Larry Giddens, director – fleet operations for R.J. Reynolds Tobacco Co. in Winston-Salem, NC, is the 1994 Professional Fleet Manager of the Year Award recipient.
Giddens was presented with the trophy at Automotive Fleet’s annual awards brunch in San Diego, CA. Also, Giddens’ name will be inscribed on a plaque permanently displayed at Automotive Fleet’s headquarters in Redondo Beach, CA. A $5,000 scholarship, $3,000 of which was donated by the Automotive Fleet & Leasing Association (AFLA), will be given in Giddens’ name to an accredited university business school.
Giddens was selected this year’s winner by a panel of fleet industry judges.
His most recognized accomplishment was in 1993, being recognized by the National Association of Fleet Administrators and Business Week magazine in their award for Quality Fleet Management Ideas. Giddens was recognized for reducing paperwork and manual applications in the management of fleet operations via Electronic Data Interchange (EDI) and other forms automation.
Expense Control Cuts Costs
From 1990-1993, Giddens expense control strategies saved R.J. Reynolds, Tobacco Co $21 million. Thus far, in 1994, R.J. Reynolds, via Giddens’ expense control additional outsourcing, and further automation, has realized a $500,000 savings. Giddens strategies analyze savings by cost efficiencies, cost avoidances, and real dollars. His expense control includes:
- Manufacturer volume incentives.
- Paper reduction programs.
- Staff Downsizing.
- Selecting alternate suppliers for specialty vehicles.
- Changing the vehicle mix from eight cylinders to six cylinders.
- Negotiating a sell/lease back of the company’s rolling stock.
- Working closer with field sales on headcount redeployment and reductions.
- Reduced field sales accidents.
- Avoidance of maintenance and repairs on badly damaged vehicles.
- Replacing damaged vehicles with surplus vehicles to avoid excess repair costs.
- Changing the lease term from 50 to 60 months.
Giddens attributes his success in fleet management to four key factors:
- A strong personal desire to manage one of the most efficient and successful departments at R.J.Reynolds.
- Support of his company’s executive management.
- A staff that includes three fleet coordinators and one senior fleet coordinator.
- Resources such as the National Association of Fleet Administrators (NAFA), his leasing firm, PHH Vehicle Management Services, and publications such as Automotive Fleet.
Technology a Key Element
‘We are examining all facets in the way we do business to determine why technology is needed, how it is used, and if there is a better way to use it,” says Giddens. “Basically, we are changing the way we do business. We are very committed as a company and as a department to automation, Electronic Data Interchange (EDI), and any new technology that is able to help us perform our accountabilities better.
“Our goal is to eliminate paper,” says Giddens. “We have automated many of the functions between our office and our field sales offices such as vehicle orders, communications, and driver change information.” Much of R.J. Reynolds information transfer is done on-line as opposed to paper.
EDI ordering and purchase order development have been implemented with PHH Vehicle Management Services located in Hunt Valley, MD, resulting in savings and efficiencies for both companies. According to Giddens, R.J. Reynolds plans to expand EDI to include change orders, quotes, new unit notices, sold unit reports, universal change notices, reporting out-of-pocket expense, and billing information.
“As we move to the future, I would like to see leasing companies and motor companies work together and adopt a set of standards for transmitting information via EDI using Association of National Standards Institute (ANSI) guidelines,” says Giddens. “This would enable the leasing companies and motor companies to pass vehicle data, orders, change orders, etc., back and forth without paper. In turn, the appropriate information could be transmitted from lessor to lessee.” As automation between the lessor, lessee, and motor companies improves, efficiencies will be realized by companies such as faster transmission of data, improved accuracy, ability to plan better, less paper, less human intervention, and cost savings.
EDI has not only been implemented with our leasing companies and motor companies, but has also been implemented with our drive-away service company, A. Anthony Driveaway Truckaway. This has improved efficiencies and cost savings by transmitting data for vehicle relocations and invoicing electronically. This approach has opened up new opportunities for A. Anthony to communicate with companies willing to take advantage of technology available in today’s market. This change resulted in an annual savings of $6,000 for R.J. Reynolds.
