In the fleet management industry, everybody knows the Total Cost of Ownership (TCO) as a standard for evaluating the cost of running a fleet. But nevertheless, companies big and small have to pay attention to gain a more accurate look at what they are really spending while travelling from A to B. Not only by paying attention to the fleet but with a holistic view extending the focus on the whole company mobility costs. Let’s have a closer look to the Total Cost of Mobility (TCM).
TCO and TCM – what’s the difference?
In a nutshell, TCO – basically the cost of a full operating lease – is calculated per car. On the other hand, TCM, which considers all aspects of mobility, is calculated per mobility user. TCO’s biggest shortfall stems from the fact that it only factors in costs related to a car and car usage. TCM makes up for this gap by shifting focus from the vehicle to the mobility user. Broader in scope, TCM encompasses everything from a car and its related services, to travel management, to all other topics related to how people move from one point to another. This includes things like hire cars, taxis, parking, flights and carsharing. In sum, TCM considers all components of mobility today.
TCM – a key metric for businesses
So now that the main difference between TCO and TCM is clear, you wonder why it’s important to understand the cost per company instead of per vehicle. One word: optimisation. Knowing the TCM gives a company greater transparency of its total mobility expenditures, which helps optimise where the money is flowing. With this valuable insight in hand, fleet managers should extend their vision to business travel and car usage policies to fill in any gaps and optimise costs.
What it boils down to: users have the greatest influence on a company’s mobility costs. But they are not the ones footing the bill; the company is. For instance, a company can benefit from more efficient cars, but users typically could care less – they just want something that works. The same can be said about eMobility and carsharing, which can also have a positive impact on both TCM, and TCO.
Driven by mobility profiles
Another important aspect for companies to consider are driver profiles. Urban drivers, on the go in city centres, consume 20-30% more fuel than suburban counterparts. By selecting vehicles most suitable for the given driver profiles, fleet decision makers can decrease their TCM, and often shrink their company’s carbon footprint in the process.
Three tips using TCM to lower mobility costs
Many companies are in the dark about TCM and still use TCO as a metric by default. It’s high time, however, to start looking at TCM instead. Many companies are open to doing so – the biggest hurdle is raising awareness about TCM and generating interest in exploring options. Next, companies should evaluate the usage profiles of employees to identify gaps. Finally, they should develop a clear mobility plan and speak openly about it with employees. Ultimately, the goal of TCM is to encourage companies to think broader about mobility and take more elements into account. This in turn opens up a world of new solutions!
Today, companies with high mobility costs are already seeking ways to better manage their budget. Fleet managers can greatly facilitate these efforts by looking at the TCM. Maybe it’s time to update the travel policy. Or maybe eMobility or carsharing are financially-sound options. TCM can reveal where the opportunities for optimisation lie.
What other advantages do you see in using TCM as a metric over TCO? Tell us!