understanding where your costs lie.
Total cost of ownership shows you exactly what each vehicle costs from purchase to retirement. Here’s what makes up your TCO:
Purchase costs
- Initial vehicle price
- Registration and taxes
- Vehicle upfitting
- Licencing fees
- Administration costs
Operational costs
- Fuel expenses
- Maintenance and repairs
- Depreciation
- Insurance
Understanding your TCO gives you the power to make smarter decisions about your fleet. You can even break down that number to get to cost per kilometre.
Once you know your total spend, you can more easily spot where you can save. It’s like a financial road map to better fleet management.
Now that you have the cost metrics, let’s look at five systems you can apply to improve fleet management:
- Real-time fleet monitoring
- Intelligent Fuel Management (IFM)
- Preventative fleet maintenance
- Driver safety and performance
- Route optimisation
5 Systems You can Implement to Improve Fleet Management
1. Real-time fleet monitoring: no more lost vehicles and delivery delays
Gone are the days of wondering where your vehicles are or how they’re performing. South African small businesses are rapidly adopting fleet management systems, and the numbers tell the story.
The market for telematics-connected fleet vehicles is set to grow to 3.8 million vehicles by 2027 with a strong 12.2% annual growth rate, market analyst Research and Markets predicts.
Here’s what makes real-time monitoring a game changer: fleets using telematics, or GPS-enabled fleet tracking systems, save up to 20 – 30 minutes on daily driving time, according to data from US consulting firm Frost & Sullivan.
Those employing the system could also see fuel costs drop by 9% and labour costs decline by 10%. Accident costs even decreased by 15%, a Verizon Connect user survey revealed. That’s real money back in your pocket.
Why you should implement vehicle tracking
Real-time vehicle tracking gives business owners real-time updates about vehicle locations, fuel consumption and driver behaviour. Think of it as having a digital dashboard for your entire fleet – one that helps you make smarter decisions and increase operational efficiency faster.
How to get started with vehicle tracking
Start with a basic GPS tracking system and scale up as your comfort level with this system grows. You don’t need to implement everything at once.
South Africa’s market offers everything from basic tracking to advanced solutions, but even a simple system can transform your fleet efficiency.
Pro tip: Choose a solution that matches your fleet size and budget.
2. Fuel management systems: stop your profits from burning away
Fuel cost can eat up a big part of fleet ownership budgets. With fuel prices pushing past R24 per litre, inefficient fuel costs hit small businesses particularly hard.
South Africa’s fuel prices fluctuate each month due to the Basic Fuel Price (BFP), which depends on both crude oil prices and rand/dollar exchange rates. Add government levies and Road Accident Fund charges, and you’re looking at roughly 40% of your fuel price going to taxes alone.
But here’s the silver lining: Fuel efficiency can cut these costs by up to 25%, the Frost & Sullivan report concludes.
Why you need fuel management systems
Companies using Intelligent Fuel Management (IFM) systems are seeing remarkable results – saving R57 million yearly for South African customers, as estimated by Avis’ fleet management division in 2020.
These systems help identify unauthorised usage (preventing fuel fraud by drivers), streamline purchasing, and provide real-time insights into fuel consumption patterns.
John Y. Motaung, sales and marketing executive at Newlands Commercial Vehicles, says, “Driver behaviour is a major factor in fuel use. Aggressive driving wastes fuel, while smooth driving saves it. Telematics systems track driving habits, such as speed and acceleration, and help train drivers in better practices to reduce fuel consumption.”
How to get started with a fuel management system
IFM is often included in broader fleet management systems. These systems track transactions, send notifications for irregular spending, and provide detailed monthly reports of fuel activities.
Start on a fuel-monitoring system that tracks:
- Real-time fuel levels
- Cost per kilometre
- Driver behaviour (speeding, idling)
- Potential fuel theft
You can’t control fuel prices, but you can control how efficiently your fleet of vehicles use it.
3. Preventative maintenance: solve problems before they start
“If it ain’t broke, don’t fix it,” said no cost-saving fleet operator ever. Because smart fleet maintenance isn’t just about fixing what’s broken – it’s about preventing breakdowns altogether.
Why your fleet needs preventative maintenance
Don’t think your savings on repair costs will reduce your fleet costs in the long term.
