Fleet management is the function that oversees, coordinates and facilitates various transport and transport related activities. For the purpose of this document it will cover vehicles involved in the movement of goods; the management of light vehicle fleets used in the transportation of people and light cargo; possibly motorbikes and other equipment such as generators and warehouse handling equipment. Fleet management underpins and supports transport related activities through the management of the assets that are used.
Effective fleet management aims at reducing and minimizing overall costs through maximum, cost effective utilization of resources such as vehicles, fuel, spare parts, etc.
The administration and financial management of fleet is very organisational specific. It largely depends on donor requirements and organisational policies. For example, in some organizations vehicles are restricted to specific projects and others utilize vehicle pools to serve multiple projects. Driving policies can vary from a strict reliance on a dedicated driver from the organization, to using staff to drive the vehicles. The administrative policies of the individual organization will dictate which approach will be utilized. This results in the custodian of the fleet management function to be very much dependant on organizational policies and structures.
A vehicle policy will provide specific guidelines for the management and use of vehicles and other mobile assets. Policies are designed to facilitate and encourage accountability, monitoring of usage and costs, provide internal control and to serve as a management tool for better decision
A basic vehicle policy would have the following inclusions amongst others:
In an emergency situation, and especially in a rapid onset one, the Logistician may seek management authorisation to activate approved emergency processes and procedures. These provide guidance on the use of vehicles. They focus more on the operational aspects. Such a policy could include the following:
Identification of fleet needs is dependent on the nature of emergency and operations, and the size and area of operation - urban operations could utilise smaller saloon cars whereas remote field operation may require larger four-wheel drive vehicles for extreme terrain. Vehicle selection criteria are guided by:
Depending on the level of emergency the criteria may vary.
Careful consideration should be given to the form of insurance selected for the vehicles belonging to the organisation. The minimum legal requirements must always be complied with; this is usually at least third party cover.
To ensure compliance with the vehicle insurance requirements, all personnel using operation vehicles under the responsibility of the organisation must be fully conversant with accident and incident reporting procedures for vehicles and personal injury.
Personnel requirements: the insurance cover for personnel will depend on the type of policy the organisation takes to cover its vehicles: third party, third party fire and theft, comprehensive or liability insurance.
Rent or outsource: insurance coverage for leased or outsourced vehicles will be dependent upon what the organisation negotiates with the service provider. The organisation will either adopt the service providers insurance as-is or adopt it with amendments. An alternative is to completely outsource the fleet management, but again the type of insurance will be dependent upon what is negotiated with the service provider.
“A vehicle or asset lease is a contract by which one party lets vehicles or assets to another party for a specified period of time”.
“A lease is a written agreement by which one party agrees to let another party have the use of specified assets for a period of time for a fixed amount of money”.
In an external leasing option, the ownership could:
However Internal leasing is different. The organisation itself owns the vehicles which are centrally managed and issued to programs on a cost recovery basis. Organisations therefore budget for leasing costs only.
Features of an external leasing agreement:
The contents of the agreement will depend largely on the negotiating power of the lessee.
Advantages of leasing
Disadvantages of leasing
The nature of the contract is dependent on the ownership status which could be:
The preferred options are dependent on the organisations approved procurement or sourcing policies and operational needs. Contracting, sourcing and leasing are done in strict adherence with the organisations approved procurement policy. (See Agreement for leased transport fleet sample and refer also to the Procurement section)
In emergency situations outsourcing and external leasing are common practices. In a rapid on-set emergency, it takes time to ship-in or purchase vehicles for use in the response. Organisations are sometimes left with the option of outsourcing or leasing vehicles or trucks from the local market. In the initial days of the emergency, this can prove to be an expensive option. In emergency situations, there are usually very many organisations and very few assets. The high demand may cause price increases.
The location of the vehicle management function within organizations’ structures varies from organisation to organisation. The management may be located within administration, transport function or have an independent fleet manager. For the purpose of the Logistics Operations Guide the manager will be referred to as the fleet manager (FM).
Vehicles are expensive but critical to an organisations' operation. They facilitate the movement of personnel and the delivery of relief supplies to beneficiaries. Vehicle management is also one of the aspects of supply management that can be easily abused if not properly managed. If properly managed this aspect would ensure:
To achieve the above, some of the measures taken by the FM are:
In recent times, to address problems in fleet management and the ever expanding need to monitor usage of vehicles, commercial organisations have designed automated control systems and other approaches to vehicle management. Simple management systems can be designed in-house for internal use to provide a good analysis of the vehicles and driver performance.
