Fleet200 discussion notes – November 30, 2011
Topic 1 - Cost
Tackling driver behaviour is the biggest win, but the hardest to achieve because it requires a culture change. EST training enabled savings initially of 13% on average, which settled down to 5-5% after around three months. A £20 investment per driver has turned into a £500 saving per saving according to one fleet.
2. Ensuring vehicles are fit for purpose.
This comes down to understanding drivers’ needs and supplying them a vehicle that meets those meets. For some fleets it has resulted in major downsizing projects, which means lower lease rates, less fuel consumption and fewer incidents by driving smaller vans. It’s about challenging behaviour and breaking the mould – particularly refocusing from engine size to torque and power to overcome drivers’ perceptions of smaller engines. Fleets should cost evaluate when it comes to change vehicles – in some cases two smaller vans have been switched for one larger van. It is also important to understand the level of kit that is required in the vans to reduce weight; also reducing weight in racking, for example switching from wood to aluminium.
One fleet changed from speed limiters to rev limiters based on the optimum torque which produced much bigger savings. Trackers have also been used to better plan journeys, and managing jobs by region.
4. Replacement cycles.
Changing at the right time to maximise residual values but also understanding the benefits of changing earlier in order to exploit the latest technology which might result in fuel savings and better BIK for drivers – particularly key on high mileage fleets. The savings can often outweigh the cost of changing.
5. Right-sizing the business.
This is about graft – it’s not easy to achieve. And it can go either way, e.g. increasing the workforce to managing the workload better – spending to save.
6. Standardisation of function cars
Removal of choice in some instances and tightening criteria on who can have a car (e.g. mileage and number of trips per day). Savings can be immense according to fleets, and it’s a good time to make these changes given the economic uncertainly means push back from staff is less likely. Reduced choice and specification also helps with reallocation because of the standardisation.
7. Taking suppliers out of the chain.
Fewer suppliers mean greater volume and larger discounts/better service. It’s important to get the right SLAs in place, but it is also easier to manager fewer suppliers, and ensure compliance. A large fleet could typically expect to save 10-15%. Advice was to have 2-3 suppliers for funding, rental and manufacturers to spread risk while still enjoying higher discounts; areas such as telematics, insurance and software work best with one supplier to manage the data.
Topic 2 - Fuel Cost Management
With the pump price of fuel rising and some experts predicting 150p per litre within months, what action are you taking to minimise the use of fuel?
The group was made up of predominately perk fleets, and the group reaction to ‘action taken’ was ‘none’. Most costs are absorbed by the driver, and any fuel/business miles are reimbursed at HMRC rates.
Moving on from this initial response we discussed fuel cost savings in three broad categories.
a) Vehicle Selection:
- View around the table, this is tied up with WLC, and a personal choice for their employees
b) Driver Behaviour:
- A couple of people mentioned Driver Training and the impact on fuel saving. They quoted EST figures of 17% fuel saving post training, but thought this benefit would not be sustained over time
- However, none of the companies had invested in driver training as they did not see a benefit on perk fleets
This is where the majority of the discussion took place, and the group began to provide examples of ways to reduce the number and length of journeys and also tactics they are implementing.
- General consensus was that journey planning will have the biggest impact, with a knock on benefit of reduced risk
- One tip is to review territories for sales teams, to avoid crossover of staff when driving to their areas
- One fleet, with a mixture of perk and job need, felt it was harder to reduce journeys for job need fleets, but would be easier on perk fleets as you could introduce other options such as conference calls and home working
- Another fleet has a satellite HO, with a bus link 2/3 times per day. However, people are still driving between sites in their own cars as the bus service did not fit in with meeting times. This requires a change in mind set to schedule meetings to fit in with transport timings
- London-based fleets could consider an arrangement with the London River Boat Service to provide free transport between their three London sites. This does not incur any costs.
- Electric cars available for staff to use can reduce expenditure on taxis. They need to save two taxi journeys per day to cover the cost of running the vehicles
- The group spoke about Car Share – but generally concluded the schemes do not work
- We spoke about how media coverage and how green initiatives within the public domain are translating to fewer miles within the business world. One fleet mentioned a 15% reduction in personal miles, and a change in mind set towards journeys as a result of higher fuel costs.
Another mentioned the number of graduates they have this year who have selected Fiestas over higher spec cars, due to the high mpg
Topic 3 - Engaging with Key Stakeholders
- Staff feel that board members live in ivory towers and do not visit them, board members need to be visible, listen to concerns before you look to influence them via fleet policies.
- Identify the issues with staff, encourage engagement and conduct a consultation process
- Plan and identify who the key influencers are within your organisation – There are people who will follow.
- If fleet policy changes, these changes must be explained clearly and communicated to the people these changes will affect.
- Drivers see change as a negative, fleet jargon needs to be removed and benefits need to be communicated in a way they understand.
- Employee Forums
- Introduce fleet issues into corporate updates incorporate them in the company updates.
- Be clear in what your policies are meant to achieve!! Example: Some drivers see telematics as a disciplinary action whereas there installation is to actually measure fuel consumption, be clear what changes are meant to achieve.