Poor vehicle maintenance leads to breakdowns, delayed deliveries, and a shorter vehicle lifespan. And that’s not all. Worn spark plugs, incorrect tyre pressure, and suspension problems can seriously increase fuel consumption and emissions.
On the other hand, businesses that adopt preventive maintenance practices see up to a 30% reduction in vehicle downtime, according to South African land management company Kishugu.
How to do preventative maintenance
Modern fleet management systems track every maintenance need, sending alerts before small issues become expensive problems. There’s even fleet management software that uses data analytics to predict maintenance needs.
However, you can already get started with preventative maintenance without spending on the latest technology. Begin with these essentials:
- Keep regular maintenance schedules.
- Monitor fluid levels, filters and tyre conditions.
- Keep detailed maintenance records.
Keep to the schedule consistently. You won’t just end up saving on maintenance costs, but it’s safer for your driver and more profitable for your business.
4. Driver safety and performance: your most important fleet asset
Your drivers are the heartbeat of your fleet operations. Modern fleet management systems make it easier than ever to monitor and improve driver performance through data analytics.
Another big consideration in South Africa is crime. Fleet vehicle crime in South Africa is a challenge to the logistics sector.
The e-commerce boom has made courier vehicles prime targets, with 81% of hijacked loads consisting of fast-moving consumable goods (FMCG).
Why driver safety and performance matter
It’s easy to see how driver and fleet safety affect your business. Stolen goods, destroyed vehicles and other worst-case scenarios come to mind. But driver behaviour also directly impacts your bottom line through fuel efficiency, vehicle wear and accident rates.
Safe and efficient drivers mean a more profitable fleet. They have fewer accidents, reduced idle time, and improved overall fleet performance.
How to improve driver safety and performance
Modern fleet management solutions provide real-time driving monitoring and driver performance metrics, allowing you to more easily identify areas for improvement and recognise good driving behaviour.
Even without state-of-the-art software, you can already implement these steps today:
- Create clear safety policies and guidelines.
- Establish regular training programmes for new and existing drivers.
- Use GPS tracking to monitor speed, braking patterns, driving habits, and overall driving behaviour.
- Systematic vehicle inspection reports (SVIR).
- Clear maintenance schedules.
Pro tip: Driver safety programmes result in lower fleet maintenance costs and better overall efficiency.
5. Route optimisation: time saved equals more profit
Remember the days of paper maps and memory-based navigation? With modern GPS and route optimisation, complex logistics turn into streamlined operations that save time and money.
Optimising routes goes beyond planning routes. While route planning plots a basic path between A and B (and C, D, E etc.), route optimisation uses advanced algorithms and AI to create the most efficient routes by considering multiple factors like traffic, delivery windows and driver schedules.
Pro tip: The more unexpected disturbances there are on a route, the more crucial it is to use route optimisation.
Why smart routing matters for SMEs
Effective route optimisation can reduce fleet running costs by up to 20% while increasing capacity without adding drivers, Dutch location intelligence provider Local Eyes estimates.
Modern routing systems also enable faster dispatch processes, reducing dispatching time by 30 – 40%, according to last-mile technology company FarEye.
How to start optimising routes today
Modern routing systems can handle unexpected challenges like road closures, staff absences or sudden traffic changes. Transform your routing approach with these steps:
- Implement real-time tracking for accurate location data.
- Use software that considers traffic patterns and road conditions.
- Set up route planning automation with driver scheduling.
- Monitor and adjust based on performance metrics.
Smart routing isn’t just about getting there faster – it’s about maximising your fleet’s entire operation.
Fleet Growth & Financing: Fuel Your Business Expansion
Growing your fleet operations requires significant capital investment. Without proper financing, even the best-managed fleets can struggle to expand and meet increasing customer demands.
For South African SMEs especially, fleet expansion presents a unique challenge. Tying up capital in vehicle purchases can strain your operational resources and limit your ability to seize growth opportunities.
But there’s a more cost-effective way to manage fleet growth.
How Lula helps small businesses grow their fleet operations
Got an unexpected breakdown? Or is it time to expand the fleet?
While traditional lenders can take weeks to process applications and require extensive paperwork and collateral, Lula’s approach is different.
With Lula, you can access up to R5 million in unsecured funding within hours of approval. The application process is streamlined – just provide basic business details and three months of transaction history. No collateral required, no paperwork hassles.
