Whether you’re managing a big fleet or small – fuel expenses account for a significant part of your overall costs. Any fluctuations in fuel prices – have a significant impact on fuel distribution costs. It’s difficult to control or accurately predict the changes in fuel prices. And in situations like this you usually end up with 2 choices: either increase margins to make up for higher costs (and probably risk losing customers to competition) or shrink margins to stay competitive (and struggle with cash flow). It’s like being between a rock and a hard place. But…what if I tell you there is a 3rd choice? While you can’t control those pesky prices directly, you can take charge of the other aspects of your operations that can help minimize the impact of high fuel prices, reduce operating costs and increase the overall cash flow by managing operations better.
Here are 5 ways you can do just that:
Streamline key operation workflows
Inefficient operations can really bleed your budget. Daily workflows like creating orders, dispatching and scheduling them, planning driver routes, loading fuel when handled manually, can drain your cash faster than you realize.
But leveraging digitized processes to efficiently run operations can make a world of difference in optimizing costs. Here are a couple of ways how:
- Route optimization – It helps you plan out driver routes in a way that ensures there are no detours, long routes or empty miles while delivering across multiple customer locations. That translates into increased fuel efficiency and reduced costs in delivery.
- Order Management – Proper order assignments and scheduling maximize truck and driver capacity and reduce the risk of losing too many dollars on inefficient dispatch.
- Real-time tracking – Gives you complete visibility into your operations, so you know exactly what’s going on in operations which gives you more control over your costs and a shot at higher margins.
- Choosing the right supplier -Fuel purchase from the wrong supplier does lead to higher costs. But once you’re able to control which suppliers and terminals drivers are loading from you can ensure you’re not purchasing fuel at higher costs.
Streamlining these processes ensures accuracy at every step and that means substantial cut down in your overall operations costs.
Manage customer credit balances
Maintaining a steady cash flow is closely tied to credit management. And not in the old way where your credit team digs through the back office system to pull out credit blocks, and then sends an email to dispatchers saying “Hey – don’t deliver to these folks.”
There’s a much error-free and smarter way to tackle this using tech.
Modern-day softwares have capabilities that allow you to unblock high value customers who are blocked, in just a click. While for customers who have let their bills ride way past their dues – you can ensure no deliveries are made to them. That way – your cash flow doesn’t slow down by selling fuel to customers who don’t pay.
Integrate accounting and dispatch accounting
The mental gymnastics in trying to figure out what happened during a driver shift (what was delivered, how much was delivered etc ) is not only tedious but also inefficient. It’s one of the major reasons for your increasing account receivables.
Working with inaccurate data leads to delayed and sometimes inaccurate invoices too.
But a real-time sync between your accounting and dispatch system helps you push out invoices accurately and at insane speed. That means – you get paid faster and your cash flow improves. Moreover, faster invoicing also means your customers’ credit term kicks in soon making customers liable to pay faster.
Data-driven decision making
Ever wondered how efficient your drivers are? How many gallons are they able to deliver per customer per location per asset? How profitable are your customers? Data has all the answers. It gives you a real picture and understanding of your operations cost. That means you can identify areas where you are losing cash and take measures to improve that.
Moreover, data is also extremely useful in responding to situations like asset damage, equipment failure which again plays a massive role in controlling costs. Analyzing asset performance, conducting regular maintenance checks, reducing repetitive equipment failures reduces downtime and maintenance costs.
Maximize driver and truck capacity utilization/better asset management
Asset tracking and management help you stay on top of your assets, improve profitability and reduce costs to a great extent. Understanding how the assets are being allocated and used helps keep operational costs marginally low by reducing downtime and improving asset performance.
For instance – if fuel efficiency is too high then deliveries might be inefficient and that increases costs. If efficiency is too low then customers might not be ordering enough to maximize tank capacity. In either scenario you end up leaving cash on the table and miss out on gaining higher revenue with ineffective tank/asset utilization.
Additionally, by tracking fuel orders for customers with rented assets, you can charge delivery fees for customers with low fuel orders than the asset capacity to cover up for the truck and driver costs.
Asset tracking and management eliminates the need for error-prone manual monitoring and reduces operational costs to a great extent.
Closing Thoughts
Most of the time, there are costs for which the impact is missed because it’s not always obvious. Implementing the 5 things we discussed in this blog is not just a move – it’s a game changer. By focusing on these 5 pillars – you’re not only reducing costs but also setting up your business for success in the long haul.
If you’re ready to put these strategies into action, we would be thrilled to help you every step of the way. So feel free to drop us an email at sales@fleetpanda.com or dial us at 607-523-4103.
