All in-house, partial-outsourcing or totally outsourced – David King brought the three together to create one way of working, reports Sarah Tooze
How do you turn three different ways of managing fleet into one and make a multi-million pound saving in the process?
That was the challenge facing David King, group fleet director at Interserve, three years ago.
At the time, the support services and construction company didn’t have a central fleet team. Instead, it had two separate fleet functions – one for the construction side of the business and one for support services. The theory was that the two teams would be better able to meet the specific fleet requirements of the different parts of the business.
The construction division favoured an in-house approach to fleet management, while support services combined an in-house team with outsourcing around 40% of the fleet activity (such as leasing, vehicle reallocation, driver telephone helpdesk) to Arval.
When Interserve acquired Initial Facilities (a subsidiary of Rentokil Initial) in 2014 it inherited a third way of managing fleet: a fully outsourced approach (to Lex Autolease).
The acquisition also swelled the fleet total from around 3,500 to 4,500 vehicles (now grown to 4,800). It also has approximately 1,500 cash allowance drivers.
That acquisition prompted the Interserve board to take a closer look at fleet and to decide a new approach was needed.
“The top table realised the size and the complexity and the opportunity with fleet and were looking for a leader to head the transformation of fleet to create a centralised outsourced fleet solution, reporting at group level as opposed to within the different divisions. I was asked to lead that transformation,” King says.
King is no stranger to such projects. A pharmacist by profession, he rose through the ranks at Boots, managing various stores before joining the change management team at head office.
His first involvement with fleet came when he was asked to look at outsourcing areas of spend. He set up of a team of contract managers who managed the outsourced relationships with suppliers – everything from facilities management to record keeping, payroll and fleet.
“So my first engagement with fleet was that outsourced way of working,” King says.
He then joined Nottinghamshire County Council in a procurement role before moving to Interserve in 2012 as one of the heads of procurement for systems, processes and methodologies.
“All the ways of working in procurement fell under me and part of that was fleet,” he says.
After carrying out a six-month review of Interserve’s fleet activity he was appointed to the newly created role of group fleet director in January 2015. The shift from fleet being managed at a divisional level to a group level also meant King reports directly to a board member (group secretary Trevor Bradbury).
That board level support has helped change to be “delivered with more pace and with more clarity”, according to King.
“Having executive sponsorship is one of the key enablers to successful change because we all know how a significant number of transformation programmes do not deliver what they set out to,” he says.
“It’s also been invaluable in positioning us at group level. I’ve been able to engage with different divisions within the business in a neutral stance rather than being from one division trying to influence another.
“That’s been a real benefit not only to deliver things internally but also when engaging with the external supply chain and so on. My team and I are engaging on behalf of the business, not just part of the business.”
But exactly how did King go about turning Interserve’s different ways of managing fleet into a single approach?
“There were a number of parallel stages,” he says.“The intent was to deliver the ongoing operations while undertaking the transformational change. That’s always the challenge isn’t it? You can’t press the pause button while you deliver strategic change, but we wanted to look at a number of items. The supply chain was one, the policies that underpin it was another and the team structure and managing the people and the resource requirement was another.”
The latter resulted in a group fleet team of nine reporting to King. It includes a team manager plus two utilisation managers – one for vans, the other cars – to ensure Interserve optimises vehicle usage.
King decided what should be delivered internally and what was best outsourced to a lease partner. He determined that around 75% to 80% of the operational processes were best outsourced.
That led to the appointment of LeasePlan at the end of 2014 on a four-year contract.
Having a single funding provider has “brought a level of simplicity and ease of management”, according to King, compared to the previous approach where there were different funding methods, leasing companies, terms and conditions and relationships.
He acknowledges that outsourcing to a single lease provider can leave a company vulnerable to price increases but Interserve has countered this by putting benchmarking clauses in the contract “to ensure that commerciality remains sharp”.
He is also keen to stress the partnership approach that Interserve benefits from by having a single provider.
The relationship is managed through daily emails and phone calls, weekly meetings, monthly and quarterly senior management meetings at which key performance indicators (KPIs) are formally reviewed, and an annual review with the executive board.
