Managing the Small Fleet

If you're like one-third of the men and women known as fleet managers, you work alone. If you have anyone working with you, chances are that person works only part-time. You read stories in industry trade magazines about the more visible figures in fleet management - the Ron Pinks, Helen Blands, and Jack Lambs - men and women who manage fleets for companies like Xerox, Hallmark, and Exxon USA, fleets with hundreds and frequently thousands of cars.

But you have only 36 vehicles all totaled. And the similarity between your operation and the highly visible corporate fleets profiled in the magazines is the similarity between Exxon USA in its sleek high-rise in downtown Houston and Ferguson Oil off old Highway 66 in hot and dusty Elk City, OK.

Some of the statistics mentioned above deserve closer scrutiny. Published in a recent issue of Runzheimer Reports on Transportation, they were drawn from the responses of approximately 500 fleet execs, representing the management of about one-quarter million vehicles. Newsletter Editor Adlore Chaudier summarizes: "We found that 34 percent of the fleets responding had no full-time staff other than the fleet exec. And 24 percent of the remainder had only one other full-time person on the fleet staff."

What that means, however, is that if you manage a small fleet, your operation may be more typical of fleet management than any big-fleet profile. In fact, with some of the smaller fleets, it seems that the following is not an atypical situation: "We take a look at turning our cars over after about five years," a fellow responsible for about 40 vehicles says. "Our cars run about 20,000 miles a year, so our mileage gets pretty high. I'd like to get rid of them earlier, and I've told management that. But I guess they got their own reasons. 'Cause they sure don't listen to me."

The fleet manager just quoted is responsible for a fleet that is half cars. Execs get Buick Centuries, and the other vehicles are decided case-by-case based on intended usage, meaning a Chevette here and a Regal or an Aries there. The other half of the fleet is made up of vans used to transport handicapped people.  

When it comes to vehicle acquisition and maintenance, this fleet's management again is different from what the case would be with a larger corporation. Expect no ship-through or national-account programs. Fleet vehicles are purchased from dealer stock, though they're not serviced at the dealerships, since the fleet manager feels that dealers have given his operation "a pretty rough deal." Consequently, after-warranty maintenance is all performed by a local outfit with whom the fleet manager has hammered out a working relationship, a supply/repair chain called Western Tire and Brake.

We're not implying that the management of every small fleet is that loose. When we profiled a number of small fleets in past summer's July issues, we found that most big-fleet trends were found in small fleets, too. We saw that downsizing had become common with small fleets and that many had' discovered the balance-sheet advantages of leasing - even if leasing was from an in-house subsidiary, as was the case with Hobart Bros, in Troy, OH. And, as we also found last summer, it's not uncommon for small-fleet managers to have trouble establishing strict fleet policies.

But in contrast with a "problem" fleet such as the one mentioned above, there are others that are more representative of the current evolution of small-fleet management practices. One such representative fleet is that of a company called Loomix, a manufacturer of liquid livestock-food supplement. With nine plants and distribution in all states west of the Mississippi, the company has need for a fleet of about 40 cars and 40 pickups. While some of the personnel working at the head office in Arroyo Grande, CA, drive company cars, most of the fleet is driven by salesmen.

Sheri Henkel serves as assistant to the president and spends about two days a week managing the fleet. And for a number of reasons, she is representative of the state to which fleet management has evolved in American business. First, she is female, with a background in business rather than auto mechanics. And second, while she divides her time between fleet management and other responsibilities, her approach to the fleet is as professional and contemporary as the latest generation of fleet management computer-generated reports.

Henkel's responsibilities include purchasing, disposal, accidents, registration - all basics of vehicle management. And under her supervision, the Loomix fleet shows many of the trends recently seen in larger fleets, as well as some of the distinguishing small-fleet characteristics.

Although the company still has a few Skylarks on the road, the car section of the fleet is primarily Chevy Celebrities. Henkel says the drivers don't complain about car size, since the Celebrities feel much larger than Citations many of them were once required to drive. For the cars in the fleet, Henkel sticks to replacement parameters of 50,000 to 60,000 miles, which averages out time-wise to about 15 months. She tries to schedule her buying for new-model introduction in September and again in January/February. The replacement guidelines are a direct result of a corporate decision to try to avoid high-mileage vehicles. However, Henkel notes that "to a large extent, resale depends on what kind of vehicle you have. You can have a one-year-old car with 50,000 miles on it and still not be able to move it just because of the kind of car it is." Consequently, Henkel pays close attention to her lessor's recommended purchases, especially as they apply to projected resale value.

