Arval’s vision is that there is the potential of taking more than 10% of total costs out of running a fleet when all areas of fleet costs are identified and understood. That is why Arval, Europe’s leading fleet and fuel management company, has worked with the University of Buckingham to develop the first ‘true cost of operations model’ in the market. This is a tool which will allow them to achieve unrivalled levels of accuracy in fleet planning and decision making while working hand in hand with their unique approach to outsourcing.
Operational, fiscal, environmental, financial and HR issues make fleet management one of the more complicated parts of overall company management, so relieving fleet managers of the pressures of the more administrative and tactical areas of fleet operation means that they can focus on more strategic goals.
This holistic approach will not just be used to identify costs of operation, but also to measure CO2 emissions, carbon footprint and to create a safety index. To do this there is a clear process. Initially, individual fleet costs are identified and compared to a benchmark. Target costs are then set for the fleet and a plan agreed as to how to move from current to target costs. The model then supports the fleet operator in developing, implementing and monitoring programmes of cost reduction.
In the past fleet calculations have suffered from the absence of real costs, whereas the total cost of operations tool places the full spectrum in scope. This ranges across: vehicle selection, capital costs, residual values, operating/maintenance costs, tyre costs, fuel costs, CO2 footprint and accidents and road safety.
Professor Peter Cooke, Head of the Centre for Automotive Management at the University of Buckingham, comments:
“The automotive industry and the company car are in a state of flux, even revolution. This means there is a fundamental need for ever-tighter management of true costs of ownership.”
“Total cost of operation and budgeting require a holistic approach. The tendency was for certain costs to be omitted from the calculations. That’s why this new model stands apart. It is the most advanced and comprehensive tool of its type which is why we called it ‘True Cost of Operation’.”
“This is a revolutionary approach to fleet and cost management and an exercise that every serious-minded finance director and fleet executive ignores at their peril.”
The new model took six months to develop by the Centre for Automotive Management at the University of Buckingham, in conjunction with Arval’s in-house consultancy team. It provides fleet operators with an invaluable management tool for true cost management and reduction that can penetrate groups of units within the business and also drill down to individual vehicles.
Using the insight provided by the model, Arval’s consultants will support customers in implementing a programme of strategic cost reduction and fleet improvement using their experience and expertise.
With this development Arval are expecting to be asked to support fleets further with a unique approach to outsourcing which will see the responsibility for the operational running and administration of fleets being managed by them. This will enable the professional fleet manager to focus on the delivery of strategic improvements to the fleet, while ensuring that the complex legal and legislative obligations are completed.
Jenny Powley, Arval Director Large Corporate Group, comments:
“With a great deal of uncertainty created by current economic conditions, managing costs is at the top of the business agenda. That’s why this market leading tool will be essential in supporting our customers to not only understand their true costs but to manage them down.”
