Over the course of a year, my path crosses those of many commercial fleet managers. Out of these many face-to-face conversations, e-mail exchanges, or phone calls, common themes tend to recur as key challenges facing commercial fleet managers. Although many of these challenges me company-specific, I often find myself reflecting on the similarity of concerns that I have heard voiced elsewhere by other fleet managers. If you know me, you know that I am a compulsive note taker and that I am usually found at industry events scribbling away on my 8½ ´ 11 white notepad. In preparing for this month's column, I thought that it might be interesting to review these notepads and to catalogue the recurring challenges and issues related to me by fleet managers over the past several months. Below are the top 5 recurring issues.
1. The Struggle to Manage Vehicle Depreciation
Almost universally, the number one challenge cited by fleet managers is declining used-vehicle resale values and the struggle to manage depreciation in a deflationary market. The value of used vehicles has declined dramatically in the past three years, and particularly since manufacturers began to heavily incentivize their new -vehicle retail sales. The meltdown in the used-vehicle market has prompted fleet managers to re-examine whether to extend their vehicle replacement parameters, the benefit of one-cycle ordering (and remarketing), to re-emphasize employee sales, to change personal use deductions, to reassess the new models to be offered on their vehicle selector list, and the criteria for determining driver eligibility.
2. Pressure to Take More Cost Out of Fleet
The pressure to reduce fleet costs is another almost universal challenge facing commercial fleet managers. The question is how do you take cost out of an already squeaky tight budget? The most common cost containment initiative continues to be to simply keep vehicles in service longer. Fleet managers are struggling to come up with new and creative ways to cut cost without negatively impacting their drivers.
3. Fluctuating Fuel Prices are Busting Budgets
The wild swings in fuel prices are making it difficult for fleet managers to stay within a fleet budget or to project future budgets. The challenge is learning to budget for the price variances.
4. Concern About Future Acquisition Costs
A growing number of fleet managers are expressing concern about vehicle acquisition costs in upcoming model-years as they analyze manufacturer future product plans which shows that some replacements for today's mainstream fleet vehicles are moving upstream in terms of content, size, and possibly price.
5. Doing More With Less
According to most fleet managers, time management is one of their greatest challenges. As a result, identifying and selecting the right supplier or suppliers to partner with is gaining even greater importance with them. To streamline their operations, fleet managers tell me they are reviewing their internal processes in order to eliminate all non-value-added functions. Many successful fleet managers have gained additional job responsibilities, but without the additional staff to assist them. In an environment of expanded responsibilities, some fleet managers say they are struggling to maintain prior fleet service levels.
Life's More Complicated than Five Challenges
This list of five challenges is by no means an all-encompassing list. Rather, these are some of the recurring themes cited to me by many fleet managers. Of course, there are other concerns such as the impact of corporate mergers, acquisitions, and reorganizations; the ongoing battle of company-provided vs. employee reimbursement, which seems to never go away; the concern about potential driver distractions caused by telematic devices and the subsequent possibility of increased corporate liability exposure; and the struggle to keep abreast of new technologies such as satellite radio, hybrid powertrains, etc., and legislation, such as new diesel engine requirements, hours of service, etc.
Fleet management is a complicated business due to its broad scope of responsibilities, so these (and other yet-to-be anticipated challenges) will always be with us. However, if there is one truism, it is that adversity will always make you stronger.
Let me know what you think.