SMR for small to medium fleets
15 November 2017
Author: Rachel Boagey
Fleet managers at small to medium-sized businesses, also known as SMEs, spend an average of 32 hours a month on fleet administration, with little supporting knowledge or tools to help them.
That's according to new research by fuel card giant AllStar, which recently created a business guide to servicing, maintaining and repairing (SMR) company vehicles in an attempt to help time-poor SME managers.
AllStar discovered that possible time and money-saving tools were not being used by fleet managers, with 65% admitting they manually approve all SMR work, and 82% saying they do not get any discounts from suppliers on this work.
One topic that keeps cropping up is the importance of fleets minimising their annual SMR spend by selecting the most cost-effective vehicles for fleet operation. But many more factors are at play here. With the right SMR strategy, it is possible to effectively manage and, in some cases, reduce costs while properly maintaining the fleet.
"The irony is that not having a robust SMR programme in place means you are going to incur even higher costs," explains Stuart Thomas, head of fleet and SME at the AA.
Where to start?
Thomas says that managers of large fleets typically rely on supplier expertise to balance the need for a cost-efficient fleet, while providing the most effective and reliable vehicles. But for small and medium companies, this becomes a greater challenge, as there is often no dedicated resource for fleet management.
The AA's Operational Fleet Insight report recently revealed that 63% of SMEs and businesses expect to be using alternative fuels to power their vehicles, "so the need for helpful advice to understand the costs of these vehicles has never been clearer," says Thomas.
Nick Webb, marketing director at AllStar, agrees that fitting SMR management around other responsibilities means many managers will have limited time to investigate new management tools and methods, but that shouldn't mean they miss out on time and money-saving options.
"Cost saving should become an area of concentration," says Webb. "Whether through purchasing the right vehicles for their fleet in the first place, choosing where to go to have their service work done, or understanding the total cost before the work goes ahead - all of these can lead to a far more cost-effective fleet."
Robust vehicle checks
One of the main challenges for fleet decision-makers, in fact, is to maximise use of their vehicles and minimise downtime.
"A key element of this is putting processes in place to plan for routine maintenance and reduce the impact of unplanned events," Simon Barter, head of SME at Lex Autolease, tells BusinessCar. "There are some simple steps that businesses can take to reduce the risk and cost of expensive surprises when it comes to keeping their vehicles on the road, and this is even more useful for small fleets."
Thomas agrees that it is vital to ensure there are regular checks for things such as mileage, tyres and fluids. "It's all about adopting a risk management strategy - this ensures any potential vehicle issues are tackled early; it helps with driver safety and keeps costs down," he says.
It is often smaller businesses that are at the mercy of unexpected maintenance and breakdowns, without the luxury of having replacements. This is why Barter believes these simple checks should be vital for any driver and small fleet.
"The irony is that not having a robust SMR programme in place means you are going to incur even higher costs."
One important factor for SMEs looking to reduce SMR costs, according to Barter, is to encourage drivers to take responsibility for vehicle checks. "Implementing a daily walk-around policy will help to identify faults and serve to educate employees on what is expected of them in terms of vehicle care."
Company-wide driver training can help to minimise maintenance costs. It has obvious safety benefits, but also reduces the likelihood of payouts for repairs. "Providing drivers with simple tips such as how to drive in difficult weather conditions - using higher gears when it's icy for example - will reduce the risk of accidents. A clean driving record will also stop insurance premiums from climbing," says Barter.
He explains that the simplest solution is rolling maintenance services into a leasing package. Drivers will have access to alternative models if a fault or problem is identified with their car, minimising downtime and freeing up time for employees to focus on more strategic aspects of their day job.
In or out?
A large proportion of SMEs don't use specialist SMR management tools or bundle them into leasing packages to look after their fleets. Instead, they often use a combination of whiteboards, spreadsheets, filing systems and Outlook calendar reminders. This is used to capture such things as MOT dates, servicing due dates, expenditure and vehicle allocation.
