The Corporate Fleet Manager: Today & Tomorrow
There is a need to identify new ways to save money and decrease accidents. Changes in the economy and to whom fleet managers report have adjusted the role of the fleet manager today and will change it again in the future.
Jim Frank, CEO and president of Wheels Inc., which sponsors the Professional Fleet Manager of the Year award, speaks about the value of professional fleet management at the 2011 NAFA Institute & Expo.
As one reviews the backgrounds and accomplishments of all of the nominees for the 2011 Professional Fleet Manager of the Year award, you cannot help but be impressed. They show:
● Numerous examples of substantial cost savings, as much as $1 million to $5 million in a year.
● Dramatic improvements in fuel economy, resulting in both cost savings and salutary environmental impact.
● Effective management of "upsizing" and "downsizing" of fleets from 400 to 10,000 vehicles.
● DOT-compliance implementation, avoiding embarrassing fines and improving productivity.
● Effective safety program implementation, resulting in significant reductions in accidents with corresponding savings in repair costs, increases in employee productivity, and most importantly, the human payback related to fewer injuries.
We have to ask ourselves whether or not these, and similar important accomplishments, would have been possible without the leadership of a capable and knowledgeable professional fleet manager. I think the answer would frequently be "no." The fleet manager's role in the implementation of successful enhancements to the fleet program is complex and multifaceted. It requires, at a minimum, obtaining endorsement of senior management, selection and supervision of appropriate vendors/partners, internal coordination and communication, and in many cases, securing enthusiasm and commitment from the vehicle operators.
Virtually all of these complex tasks, by their very nature, require an in-house manager to sponsor and drive.
So, would the job definition of fleet manager today look like one written five or 10 years ago? It is pretty clear that the answer is "no," which is a positive development as the scope and impact has clearly been elevated. There is no less need for fleet management today; rather, the stakes have been raised much higher and the potential contribution has been dramatically enhanced as the fleet manager leverages supplier expertise and technology to the benefit of the employer.
The Future of Fleet Management
What about the future? A recent article in Automotive Fleet indicated expense control and reduction is by far the No. 1 priority of the vast majority of fleet managers. Our own experience at Wheels would confirm the survey results. And this focus on expense reduction is perfectly rational.
To start with, 70 percent of the fleet managers with whom we deal now report to sourcing, whereas in the past it was very common for fleet to report to sales, operations, finance, or HR, depending on the nature of the client and their primary business requirements. Sourcing, by its very nature, will tend to focus on expense reduction. And appropriately so, given that we expect to see serious pressures on the cost of fleet operations in the near future.
We have been fortunate that through sound management, aggressive and thoughtful initiatives led by fleet managers, and sympathetic external forces, cost of fleet has barely increased, if at all, in the last 10 years.
The future, however, promises to be more difficult on a variety of fronts. Certainly, we cannot anticipate that interest rates will remain at record lows and could easily expect that they will increase by 2-3 times the current levels in the next few years. Fuel prices are already at record levels with a reasonable probability of further increases over time. There are powerful forces that may well drive significant increases in new vehicle prices, not the least of which are production rationalization by the OEMs and the cost in technology and materials required to achieve a 40-percent increase in fuel economy as mandated by the federal government. Some of these cost pressures will be offset by strong residual values and improved mpg, but the net impact will be increasing costs.
Given that we have effectively harvested the low-hanging and obvious savings opportunities, it will require the combined and shared thinking of sourcing, the fleet manager, and supplier partners to identify and effectively implement material savings in the future.