The best way to manage fuel consumption and increase profit

How to increase profit without any major investments

Fuel prices have reached a new high in 2022, and the post-covid and post-war inflation constantly threatens our livelihoods and profit margins. For most entrepreneurs and businessmen, a major revenue growth in the foreseeable future seems to be an unrealistic or hard to obtain dream.

Still, most difficult situations have a solution. But how can we deal with something that is beyond our means, like inflation?

Simply put – you can’t. However, when you can’t control external factors, you do your best to avoid them. To focus on what you can do from within. In other words, when you can’t beat the prices, you look for ways to manage costs better and save resources.

In the case of fleet centered businesses, fuel consumption is the most pressing concern and the biggest budget wrecker that can be cut down with proper surveillance of the vehicles’ condition.

How do you cut down on fuel costs?

  1. You calculate fuel consumption
  2. You analyze fuel consumption patterns 
  3. You create an internal rulebook
  4. You monitor your fleet
  5. In other words, what should you consider?
  1. You calculate fuel consumption

Driving environment

You need to calculate fuel consumption on a 100 kilometers distance. 

For the sake of accuracy, it is important to differentiate between driving environments. There are 5 driving environments you should consider (based on WLPT, explained bellow):

  • Urban (city) environment – low speed, of up to 55 km/h;
  • Suburban (town) environment – medium speed, of up to 80km/h;
  • Rural environment – high speed, of up to 90 km/h;
  • Highways – very high speed, of up to 130 km/h;
  • Mixed environment – with varying speed margins.

Aside from variations caused by the environment, driving style and car model will have a big influence on fuel consumption. For a better understanding of fuel consumption based on brand and model, have a look at this guide.

Evaluation methods 

1. The NEDC Driving Cycle

NEDC (the European Driving Cycle) is a fuel consumption measuring standard for new vehicles, established in 1970 and actualized in 1997. The results obtained during simulations – in an environment with temperatures between 20 and 30 degrees Celsius and with an average speed of 33 km/h – were contested, as many factors were not taken into account, such as driving environment variation or the technological advancement of certain cars. In addition, parameters such as acceleration patterns did not reflect real life conditions. 

2. The WLPT Driving Cycle 

In 2008, the European Union adopted a new standard in order to simplify and improve NEDC. WLTP (World harmonized Light-duty vehicles Test Procedure) used more realistic conditions to test vehicles and obtained higher values in the process. Conditions now included temperature variations, long distances, higher speed average and more practical acceleration patterns. 

Consequently, consumption tests are run in similar conditions and the results are much more accurate and realistic. 

What do these procedures mean for you?

First of all, these driving test standards determine the classification of vehicles based on brand and model and their corresponding prices. Thus, knowing how they are classified helps you make better buying decisions regarding vehicles. Secondly, they help you use more accurate formulas when calculating fuel consumption. 

Some practical advice 

  1. If the board sensor turns on – there are approximately 10 liters of fuel left in the tank. You should not fill it up until that point. 
  2. When you are filling up the tank, make sure you respect the model’s requirements.
  3. Write down the value of the fuel used to fill the tank.

Formulas  

1st Variation

The majority of vehicles show the average consumption of fuel in real time. If a car is not equipped with this kind of sensor, the calculation can be made in a simple way, based on two indicators – mileage (since the last fill), by using a mileage counter that can be reset back to 0, and the fuel quantity from the last fill.

The final formula will be:

NUMBER OF LITERS FILLED LAST / KILOMETERS x 100

Or:

L/K = X*100

If the traveled distance is 840 km and the fuel quantity is of 65 liters, then:

65l / 840km = 0.0773 x 100 = 7,73 l at 100 km

2nd Variation 

Another combination would be:

NUMBER OF LITERS x 100 / KILOMETERS

Or: 

L x 100 / K

And, using the same numbers:

65l  x 100 / 840km = 6500/840 = 7,73

  1. You analyze fuel consumption patterns 

Route type

It is important to always take into account the way in which fuel is being used. The main cause for waste is the use of fuel for personal matters. 

By differentiating between routes traveled for personal and business purposes, you can prevent unnecessary costs and maintain a good internal organization. Also, you can establish an internal rulebook for the conditions in which your employees can use the vehicles, based on timeframe or other criteria. 

Establishing routes

Aside from route type, the trip is also important in fuel management. A shorter trip evidently means using less resources. Route optimization, however, implies more than just choosing the shortest way to an address, such as prioritizing trips based on significance, on distance or on other factors. For this purpose, route coordination in real time is also essential while at the same time, knowing the location of the vehicles on the map and the status of the agents’ tasksnaturally leads to better management of operations and of fuel consumption. 

Driving style

The lack of attention or of a sense of responsibility when driving increases both the risk of accidents, as well as fuel consumption. By understanding the behavior of the drivers in traffic, you can have an overview of fuel waste and its causes. First of all, it is important to take note of tendencies such as:

  • Overspeeding;
  • Inadequate breaking and accelerating; 
  • Stationing with the engine turned on.

