I was talking to a client earlier this week, and he was telling me his diesel fuel prices were up 23 percent since this time last year.
He was thankful that his fuel management program with us was in place, but for those of you that don't have one, it's time to start reading about a fleet fueling policy, whether you put it in place yourself or get a company like ours to help.
Most fleet companies review standard operating procedure at least annually. When it comes to a fleet fueling policy, however, most companies don't even have one because they feel like diesel fuel prices are out of their control. Fleet managers would be correct in believing that they cannot control the open market of the rise and fall of diesel fuel prices (crude oil) on NYMEX. But just because you can't control the fueling market doesn't mean you bury your head in the sand. The only way to get control of your fleet fueling policy is to actually have a policy. This fueling policy could include fuel hedging, fleet fuel cards, mobile fueling, fuel tax exemptions, fuel card, diesel fuel additives, fueling companies that you use, your fuel saving goals, and so on.
There are many different ways of having a fuel management system for fleet fueling policy. We only get so much space in our column, so we look at one part: fuel cards, fleet cards, fleet credit card, fleet credit card services, fuel credit card, fleet fuel cards. We're going to put them all in one bucket for your company to control diesel fuel prices and help fuel savings. (We could go many other directions like truckstop, mobile fueling, diesel fuel additives, fuel hedging, but this is a good place to start.)
We have talked about fleet fuel cards before, and how the electronic capture of diesel fuel price data at the pump through the use of electronic fleet fueling cards means fleet managers now have timely, accurate data they can use to battle waste and abuse.
People are always surprised to learn that on average, over one and half percent of a company's fuel budget goes to fueling theft. We are talking about the kind of fuel theft that happens when someone at your company takes fleet fuel from you. Eighty one percent of the time this is the kind of fuel theft that takes away from your fleet management budget. The other 19 percent of the time is from an outsider stealing from you through siphoning or using your fleet fuel card without proper authorization.
If a driver makes a purchase outside parameters set by the fleet manager - say the driver buys premium rather than regular gasoline - this information is recorded instantly and appears on a regular billing statement along with the individual driver and vehicle number. Through the use of tools like exception reporting and purchase alerts, fuel managers can enforce cost-saving policies quickly, not weeks after the fact or not at all. Hours make differences.
We have all heard of management by exception, and when you're dealing with hundreds to tens of thousands of fleet fuel transactions, it is really the best way to go. With exception reporting, fleet fueling information is funneled through the company's policy parameters and is sorted to show where, when and by whom fleet fueling policies are being disregarded.
The more experience, time and expertise you have in your fuel management system as part of these fleet management services, the better your fleet company's operation is. Look out, with diesel fuel prices almost $3.50, people become a little more likely to steal.
Six ways to stay sharp in putting together an effective fleet fueling policy for your company:
1. Once your fleet fueling policy is in place, the next step is to communicate the new policy clearly to every driver in the fleet. Let them know that all fleet fuel purchases will be monitored and that all exceptions, especially repeated infractions, will need to be justified.
2. Set up the desired grade of fuel for each vehicle. Every time a fleet driver fills the tank with a premium or mid-grade fuel, the company wastes as much as 10 to 25 cents or more per gallon.
3. Enforce limits at the time of purchase. The most effective way to enforce a fleet fueling policy is to set limits so that purchases outside the limits are not even allowed. For example, if you restrict transactions to two per day, the third transaction will be declined at the point of purchase.
4. Restrict non-fleet fuel products and services. Many fleet managers find it helpful to place restrictions on the kinds of products drivers may purchase. These things could be soda, coffee, car washes, etc. This helps to control costs, quality and consistency.
5. Control the location, days, and times of fuel purchases. Frequent fuel purchases made with the company's fleet fuel card outside of business hours are often a sign of waste and abuse. Also look for fuel purchases that exceed fuel tank capacity, and eliminate multiple purchases in a single day whenever possible.
6. Make fleet drivers go to low diesel fuel price supplier and buy at locations with pay-at-the-pump. Drivers will save time and get on the road faster by only pay-at-the-pump locations. It will also further reduce any chance of non fleet fuel purchases inside the store.
Diesel fuel prices are going to hit $4 a gallon before they hit $2 a gallon. A good fuel card/fleet card program can help your fuel management system.
Glen Sokolis is president of Sokolis Group, a nationwide fuel management and fuel consulting company, www.FuelManagementSokolisGroup.com. You can reach him at firstname.lastname@example.org or (267) 482-6160.
Recent installments of "Friday Fuel:"
* "Are Fuel Prices Going To Break Your Budget?" 1/7/2011
* "Happy New Year, Diesel Fuel Prices!" 12/30/2010.
* "Why Diesel Fuel Prices Need Increased Taxes," 12/3/2010
* "Diesel Fuel Prices Going Up, Fuel Management Needed If You Want Fuel Savings">, 11/19/2010
* "Bad Fleet Fuel Auditing," 11/5/2010