June 2009, Automotive Fleet - Feature
Professional Fleet Management: A Unique Point in Time
During these times of financial upheaval, fleet managers may have an opportunity to make changes that would not have been considered in the past — to address challenges with a positive approach.
By Jim Frank
Jim Frank, Wheels Inc. CEO, is a long-time supporter of the Professional Fleet Manager of the Year award. Recognizing the value of in-house professional fleet management, he shares his perspective on the industry's challenges and opportunities during these times of historic change.
I believe in two years we will look back at the second half of the year 2009 and recognize it was a unique point in time, certainly for our country, but even for our fleet management profession. The financial crisis in the U.S., which had been brewing since July 2007 with the first mortgage securitization defaults, reached a dramatic point Sept. 15, 2008 with the bankruptcy of Lehman Brothers and the consequent "tsunami" that hit the U.S. economy and financial markets. I would suggest that within the next 30-45 days, the smoke will have cleared sufficiently to move from a reactive, defensive position to a more positive approach to the challenges we face.
Don't Waste a Good Crisis
As President Obama has suggested, we should never waste a good crisis. From the perspective of fleet management, there are at least two dimensions to the crisis reaction. First, it has never been more important to have a deep understanding and appreciation for the challenges facing your business and the strategy your senior management is putting in place in response to the situation.
This strategy will vary from company to company and fleet can often play an important role in supporting it. For example, in many cases, the emphasis will be on either profits or cash flow (similar, but different in subtle and important ways). The response in fleet can involve various tactics with which we are all familiar: extended replacement cycles, less expensive or more fuel-efficient vehicles, aggressive reduction in surplus or underutilized vehicles, and increased personal use charges.
One should be sensitive to two subtleties. First, the time frame is going to be very important. I suspect most companies are looking for short-term solutions and consequently, the traditional lifecycle-type of analysis may not be particularly helpful.
Secondly, fleet actions should be considered part of a comprehensive corporate strategy. Hard-pressed businesses may be taking very aggressive actions in terms of salaries, bonuses, benefits, and other high-impact areas. In this context, we should keep in mind we might even want to enhance the vehicles since frequently that can be done at very little expense if residual value and other advantages are taken into account.
On the other hand, maybe your employer is doing well and is financially sound. If so, this may actually be a time when you would want to enhance your fleet program as one element of a program to attract quality staff that may be available from the competition.
The important point here is there has never been a time when the issues were more complex, but also when well thought-out and executed fleet strategies could have such a significant impact.
But beyond responding to immediate requirements, current times are also an opportunity of much broader scope and more exciting implications. I would suggest now is the time to dust off your wish list and develop proposals for changes or enhancements in fleet policy that would not have been considered in a more normal and benign environment. Such a list will be different for each fleet manager, but some of the enhancements we have discussed with clients and prospects over the years are:
- More consistent and aggressive approach to safe driving initiatives and accident reduction.
- Sale of replaced vehicles to drivers at a higher price, but fair to both employer and employee. A win-win solution.
- Vehicles more customized to specific driving and geographic requirements, rather than one-size-fits-all.
- Greater flexibility with respect to vehicle selectors and the ability to up-charge for upgrades, offsetting more than 100 percent of employer cost.
- More flexible personal use charges that reflect more accurately the actual cost of personal use.
- More flexibility in selector development and timing to take advantage of strategic opportunities for savings.
I am sure each of you has additional items to add to the list and different versions of these points. The point is not about the list, but about the fact that NOW is a unique point in time in which we may have an opportunity to make changes that would not have been considered in the past. Carpe Diem - Seize the Moment!!
I hope that two years from now we will all look back with pride on having thoughtfully identified very important ways in which we can enhance our fleet programs, and that we took the appropriate steps to realize our aspirations.
2009 Professional Fleet Manager of the Year Christy Coyte, global fleet director for Johnson Controls, Inc., celebrates her win with Wheels CEO Jim Frank. Wheels has been a long-time supporter of the award program.