One of the ongoing themes in the fleet industry today is that somehow, the profession has changed dramatically from that of 20, 30, or 40 years ago. We're in a "knowledge" industry, the "information age," where computers, the Internet, and now smart phones have made the job of the fleet manager virtually unrecognizable from what it was in the past.
To an extent, and in some ways, this is true. Where the 1970 fleet manager used a desktop adding machine, a pencil, and a green paper spreadsheet, today's fleet manager enters formulae and numbers into an electronic spreadsheet.
Though both share the office telephone as a key means of communication, the phone booth of the '80s was replaced by the cell phone. As little as 20 years ago, e-mail was something new and mysterious, and a fleet manager's written communications were typed out on a word processor and mailed. Today, if we're away from our BlackBerry or iPhone e-mail for an hour, serious "withdrawal" kicks in.
But has all this really changed the job itself? Has the job of a first baseman in baseball changed because Lou Gehrig wouldn't recognize the glove used today by Albert Pujols? Has a golfer's goals changed because today's driver is three times the size of the one used by Ben Hogan? No, no, and no. The job of the fleet manager, in 1970 and today in 2011, are the same: to acquire, care for, and manage a fleet of vehicles in the safest, most cost-efficient manner possible. Surely, there are things Tiger Woods could learn from Ben Hogan, and equally surely there are things the fleet manager of 2011 can learn from fleet managers of years past.
What Was It Like?
What was fleet management like, say, 40 years ago, in 1971? How were the basic functions carried out? First, just about all of what is done today with the click of a mouse or the push of a cell phone button was done manually, written with pen on paper or typed into a desktop typewriter (and a manual typewriter at that). The open-end lease was still being discovered, and many fleets leased via fixed-term, closed-end leases. Vehicles were ordered either from a fleet-minded dealer or via the fledgling fleet service known as a "buy-sell" or "purchase-disposal" program from a fleet lessor. Orders were written, or typed, onto a paper requisition (don't forget the carbon copies), stuck in an envelope, and mailed. Order status came by mail too, or a phone call to the supplier.
Drivers got a phone call from the dealer when the vehicle was delivered; the courtesy delivery fee might have been $25 or $30. Confirmation went to the fleet manager via a post card, or a copy of a sight draft for the title and registration.
The bottom line? Fleet management was primarily a manual process, and fleet managers were more involved in day-to-day activities than they are today. Data was accumulated and reports generated via mainframe computers, and any changes required programming that sometimes took weeks. Communications took place via telephone or hard copy memos and letters.
Who Were They?
Going back decades, fleet managers were more likely to come from an automotive background than they are today. They came out of dealerships or had motor pool experience in the military. Hands-on experience, either buying, selling, or maintaining and repairing vehicles was more common than it is today; as many fleet management programs were in their relative infancy, it was more important as well. This led to a perception that has carried over even to today, that the fleet manager was a "car guy," a double-edged sword.
Today, a fleet manager is likely to have some background in finance, accounting, purchasing, or sourcing, and less likely than in the past to have true automotive experience. This is where yesteryear's fleet managers can help.
It's Still About Vehicles
As stated earlier, there is something to be said about fleet management today being different, that the accumulation and tracking of copious amounts of data is more important than ever. That said, it is sometimes forgotten that this data is accumulated by the acquisition and operation of a fleet of vehicles, and the more a fleet manager knows about the subject asset, the more effective performance can be.
For example, we often take today's maintenance management programs for granted. The management of a preventive maintenance regimen and decision-making when repairs are needed can be outsourced. After all, isn't it best to use the expertise and resources a fleet supplier can provide, rather than getting directly involved? Yes, and no.
The large majority of activity in most fleets, as it pertains to maintenance and repair, is routine preventive maintenance and predictable repairs (tire and brake replacement, for example). Much of the rest is covered under warranties that are vastly lengthier and more comprehensive than anything a fleet manager in 1975 had working in his or her favor. But the fact remains that there are always decisions to be made when repairs are required that aren't predictable, and that occur beyond the warranty period.