The observations regarding traffic behavior can then be centralized and turned into driving rules  – and any rule breaking should be followed by sanctions. 

3. You create an internal rulebook

An important step in cutting down on fuel consumption is establishing driving rules, based on the fleet’s activity and on analyzing driving behavior. 

On top of restrictions and warnings when employees break the rules, you can also include indications on how to drive to reduce fuel waste to a minimum. Such indications would include:

  • Progressive acceleration – an engine revolutions value of around 1800 in an urban environment saves you a lot of fuel;
  • Using the handbrake as frequently as possible – to get fuel consumption close to zero;
  • Driving without heating the engine beforehand – by avoiding this and by having a low engine revolutions value, consumption is considerably reduced;
  • Avoiding high speeds as it leads to a higher fuel consumption.

It is essential to also include rules about how and when to use the company owned vehicles. Establish a timeframe and conditions in which assets can be used for personal reasons, to avoid unnecessary costs or the lack of resources when required.

4. You monitor your fleet 

A good way to manage fuel consumption and your team’s activity is through a fleet management system centered around GPS Tracking technology. A GPS Tracking System revolves around GPS devices installed directly on the vehicles, which communicate information about the condition of the vehicle, of the engine, about location, speed and many other aspects.

By adopting this kind of system, you will know, first and foremost, in what state the fuel tank is. Also, by being aware of how your drivers use the engine and by analyzing driving behavior, you will be able to have a clear view of fuel waste and of how you can prevent that from happening. 

Moreover, aside from using the data sent by GPS devices about the condition of the vehicle and about routes and traffic mistakes to compile the internal driving rulebook with, you will be able to:

  • Know the whereabouts of your drivers and vehicles, at any time;
  • Give customers accurate time frame estimations;
  • Always know the condition of  your vehicles and their availability;
  • Find out right away what driver is nearest to a location;
  • Have access to automated information archives;
  • Keep track of customer meetings and tasks.

To make sure drivers respect the rules, a GPS system gives you the option to set up personalized alerts for overspeeding, extensive stationing and for other useful factors.

Having a personalized database and the possibility to convert information into useful reports means you will never lose track of your fleets’ activity, of tasks and of the state of the vehicles. Moreover, data processing in real time equals coordination that is always up-to-date with current needs. This way, you can avoid unnecessary trips and optimize routes will in real time. 

Aside from fuel consumption optimization, a GPS monitoring system can contribute to the improvement of all fleet operations, such as:

  • The prevention of misuse and theft of the vehicles  – Aside from monitoring the condition and location of your vehicles, you will have access to road data to make sure they aren’t being used  for personal gains, as well as to be able to identify and find stolen assets.
  • The improvement of traffic safety and driving behavior – Overspeeding, over accelerating and other such tendencies behind the wheel increase traffic risk as well as fuel consumption. In the long run, this means material losses and damage to brand image and trust. Monitoring driving patterns will prevent such negative scenarios.
  • Improved communication –  Accompanied by the proper software, all data will be stored, processed and interpreted in real time, so that it will be easy to coordinate activities and generate and assign the right tasks.
  • By reducing maintenance and operational costs – With a GPS Tracking System, you will be notified when a vehicle approaches tax and service related deadlines. You will also be notified if the drivers do not use the vehicle in accordance with established guidelines, showing signs of aggressive driving or other inappropriate behavior.

5. In other words, what should you consider?

  1. For fleet centered businesses, fuel consumption is the most pressing concern and the biggest cost that can, however, be greatly reduced.
  1. To reduce fuel costs – calculate fuel consumption, analyze fuel consumption tendencies, create an internal rulebook for driving, and monitor your fleet. 
  1. You calculate Fuel consumption on a 100 kilometers distance and for 5 different types of environments: urban (city), suburban (town), highways, rural and mixed. 
  1. Make sure that you only fill up the tank when needed; that you respect the car model’s requirements; and that you take note of the quantity of fuel used for the fill. 
  1. The calculation formula is the quantity of the fuel filled last divided by the mileage traveled, multiplied by 100:  L/K = X*100 or L x 100 / K.
  1. In analyzing fuel consumption, take into account route type,the way to establish routes, and the drivers’ traffic behavior.
  1. Use the data obtained to establish an internal rulebook, based on fleet activity and on driving patterns.
  1. Monitor your fleet using a GPS Tracking System that uses devices set up on the vehicles to communicate relevant information about them in real time.
  1. Centralize your data, set up personalized notifications, and make reports for better fuel and fleet management.

Find out more about GPS based tracking systems, here.

Before leaving, don’t forget the following things are the most efficient and the less expensive way to grow revenue:

  • Preventing unnecessary costs and
  • A good management of investments.

Spend your money wisely by investing little and profiting to the fullest.