Optimizing TCO by Effectively Controlling the Controllables

For the past several years, fleet operators have been navigating a number of significant challenges—supply constraints, persistent inflation, elevated interest rates, and economic uncertainty. As these disruptions begin to stabilize, many organizations are re-evaluating the fundamentals of fleet management, and that typically begins with optimizing the vehicle lifecycle to minimize total cost of ownership (TCO).

Throughout the vehicle’s lifecycle—buy, drive, service, and sell—there are countless variables that impact operating costs and performance, all of which are interconnected and affect one another. While fleet personnel can closely manage many of these variables, others are simply beyond your control. At Holman, we advise our customers to focus on the factors they can control and effectively influence the behaviors of key fleet stakeholders to help minimize the impact of the variables outside of their control—fuel prices, interest rates, and tariffs.

Ready to take control of these variables and maximize the potential of your fleet as a strategic business asset? Here’s a brief overview of how you can better control the controllables, influence key behaviors to create positive outcomes, and ultimately optimize fleet performance.

Buy & Sell with a Long-Term Vision

Establishing the optimal lifecycle for your vehicles is the foundation upon which your overall fleet strategy is built. What vehicles you acquire, how many you acquire, how often you acquire them, how you deploy these units, and when you remove them from service has a profound impact on virtually all aspects of your fleet operations—and your business.

Fortunately, fleet operators have direct control of perhaps the most important variables affecting their fleet – your acquisition and liquidation strategy. You should look to align the bookends of your vehicles’ lifecycle – buy and sell – with your overall business objectives.

We recommend tying your cycling strategy to something concrete within your company, taking into consideration any fundamental changes to your business that may be on the horizon. Identify what optimal looks like—both short- and long-term—and align your lifecycle strategy to achieve that vision. Most organizations will benefit from adopting a consistent annual replacement methodology that helps you avoid replacing too few, or too many, vehicles during a particular timeframe.

As you develop your acquisition strategy, you’ll also want to identify the optimal window for removing vehicles from service to avoid costly repairs late in the unit’s lifecycle. This will also help minimize downtime and lost productivity while also optimizing resale value and, in turn, lower your TCO. Typically, fleet operators are best served by selling vehicles while they still hold value on the secondary market, allowing you to recoup some of your investment. This decision also influences your capital expenditure forecast, which, in turn, impacts your acquisition strategy. Again, it is all intertwined.

By assessing factors such as total cost of ownership and utilization forecasts, you can ensure your acquisition and liquidation strategy serves as a strong foundation for long-term success.

Effective Behavior Management to Optimize Drive & Service

While fleet personnel have significant control over the buy and sell portions of the lifecycle equation, your influence on the remaining areas – drive and service – is much more indirect. Driver behavior is among the most important variables impacting your fleet. Whether it’s their performance behind the wheel or the role they play in maintaining your vehicles, your fleet drivers have a profound impact on the condition and performance of your vehicles, influencing everything from fuel consumption, repair costs, and resale value.

To minimize your TCO, you’ll need to positively influence your drivers’ performance and ensure they adhere to your maintenance protocols.

You can begin by monitoring driver behavior through telematics. This powerful technology essentially puts you inside the vehicle with your drivers and you can begin to identify high-risk behaviors such as speeding, harsh braking, and aggressive driving. By proactively addressing these issues, you can begin to mitigate the negative behaviors that reverberate throughout the vehicle’s lifecycle.

You’ll also need to be mindful of the role your drivers play in supporting your maintenance strategy.

When it comes to maximizing the useful life of a fleet vehicle, it’s all about your preventative maintenance (PM) strategy. A comprehensive PM strategy helps you control operating costs, increase reliability, and minimize unforeseen downtime while also ensuring your vehicles remain in top operating condition for as long as possible – and consistency is key.

Regularly completing routine maintenance – oil changes, tire rotations, brake services, etc. – dramatically reduces the occurrence of costly, more significant repairs. Collaborate with your drivers and emphasize the importance of PM compliance. Additionally, look to leverage maintenance data to ensure they adhere to the service parameters you’ve established. Minimizing PM variability is among the most effective ways to improve reliability and reduce your TCO.

Aligning the Entire Lifecycle

With insight to effectively control the controllables and strategies for managing key behaviors that drive positive outcomes, you can begin aligning every phase of the lifecycle. By taking a holistic approach to the vehicle lifecycle, you move beyond viewing fleet as a cost center and start managing it as a strategic investment that supports your broader business goals.

This crystal-clear understanding of your fleet operations and how each variable interacts , enables you to focus on the factors that are most critical to your fleet’s performance. Additionally, if your business has constraints or limitations in a particular area, you’ll have the insight necessary to adjust other aspects of your fleet operations accordingly.

For example, if your fleet faces capital constraints that limit your replacement cycles, you can focus on driver behavior and prioritize PM compliance to maximize uptime, control costs, and extend lifecycles. Conversely, if your fleet vehicles are subject to harsh operating conditions and incur significant wear, replacing vehicles at consistent intervals becomes much more critical.

There’s no one-size-fits-all approach to fleet management, and certainly no “quick fix”. Your fleet’s current performance reflects years of accumulated decisions and actions. Instead of seeking immediate results, leverage data to identify underperforming areas and prioritize the biggest opportunities for long-term improvement.

By taking control of the controllables and effectively influencing the behavior of key fleet stakeholders, you can turn your fleet into a strategic business asset that helps power revenue, not drive costs.