Take Control of Your Fleet: 11 Tips to Reducing Costs with Risk Engineering

Jan 26, 2021 | Business Insurance

A 2019 survey found that saving money was the top goal for fleet managers. How do you reduce costs without cutting corners?

Risk engineering can help. By identifying potential risks and creating a plan to minimize them, you can save money while actually improving safety.

Implementing risk engineering processes can improve your customers’ experience too. You can offer a lower price, and your drivers will still arrive safely and on time. You create a better work environment for your drivers and other employees.

Find out more about how risk engineering can be an important part of your fleet management strategy. Learn how you can reduce costs, improve safety, and protect your business.

Risk Engineering in Your Risk Management Plan

A strong risk management plan is an important part of ensuring the health of your business. Risk engineering is a process within your risk management strategy. It helps you reduce the cost of risk.

Risk Management

Your business’s risk management plan helps you identify, assess, and control threats to your capital and earnings. Risks can come from many different sources, including legal liability, flawed strategic management, IT security threats, accidents, and natural disasters. An effective risk management plan helps you minimize risks before they happen.

Your company will save money by successfully implementing a risk management plan. You’ll have procedures in place to avoid possible risks, minimize their effects if they occur, and handle the results.

Risk Engineering

Risk engineering techniques work within your risk management plan. They support your risk management in several ways.

Risk engineering gives you an early warning about potential threats. You can reduce your exposure and lower the cost of risk. Risk engineering helps with controlling risk by giving you guidance on best practices for loss control.

Risk engineering saves your business money. Preventing a loss is less expensive and safer than trying to restore a loss after it happens.

Developing a culture within your company that is more risk-aware can have a positive impact on business continuity and legal compliance. You may also have fewer insurance claims. The work environment is safer for employees and customers.

Reducing Fleet Costs with Risk Engineering

To reduce your fleet costs, a risk engineering process can help. You’ll save time and money by reducing the risk your drivers face on the road.

First, you need to establish the criteria you’ll be using to evaluate risks. Then you can identify and define potential risks that would increase your fleet costs.

Once you identify possible risks, you should analyze them. You need to know the probability that they will occur and what the consequences would be. You can then decide if a risk is acceptable based on your goals for reducing costs.

For risks that are the most likely or that would result in the highest costs, you can make a plan to deal with them. Strategies include processes to avoid, reduce, or share the risk.

You’ll need to keep monitoring potential risks and your overall plan. This lets you be proactive in addressing new risks and staying on top of the ones you have already identified. You can increase your future opportunities for growth.

The strategies and plans you develop with risk engineering can also contribute to your fleet safety management program.

1. GPS Tracking and In-Vehicle Monitoring

When you’re trying to identify and minimize the cost of risk in your fleet, GPS tracking software, and in-vehicle monitoring are valuable tools.

This type of software can alert you when a vehicle has a maintenance issue. It can also be sent automatic engine diagnostic alerts if a problem occurs.

GPS tracking lets you see the vehicle speed, location, and engine performance for each vehicle in your fleet.

You can easily access the repair and maintenance history of each vehicle. You can set reminders for preventive maintenance. You can keep more accurate records. This allows you to predict maintenance costs and make more informed decisions about replacing vehicles.

Finally, when drivers know that you’re monitoring their driving, they’re more likely to try to drive more carefully.

2. Preventive Maintenance

One of the most important things you can do to reduce risk potential and lower your fleet costs is preventive maintenance. Following an accurate preventive maintenance plan will reduce how much you have to pay for repairs.

Scheduling maintenance proactively reduces the need for urgent repairs, which can take a vehicle out of service. You save time and money by keeping your vehicles on the road. Regular maintenance will also give you a higher resale value for your vehicles.

An in-vehicle monitoring system lets you easily track data on engine use, mileage, and fluid levels. Keeping detailed, accurate records also helps you avoid doing any unnecessary maintenance work.

3. Avoid Unnecessary Maintenance

Preventive maintenance is important, but performing maintenance too frequently wastes your resources. Many light-duty fleet vehicles only need maintenance every 6,000 to 7,000 miles. The vehicle manufacturer’s recommendations can guide your maintenance scheduling.

A maintenance cycle with longer intervals means that completing the scheduled maintenance on time is even more essential.

4. Reduce Lifecycle Costs

Many people think that keeping fleet vehicles as long as possible saves money. However, keeping a vehicle past its optimum economic life will cost you more in maintenance, repairs, and fuel. It can also be less safe.

You need accurate data to fully optimize your replacement cycle. When you consider factors like the cost of a new vehicle, projected resale value, fuel economy, and scheduled maintenance costs, you can calculate the best time to replace your vehicles. A short-term and long-term plan will help you maximize the cost savings.

5. Driver Vehicle Inspection Report Compliance

The Federal Motor Carrier Safety Administration requires drivers of commercial vehicles to complete a pre-and post-trip inspection each day. The Department of Transportation enforces compliance with Driver Vehicle Inspection Report (DVIR) regulations. Inspecting the vehicle helps ensure the safety of the vehicle and the driver.

Drivers should understand the procedures for pre-and post-trip inspections. They should also understand why these inspections are important. You should establish a clear chain of communication so drivers know who to inform if they find a problem.

The vehicle inspection report includes parts such as:

  • Brakes
  • Tires, wheels, and rims
  • Turn signals, brake lights, and headlights
  • Windshield wipers
  • Safety and emergency equipment

You need to keep DVIRs for at least three months. Drivers can complete a paper or electronic DVIR.