Effective Replacement Policy
R.J. Reynolds uses a four-year/70,000-mile replacement policy on cars and a four-year/80,000-mile replacement on trucks. “We feel this gives us the opportunity to get the most for our dollars,” says Giddens. “We’ve gotten good use out of our vehicles and the mileage still affords us the opportunity to maximize the resale value of our vehicles.”
R.J. Reynolds has an employee purchase program for its drivers. “We feel this plays a major role in encouraging our drivers to take good care of their vehicles,’ says Giddens. Proper maintenance and care will ensure the driver that they are purchasing a vehicle that has been well taken care of.”
If a driver does not want to purchase a vehicle, Giddens will make it available other employees or, in some cases, family members. They closely monitor the condition of their vehicles and PHH Vehicle Management Services’ used-car department to ensure a good return on their vehicles.
PHH has been very successful in disposing of the vehicles and achieving a good return for R.J. Reynolds. This is the number one way Giddens remarkets his vehicles. Currently, Giddens only sells 12 percent of his fleet vehicles to R.J. Reynolds employees. “The reason our sales to employees is lower than other companies is because 70 percent of our vehicles are vans,” says Giddens. “We think as we shift from fewer vans to more cars we should realize more employee sales.”
Giddens and his staff have recently made some changes to improve driver productivity. Vans are now designed with custom interiors to better organize materials. Re-registration and payment of vehicle taxes are now outsourced to PHH. This reduced, on the average, one hour and 15 minutes that each person assigned a vehicle had to leave their job and go to the Department of Motor Vehicles. This change in procedure resulted in $126,000 in savings annually.
Toll-Free Number Saves $52,000
An 800 number has been implemented for reporting accidents to R.J. Reynolds’ insurance company eliminating the need for drivers to complete an accident report. This saved R.J. Reynolds $52,000 annually in administrative costs, postage, envelopes, etc.
“We utilize PHH’s maintenance programs to insure repairs are made timely and cost effective helping improve driver productivity. With PHH’s assistance in 1993, we cost avoided $300,000 in unnecessary repairs that were covered by warranty and not done because of oversell.
“Treat people the way you want to be treated,” says Giddens. This is Glidden’s philosophy regarding his relationship with PHH Vehicle Management Services.
“We both will make suggestions, changes, and recommendations in our partnership,” says Giddens. “We both have a lot invested in each other money-wise and in tenure. We approach things in a very business-like manner and realize that for both companies to be successful, there has to be some give and take.”
According to Giddens, another reason why the relationship is so successful is because “we say it like it is.”
“We don’t dance around issues and we don’t worry about hurting each other’s feelings,” says Giddens. “If we gave praise, we express that, if we have problems or opportunities, we attack them head on. A great deal of mutual respect has developed as a result of this no-nonsense approach.”
Outsourcing Study Conducted
In late 1993, R.J. Reynolds management conducted an in-depth study on outsourcing fleet operations. The study revealed that the areas of fleet operations currently outsourced were in the best interests of R.J. Reynolds and would continue to be outsourced such as vehicle registration and renewal program, vehicle specification and pricing, and the 800 number for the field sales people to check for vehicle delivery status.
“Over the past five years we have improved efficiencies and outsourced accountabilities which allowed us to reduce our staff from 10 people to five people,” says Giddens.
“Our study revealed that we are currently maximizing our opportunities to outsource and manage our fleet accountabilities with the proper headcount resource at a very efficient budget level. We are committed to continually evaluate our department and to look for opportunities that are in the best interests of our company.
Giddens Eyes Alternative Fuels
When asked about alternative fuels, Giddens responded by saying: “We are watching the alternate-fuel mandate very closely. Currently, in the cities most affected, our vehicles are housed at home, therefore exempting us for the time being. I am concerned about the impact it will have on our fleet. R. J. Reynolds is interested in the Clean Air Act. However, we would prefer to see alternate fuel vehicles available from the manufacturer versus fleets having to make aftermarket installations.”
Giddens continued by saying “We would like to buy these vehicles from the manufacturers as opposed to some of the states trying to put the cart ahead of the horse. I want to avoid going out to aftermarket companies and making the conversion ourselves. The aftermarket installations are expensive, take up a lot of the trunk capacity, and currently there is not a resale market for alternative-fuel vehicles. My other concern is the availability of fuel. Alternative fuels have to be widely available for the program to be a success.