Siemens Shared Services Leverages Fleet Expertise
When asked about the key to his success, Jim McCarthy sums it up succinctly, “Communicate, communicate, communicate.” McCarthy, director, Vehicle Management Services for Siemens Shared Services in Iselin, N.J., effectively and profitably manages 23 distinctly different fleets. He has created one efficient and knowledgeable fleet team, leverages in-house expertise, and maintains successful fleet programs.
McCarthy, who has 12 years of fleet experience, received the Automotive Fleet 2005 Professional Fleet Manager Award. Co-sponsored by Wheels Inc. and the Automotive Fleet & Leasing Association, the award was presented April 10 at an awards brunch that coincided with the National Association of Fleet Administrators (NAFA) Fleet Management Institute and Law Enforcement Group (FMI-LEG) conference in Grapevine, Texas. This award recognizes and honors an experienced and proficient fleet manager who has demonstrated special business acumen in developing and executing key management policies. A 27-member judging panel, representing all areas of fleet, determined McCarthy as this year’s award winner.
Siemens Shared Services Provides Value-Added Expertise
Siemens Shared Services provides services that add value primarily to Siemens’ many operating companies through economies of scale, centers of expertise, and best practices.
Shared Services business units fall into one of four major clusters: accounting & finance, information technology, human resources, and procurement & logistics.
Shared Services’ mission is to“improve the way Siemens does business through a shared services framework that adds recognized value.” In order to comply with its mission, Shared Services has developed a partner relationship with its customers, known as the Power of Partners initiative. The ultimate goal is to create value for Siemens by:
- Partnering with each operating company to drive toward world- class performance.
- Enabling each company to focus on its core business.
- Driving costs down while improving quality.
- Leveraging the sheer size of Siemens by utilizing centers of expertise and centers of scale.
According to McCarthy, the core mission and the partners initiative are the critical foundations that allow the Vehicle Management Services division of Shared Services to prosper.
Vehicle Management Services Grows Business
McCarthy works with a team of 15 account managers to manage 14,300 vehicles for 23 of Siemens North American operating companies, as well as three non-Siemens companies. Vehicles are leased through Wheels and ARI.
“We started out as a Siemens medical fleet with about 950 vehicles in 1993,” says McCarthy. “Then in 1997 we started taking on new business, consolidating with current opportunities, and, in essence, created a shared services platform for fleet within Siemens.”
As one of the first business units to enter into a shared services company, the overall objective was to grow the business by selling services to the other Siemens operating companies. However, this proved challenging at first.
“Many of the operating companies were not really interested in a shared services initiative,” says McCarthy. “Autonomy was very important, and because there was no mandate to use our services, there was a general push back. However, as we started to win clients and gain leverage, confidence in our approach improved tremendously.”
Through hard work and strong communication, McCarthy and his team grew Vehicle Management Services and now provide vehicle management for 99.6 percent of Siemens’ U.S. operating companies. Because Vehicle Management Services has grown so quickly - they added 4,500 vehicles in 2002 and 2,900 vehicles in 2004 - they have the challenge of managing an ever-changing portfolio.
“Due to acquisitions and associated transitions at one time, we were managing fleets with eight different leasing companies,” says McCarthy. “As customers were looking for return on investment validations, we were struggling with consolidating data for analysis across these eight leasing company platforms.”
Originally a predominantly car, minivan, and SUV fleet, the Siemens fleet portfolio has recently been expanded to include everything from heavy-duty trucks, to tractor trailers, HAZMAT and recovery vehicles, and even a few forklifts.
“Finding, hiring, and training specialists in these areas is a real challenge. However, we are fortunate enough to have a superior staff of dedicated fleet managers who are continuously raising the bar and exceed expectations,” says McCarthy.
Vehicle Management Operates With Account Managers
Because all 23 Siemens fleets had their own fleet infrastructure and fleet manager, most of McCarthy’s work has been transitioning fleets to the Shared Services fleet management program. The most efficient way to handle these transitions, and the subsequent maintenance of accounts, was to create an account management strategy, says McCarthy.
“Account managers act as partners with their respective operating company,” he says. “They are involved in presentations and executive consultation, and are continuously involved in policy setting and selector recommendations based on their knowledge of that company. They truly are an extension of the customer that they work with.”