Using a single leasing provider has simplified communication. Drivers can now call one helpline rather than having multiple phone numbers and email addresses.
“One of the things we realised very early on, because of the degree of change, was that communication was massively important. So we committed to do two things. One, to make telephone engagement as simple as possible; and, two, to make the provision of information through our intranet site as up-to-date and as comprehensive as possible – that’s the first ‘go to’ place if the telephone isn’t the right answer,” King says.
The fuel card provision, which is managed by Interserve’s fleet team rather than LeasePlan, has also been changed from two providers to one, with a Platts-based card rather than pump price.
Interserve has more than 3,500 fuel cards and the change has enabled it to save hundreds of thousands of pounds.
“We wanted to ensure there was appropriate governance and compliance over the use of the card and also to make sure we were able to control the use of the cards through the network across the UK that best met our requirements and commercial needs,” King says.
Telematics has also been simplified from five providers at the start of 2015 to a single one (Microlise), with the units now fitted in more than 2,000 commercial vehicles.
It is being used to monitor when and where vehicles are used, and how they are driven.
Already, Interserve has been able to remove around 30 vehicles from the fleet and anticipates more to follow.
It has also identified low mileage vehicles where an electric vehicle might be a better option. Interserve already has 25 Renault Kangoo ZEs, which operate in London and on sites or campuses, and King plans to order “significantly more” EVs in future.
Telematics is also being used to identify driving styles that “may not be optimal” such as harsh braking/accelerating and long periods of idling, with the intention of supporting drivers and management teams to reduce the amount of fuel used.
More than 200 managers have access to the management information portal to view the performance of their drivers and the fleet team has held a number of roadshows to help support managers’ use of the portal.
A smartphone app is also being piloted to provide feedback to drivers on performance.
King has appointed a business analyst to bring together various data sources – telematics data, driving licence points an individual may have, accident management data, the amount of miles the driver undertakes, any customer complaints, wear and tear on tyres and brakes, MOT information, and fuel card information – to give a holistic view and create something meaningful the fleet team or business divisions can act on.
The business analyst has brought improved oversight of servicing and MOTs. Average repair costs from accidents have fallen 24% since 2014, while vehicle off-road time has been cut from an average of 7.8 days in 2014 to 4.5 days last year.
Interserve has service and maintenance workshops at Swansea, Wigan and Aldridge (near Walsall). The latter, and largest, also does accident repairs if they occur within a 50-mile radius.
Outside that, the vehicles go through FMG and LeasePlan.
A new driver training programme is planned which includes online assessments followed by online training and potentially an on-the-road course.
King is also working on an improved new car order process in conjunction with LeasePlan. They have identified driver ‘high points’ (e.g. when they order the vehicle) and potential ‘low points’ (when delivery is delayed) and have come up with ways to keep the driver enthusiastic while they wait for their new car.
Solutions include phone call and email updates and reminders, which also offer an opportunity for Interserve to give them practical tips about the vehicle they are returning.
In addition to improving the driver experience, King has also expanded the number of manufacturers and models on the company car lists following feedback from a driver survey.
“Traditionally we were seen as having estates and saloons and quite a boring, staid car list,” King says. “We’ve worked hard to refresh that to put different models that may appeal to different driver types so the introduction of some crossovers and SUVs.”
While he has no plans to end the cash scheme, King hopes the positive experience will tempt more cash takers back into cars.
It already appears to have had an impact – around 5% of cash takers have opted in during the past year.
Interserve hits carbon reduction goals
Interserve has hit its target of reducing its overall carbon by 30% (compared to its 2013 baseline) by 2016 and has set a new target of a 50% reduction by 2020.
“We have an internal programme called SustainAbilities, which has a number of elements to it, of which business travel is one,” David King says.
Fleet and business travel contributes to about 65% of Interserve’s total carbon emissions. Reductions have been made by refreshing the car list with lower CO2 vehicles, supporting hybrid vehicles, using telematics to reduce fuel use and replacing ageing HGVs and minibuses.
A new Midlands regional office is being built near junction 6 of the M42. When it opens next year it will bring together employees that were previously at five locations across the West Midlands so it will reduce business travel between different offices, as well as commuting.