The solutions being employed by the UK’s largest fleet operators present a blueprint for the industry. Jonathan Manning reports
If there’s one factor that unifies Britain’s largest and most diverse fleets, it’s a relentless quest for efficiency.
The business and operational demands of each fleet are unquestionably unique – even different divisions within the same organisation can have highly individual fleet requirements – but the overarching drive for higher productivity levels at lower cost is common to all.
With thousands of vehicles on the road, these big fleets have the economies of scale to drive real change through the entire industry.
Achieving savings of just a few pounds per year per car or van, when multiplied by a thousand-plus vehicles, can make major contributions to corporate bottom lines. Conversely, failure to tackle seemingly minor issues, when multiplied by thousands of vehicles, can become dauntingly expensive.
Keeping a lid on costs, maximising value from contracts, forging strategic partnerships, seizing opportunities presented by new technology, preparing for a zero emission future, managing occupational road risk, and forecasting the ramifications of Brexit and the long-term future of business travel mean there’s no shortage of challenges resting in the in-trays of fleet managers.
And these are not challenges that can be tackled by fleet departments in isolation. Effecting change across companies and organisations of this size is a huge management undertaking.
New initiatives demand the involvement of several internal departments, as well as drivers, trade unions and suppliers.
But it’s those learnings from which all fleets can benefit, whether it’s cost reduction or tackling driver safety.
Value for money
If pound signs dominate their spreadsheets, it’s the need to deliver best value that preoccupies the managers of the UK’s biggest fleets.
As austerity maintains its vice-like squeeze on UK plc, there’s a constant focus on achieving greater value from vehicles.
Utilisation rates are under the microscope as fleets “use technology to analyse how we use our fleet and how we could better use it to sweat the assets more”, says Dale Eynon, head of Defra Group Fleet Services, where he is responsible for 6,000 vehicles.
At Anglian Water, telematics data is providing the statistical evidence for Stewart Lightbody, head of fleet services, to identify under-utilised vehicles among its 1,800 vans. These LCVs can then be taken out of service or redeployed, allowing the company to grow without increasing fleet size.
The same data source is also delivering bigger, business-wide wins as the telematics system integrates with Anglian Water’s work scheduling system for field-based staff.
In broad brush terms, the integration gives the company the ‘granular detail’ to dispatch the operative, with the right skills, right vehicle and the right parts on board, rather than default to the nearest engineer.
“Let’s make the journey we have to make the most effective one we can,” says Lightbody.
Setting ambitious annual targets for cost savings, Paul Tate, commodity manager at Siemens, puts the ball firmly in the court of suppliers to the company’s 4,500-vehicle fleet in the UK.
“We are looking for a 5% saving from the supply chain this financial year on a £40 million PVO (purchasing volume),” he says. The economy drive is even more of a stretch because savings are measured only on initiatives introduced in the current year – reductions that continue from programmes started in previous years are excluded.
Tate acknowledges that it would be unrealistic to rely on price cuts to achieve the target savings, but to ensure Siemens is securing best value, he is planning a retender process for its leasing supplier.
“We are challenging the status quo,” he says. “We have been with our strategic partner for a long time. We are going to market to challenge what we are getting from them and to see if this is the right solution for Siemens in the UK, or do we want to consider a new model? We are looking to see if Siemens in the UK is utilising the right mechanisms for procuring its vehicles and for managing its vehicles,” he says.
The great fuel debate
If it comes as no surprise that fuel is a significant element of vehicle wholelife costs, the news that one of the UK’s largest fleets is considering a move away from diesel will cause ripples – especially when the majority of its vehicles are vans.
The combination of benefit-in-kind tax rules and environmental considerations has led construction services company Wates to reconsider its diesel-only policy.
“Although the reversal on the decision to remove the 3% diesel tax penalty from 2016/17 will have a relatively small direct impact on company costs (in terms of the Class 1A NIC), the impact on the driver population will be quite significant,” says Ted Sakyi, group fleet manager of Wates.
“Drivers of cars ordered or delivered pre the tax change announcement may find themselves in difficulty in three years’ time when the tax impact really starts to hit home.”