Vehicle management systems are structured in a way that enables the capturing of information on various aspects of fleet usage, maintenance and operations. For example:
The reports can be produced on a weekly, monthly or bi-monthly basis, depending on the needs of the organisation. Weekly reports may comprise a summary weekly refuelling by vehicle – which may highlight any exceptions to targets set per vehicle, whereas monthly reports may comprise:
Vehicles are regularly maintained for optimum performance, and kept in good repair. In emergency situations the Logistician is sometimes tasked with the responsibility of managing the vehicle fleet. To streamline vehicle management the FM should put in place a simple process. Such a process could entail the following:
There are three main options;
It will be necessary to review the operational requirements and match the most suitable form of maintenance to the individual operation.
Whichever mix is selected, it must be preventative and must be under the control of a competent manager; if it is not, the condition of the vehicles may quickly decline and running costs may increase.
Whichever maintenance options is followed, vehicle maintenance schedules must be drawn up together with, and published by the FM as part of the vehicle planning.
All members of the management team must make a commitment to respecting the scheduled dates for maintenance.
A master vehicle inspection and servicing schedule should be drawn up for one year – a wall chart is recommended. This chart can also be used to show road tax renewal, annual inspection dates, etc.
Vehicle servicing is a compromise between inadequate attention, resulting in progressive deterioration in condition and the ensuing serious consequences, and too much attention, which is costly and unnecessary.
The person responsible for the condition of the vehicles must decide the scope of the servicing work required and how often this should be carried out; taking into account the manufacturer’s guidelines and kilometres travelled and in which type of environment the vehicle has been used.
This is done on a ongoing basis. This type of maintenance addresses the basic things that could cause a problem in vehicles if they are not properly maintained. The Logistician or FM develops an inspection check-list to be used by all drivers as a guide.
Each day, the first driver to use a vehicle will inspect the vehicle using the check-list.
This type of maintenance is done on a monthly basis. It may cover the following:
In emergency situations, in the absence of local facilities, the organisation would have to undertake its own maintenance and ensure that:
Selection of Garage
Based on the organization's needs, the criteria for selection of the right garage is set with the input of the Logistics officer and the FM, keeping in mind the organisations approved procurement procedures. For example the minimum requirements may include:
Basic spare parts in a workshop
Should the organisation decide to manage its vehicle maintenance in-house, certain fast moving spares are recommended for stocking. This reduces vehicle down-time.
The number of vehicles owned by the organisation will determine the purchase of these parts and equipment.
This aspect of vehicle management is very sensitive and is often abused. It is therefore necessary to have a clearly defined policy regarding vehicle usage and staff benefits. Understandably, most organisations do not have the capacity to assign a driver for each vehicle that they own. Under these circumstances, after testing, staff may be authorised to self drive. The vehicles would in most cases be pooled and rotated based on needs, except where a specific donor requirement conditions ties a vehicle to a specific project. For practical reasons, light vehicles are utilised for office operations and within urban settings and heavy vehicles for field based operations.
See Vehicle Usage Policy for some basic inclusions and Vehicle Related Documents for more details.
Running old vehicles may lead to high costs of maintenance and uneconomical fuel consumption. To avoid this, organisations should have approved and clearly stipulated policies and procedures on how and when to replace and dispose of vehicles/assets (See sample on Disposal of Assets policy). The need to dispose may arise due to any of the following reasons:
The disposal procedure applied for vehicles will apply for all other assets such as:
Vehicle safety is one of the key roles of the FM. It leads to staff safety and enhances road safety. WHO estimates 1.2 million people died and 50 million were injured in road crashes in 2002.
Vehicle safety hints.
Complying with legislature and security requirements
Legislature and security requirements are country specific and may relate to:
The key to successful observance of health and safety is the development of an organisational culture of awareness of, and compliance with health and safety issues. To ensure that this is possible the Health & Safety policy document must be practical and be incorporated within day to day tasks.
Health & Safety Specifics in Fleet Management
Some organisations manage their own routine minor repairs and vehicle service workshops. Some basic health and safety measures for workshops would be:
There are five areas specific to transport management where local health and safety procedures will probably need to be agreed and documented by the fleet technical staff:
As part of fleet management it is necessary to divide drivers into categories based on skills and competence. Constant evaluation of their skills, regular training and refresher courses will improve driver and vehicle performance, reduce number of accidents and reduce maintenance costs.
Each organization has the responsibility of identifying relevant training and courses available. These could be included in organizational capacity building programs for drivers.
Fleet management in organisations is expensive. Vehicles are valuable assets and critical for business continuity. They therefore require adequate attention.