Over the last 10 years, AutoZone has made some major changes in terms of how it has managed its fleet.
These changes were made concurrent with trending industry movements and helped the continued effort to establish the company’s significance in the automotive industry.
AutoZone maintains a global fleet size of about 16,000 light-duty vehicles and has to ensure that all operations are running smoothly.
What the company’s fleet focuses on in terms of cost control, driver safety, procurement, and more has helped ensure overall efficiencies.
Managing Personal Use to Reduce Costs
Considering the size of the fleet, looking at ways to reduce costs is a major focus for AutoZone.
Clay Gaudet, fleet manager for AutoZone, said there are numerous ways the company controls costs, which includes changing vehicle sizes, employing technology such as telematics, leveraging the OEMs, focusing on driver safety, and sticking to a cost-of-ownership model.
Another methodology that AutoZone credits to greatly curbing fleet costs involves policies that surround personal use of company vehicles.
“AutoZone has a few fleet policies around personal use which help control costs, but we also utilize a lot of exception reporting to identify outliers,” said Gaudet. “We have the ability to monitor miles driven, when driving is happening, if driving is for business purposes, the style of driving (speed, aggressive starts, harsh braking), vehicle idling, etc.”
When the data is tracked and observed, Gaudet said that the aforementioned exception reporting is shared with field management to identify and correct bad driving behaviors.
“We have our own business intelligence product that allows us to publish reporting to all levels of management,” added Gaudet. “The reporting is used to keep the topic top of mind as the store managers can use the reporting to identify and coach on specific driving behaviors.”
Improvements in safety from this came in the form of in-cab coaching, as well as an increased focus on safety from senior management.
“The in-cab coaching provides immediate alerts to things like speeding, harsh braking, etc. This gives the driver a real-time opportunity to fix the behavior before it hits the exception report so the drivers start to correct the behavior to keep off the reporting,” he said.
This focus on personal use follows suit with a major company change that was made 10 years ago: the decision to remove branding from its fleet in 2008.
This decision reduced accident claims by millions of dollars, according to Gaudet. However, vehicle wraps still appear on the company’s tractor-trailer units in AutoZone’s supply chain and the company’s maintenance vehicles.
Moving to Smaller Vehicles
Recent rightsizing has also played a major role in how AutoZone’s fleet operates.
AutoZone found that it could accomplish the same tasks its fleet was conducting with smaller vehicles.
“Switching to smaller vehicles was a no-brainer. Most of the deliveries are hot-shot (on-demand) that have a few smaller items,” said Gaudet. “When you reviewed total cost of ownership, it made no sense to have an entire fleet of trucks. The acquisition costs were higher, the gas mileage was lower, and maintenance was higher, which didn’t get offset by higher resell values. In addition, the smaller trucks weren’t as driver friendly as the smaller vehicles we use now.”
AutoZone transitioned to a fleet that consists primarily of small cars, pickup trucks, cargo vans, and passenger vehicles. The majority of its fleet is comprised of cars and light-duty trucks used to deliver parts from stores directly to customers.
“We try to optimize the vehicle for its specific function in the company,” said Gaudet.
Gaudet elaborated on the necessity of focusing the roles of its various assets.
“Most of the time people weren’t actually utilizing the truck bed to carry what they’re bringing to our customers. They’d put it on the seat next to them,” Gaudet explained. “Cars and trucks are making the deliveries; the only difference is trucks can deliver things like engines, exhaust systems, rack and pinions, and transmissions.”
Although maintenance is handled by a fleet management company, Gaudet works directly with OEMs for procurement.
Earlier, AutoZone utilized just one OEM to procure assets, but the changes in overall portfolio expanded this to more than one. Now AutoZone utilizes assets from Nissan, Ford, General Motors, Toyota, and many more.
“As the group focused more on cost of ownership and picking the right vehicle for each function we have evolved into working with most OEMs,” said Gaudet. “We are always testing new vehicles for driver acceptance and cost of ownership. It also provides some security in having a diverse asset base.”
In addition to the smaller price tag, reducing acquisition costs, the move to downsize also shrank the fleet’s carbon footprint.
Speaking of carbon footprint, the company has tested alternative fuels, including compressed natural gas (CNG) and propane autogas. However, the fleet has not been able to justify a switch due to low gasoline prices, though it has considered a return to diesel in a few locations, including Puerto Rico.
AutoZone strictly utilizes a corporate fleet leasing program for its fleet.
Also important was the decision to rightsize was that it benefited drivers; since they were happy with the company’s decision to change the portfolio.
