Reducing Maintenance Costs Helps Inter-Tel Save $300,000
Despite increasing its fleet by 55 percent over four years, the company has saved more than $300,000 by reducing maintenance costs and premium fuel usage, instituting a Web ordering system, and updating its replacement cycle.
Most companies have a hard enough time maintaining fleet costs during business growth. Decreasing costs during an expansion phase may seem next to impossible.
However, Inter-Tel has done just that. The Tempe, AZ-based advanced business telephone systems company has dramatically revitalized its fleet in recent years. Since 1997, the company has saved $324,268 while increasing its fleet size 55 percent (from 314 to 487 vehicles). Over the past four years the company has:
- Decreased maintenance costs by 23 percent.
- Reduced premium fuel usage from 43 percent to 8 percent.
- Set vehicle replacement cycle at 100,000 miles.
- Standardized upfitting through Adrian Steel.
- Completed rifle shot negotiations with General Motors.
- Factory-ordered all vehicles instead of stock ordering.
- Implemented Web ordering.
- Put into practice a vehicle management computer program.
Inter-Tel is a provider of business telephone systems in the United States, as well as related call processing software, voice processing software, and call accounting software. Inter-Tel is also in the voice and data convergence market, with a line of voice data routers, IP phones, commerce Web software, client software and related networking software, which allow Inter-Tel to handle networked applications as large as 20,000 ports.
The company currently has 487 vehicles, mostly driven by Inter-Tel's technicians. The company's fleet consists mainly of Chevrolet Astro Vans, with a few Toyota pickups and Chevrolet Safaris sprinkled in.
Inter-Tel Re-Evaluates Fleet in 1997
The turning point for Inter-Tel's fleet came in 1997 when the company decided to sign on the services of a leasing company. Of the four potential suppliers considered, GE Capital Fleet Services was selected in May 1997.
"The decision was based on a quote process conducted by Inter-Tel to select the primary supplier for vehicles," says Jack Woods, purchasing fleet/manager for Inter-Tel. "We determined that GE Capital provided the best overall fleet leasing, management, maintenance, and fuel card program."
The first step at this point was to standardize the fleet vehicles. Inter-Tel chose to use Chevy Astro Vans based on a survey that was conducted of all operations managers.
"We solicited their input on the vehicle configuration that they deeded most appropriate for their operation," says Woods. "The Astro Van won hands down."
Next, a replacement cycle of 100,000 miles was set. Prior to 1997, there was no replacement policy in place at Inter-Tel.
"Based on information provided from GE Capital and utilizing industry standards, it was determined that at the 100,000-mile plateau Inter-Tel would able to maximize the use of the vehicle, reduce repairs, and receive the most in resale value when remarketed," says Woods.
Fleet Policies Established Help Reduce Costs as Fleet Grows
Maintenance costs have decreased by 23 percent since 1997. According to Woods, this was primarily accomplished through the use of GE Capital Fleet Services Maintenance Management's negotiated service centers. Inter-Tel also instituted a policy that required these centers to be used for as many repairs as possible.
In addition, premium fuel usage decreased 82 percent since 1997. How did this dramatic decrease occur? Inter-Tel decided to use GE Capital's Fuel Card Program and implement a "no premium fuel" usage rule.
The Fuel Card Program tracks all refueling transactions by type of fuel. An operations manager can identify premium fuel usage violations via monthly Web reports and take appropriate action.
Using the Web to Manage Fleet Helps Inter-Tel Cut Costs
FleetFacts, a Web-based program, consists of "branch-specific" monthly electronic reports. Operations managers provided input into the design of the reports based on what they deemed critical fleet management information.
Reports provide an inventory listing of all vehicles in their particular cost center, fuel and maintenance transactions, chargebacks, and total costs for services rendered during the billing cycle.
Implementing a Web vehicle-ordering system helps minimize Inter-Tel's fleet costs. Before the Web system was put into use, all orders were hand written, faxed, and responded to in a couple of days. Now, all new orders are processed through the Web, after receiving approval from management.
"It has been an extremely easy process," says Woods. "All standard and special specifications are already loaded into the database, so all that remains to be entered is the address, driver's name, and account level. Then the order is electronically sent via the Web for processing."
A vital part of the new fleet process at Inter-Tel is the use of a program called View Update Vehicle (VUV).
"This is probably the most important management tool in the program," says Woods.
The VUV option enables the 54 regional operations managers to monitor - via the Web - the performance of their vehicles, reassign drivers and vehicles, review costs, retire vehicles, order fuel and maintenance cards, and perform any other management function. However, ordering vehicles is restricted to the fleet department.
GE Capital also provides Web security that includes logon and password protection.
Productivity Award Confirms Inter-Tel's Fleet Successes
GE Capital presented one of its 2001 Fleet Management Productivity Awards to Inter-Tel in November 2001. Woods acknowledges the pride his company takes in this recognition.
"Our progress through the evolution in fleet management has come as a result of the support of many people within Inter-Tel and outside the corporate structure," he says. "The award confirms that those steps taken some years ago are now saving the corporation substantial amounts of money and at the same time increasing the efficient use of our vehicles, as well as the technicians that depend upon them in their servicing of our most valuable resource - our customer."
Going forward, inter-Tel's fleet will remain an important part of how the company provides the support required to satisfy its customers' needs. "As costs increase we must find ways to increase efficiencies of operations and reduce the overall cost of operating our fleet vehicles," says Woods.
He sees the Internet as a great way to achieve these goals because of its "ability to communicate real-time information, digest and retain vast amounts of information, and format that information into meaningful reports for management. The potential is as limited as the individual who utilizes its services."