Procurement expenses are a fixed part of the landscape that also bite into our budget when they’re least wanted. Shifting costs, elastic supply timeframes, and other logistical considerations can make both procurement, and budgeting for it, a waking nightmare. To help avoid going insane, because that’s never a good way to run a fleet, we’ve researched the most effective ways to cut down costs in five key areas of your fleet’s procurement budget.
With an eye to reducing expense and adding value while avoiding the appearance of “cost cutting”, you can optimise spend to accommodate business-as-usual needs and the unexpected procurement costs that arise throughout the year.
Five ways fleets can reduce procurement expenses
1. Optimising Expenditure With the Right Technology
Efficiency is key to running any business well, but manual processes alone aren’t enough to coordinate all the moving parts of your fleet at scale as your business grows.
Finding a harmonious combination of management culture and logistics software is an important first step to laying out the blueprint of how your fleet should operate, taking the guesswork out of managing fleet logistics and spending.
It’s important to have visibility of driver activity to determine their progress, schedule movements, and allocate appropriate time investment. It’s also vital to monitor metrics that affect the fleet in real time, keeping an eye on areas where time and cost might blow out. That means having a reliable way to view key data points about your fleet’s movements at a glance.
The right fleet accounting software or SaaS product will also simplify administrative control of payments and expenses. This enables managers to spend less time and resources in back-office work. Records that are paperless with digital offsite backups to ensure an easily accessible, permanent audit trail won’t take up storage space, and help to clear further administrative overhead.
Having a holistic software environment for managing inventories, training, procurement, maintenance schedules, and general business travel can also help optimise time and cost spend, while ensuring resources are available as needed.
A well-planned suite of business operations software gives you a wider view of outgoing time and expenses, helping you stay ahead of predicted costs before they arise.
2. Managing Non-Fleet Equipment Purchases
Most fleet equipment needs to meet rigorous standards for safety and longevity, but these standards don’t apply to all business equipment used by your administrative staff.
For example, many technology businesses require cutting-edge IT equipment, having to upgrade their entire office once or twice a year. This can mean there are bargains to be found in bulk for businesses who may not need the most up-to-date hardware, but regularly seek out cost-effective, reliable and modern IT equipment to operate at scale.
Similarly, office uplift projects for global giants regularly cycle through ergonomic, modern, almost brand-new office furniture. Avenues to procure used office furniture will differ by area, but the option is worth investigating for the huge savings it can bring.
Buying office equipment refurbished can be a great way to help the procurement budget without compromising on functionality or quality.
Physical space requirements for operations and staff change constantly throughout the year, so it’s worth evaluating regularly whether space is excessive or under-utilised. Ensure that your business isn’t tied down to unfavourable long-term lease arrangements for flexibility when an upgrade or downsize are needed.
3. Leveraging Volume Discounts for Recurring Expenses
Repair work and fuel expenses are a predictable, recurring, long-term expense. That makes for a predictable way to secure volume discounts on fleet purchases for a range of operational needs.
Fleet fuel card programs not only provide volume discounts on petrol, but also discounts that can earn the business additional savings on travel-related expenses. Besides the cost savings of volume and long-term use, cashless purchases save time by removing friction for drivers at the pump, getting them back on the road faster.
Fleet fuel card systems also provide varying levels of real time tracking, and comprehensive reports detailing usage, expenditure, time and place of purchases, which eliminate the need to chase up receipts and records.
Streamlining these processes takes additional burden off back-office administrative teams, and provides your business with human support for records management and administration of travel expenses.
CardLink is New Zealand’s leading provider of widely accepted fleet fuel cards, and we’d be happy to help you assess which type of fleet fuel card program would have the most impact on your bottom line. Get in touch for an obligation free chat.
4. Streamlining Vehicle Upkeep and Replacement
A big chunk of expenses goes into keeping high mileage vehicles running, dealing with the cost of labour, parts, fuel consumption, and lost time when not operational.
Many fleets schedule new equipment purchases in cycles, whether it’s big-ticket office items, vehicles, generators, or other equipment. At a certain point, maintenance costs can exceed the value a vehicle offers to the fleet.
Auditing equipment regularly with a repair and replace analysis can determine if equipment should be replaced earlier to offer a net positive value gain to the business, avoiding double handling and time off the road.
Where vehicles aren’t being utilised as often as others, pruning your overall fleet size can also reduce maintenance and costs. Removing the least used trucks from the fleet saves on spending per vehicle, but also streamlines the knowledge and parts required to keep your fleet operating.
5. Using Your Purchasing Power
Having broad procurement needs sometimes feels like a burden, but you can leverage that procurement power for additional discounts from suppliers who see your mountain of needs as their Everest of sales.
Insurance is a great example of something you can shop for as individual plans, or talk to suppliers that can package all of your insurance needs at a discounted overall rate.
Shop around for a broker who understands that bundling your office, operations, employment, vehicle, and other flavours of insurance together for a significant annual discount is a mutually beneficial arrangement.
Likewise, for items that you regularly buy in bulk, or where storage or perishability aren’t an issue, look into negotiating further discounts by purchasing several months ahead, or exclusively through that supplier.
Determine Potential Operational Efficiencies in Your Business
To start reducing procurement expenses, review costs from the previous year and pencil in your planned spending cuts. You can create a more realistic reduced budget for expenses based on changes across all expense types, collated and weighed against priority of needs.
Effective fleet management often comes down to shaving a few dollars here and there, repeated many times throughout the year in large numbers. Establishing more cost-effective ways for your fleet to operate at the outset with better management and visibility will pay long-term dividends in reducing overall operational costs.