A presentation by Christopher Hill, fleet operations specialist, Altech Netstar, at the 1st annual Fleet Management Conference held at the Indaba Hotel in Johannesburg, South Africa.
Measuring the performance of your fleet by clearly defining strategy and tactics
1. Measuring the Performance
of Your Fleet By Clearly
Defining Strategy and Tactics
1st Annual Fleet Management Conference
Johannesburg, 4-5 May 2016
2. Christopher Hill, MBA, CMC
1974-78 Fleet Manager, Leasemaster
1978-83 Fleet Manager, General Foods
1983-85 Fleet Manager, Reichhold
1985-93 Fleet Manager, Honeywell
1993-94 Director Total Fleet Management, Triathlon Leasing
1994-97 C. Hill Management Inc. Fleet and Travel Management
98-2002 Manager Fleet & Equipment, Enbridge Gas Distribution
2003-04 Fleet Manager, City of Toronto
2004-11 Manager Central Fleet, City of Hamilton (Ontario)
2012-13 CEO, Electric Mobility Canada
2014-16 Fleet Operations Specialist, Grant Thornton LLP
3. What Do You Want To Be Known
For?
A trusted and valued supplier of high quality services that
help users deliver their peak performance, OR
Another internal source of mediocre service that gets in the
way for no noticeable benefit.
5. Agenda for Part 1
What is “Strategy”? How is this different from “Tactics”?
Building a framework to find solutions
Problem identification
What needs to be addressed
Strategy options for fleet management
Developing tactics to implement the strategy by management
function (Finance, Information Technology, Operations,
Human Resources, Marketing and Communications)
6. Agenda for Part 2
Your Fleet
Who controls fleet expenses?
Tactics by management function - developing these for your
own fleet situation
Creating Your Fleet Strategic Plan
7. What is “Strategy”?
'Strategy' is part of everyday business language and is often
used in the wrong context ( 'Operational Excellence' is not
strategy).
The core of any strategy is about making choices of where
to play and how to win, supplemented with a 'why' (the
objective) and the 'how' (doing it).
8. Defining “Strategy” and “Tactics”
1. Situation: what have we got
2. Objective: what do we want
3. Strategy: what is the most effective way to get it
4. Tactics: how we are going to do it
STOP
9. Creating Strategy
Developing a solution framework – problem identification
“What needs to be addressed?” (WNTBA)
WNTBA and Strategy Options
Sort the problems and issues by management function -
Finance
Information Technology
Operations
Human Resources
Marketing and Communications
10.
11. Agenda for Part 2
Focus On Your Fleet
Who controls fleet expenses?
Tactics by management function: Finance, Information
Technology, Operations, Human Resources, Marketing and
Communications - developing these for your own fleet
situation
STOP
13. Finance
Control and accountability
Budget-based relationship or transaction-based relationship
User budget line items for fleet expenses
Life-cycle estimates
Cost controls and reduction targets
Leasing
14. 3 Main Drivers of Fleet Costs
1. Number of units in
service.
2. Number of kilometers
driven.
3. Type of vehicles in the
fleet.
1. How many waste
collection trucks?
2. Weather-related usage
such as snow removal.
3. Trucks or cars?
Who effectively controls these drivers, the fleet
manager, or the users?
STOP
15. Recovering costs through
chargeback rates (1)
1. Having the budget in fleet is inefficient – users, not fleet,
control the cost drivers.
2. Users must budget for reserve fund, fuel, repairs, driver
training and licence renewals, with line items in their own
operating budgets.
3. User behaviour will not work for economy unless users are
accountable for costs, i.e., continuing to operate
equipment with warning lights on.
4. Having prices for transactions, such as mechanic labour
rate, parts, and fuel allows comparison to outside
contractors.
16. Recovering costs through
chargeback rates (2)
5. Fleet has advantages over outside contractors: usually
costs for facility rental, utilities, insurance are covered
elsewhere.
6. Fleet has disadvantages compared to outside contractors:
mechanics are on salary instead of piecework; wages are
higher; simple jobs (oil changes) don’t have the volume to
justify a headcount at a lower wage rate.
7. Resistance to more work by accounting department to
recover costs.
8. Inadequate fleet information system must be adjusted to
handle transaction costs.
17. Recovering costs through
chargeback rates (3)
9. Ideally, users receive a “bill” to be paid when they pick up
the keys.
10. Users will try to avoid expenses by cutting back on oil
changes and inspections.
11. The most effective response by users is to reduce the
number of fleet units (#1 driver of fleet costs) by turning in
the “just-in-case” units. Most fleets have 25%+ excess
units. Peak demand user activities can be met through
sub-contracting.
18. Inputs and how you recover them
Input (what you pay for directly) Transaction pricing (your
products and services)
1. Labour (employee costs) 1. $/hour
2. Materials 2. Cost plus markup
3. Outsourced services 3. Cost plus markup
4. Overhead 4. Covered in markup and labour
The highest risk is poor quality in any input. Example: inferior quality
vehicles as a result of lowest bid procurement rules damage the fleet
system through higher maintenance needs, lower reliability for users.
20. Information Technology
Systems
Data capture and input
Reports produced – 8 key performance measures that matter
to users
Budget management
Benchmarking
21. What the User Wants – 8 Key
Performance Measures for Fleet
1. Suitable
2. Reliable
3. Safe
4. Affordable
5. Energy Efficient
6. Environmentally Friendly
7. Available
8. Compliant
1. Kilometers/year OR hrs
2. Work orders/year
3. Accidents/million km
4. $/km
5. Litres/100 km
6. Greenhouse gas/year
7. #labour hrs maint./year
8. Safety/regulatory rating
22. Operations
Shop Hours
In-house Mechanical Services
Contracted (outside) services
Parts
Fuel
Driver Training
Safety and Regulatory Compliance
Procurement
Remarketing
23. Human Resources
Creating a high quality of life at work
Labour relations with union staff
Handling grievances and collective agreements
Technical training for mechanics
Non-union staff
Succession planning
24. Marketing and Communications
Fleet Strategic Plan
Senior management/Council approval
Fleet Advisory Committee
Green Fleet Plan
ISO standards
Membership in associations