Learn the Asset
The first lesson yesteryear's fleet manager can teach fleet managers of today is to learn the asset they're managing. Certainly, fleet management is as much managing data as it is managing vehicles. This was as true 30 years ago as it is today. Just because, however, that data is collected and mined far more easily today does not mean a fleet manager shouldn't be, to some extent, well-versed in the vehicles themselves.
Learn the basic systems: ignition, powertrain, electronic, cooling, braking, etc. It is probably not necessary to be able to rebuild an engine, or slap a rotor on a lathe and resurface it. Although larger fleets today use some sort of maintenance program, there will come a time when the fleet manager must make a decision: Should that repair be done? Is that estimate padded? How many tires are really needed?
The time will come when a conversation with the service manager at a shop, or even the technician for the fleet supplier, must take place. If the fleet manager's background is accounting or procurement, he or she should at least be able to understand the difference between an alternator and a caliper when the shop calls.
It is not necessary to actually be able to perform the repairs or diagnose the problem, but that basic understanding of how a vehicle works will make mining the data much more meaningful. Just because a child today has access to a calculator does not preclude the need to teach him or her how to add, subtract, multiply, or divide. By the same token, just because the company has access to certified technicians via a maintenance management program does not preclude gaining the advantage of knowing the assets managed. There are any number of sources available:
● Local colleges often offer basic courses on vehicle mechanics. Some are adult education courses targeted toward exactly the kind of basic understanding that a fleet manager needs.
● Maintenance providers, such as mechanical chains, tire manufacturers, and even fast lube chains, offer similar courses.
● Fleet maintenance suppliers will usually be happy to assemble a day's worth of this type of training, or offer it already.
● Auto manufacturers can be a source for this as well.
As the saying goes, you don't need to know how to play the instruments, you just need to know how to lead the band. Yesteryear's fleet managers, who often had backgrounds and experience in auto mechanics, weren't out there doing brake relinings, but were confident and knowledgeable when decision-making time came, and they had to talk to those who were doing the work.[PAGEBREAK]
Learn the Business
What business? The auto business. Yes, a leasing company buys a fleet's vehicles, sells them, and purchases them out of dealer stock when needed. But yesteryear's fleet managers, once again with more of a vehicle background, knew more about those buying and selling processes.
When that order is entered online into the lessor's system, does the fleet manager know what ensues? The answer is as likely no as it is yes. It's nice to know that when that order is placed, the vehicle gets built and delivered. But it's also nice to understand what happens in between and how that is accomplished.
Yesteryear's fleet managers were closer to the manufacturers, and more importantly, to fleet dealers. They knew how cars were priced, the difference between retail, factory invoice, and dealer invoice. They knew where the money was, what was negotiable, and what wasn't. They understood the ordering process, from dealer subcode to courtesy delivery. And though a lessor applies its own resources to these processes, an understanding of them can help a fleet manager react to emergencies, problems, and delays.
Learn the specifics of vehicle pricing; not just holdback, or "invoice," but what the components are - factors such as advertising support, floorplan costs, what fleet incentives a dealer receives from the factory, and what incentives are due to the fleet buyer. Know what a courtesy delivery dealer must do to prepare a vehicle for delivery to a driver, how much it costs, and how the dealer gets paid. Learn when an order can be cancelled, and when it's too late. Understand the "order-to-delivery" timing of the various manufacturers. If the fleet uses imports, gain a thorough understanding of the ordering process and how it may differ from the domestic manufacturers.
Finally, buy a vehicle yourself, or better yet, several, throughout the model-year. Knowing all of the above will help not only when, for example, a vehicle is needed out of dealer stock, but in lease negotiations as well.
On the back end of the fleet lifecycle, learn about the resale markets. Follow used-vehicle values as one would any market. Know when vehicle values peak and when they crater. Understand what optional equipment enhances resale value and what does not. Learn the depreciation curve, how both time and mileage impact resale values, and when and what to recondition. Understand the difference in the various markets - retail, wholesale, and auction, and when to use each. Don't just turn vehicles back to lessors to be sold; take the above knowledge and use it to increase proceeds (and decrease depreciation) yourself, by selling vehicles on your own throughout the model-year.
