Data integrity. It’s becoming more important to fleet managers in these challenging economic times.
When you oversee 16,540 vehicles for the entire Siemens North America operation, a miscalculation in the fleet budget can mean millions of dollars. The company’s upper management not only wants to know how costs have changed over specific periods of time, but also in what areas they changed and why.
In the past, the Siemens fleet department’s budget process was an almost completely manual task.
"There wasn’t a lot of data integrity involved," says Jim McCarthy, director of vehicle management services for Siemens. "The cost projection tool Wheels developed changed that tremendously."
Fleet management company Wheels, Inc. recently rolled out two Web-based business intelligence tools to assist fleet managers in managing budgets. Expense Variance allows fleet managers to drill into seven different fleet expense categories to pinpoint where and why costs have changed over time. With Cost Projection, users plug in various estimates for factors affecting fleet costs, such as fleet size, capitalized cost, and fuel prices, to calculate future budget needs using prior-year and year-to-date data.
Saving Time with Accurate Data
McCarthy oversees a shared services operation covering vehicles for 18 Siemens clients and three non-Siemens clients. "Before, we just used a lot of hunches and gut feelings and historical extrapolations," McCarthy says. Now, the cost projection tool allows his department to insert specific parameters for individual operating companies and develop a per-operation company budget. In the past, one fleet budget covered all of Siemens. The company has been using the Expense Variance tool extensively for about three quarters.
Expense Variance has freed up previously unavailable time for McCarthy and his department and improved data integrity for analysis. Expense Variance allows for applications and filters such as organization structure, period, year, and vehicle make and model.
The user enters the desired parameters, and Expense Variance automatically prepares the fleet’s defined timeframe with the exact prior period. The initial analysis screen "provides an overall financial view as well as a cost-per-vehicle view so you’re able to get the big picture while at the same time understanding the inherent relevance of a per-vehicle picture," McCarthy says.
On-screen comparisons are segmented by primary cost drivers, such as depreciation, fuel, maintenance, registration, and funding. Other information includes number of billed units, capital average, capitalized cost, book value, and average months in service. "You’re able to get a down-and-dirty look at exactly how the fleet has progressed from one period to the next," McCarthy says.
"Much of our past budgeting process was based on assumption, and it was based on the Siemens fleet in its entirety. We left it up to the operating companies to fine-tune the numbers based on their mix because we did not have time to weave through all the data and do it on a specific operating company level," McCarthy says. "However, the integrity of those budgets probably was not that good."
The Expense Variance fuel section provides a wealth of important information. Once fleet parameters are entered with the tool, a fleet manager can drill down to fuel and the screen displays fuel variance and fuel spend tabs.
"Both tabs provide a wealth of fuel-related information," McCarthy says. The variance tab addresses the number of vehicles currently in the fuel program, fuel card utilization percentage, number of gallons used per month per vehicle, and fuel price comparison by type of fuel. The fuel spend tab provides spending information broken down into areas such as product, fuel brand, and vehicle model and application.
The data "is tremendously more detailed than we’ve been able to pull out before," says McCarthy.
For example, a fleet manager can drill down to an actual vehicle level to obtain fuel information about Dodge Chargers, for example, including such data as the mpg of an individual Charger in the fleet, where most of the fuel is purchased, premium versus regular fuel total, ethanol consumption, and fuel price.
"It’s just a tremendous tool, and everything I’m talking about is a comparison, not just data — data compared the prior period," McCarthy says. "So it’s definitely helped us get a handle and be more consultative in our efforts with our clients."
Determining Future Expense
A budget forecasting tool, Cost Projection considers major factors that drive fleet costs, including number of vehicles in the fleet, average cost of the new vehicles, number of disposals, the gain or sale on disposal, interest rates, fuel prices, and miles per gallon, plus other major drivers that impact fleet expenses.
While the Cost Projection tool is still new to his fleet, McCarthy says it will be valuable.
"The Cost Projection tool is going to allow us to do a much better job in aligning ourselves per operating company with exactly what their needs are going to be, what their costs are going to be based on specific vehicle mix, based on specific replacement parameters, and the amount of vehicles being ordered," McCarthy says.