According to the latest Fleet Advantage survey, 31.3% of those doing the finance don’t understand some of the costs of running the fleet. This includes procurement and cost management.
Fleet Advantage says there is a significant lack of communication between fleet operations and the finance department. And with close to a third not quite understanding what is going on, the loss in terms of money, efficiency and customer attrition could be substantial.
This not only applies to operators with large fleets. For small operators, effective communication is even more important because the losses can have more consequential damages. The operations, which includes drivers, dispatchers and bookers have to be on the same page with those in finance.
Communication Challenges in Transportation Companies Hinder Success
As Brian Holland, President and Chief Financial Officer at Fleet Advantage explained in the press release, there are different priorities. Holland said, “It is evident that both the operations and finance departments are focused on different priorities in terms of fleet management and costs, and this poses a challenge to collectively achieve a singular organizational goal.”
He goes on to say, “Hopefully, this survey will shed light on these communications challenges so that both departments can work closer on a fleet that operates more smoothly, with lower costs.”
The survey was carried out by Fleet Advantage, a company specializing in truck fleet business analytics, equipment financing, and lifecycle cost management. The respondents in the online survey were made of industry insiders including 20% VPs, 40% directors, and 40% managers.
In addition to the 31.3% mentioned previously, 37.5% find there is an obstacle when it comes to operations understanding the financial metrics, goals and performance of the fleet.
Those in finance also seem to be almost equally in the dark, as 34.4% stated they don’t know the benefits of investing in new trucks. The problems also extend into driver turnover and overall communications between both departments.
A great example is 18.8% of finance never ask about any total cost of ownership questions, while 43.8% of operations ask the initial cost of truck Vs. operating costs.
This is resulting in operations and finance not seeing eye-to-eye. Cost reduction and improving cash flow is seen as what the finance department is most concerned about by 53.1% and 40.6% of the respondents respectively.
At the same time, 62.5% of fleet executives focus more on maintenance and repair (M&R) costs when they calculate the ROI for their fleet. Another 75% indicated the M&R data is given to the finance department to determine the capital expenditure for new equipment.
As Holland said, there seem to be different priorities.
You can look at the infographic below for the rest of the data in the survey.
Image: Fleet Advantage
This is true. If something is not properly communicated, then there is a cost to go back and clarify things. It is important to also look at this process closely.