Loomix disposes of most of its vehicles through its lessor, U.S. Fleet Leasing. "We sell some of our cars through our salesmen, who in some cases may know of someone who wants to buy the car, and we've done a little better dollar wise when we sell the car in that manner. But we can't spend the time; we can't have our salesmen on the phone, trying to market a used car. So in terms of overall economy, disposing through our lessor has its advantages."

Like many other fleets, Loomix experienced drastic problems earlier this year with expense reports when the IRS was requiring "contemporaneous" records.

"Some of our salesmen make 20 calls a day," Henkel explains, "so they were really burdened." Now, with the repeal of the law, the situation has calmed down. As to personal use, the company has not required its salesmen to bother with withholding or reimbursement for personal use of company cars. But before the Deficit Reduction Act, Loomix required head-office personnel, who had a high percentage of personal use, to reimburse the company at the rate of $50 a month for vehicle use.

Henkel explains that her company's decision to lease rather than buy was made "because of cash flow." But not all the company's decisions on fleet policy are that cut and dried. With maintenance, for example, the company has about 25 percent of its work done through Leaseway Mileage Consultants. But the decision is basically left up to the driver. "We let our guys pretty much do what they want. Some go to Sears, Firestone, or Goodyear.

But we haven't made any real push to get everyone using a national account. In truth, our management simply doesn't want to hassle our drivers. We prefer a more easy going approach. And I think our drivers appreciate that."

That approach contrasts somewhat with small-fleet management at the college division of Little, Brown and Company, a 148-year-old publishing firm based in Boston, MA. There, sales administrator Elizabeth Philipps spends about one-tenth of her time managing a fleet of 38 cars -most of them Chevy Celebrities, the rest Toyota Corollas, Chevy Citations, and Malibu Classics. Philipps' vehicles are driven by three regional managers and 35 salespeople whose job it is to visit college campuses in all 50 states, trying to persuade teachers to adopt the division's text-books in social science, economics, humanities, and literature.

Acquired under open-end lease from Wheels, Inc. and maintained through national account programs coordinated by Consolidated Services Corp., the Little, Brown cars are assigned by Philipps according to the drivers' unique needs.

"Our Colorado salesperson covers Colorado, Wyoming, Montana, parts of Utah, Idaho, New Mexico, and Arizona," Philipps explains. "She drives long distances through fierce terrain and bad weather, and she needs a bigger car with heavier shocks to carry her personal effects, as well as a trunkful of brochures and textbooks. By contrast, our salespeople in the larger urban areas work more out of their homes, and they do quite nicely with the smaller Toyotas. There's also a bonus in the Toyotas' front-wheel- drive feature, which helps with traction during the Northeastern winter,"

To administer the Little, Brown fleet, Philipps relies heavily on advice from Wheels and Consolidated Services, talking often with their representatives by telephone. She also reads such periodicals as the Classen Corporation's Leasing Edge, and keeps in touch with her drivers on topics such as maintenance and recordkeeping through a series of personal memos, which she closes with the cheery Roy Rogers tag: "Happy Trails."

Philipps has overseen several changes during her five years as fleet manager, including the move to downsized cars and the integration of more and more women into the Little, Brown driver sales force. The most important change, however, involves the division's vehicle replacement policy. Formerly three years or 30,000 to 40,000 miles, the guideline was adjusted in response to a dramatic increase in car prices. It's now four or five years and 60,000 miles - though some sturdy vehicles may register as many as 110,000 miles before replacement.

Don't such mileages affect resale? "The resale value of a car is not an important concern to us," Philipps replies. "It is a consideration, of course, but it's given lesser weight than it might be at a larger fleet with a full-time manager."

Overall costs, however, are important to Philipps. "Little, Brown is a wholly-owned subsidiary of Time, Inc., where everyone is conscious of cost," she says. "Someone realized that our division is running the largest fleet in the whole corporation, and suddenly we got ourselves noticed. As a result, we're more familiar with costs these days. And we've turned toward more careful management of the fleet asset."

Tracking expenses through quarterly reports on mileage and maintenance, Philipps says her costs have "increased more slowly than might be expected under inflation."

As these examples illustrate, a company's fleet program can either be haphazard - proving a burden to management and drivers - or intelligently run, satisfying executives, fleet administrators, and drivers alike. If a fleet is to achieve the latter, though, there must be intentional cooperation among all involved. No matter how small the fleet.