Electronic Driver Vehicle Inspection Reports

Electronic DVIRs are more efficient for you and your drivers. Drivers can complete the DVIR using a smartphone or tablet. Features of the electronic system help ensure that a driver actually spent enough time to have conducted a complete inspection.

If a driver notes a problem, an electronic DVIR immediately sends the report to the service department. You can repair your vehicles sooner.

Everyone from the driver to the mechanic can read and understand an electronic DVIR. You eliminate errors that can occur from misreading handwriting, improper filing, or missing details.

DOT Enforcement

Motor Carrier Safety Assistance Program inspectors conduct roadside inspections. If a carrier isn’t in compliance, you face a fine from the DOT. If the inspection finds that a vehicle is unsafe, the vehicle is out of service until it has been repaired.

Violations can lower your Compliance, Safety, and Accountability (CSA) score. A lower CSA score can hurt your sales, increase your insurance premiums, and bring more inspections.

Even if your fleet vehicles don’t fall under the regulations that require a Driver Vehicle Inspection Report, vehicle inspections are well worth the time.

Staying in compliance with DVIR requirements keeps your drivers and vehicles safe. You avoid possible fines, and you keep your vehicles on the road.

6. Avoid Electronic Logging Device Violations

An electronic logging device (ELD) synchronizes with a vehicle’s engine to record driving time. Federal Motor Carrier Safety Administration regulations govern the use of ELDs.

The ELD rule helps prevent tired driving. It improves safety for commercial drivers, their passengers, and other drivers.

If your drivers are subject to the ELD rule, a safety official can request their data to ensure compliance with the limits for their hours of service. Fines for an ELD violation range from $1,000 to more than $10,000. Multiple violations will lower your CSA score.

In addition, commercial drivers who carry property will be out of service for 10 hours if they don’t have an ELD. Commercial drivers who carry passengers will be out of service for eight hours.

Avoiding violations improves fleet safety. It also saves money and prevents lost time from out-of-service drivers.

7. Improve Your Routing

Improving your routing reduces wear and tear on your vehicles. It saves money on fuel. It can also improve safety.

GPS tracking makes it easier to optimize your routing. You’ll reduce mileage, which extends the life of tires, belts, and other parts of your vehicle. Your drivers can navigate unfamiliar locations more easily and efficiently. Drivers can avoid congested areas, which reduces idling and improves fuel economy.

In addition, studies have shown that telling your drivers you’ll be auditing their mileage reduces unnecessary driving.

8. Promote Safe Driving Behavior

Monitoring and modifying driver behavior can reduce costs and improve fleet safety. First, your fleet hiring manager should request to see all applicants’ motor vehicle records. You can avoid hiring bad drivers in the first place.

When you hire a new driver, the onboarding process should include a comprehensive explanation of the company’s safety policies. Drivers should receive training in the vehicle they’ll be operating if they don’t already have experience.

Tracking the safety profiles of your drivers can prevent accidents and other safety issues. Driver management software lets you identify hard stops and starts, speeding, aggressive driving, and other poor driving behaviors. You can give these drivers customized training and assistance.

Data about driving behavior can help prevent crashes. For example, the National Highway Traffic Safety Administration has identified speeding as the top factor for drivers involved in fatal crashes.

Good driving behavior reduces repair costs and prevents injuries. You can also lower your insurance premiums.

9. Promote Fuel Efficient Driving Behavior

You can encourage more efficient driving behaviors to reduce fuel costs. Aggressive driving, hard stops and starts, and speeding are examples of driving behavior that is not only dangerous but also increases fuel costs.

Driving the speed limit uses less fuel. In addition, it’s safer. Vehicle tracking systems can send alerts to the driver or the fleet manager when a driver exceeds the speed limit.

Maintaining the right tire pressure also reduces fuel consumption. Under-inflated tires reduce your fuel economy by as much as 10%. Properly inflated tires are safer, and they last longer.

Drivers can also save fuel by reducing their use of air conditioning at low speeds. When driving at less than 35–40 mph, opening a window is more efficient.

The price of fuel can vary depending on the location of a gas station and competition in the area. If your drivers plan ahead, they can avoid urgent refueling at more expensive gas stations.

10. Lower Your Insurance Premiums

Your fleet insurance company calculates the rates for your commercial auto policy based on an assessment of risks. Risk engineering quantifies the risk exposure of your fleet and the internal controls you put in place to deal with those risks.

Creating and maintaining a risk management plan shows your insurance provider that you’re aware of the risks your fleet faces and are committed to minimizing them. This makes your company less of a risk to insure. Your policy premiums will be lower if you’re a lower risk for the insurer.

Risk Engineering and Fleet Insurance

When you want to reduce your fleet costs, risk engineering can be an important part of your strategy. You reduce the risk exposure of your fleet. This saves money and improves safety.

Your fleet insurance is another important way you can cut costs and reduce risk. You need enough commercial auto insurance coverage to fully protect you and your business from claims.

You want to find the best coverage for the most competitive price. Your risk management and fleet safety management plans are a step toward lowering your premiums. However, not all insurance companies will give you the coverage you need.

The experienced professionals at Advantage Insurance Solutions will work with you to tailor a policy to the needs of your business. We represent insurance providers who are both affordable and responsive if you do have a claim.

Contact us to schedule a meeting. We look forward to helping protect your business from risks today and in the long term.

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