Factor in the impact of NOx emissions on local air quality, and Wates has decided that for lower mileage vehicles, which are not trundling up and down motorways, the choice of a diesel vehicle is being withdrawn.
“Petrol is cleaner and cheaper to run. The only problem is trying to find petrol vans, in particular. It’s proving very, very difficult,” says Sakyi.
Clean petrol is only a short-term solution, though, and the prospect of operational vehicles paying heavily to enter ultra-low emission zones, or even being excluded from certain urban areas, is pushing Sakyi to focus on the future-proofing of his fleet, “not just for now, but for way, way beyond 2020”.
“We are looking at electric vehicles, and installing charge points in all our key sites where there are a large number of vehicles, not just for company vehicles but to encourage members of staff who have their own private electric or hybrid vehicles to tap into that power,” he says.
Zero emission adoption, however, is subject to the availability of appropriate vehicles in the marketplace.
“The problem with electric vehicles is always range,” he says. “Our vehicles are racked out, kitted out and loaded with equipment. So we are looking at what vehicles are suitable, working closely with Renault and Nissan to see what options are available, and putting in place an infrastructure of charging points. If the vehicles are there, I will get them.”
But analysis of which Wates vehicles are suitable for a switch to electric is very difficult, given the different mileages and lifestyles of staff, particularly on a fleet of this size.
An employee whose work profile might be ideal for an electric car, for example, may not have off-street parking for overnight recharging, scuppering the plans.
“At the moment our commercial vehicle fleet does very low mileage in some parts of the company, because we are very local to where we work,” says Sakyi. “I am currently working with Drivelectric to research which operatives are suitable for driving electric vehicles.”
By the very nature of the organisation it serves, Defra Group Fleet Services is wholeheartedly committed to green fleet practice. And its ambition to go ‘ultra low’ in terms of its environmental footprint extends significantly further than the selection of the lowest emission vehicles
“We have a travel hierarchy whereby before people get in a car they need to decide whether they need to have a meeting in the first place, and then if they do, can they attend by public transport; and their last option is to look for a vehicle that is available,” says Eynon.
“When you get to that point, you need to make sure the journey is the greenest one possible, and that we are getting it at the lowest cost. We need to make sure we are going green and not increasing our cost – we think going green is cost-effective, and should be a better option in terms of how much it costs to run a vehicle.”
Looking further into the future, there’s a question of whether the installation of a comprehensive recharging infrastructure for electric vehicles will be overtaken by alternative communication and transport solutions.
Will high-speed broadband see more staff work from home? Will tele-conferencing replace meetings? And will fleet departments be replaced by mobility departments?
At Siemens, Tate asks: “Are company cars going to be the future or do we get a mobility allowance and just seek the best way of getting from A to B?
“If congestion charging comes in, and town charges mean you can’t go into certain areas, is the company car going to be a viable option? It all depends on the strategy of the Government, the strategy of local towns and the technologies that the future employee base accepts and wants to live with.”
Duty of care
A deep sense of responsibility towards employees driving for business has become ingrained in the UK’s largest fleets.
The days of a cursory licence check have long gone, as new technology delivers priceless information to the desk of the fleet manager.
Online risk assessments, and in particular telematics data that highlights incidents of excessive speed and harsh braking, are now giving fleets the tools to tackle road risk head-on.
Anglian Water started installing telematics trackers across its commercial vehicle fleet two and a half years ago, based on a business case of lowering fuel bills by 10% through improved driving styles. The benefits, however, have extended well beyond fuel economy, reducing accident rates to the point where the firm’s annual insurance premium has tumbled by £60,000.
And it’s this success in improving its fleet’s safety record that is leading the utility to roll out telematics tracking throughout its 650-strong car fleet.
“We are having half as many speeding convictions in our vans as we do in our cars, but the van fleet is three times the size of our car fleet,” says Lightbody, adding that Anglian Water’s car drivers are twice as likely as its van drivers to have an accident.
“We have had a positive impact in managing our commercial vehicle driver risk, and now it would be remiss of me not to apply the same attention and process to our car drivers,” he says.
“And I really want to demonstrate to our van drivers that there is an absolutely level playing field. We treat driving at work the same, whether it be in a car or a van.”
