The Car and Truck Fleet and Leasing Management Magazine

When You Move to Managed Fuel, Assess Your Needs Accurately

March 2002, by Paul Dexler - Also by this author

In a series of articles that ran in Automotive Fleet last year, we detailed some of the reasons why a managed fuel program can be of benefit to your company. The consensus was that a company putting a managed fuel program into place will likely realize savings of at least 15 percent in overall operation costs over not using fuel management. An important factor was those basic savings bore no relationship to the size of the company fleet.

For example, Jim McCarthy, fleet manager for Siemens Shared Services, runs a mixed car/truck fleet of more than 7,000 vehicles. He noted that when switched to a fuel management program, "We were able to get a more complete picture of each driver's operating characteristics, pick out problem areas such as the wrong grade of fuel being pumped, and monitor any and all incidental expenses incurred."

Pat Grove is fleet/property manager for the Air Conditioning Co. in Glendale, CA, who runs a small fleet of mostly pickups and vans. He likes the ability to terminate a card instantly. "We deal with union workers. If they work out, we keep them full time, if not, we let them go. This way, we can cut the PIN number, and if he's kept the card he can't use it" Grove added "They give us a printout statement each month, that shows purchases by vehicle number. It gives me the miles they traveled that month, how many miles per gallon the truck was getting, and if it's blatantly different, then we can contact the driver and find out if they're mismanaging their fuel purchases."

On the other hand, Ana Flood, assistant to the treasurer/CFO of Muropharm in Tewksbury, MA, runs 200 vehicles. She said of the fuel management program she initiated in 1999, "The benefits are numerous. For example: less paperwork, no monthly expense reports to track, and fuel type and price are being properly monitored, managed and controlled."

Find the Existing Numbers

The more carefully you can design the program to fit your company's needs, the greater the savings can be. In this article, we will go over some of the considerations you need to take into account when developing your program.

Start out by going through your current fuel charge, billing and payment systems as carefully as you can. Find out what your actual costs are. Without an established baseline, there is no way you can plot any benefits against your current costs. You have to know where you're coming from in order to develop a correct course toward where you want to go.

Find out what it costs to cut a check in your accounting department. Determine the amount of time it takes to decipher a fuel receipt and enter it into your system. Track each of your current fuel-related expenses, to build a baseline from which you can work.

Multiple Suppliers Are Available

There is a long list of possible fuel management suppliers from which you can select. Once you have determined what your needs are, present them to several suppliers to see which one will most closely match those needs.

Fuel companies and major credit card companies all have programs through which a fleet can manage its fuel purchases. In addition, there are companies specializing only in fuel management for fleets. A suggestion might be to pass your requirements by one or more from each type of company, to see how, or even if, their responses differ. Most fuel management program providers will fine-tune their program for your specific needs, so do not hesitate to ask for special considerations.


Multiple Tools Are Offered

Here are some of the tools offered by fuel management providers, not necessarily in any order of importance. Your actual order of importance is determined by you

Are you and your company looking for the best fuel prices, or looking for maximum convenience, or are you only concerned with data capture and controls? Any one, or all three, of those goals can be reached through the use of these fuel management tools.

  • Driver convenience. One card may be good at thousands of fueling stations across the country.
  • Increased security. You can set the PIN number requirements for driver or vehicle.
  • Electronic transaction capability. Most stations offer this added convenience.
  • Custom-designed billing. Payment can be set up monthly weekly, or whatever frequency you need. Payment can be electronic.
  • Multiple reports. Reports can help you see and control every aspect of the drivers' use of the fuel cards.
  • Exception reports. These can help you pinpoint vehicle performance and maintenance needs, as well as pinpoint problem vehicles.
  • Tax-exempt fuel services. Most fuel management providers allow tax-exempt entitities to have their adjustments handled at the pump at time of purchase.
  • Direct account access. Customers can view account status directly from their own desktops.
  • Service staff available 24/7. In an emergency situation, no matter what the day or time, service personnel are available to assist.


Reducing the Human Cost Factor

One saving that is not directly addressed by the various fuel card providers, but is certainly an important cost factor in your operating expenses, is the human factor. Every time someone inputs data at a keyboard, there is an error factor involved. The automated systems in place at fuel management providers virtually eliminate the need for re-keying any data. From pump to final statement, there is no keyboarding involve, which means savings in terms of accuracy as well as of time. Last year, when AF conducted a survey of fleet managers on the subject of fuel management, several indicated that their operations were simplified and sped up, while at the same time more detailed information was available.


No More Twinkies

In unmanaged systems, drivers occasionally slip in a snack along with their fuel purchase, knowing the notation on the receipt will probably go unnoticed as it course its way through the corporate accounting system. With a fuel management system in place, these little high-calorie extras cannot happen.

A more common occurrence that can no longer happen in a managed fuel system is the pumping of a higher grade of fuel than is required by the vehicle.


Scotch the Urban Legend

There is an urban legend that if a vehicle runs well on regular grade fuel, it will run "better" on premium. As with other urban legends, this is absolutely untrue. With a modern vehicle, if it is designed to run on regular, that's all it needs. Anything else is a needless expense. At 20 cents per gallon extra for premium on a 15-gallon fill, that's an additional $3. Do that twice a week, 52 weeks a year, and it amounts to $312. Multiply that by even 100 vehicles in a fleet, and you have to account to finance for an extra $31,200 over the course of a year.


What Works Best for You

While you keep all this in mind, we'll repeat what we said at the start. You have to take an in-depth look at your current operation. Most fuel management providers will be happy to sit down with you and review where you might save money, estimate what your potential savings could be, and lay out a custom-designed program that is best suited to company needs. With the right program in place, you will find that you will have everything you are looking for, with less work and at a lower cost.


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