"Making a success of managing SMR in-house is dependent on the quality of processes put in place, but even the best set-ups tend to be limited," explains Thomas. "What's more, they tend to be labour intensive and prone to user error - managing SMR in-house certainly
Using technology can help, such as specialist software that can enable more effective fleet management. "Tech such as telematics can play a positive role: it allows you to track, manage and act when a service is due, for example," says Thomas.
82% of SME fleets do not get any discounts from suppliers on SMR work
Services available through leasing can help to minimise downtime by providing access to reliable back-up options should there be a maintenance issue. "This also provides assurance to firms the vehicles of which are critical to their business as employees will spend little to no time off the road. Vehicles are generally under warranty throughout the leasing period, which can also reduce maintenance costs,"
Whether vehicles are maintained in-house or outsourced to a supplier, it's important for decision-makers to effectively monitor the overall health of their fleets to identify patterns and safeguard against future issues. "By monitoring and identifying driver habits, businesses can save money through an integrated reporting system," Barter explains.
But first, fleets need to make the decision on whether a supplier is worth the extra cash to obtain what could perhaps be a far more effective SMR strategy.
Leasing, for example, has the benefits of lower upfront costs and monthly payments, and frees up cash flow for investment in other areas of the business. Monthly maintenance and service payments allow businesses to plan more effectively and mitigate the surprises that come from unexpected repair bills.
"There are no right or wrongs in choosing the right supplier," notes Thomas. "It is about finding the supplier that best meets your needs." There are, however, some key factors he says fleets need to consider such as location (easy for drivers to get to), availability of a courtesy car, or a collection and delivery service. Can the supplier book the car within the timeframe you need, and do they have all the equipment necessary to service and maintain your vehicles?
Businesses should also consider outsourcing other elements of managing a fleet, such as fuel, oil, tyres and car-related goods. There are schemes, like the AA's Fleet Advantage, that can cover all these items and provide breakdown cover that helps keep costs under control. This allows the user to secure everything from fuel through to replacement windscreens with a provided card. The scheme also tracks costs and use, with regular reporting back to the company.
Taking the shortcut
One problem that small and medium fleets can face is getting value for money when it comes to the cost of servicing
and maintenance. "The challenge is that prices can vary considerably for common jobs and you need to ensure you are comparing like for like," says Thomas.
The drawback to outsourcing is firstly, finding a quality supplier that can provide the right level of support and an effective service that is excellent value; and secondly, creating a strong working relationship with them. Thomas explains, "There is no easy route to finding the right SMR supplier, so it pays to do your research, but it is worth the effort as the right supplier can make a major difference in managing your fleet."
Another question, then, is whether to use a quick-fix supplier or a more established volume franchise dealership for repairs.
Kwik-Fit is undoubtedly one of the most well-known names in this arena. Andy Fern, the company's sales director, says, "We have recently rolled out our 'Kwik Fit Plus' centre network, which delivers superb customer experience and quality. Each centre has a team of fully trained staff delivering traditional 'fast-fit', and a second team delivering mechanical services, all at a quality, service and price demanded by fleet customers."
Fern adds, "Demand for mechanical work across the fleet sector is being driven by a range of factors, but notably the short-term availability of servicing slots as well as Kwik Fit's price competitiveness, high customer service levels and an extended opening hours policy at centres when compared with franchise dealers."
While some parties may criticise these one-stop solution companies for being too quick on the job, meaning that sometimes poor customer service is delivered, Thomas believes it's not about the company's method but rather its overall delivery of the services. "It's about the total package of support. If small companies are going to outsource, they need to find suppliers that make it easy to keep on top of the fleet, and a quick-stop solution could do just this," he says.
Fern agrees, "The more fleet mechanical work and MoTs we undertake, the greater the confidence that fleet managers and company car drivers have in allowing Kwik Fit to undertake the work."