Ensuring that account managers are successfully paired with the appropriate company is a top priority for McCarthy. “With 23 different companies, there are many different strategic directions. Some companies focus on financials, while others focus on driver satisfaction; some are adamant about safety and risk, while others are more concerned with leverage. As such, we need to ensure that our account managers are aligned based on the type of customer and their expectations,” adds McCarthy.
“This team of 15 account managers is tremendously competent,” says McCarthy. “I have been fortunate to be able to surround myself with extremely talented and dedicated fleet professionals. Without question, this team is the primary driver for our success.”
Balancing Global and Operating Company Goals
McCarthy must consider what is best for each operating unit, and at the same time make sure that the policies, programs, and end results make sense for Siemens as a whole. This has made selling and managing the Shared Services’ vehicle programs very challenging.
“When services aren’t mandated, there is a need to develop pre-sell relationships within the operating company,” says McCarthy. “This is a bit difficult when the operating companies don’t necessarily want to be sold.” However, in the long run, having these relationships proved to be a real advantage. As opposed to a mandated service “intruding” on a business uninvited, each sale and associated service level agreement, no matter how difficult to consummate, created a mutual partnership.
McCarthy’s team has been instrumental in helping all 23 customers draft individual fleet policies based on their particular needs and expectations. “We determined the commonalities in all of these policies and then put together a general standard policy for all of the fleets,” says McCarthy. “Each customer then has ownership of their own addendum, which is driven by company-specific issues.”
The key for McCarthy is to understand the uniqueness of each operating business, and at the same time standardize policies across the board, allowing for some flexibility. “From high-speed rail transportation to high-tech medical equipment, and from power generation and lighting to mobile communication, the needs of our clients vary greatly. While we’ve moved these fleets to a common platform, we manage these policies ongoing and make any adjustments as needed,” he says.
McCarthy and his account managers effectively communicate with each other and their operating companies via staff meetings, presentations, and a very sophisticated and interactive Web site available to all of Siemens’ operating companies.
Vehicle Management Provides Leverage and Fleet Expertise
As a Shared Services organization, Vehicle Management Services provides two primary benefits: leverage and expertise. However, McCarthy says it is vital that the leverage piece does not overshadow the expertise component.
“Our goal is to continuously improve the quality and quantity of the expertise we offer, while also leveraging our services,” he says. “Through our strategic alliances and partnerships, we are able to make knowledgeable and expert decisions for our operating companies.” McCarthy’s team continuously monitors the ratio of leverage to expertise benefits for their clients.
“In the beginning, the benefits that we provided were approximately 90 percent leverage-based and 10 percent expertise-based,” he says. “Today, we’ve moved that ratio to 75 percent leverage and 25 percent expertise - a tribute to the excellence of our staff.” McCarthy’s goal is to continue increasing the level of expertise provided to the operating companies. “We feel that leveraging our scale is very important, but long-term management of our expertise-based savings will provide more value-add for our customers. Benefits associated with leverage are going to rise and fall based on various markets and industry trends,” says McCarthy. “As such, if we’re going to continue to be a viable entity, it is imperative that we highlight and market the expertise portion of our business.”
Performance Index Helps Monitor Programs and Policies
A new metric-based scorecard system helps McCarthy assess, monitor, and maintain the service-level quality of those fleets utilizing his services.
“One of the many keys to our success in terms of retaining customers and building customer relations is our performance index,” he says. This performance index consists of 40 possible metrics that are divided into three fleet management segments:
1. Low-cost transportation.
2. Driver productivity.
3. Driver and client satisfaction.
Created three years ago, in conjunction with Wheels, its primary leasing partner, the performance index is managed individually for each client and updated quarterly.
“Every metric is a key metric in the auto industry,” says McCarthy. “As such, this index affords us the opportunity to create dialogue and educate our clients. We meet with each client periodically to mutually decide on which metrics are important to their business. This performance system really ties down expectations and puts everyone on the same page.”
According to McCarthy, his key to success is communication, and the performance index is a tool that enhances the communication between the operating company and Shared Services Vehicle Management. “We cannot rest on our laurels,” he says. “We need to market our successes to our customers. They need to know what we’re doing, why we’re doing it, and what the benefits are to them.”