Understanding and Managing TCO
Understanding the Total Cost of Ownership of your fleet is about looking at all costs over the life cycle of your vehicles and assessing the case for change which can lead to long term cost benefits.
Achieving significant and sustainable cost savings requires detailed insight into every aspect of running your fleet.
Whilst competitive procurement practices can assist in reducing headline fleet costs such as vehicle price or monthly leasing charges, changes to the core ‘DNA’ of your fleet can also deliver significant long term cost benefits.
In order to understand your TCO one needs to start with an analysis of your direct costs, made up of depreciation, interest, vehicle repair and maintenance, tyres, fuel consumption, insurance, tax and fleet management fees.
Similarly, there are indirect costs which are often harder to quantify, but have a significant impact on your TCO. These include time spent on fleet management processes and administration and employee productivity factors such as driver downtime and motivation.
A structured examination of all these components and the use of critical levers, such as fleet policy and vehicle choice, can have significant impact on your bottom line.
Without doubt, TCO is the real key to fleet optimisation and cost control. For further insight into this important topic please contact us to talk further about managing your Total Cost of Ownership.