Drivers and their line managers are emailed their driving record for the previous week, with their performance ranked in a team league table.
This relentless attention to safety is paying dividends, but it does require constant reinforcement from the fleet department.
“You have got to be prepared to do something with the data when you get it. As a business, we said we are going to see what the data tells us, and then commit to doing something about it, and that’s where we have delivered our savings,” says Lightbody.
Determined to make Wates ‘the safest fleet in the UK’, Sakyi is converting 600 of the company’s 1,300 cash allowance drivers back into company car drivers.
All staff in receipt of a cash allowance, “need to be treated as company car drivers”, he says.
Across the company, every driver will have their licence checked and will undergo an online risk assessment.
For commercial vehicle drivers, this is reinforced by telematics data from vehicle tracking systems (fitted to more than 800 commercial vehicles and specified for all new additions to the fleet).
“Those who are identified as high risk drivers are then put on a road risk assessment to make sure they realise their behaviour. And we are looking to roll this out to any member of staff who drives,” explains Sakyi.
“We have a duty of care to all of our employees, irrespective of whether they drive a company vehicle or not.”
The message is reinforced by safety briefings and the inclusion of fleet risk in staff team talks, as well as Wates investing in its new vehicles to make them as safe as possible – all new LCVs are specified with air conditioning, electric mirrors, reversing sensors and twin airbags; and the company is considering the installation of forward facing cameras to mitigate its risk.
But Sakyi has already identified further dangers on the horizon.
“As technology develops, fleets face new risks and opportunities around the rise of streaming while driving, connected vehicles and autonomous technology,” he says.
“It is important that fleets keep up to date with how technology is changing the driving environment and how it can be best utilised together with mitigating the evolving risks.”
Working in partnership
Any analysis of the evolution of fleet language over the past 15 years would highlight the rise of key themes.
Chief among these is a sense of drivers becoming ‘customers’, and suppliers being viewed as ‘partners’. For the former, fleet managers are now focused on automating processes, so that drivers have the convenience and
efficiency of booking all their service and maintenance work online.
There is also considerable attention being paid across LCV fleets to the van as an ergonomic workplace, with cab, racking and layout assessed to create a safe and efficient place to work.
Neither of these developments will be achievable, however, without fleets working in partnership with key suppliers.
At Siemens, Tate identifies the principal achievement of the past few years as, “getting the supply chain to be the face of the Siemens fleet department so we have seamless service provision to our employees which mirrors the historic internal fleet management approach”.
Failure to provide a consistent service leads to confusion and undermines compliance with central policy, in a business as diverse as Siemens.
“The supply chain has to understand the strategy of the business to provide a service to match that,” says Tate.
“We have to make sure both strategies are aligned. We have had to put in place various channels which will assist our leasing company to truly understand the direction in which Siemens was going.”
While this requires the company and its fleet to communicate openly and regularly with key strategic suppliers, it also demands open-mindedness from Siemens.
“There may be something which we want to do with fleet where our strategic partner can come back and say that’s not really feasible, or say, if you go that route it’s going to cost you X, Y or Z,” says Tate.
“We use them as a sounding block on a lot of our procedures and policies. We ask them for guidance on potential pitfalls and we benchmark our strategy against other businesses’ strategies.”
At Wates, Sakyi echoes the need to forge genuine partnerships with suppliers, and has rationalised the number of leasing companies supplying the 1,300-strong fleet from eight to three since he joined at the start of the year.
“All our supply chain, whether they are leasing, rental, fuel, bodyshops or service centres are all an extension of the fleet department,” he says.
“They are our partners, and they need to be seen as partners. There is no point in having a supplier that you can’t trust.”
Likewise, adds Sakyi, there is no point in making undeliverable demands or driving down price to unworkable levels.
“An unhappy supplier is not worth having,” he says. “It’s a two-way street, we are all in this to be profitable and to have a long-term working relationship.
“You cannot have a long-term relationship if you are driving down cost to the point where it becomes unrealistic, because that supplier either will not be there in 12 months’ time or will walk away from your business, and then you start all over again.
“We are engaged with them, and we want them to be open and honest, and brutal, if needs be, with us; to say, this is not the right way. They do it day in, day out, so why would I not want to listen to them?”