Reducing Fuel Cost - Research Paper Example

? REDUCING FUEL COST Number) al Affiliation) Introduction With the increase in the fuel prices and competition especially in the past two decades, it is important for the transportation industry to find innovative ways that will assist in reducing fuel costs so as to meet the goals of an organization. An increase in costs affects the performance of any organization as it leads to a decrease in the profits. Most transportation organizations have over the years tried to address this issue through improvement in equipment such as tires and having efficient engines, new rings and fleet operation rules. In 2008, a total of 758 companies in the trucking business went out of business because of rising fuel prices. This shows how crucial this issue is in any trucking company. With the uncertainty in the prices, companies lose a lot of money when there is a spike. This is why it is important to reduce the costs as much as possible. This document tries to evaluate available methods of reducing fuel costs in the company by using equipment that is the most efficient and socially conscious. It also looks at other ways that relate to rules and software which the company can employ. It also considers efficient operating methods that can help achieve this saving. Finally, it looks at the results the company can expect from employing the different methods. Body Looking at Peregrine Trucking Company, the fuel price is one of the highest direct costs it incurs in its operations. This is because it is in the transportation industry. These costs affect the performance of the company in terms of profits where an increase in costs leads to a decrease in the profits (Taylor & Weerapana, 2009). This is the reason why it is important to evaluate the potential of reducing fuel cost to gain a competitive advantage. The company can adapt efficient operation rules which can include training employees on how to save fuel, e.g., on the importance of not leaving a vehicle idle as it can consume over one gallon of gas per hour when it is idling. This can also lead to an approximate of 70,000 miles of vehicle wear and tear in the engine if the trend continues for a year. A potential result of this rule is saving in the fuel cost and costs associated with vehicle spare part replacements. Another rule is for employees to ensure that the mile-per-gallon is as high as possible. To ensure that they abide by this rule, the company can motivate employees by providing incentive plans in form of rewards for providing the best records over a period of time. Employees also need proper driving skills through training as some may be forceful when hitting the brakes, while others may tend to drive fast around corners, which results to an increase in fuel consumption. Training also helps reduce the period that the trucks idle as employees will learn to appreciate the effects of doing this. It is important for drivers to be informed of the importance of turning off the engine when the truck is not moving, in order to avoid burning up fuel unnecessarily (United States, 2008). Drivers are also required to be trained on avoiding shifting too many gears and try to keep the vehicles continuously moving instead of stopping and then starting again. They also need to be trained on the importance of avoiding overspeeding and the use of natural speed instead of the accelerator when going up and down hills. All these will help to reduce fuel consumption. Training results in better drivers and efficient working. Looking at the equipment, the company can adapt, first and foremost, the use of speed governor. It may seem as be increasing the expenses of the company; however, the long term benefits are visible. Speed governor reduces the maximum speed in trucks, thus preventing drivers from overspeeding. An extra mile or two per hour that can be saved as a result of using the speed governor can save fuel, which, in turn, reduces the costs incurred by the company. The company can also adapt truck routine software that will provide in-cap navigation service to enable drivers plan the most accurate and timely routes so as to save fuel that would be used if an unsuitable route were taken. With an increase in the cost of fuel, most companies in the industry are adopting low emission, which is also fuel efficient natural gas rings (United States, 2008). The company should also consider adapting this so as to improve aerodynamics and reduce fuel consumption as they are efficient. This can also help save on costs in the future especially if the fuel prices continue to increase. The company needs to also streamline the designs of vehicle cabs with features that will allow wind to flow around the cab freely and which will help the trailer to cut down the drag and fuel costs. The company needs to select trucks that have turbocharger engines as they tend to consume less fuel than other kinds of engines. The engine also converts the heat that it produces during the travel into energy source. This technology was introduced in the automobile industry in the 1990s and has been very effective in saving costs. It is estimated that when tires are properly maintained and inflated and vehicle oil is changed on a timely basis, the company will also be able to save approximately up to 10% on fuel. The company can also adopt Telematics software which allows communication between the truck, driver and the headquarters. This software helps in reducing fuel cost by advising on the best route to follow, taking into consideration the condition of the road and the traffic (National Research Council (U.S.), 2010). This system also shuts down if the truck stays idle after a considerable period of time and depending on the habits of the driver, sends information to the headquarters. Information sent can be used for evaluating the employee so as to find out any training needs required to make an employee perform better. If this system is in combination with good record keeping, the company can be able to create helpful strategies of buying fuel at low costs by identifying the most favorable gas stations as per the truck location and route. Apart from the use of Telematics, the company can install GPS in vehicles to alert operators when trucks are working past their authorized working hours. This will reduce fuel consumption that will be useful during business hours. Considering all the methods, it is also important to maintain proper records. It is a big challenge to manage how the company is consuming fuel when it is stolen. Maintaining track of fuel purchases is a very effective way of managing these expenses. Proper records can give the company an opportunity to save where the records can help identify areas to save. For example, with the help of Telematics software, these records can also help identify stations where fuel can be purchased at a discount, thus making some savings. These records can also include data on mileage which can help keep track of the distance covered so as to ensure that there is no unauthorized use of the trucks. Unauthorized use costs the company a lot of money as this use translates to increases in the fuel cost and costs related to wear and tear. Finally, the company can adapt policies that will help reduce fuel consumption, such as having regular checks and maintenance of the trucks. This implies that there is a check on the vehicles, which ensure that there is no serious wear and tear that leads to an increase in fuel consumption. Policies can also include frequent trainings after the initial training so as to ensure that employees are up to date with all the rules and procedures that ensure efficiency while working. These trainings can be held as and when needed by the employees and for this reason, there is a necessity for the company to have policies on conducting appraisals regularly to determine these needs. Conclusion In conclusion, as fuel prices change very often and do not come down in most cases, it is important for the company to find ways to save costs. Implementing the methods will ensure that the company saves on costs as there will be well-trained employees who will work efficiently by, for example, using routes that are most convenient. Better equipment and methods of operation ensure that there is job efficiency. The methods will also help the company be socially conscious on issues relating to carbon printing, as it will help to reduce greenhouse gas emissions (National Research Council (U.S.), 2010). It is also evident that in the long run, the stockholders will benefit when adapting the methods since a reduction in costs leads to an increase in profits, which affects them positively. This is important as in any company, one of the main objectives is to satisfy the stockholders who want to profit from the company’s positive performance. This good performance will also help the company in attaining and maintaining a competitive advantage and reduce competition. For this reason, it is important for the company to adapt the methods in its operations. References United States. (2008). Rising diesel fuel costs in the trucking industry: Hearing before the Subcommittee on Highways and Transit of the Committee on Transportation and Infrastructure, House of Representatives, One Hundred Tenth Congress, second session, May 6, 2008. Washington: U.S. G.P.O. National Research Council (U.S.). (2010). Technologies and approaches to reducing the fuel consumption of medium- and heavy-duty vehicles: Washington, D.C: National Academies Press. Taylor, J. B, & Weerapana, A. (2009). Principles of microeconomics. Mason, OH: Cengage Learning. Read More