Yesteryear's fleet managers were far more likely to attend an auction themselves, or negotiate the sale of vehicles directly with wholesalers, and it's a lesson that fleet managers today would be wise to learn.
Learn the Numbers
Leasing vs. ownership vs. reimbursement, calculating lease rate factors and payments, opportunity cost, etc., are all part and parcel of fleet management. Today, they're done on Microsoft Excel spreadsheets, and as likely as not, the fleet manager is not directly involved in the process or the decision. Even the choosing of suppliers and the RFP process have moved away from the fleet manager and into the world of procurement or strategic sourcing, with the fleet manager just another team member, a subject matter expert.
Years ago, the fleet manager was more directly involved, particularly in the RFP process, if there even was one. It was as likely that proposals from lessors or other fleet suppliers were solicited not on some regular two- or three-year schedule, but as needed or requested by a fleet manager based on a sales call from a leasing company. Also, the proposal would have been reviewed, analyzed, and either accepted or rejected solely based upon the fleet manager's decision. Although a fleet manager would not be the decision-maker in, for example, a lease vs. own analysis, he or she would often be tasked with doing the financial analysis ("net present value of the after-tax cash flows" was part of the job), or at the very least, providing the assumptions upon which the analysis was based.
Learn the numbers. Understand, at least, what "net present value of the after-tax cash flows" means, what makes it up, and why it is relevant to a lease vs. buy decision. Find out exactly what makes up the fleet's lease rate factor; understand the difference between average and actual depreciated value, as well as the difference between amortization and depreciation.
Know what the tests are in FAS 13, how they're calculated, how they may differ from the upcoming IAS 17 tests, and what effect, if any, this will have on your company's financial statements. Much in the same way that a fleet manager doesn't need to be able to rebuild a transmission, but should understand basic auto mechanics, a fleet manager should learn the underlying financial and accounting processes upon which decision-making depends.
Know Your Drivers
Most companies differentiate between internal and external customers. Employees are tasked not only to serve the external customers who purchase and use their products and services, but also internal customers, those employees they serve as well. A fleet manager serves, ultimately, the driver. Drivers must use the vehicular tools the fleet manager provides to do the job.
Certainly, today's fleet manager lacks many of the resources yesteryear's fleet manager had, specifically in staffing. Today, it is likely that a fleet of thousands must be managed by a fleet manager without staff, where yesteryear that same fleet department would have staff to help do the job. For that reason, it is more difficult for fleet managers to spend much time with their drivers. Yesteryear's fleet managers were more likely to go out in the field and spend time with a driver, driving their routes, joining them on sales or service calls.
Nonetheless, it is important that fleet managers know their drivers, what they do, how they do it, and what they need to get it done. That vehicle is merely a tool - an important one - just like a cell phone, laptop computer, or a sales presentation. No one knows better than the driver what vehicles are needed, how they should be equipped, and why.
There are a number of ways this can be accomplished, and not all of them require a trip away from the office. First, if at all possible, take that trip. Get in the car or truck with a driver, and pay close attention to how they spend their day, how they do their jobs, and how the vehicle allows them to do it. This can be done locally, but if possible, try to get out into different territories - urban, rural, in the mountains, and out in the desert. One driver may only have to drive a few miles, or even blocks, from one customer to another (in an urban environment), another several dozen miles. One driver might need to drive mountainous terrain, another on the open highway.
The value is obvious; when time comes to review the selector, driver input is critical. Sure, some drivers will lobby for larger or more luxurious vehicles, replaced with new ones more often than is economically sound. But they do know how much cargo area they need, how many passengers they carry, and what they need to haul. There is no better way to understand these requirements than to see them firsthand.
If this just isn't possible (or even if it is), participate in driver communication sessions - conference calls, or webcasts. Ask for time during new driver orientation. Participate in scheduled conference calls, or sales meetings. Work with field management to become a familiar face (or voice), and make sure drivers understand your role, and the role of the vehicle, in helping them do the job.
Yesteryear's fleet managers may have had staff backing them up when they left the office to ride along with drivers; but they understood the importance of getting to know drivers.
Is the "Dedicated Fleet Manger" Disappearing? [April 1993]