The Scooter Store Focuses on Reducing Fleet Operating Costs
One of the Ford Transit Connect vans The Scooter Store used in its fleet.
NEW BRAUNFELS, TEXAS – The Scooter Store was the recipient of a Runzheimer International 2011 Mobile Workforce Best Practices award earlier this year. One of the key reasons for receiving the award was its commitment to improving how it manages its fleet, including making its fleet more cost-effective and enhancing employee satisfaction.
The Scooter Store operates a fleet of 454 vehicles, consisting of Ford Transit Connect, E-250, and Ranger pickup trucks. Managing fleet operations for the company is Rachael L. Smith, fleet manager, who Automotive Fleet magazine spoke with about how the company reduced its operating expenses while maintaining a high level of service to internal and outside customers.
To start, in-depth fleet analytics of key performance indicators (KPIs) allowed the company, and Smith, to get a “big picture” view of the fleet’s operations.
“Charting and graphing data with partnered analytics allows for a more complete picture of not just the fleet, but the negative and positive effects on the fleet operationally,” Smith explained. “This allows savings ideas both inside and outside the fleet, which maximizes the overall impact.”
Using that data, one major area The Scooter Store focused on was fleet composition. Smith said the company has adjusted its vehicle mix over by evaluating which vehicles can meet the fleet’s applications while lowering costs.
“The Scooter Store has aggressively adopted the strategy of purchasing more efficient vehicles since instability in energy markets started several years back,” Smith said. “We have continued to evaluate daily service and delivery capacity needs with a detailed analysis that allowed us to aggressively integrate the Ford Transit Connect into the fleet. The end result is 81% of our fleet is now comprised of the Ford Transit Connect, which has a cost of ownership that is $352 per month/vehicle less than the E-250.”
The diagram here shows the fleet’s vehicle composition.
In the process of determining which vehicles are most cost-effective for a given application, current high resale values of used vehicles led Smith and The Scooter Store to pursue a short-cycling strategy. She said the company doesn’t apply a “cookie cutter” approach to vehicle replacement, though and that the company analyzes each fleet location to determine the optimal termination mileage and appropriate lease term.
“In the past year we realized that the resale market has been very strong while interest rates on our leases are at record lows,” Smith said. “These conditions coincided with our effort to eliminate larger vehicles. As a result we took the opportunity to short cycle several vehicles, which allowed for significant proceeds on sale, new leases at much lower interest rates, a newer fleet that has less downtime/maintenance issues, and the ability to quickly integrate more efficient vehicles into our fleet.”
As part of the overall analysis The Scooter Store conducts, Smith said the company analyzes vehicle fueling frequency each month to determine actual utilization. For example, she said that in some cases, it makes more sense to use a daily rental for seven business days than it does to deploy a full-time vehicle. Using this type of analysis, the company has reduced its fleet by 10% during the past 12 months. The company is able to operate 10% fewer vehicles than it has full-time drivers by managing the fleet as a motor pool.
“We continue to work closely work with the distribution team to identify further opportunities and to avoid deploying a new vehicle just because there is a new driver added at a location,” Smith said. So far the projected savings of this project is $432,000 in annual fixed expenses and is directly related to the reduction in our fleet size.”
One other major project The Scooter Store focused on was route planning and logistics technology, which was necessitated by the company’s need to ensure its drivers can make timely deliveries while efficiently operating the motor pool.
“We always asked ourselves ‘How can we drive fewer miles?’ as we knew it would result in transportation savings,” said The Scooter Store’s Director of Corporate Operations Chet Lange.
Use of the new system has resulted in savings in a few areas, according to Smith.
“Since implementing the tool the company has seen a significant overall improvement in our logistics operations,” she said. “Miles per customer visit have improved by 19%, which correlates to 3.6 million fewer miles driven per year and pacing near $1 million per year in variable expense savings.”
Overall, The Scooter Store’s cost containment strategy has resulted in significant savings and increased driver productivity, which is a win for the company and the company’s customers. So what’s the current focus for The Scooter Store’s fleet operations?
She explained the company recently added a new tier to its Wright Express fuel management program that captures a rebate even when accounting for overall reduced fuel use, miles, and improved fleet vehicle fuel efficiency. She is also planning to implement a windshield chip repair awareness program, which she said could result in reduced costs for windshield replacement. Smith added that The Scooter Store will expand its utilization program and work with vendors to negotiate improvements that further reduce fleet-related costs.
By Greg Basich
Updated 7/24/2012, corrected spelling.