“Our drivers gave a very positive response to the change. They liked the ease of driving, the comfort and the improved visibility. They also liked the ability to load in the hatchback versus lifting over truck bed,” said Gaudet.
Focusing on the needs of drivers is a major priority for the company.
“AutoZone has a very strong culture and we provide a great working environment for all AutoZoners. When you do this and focus on customer service, it is easy to keep everyone on the same page,” said Gaudet.
Remarketing of Used Vehicles
The change to the fleet’s overall asset portfolio improved the remarketing process of the company.
“Moving away from a homogeneous fleet gave us a level of protection because we didn’t have exposure to just one type of vehicle in the secondary market,” said Gaudet. “We increased the number of interested buyers because we are remarketing a diverse pool of vehicles (color, make, model, etc.).”
Gaudet said that AutoZone actively manages the lifecycle process and monitors the used car market to determine the right time (to remarket).
“We also heavily utilize our lease administration partner to do remarketing activities,” said Gaudet.
He said AutoZone utilizes the lease administrator in remarketing and vehicle life-cycle analysis.
AutoZone's Focus: Driver Safety
Gaudet said that considering driver safety has been a major focus for the fleet.
“Senior management talks about safety in key meetings,” he said. “We use internal publications to mention safety and there is more focus on our safety reporting by management.”
He said that buy-in from senior management to instill safety across the company was essential for their safety program.
“We are lucky to have a senior management team that cares about driver safety and is willing to invest time and money in technology/training/hardware,” said Gaudet.
Gaudet said when the company implemented telematics into its fleets in 2011, driver behavior improved.
“It reduces the amount of accidents that we have from people doing jackrabbit starts and jackrabbit stops — those are the precursors to someone who is actually going to be involved in an accident,” Gaudet said.
Gaudet said that AutoZone uses Geotab as its telematics provider.
“The service provides the usual speed, braking, aggressive driving, seat belt data but we also get engine diagnostic data. While we have developed reporting for the driving data, we are in the infancy of using the engine diagnostic data,” said Gaudet.
Beyond the safety aspects, an unexpected benefit of implementing telematics was the reduced fuel cost, as drivers were now held accountable for idling.
“Fuel usage was definitely a benefit of the telematics program but there are many other financial and non-financial benefits from productivity to safety,” said Gaudet.
However, Gaudet said that there are still opportunities in improving safety and efficiency, which is where the company’s focus currently rests.
Indeed, the company is looking to establish initiatives with a focus on driver productivity and driver scorecard, add-ons for the Geotab telematics program.
AutoZone’s Van Fleet
Beyond its fleet of cars and light-duty trucks, the company also utilizes vans for deliveries between stores. AutoZone parts are delivered from distribution centers to stores on a weekly basis.
AutoZone locations are arranged in a hub-and-spoke formation. Larger “hub” stores are stocked with a variety of products, and are surrounded by smaller satellite stores.
Fleet vans are used to transport products to satellite stores, which carry fewer products and require deliveries multiple times a day to keep shelves stocked.
“Our goal is to provide our customers with the best possible service and since we can’t stock all parts in each store we use a hub and network model to make sure inventory is as close to customers as possible,” said Clay Gaudet, fleet manager for AutoZone.
AutoZone's Global Challenges
Outside the U.S., Autozone’s global fleet delivers supplies across Mexico, Europe, and Brazil, and working with a global fleet means dealing with different standards.
In Germany, for example, the fleet cannot deploy telematics. In Brazil, the company must pay for the driver’s lunch. In some countries, you make one stop to obtain vehicle registration from a federal or state-level agency; in others you have to meet region-specific regulations, which may require multiple steps.
“It’s knowing the idiosyncrasies of each area where your vehicles are located and what you have to do for the employees,” Gaudet said.
This challenge also arises when managing fuel use. Not all countries allow access to the same data. In some cases, the fleet must rely on employees to send receipts for every fuel purchase, which is liable to human error.
“Each region does have its own needs but ultimately everyone is looking for a safe, dependable vehicle that positively represents the brand without breaking the bank,” said Gaudet.
With technology advancing, the future of fleet is not always clear, but AutoZone is always re-considering fleet as the industry evolves.
As a former operations manager with UPS, Gaudet learned about logistics, and knows to be prepared for what comes next. Gaudet and the AutoZone team are already discussing how the fleet will employ autonomous vehicles once they arrive.
“We have had discussions internally and with OEMs about autonomous vehicles but it is too early in the technology to have a complete plan on how to utilize,” said Gaudet.
Editor’s note: Roselynne Reyes contributed to this article.
Originally posted on Fleet Financials