- League tables which are tailored regionally ie: A Driver in London has different KPI’s to that of someone who operates in Yorkshire for example.
- Board members should also receive KPI’s and then show them how their behaviour reflects on the policy – Are the board wasting or saving money?
- You need to pull not push board members for their involvement in fleet policy.
- Bonus Scheme – Throughout the company which is linked to performance, if employees save the organisation money than they are incentivised financially so they see it as being for the good of themselves and not just the company.
- Union buy in where relevant to eradicate any initial conflicts from the offset.
- Spend limits, incentivise staff to go for lower emission cars and reward them with an improved choice list
- Steering committees with Board, HR and Procurement – Achieve buy in from the start.
- Record fleet policies onto CD rather than formal notices or memos.
Topic 4 - Eligibility for company cars
The objective of this discussion is to identify some general trends on the methods fleets use to determine eligibility.
Who decides which staff are eligible for a company car?
This depends on the culture of the business and whether it is perk or job-need focused. However, there is a suggestion that the focus is generally between fleet, general management and finance. HR do have a role to play, but there is a feeling among fleet managers that they need to be controlled to avoid car policy being overtaken by driver demands, which would undermine the close financial control of the fleet. There is also the suggestion that HR has held less sway as companies have had to control costs, so employees are more willing to accept what they are given in the uncertain employment environment.
What are the criteria for a job-need and perk car?
Although there are wider choice lists for perk compared to job-need fleets, the criteria seem to be quite similar, starting with job grade. This is then supported for job-need cars by mileage and specific job-need. Job-need can be separated into both Operational and Occasional job-need, which may have different vehicle requirements.
Have these criteria changed? If so, how and why – and how was change implemented?
The current environment has meant that companies can be more aggressive with their policies. In the past, a company might have provided a much more extensive HR-led perk choice list, but even here choice is now likely to be restricted. There also seems to be a growing focus on enforcing mileage requirements for access to a company car, so employees who do not justify a company car because of their low or zero business mileage risk having it removed as part of an annual review, to keep the investment in cars to a minimum. This mileage requirement is typically 10,000 miles, but can be as low as 3,000 in some sectors. However, any changes have to be considered against an employee’s historic access to a company car, as it may be something written into their contract of employment.
What restrictions do you have in place, e.g. age, car type, clean licence, minimum mileage, CO2 caps? How are these restrictions (e.g. minimum mileage) monitored?
Mileage is a key factor, as is job-need, then there is a general expectation that the vehicle will fall under 160g/km, with some fleets introducing caps at a lower level. There doesn’t seem to be a cut and dried approach to licence points, as fleet take a watching brief on drivers with lots of points, including new joiners, but don’t seem to have the authority to say no.
What grading system do you use to determine the type of cars staff can choose form on the policy list?
Typically, grading is by job-grade, which leads to a type of vehicle access or a sum to spend. Typically, fleets don’t allow upgrading to a different vehicle (although up-spec’ing is allowed), but they do allow downgrading, as this gives employees access to lower CO2 vehicles.
Note on vans:
With vans, companies are taking a closer look at how they are used. Employees may be given access to a van just to get to work and there is little control over their use outside working hours. One fleet manager ordered a pizza and it was delivered in one of his own vans.
Topic 5 - Accident management
Why do you outsource accident management?
- Accident management is not ‘core business’
- Easier to use the resource and expertise of an accident management provider
Are average repair costs coming down?
- One fleet manager’s invoices are reducing each month because their leasing provider is challenging the repairer at every stage of approval and does not just accept what the garage says.
- Another fleet operator says it’s about making sure the invoices are accurate rather than saving money each time. “If you’re saving money each time then you’re going to the wrong repairers or the estimates are wrong in the first place,” she says. “It’s more about sense checking.”
How do your reduce downtime?
- Set stringent service level agreements from the outset.
- Specify average downtime.
- Put pressure on the provider to demonstrate they have chased the garage.
- One fleet manager says you need to trust your provider to effectively manage the repair from start to finish in an appropriate period of time. Otherwise there is a temptation to maintain spare vehicles to reduce vehicle hire costs.
Do you use mobile repairers?
- One fleet manager uses a mobile repairer for minor repairs and finds it cost effective.
- Another is considering it to reduce vehicle down time and hire costs but they are concerned that there may be health and safety issues.
How do you set the right threshold for authorising jobs?
- One fleet manager finds this a challenge. If the threshold is set too low they are contacted frequently which can be time consuming for a small fleet team. It can also mean you inconvenience the start time of the job because the garage is waiting for authorisation.
- Another says they change thresholds as and when they see trends.
- The accident management provider should advise if a particular repair keeps cropping up and whether the threshold should be set higher.
- Some accident management providers do benchmarking to show how your thresholds compare to similar fleet customers on an anonymous basis.
What type of accidents do you usually have?
- Low speed, manoeuvring accidents are the most common.
- For one fleet most accidents occur at their depots so traffic management systems are being installed. They also encourage drivers to reverse into spaces and fit parking sensors.