Implementing Fuel Best Practices
One of the top three overall concerns for most commercial fleets, reducing fuel expense is a challenging issue. How are ideas to reduce fuel expense implemented, and what challenges must be overcome?
Fuel management is one of the top three overall concerns for most commercial fleets, second only to safety and total cost of ownership. Fuel can be the No. 1 concern as far as fleet spend. With gas prices fluctuating, fuel is still a volatile challenge for fleets. Money-saving ideas aren’t hard to find; the tricky part is implementation.
Automotive Fleet met with Joe LaRosa, director of global fleet at Merck & Co. (and Automotive Fleet’s2008 Professional Fleet Manager of the Year); Donna Bibbo, manager of fleet and employee services, Novo Nordisk Inc.; and Jeff Coleman, director of fleet operations, Time Warner Cable, western region, to discuss how these fleets are implementing programs to reduce fuel costs.
Suggest Changes to Overall Policy
"Considering prices in Los Angeles have fluctuated so much, fuel is currently my No. 1 concern," Coleman said. "When costs increase, management gets concerned, starts looking at expenses, and fleet visibility increases dramatically."
To decrease fuel expenses, fleets need to alter how they view and handle fuel expense, developing specific plans of action.
According to Bibbo, Novo Nordisk is starting with the "obvious" items — assessing who is buying premium and mid-grade fuels and sending e-mails asking drivers to go back to using regular.
"Only some executive vehicles require premium. ‘Recommends’ in the owner’s manual doesn’t mean you have to!" Bibbo pointed out.
To develop a plan with management, she presented three key strategies:
1. Immediate action: i.e., remove certain vehicles from the selector or change to more fuel-efficient vans.
2. Longer term steps: implement the easiest ideas although they may get push back from drivers: e.g., not using minivans.
3. Culture-changing items: action items enlisting strong support from all levels changing how company vehicles are viewed (beyond simply as tools of trade).
Reviewing Vehicle Selectors
By changing vehicle selectors, fleets can save on fuel expense. Six-cylinder engines are not as fuel-efficient as four-cylinders. If possible, removing six-cylinder engines from vehicle selectors can save in acquisition costs and fuel expense.
"We ordered new minivans. They will still be in fleet, but will be cycled out. Now we offer four-cylinder engines and are right-sizing fleet," LaRosa added.
Unfortunately, vehicles can be considered a "job perk" in the pharmaceutical industry. Selecting the right vehicle presents a balancing act.
"Drivers view vehicles as a job perk. ‘If I don’t like what one company has, I’ll see what another one is offering.’ It requires balance between cost and environment," said Bibbo.
Fuel Cards Help Monitor & Analyze Expense
Time Warner is currently on a universal fuel card program, and according to Coleman, the company uses all available tools in terms of alerts and exception reporting.
LaRosa implemented a fuel card program a year ago. Until the fuel card, Merck struggled with reporting and analyzing trends.
"Pump coding is not always accurate, and stations in the Midwest can run out of regular gasoline," said LaRosa. "Sometimes drivers must use a higher grade. Fuel card reports now allow us to see where one driver is consistently utilizing premium grades."
Another struggle was fuel capacity. For example, if a vehicle has an 18-gallon tank and consistently fills with 21 gallons of gasoline, it’s obvious the driver is filling up something else in addition to their company vehicle. "These issues might be a small percentage of the big picture, but every little thing helps!" said LaRosa.
Implementing new policies or programs can present significant challenges.
"The biggest challenge with our fuel card program was accuracy," said LaRosa. "Previously, we were using a corporate credit card. Mechanically it was fine. The problem now is the corporate card didn’t have a pin number associated with it and the gas cards do. Our drivers complain about learning another pin number."
Some suggestions are making the pin number something the driver already knows, such as their employee voicemail number, another access code, etc.
Most divisions of Time Warner use a type of universal fuel card while others go through a maintenance management partner. Cards are assigned to vehicles while employees are issued personal driver codes. All system users are required to sign an agreement outlining acceptable use and policies.