As our world is responding to the COVID-19 pandemic, and I do my part by sheltering at home, I find myself with the time to reflect on the state of the fleet industry, and what the future might hold for us.
While we are all adjusting to a new and temporary reality, we will be back to normal at some point, and numerous opportunities await us. It is an exciting time to be in the fleet space.
Like a number of industries that rely on software systems and data management to function, our market has benefitted from several steady and persistent trends throughout the 2010s that have led to an unprecedented amount of technical innovation. Three of these megatrends: mobile connectivity, machine learning and the sharing economy have put tools in the fleet manager’s toolbox at a pace never before seen in fleet.
With 25 years of fleet supplier experience, I can say that from a supplier perspective, innovation has become essential to competing for customers in the fleet market. This race for innovation seems to be moving at a dizzying pace and new entrants into the fleet space are further reshaping the technical tools of fleet management. For the corporate or government fleet manager, these new technologies can be expensive, difficult to justify, and overwhelming.
However, no one in the fleet value chain is more important than the fleet manager to actually drive the productivity that these megatrends enable. It is he or she who has to take the insights from these new technologies and actually champion changes to fleet processes and policies to monetize these benefits.
The successful fleet manager of the future will have to be open to the insights from these new tools, engage diverse stakeholders within his or her business, and lead changes to the fleet policy across the enterprise. The courageous manager who is willing to drive changes to fleet policies, will be the career enhancing heroes of this fleet era, creating value by monetizing the insights provided by these new tools.
Overview of Three Megatrends
Mobile Connectivity: This trend started with the introduction of the smartphone in the 2000s. A handheld device with built in GPS and wireless communication ability created a platform for innovation through its ability to connect and capture data from many different endpoints. The GPS capabilities in the phone led to the demise of not only the aftermarket and OEM-installed mapping devices in vehicles, but also the downfall of the relatively new website mapping/directions industry.
The connected GPS smartphone also served as a platform for innovation. It allowed for tracking and gave birth to several new business models based on the new connectivity people had through their smartphones. The businesses that leveraged this technology are continuing to use it to disrupt and transform the markets it serves. In fleet, we see this disruption occurring all over the visible adjacent industries.
One simply has to look at adjacent markets to see this dynamic playing out. We have seen how Uber/Lyft supplanted the neighboring taxi industry. Connected vehicles are allowing car rental companies to transform the way they offer vehicles for rent on an “on demand” basis with much lower costs, and even the global trend to “free floating car sharing” to transform municipal transportation.
The Mobile Connectivity trend gave rise to the fleet telematics technology that has been persistent since the early 2010s, and the pace of innovation in this space has been exponentially fast and furious. OEM-provided devices are now part of the vehicle build process easing the administration of a telematics program by eliminating the need to manage aftermarket devices.
New in-cab camera offerings by companies such as Nauto and Samsara have extended the connectivity and has provided even more insights for the fleet manager who oversees fleet policy. But surprisingly, we are still not quite to the “tipping point” of the usage of this technology. We still are seeing more fleets without any telematics technology than those with it. I believe this has to do with the fact that the relative cost for the technology does not guarantee a return in terms of fleet cost.
The extent of many telematics companies technical offering is simply to point out the opportunities to improve fleet performance. Whether it be to identify risky driver behavior, detect vehicle performance issues, or to identify inefficient deployments of fleet vehicles, most telematics companies can only point to the fleet opportunities. It is up to the fleet manager to use that information to drive improvements, unlocking the value of the insights.
Data Analytics Using Machine Learning Tools. This is the second megatrend. There have been significant advances in the ability to analyze large data sets using machine learning tools that identify current productivity opportunities and even predict cost swelling behavior.
This trend has been especially beneficial to the fleet industry, which has always thrown off millions of data elements in the practice of fleet management. New tools for analyzing data, visualizing data, and creating software triggers to notify and act on data exceptions seamlessly has created the opportunity to respond immediately to fleet anomalies.
Whether the violation of fleet policy involves driver events, safety incidents, purchase card usage compliance, or DOT compliance, the data analysis and tools are now becoming standard offerings from the FMCs; other relatively new entrants like Keep Truckin’ and Fleetio, which also package these new data analytics tools on their platform to identify, prioritize and list these exceptions for the fleet manager.
Further, many companies are also using machine learning to predict fleet policy infractions based on complicated patterns of use due to a variety of factors: driver, vehicle, geography, and others. These machine learning insights are often presented as risk scores to alert the fleet manager to predicted additional costs due to these patterns. While these new data patterns are heralded by the vendors of these tools as something of a “holy grail” of machine learning, they present an additional challenge to the implementing fleet manager.
This breakthrough technology is now pointing to potential problems before they become problems. Yet, this can make the implementation challenge that much more difficult: How do fleet professionals build the business case for change when the problem that the fleet policy improvement solves has not yet happened?
This predictive insight can provide an even more difficult change management situation within the business environment in which the fleet manager is advocating. Not only is the quality of insights improving, but the quantity of insights is also improving as these machine learning tools are trained on every aspect of the fleet management process. The “embarrassment of riches” that this megatrend has provided to the fleet manager, means more pressure is put on them to actually drive changes from these observations.
The Sharing Economy. This third megatrend is in some ways a derivative of the first megatrend. With so many connections to people through their handheld devices, and to vehicles through telematics, new business models have been created that are constantly challenging traditional business value propositions all along the fleet supply chain.
The cost of transportation is getting low enough so that in many urban densely populated areas, a mobility budget (to include commuter benefits, rideshare or carshare options) can be more cost-effective than providing a dedicated company vehicle, especially if that vehicle is not equipped with essential tools for the job. Further, the concept of a mobility budget begins to blend and overlap with HR Travel and Living policies, and can create a need to coordinate fleet policy with the travel policy.
The European fleet model is a bit ahead of the U.S. and Canadian fleet market in this regard, and we can learn from their progress. While there are a number of “mobility aggregators” that are emerging in Europe, it is up to European fleet managers to actually determine how to apply a mobility policy in concert with their overall fleet policy to achieve the savings that this alternative model provides.
This sharing economy is not just providing alternatives that can replace the need for a fleet vehicle, key services for fleet vehicles are being challenged by this megatrend as well. Companies like Wrench, Inc. and Your Mechanic are using technology similar to the rideshare/carshare model to aggregate maintenance events and deploy them to qualified mechanics on a “gig” type basis.
As fleet managers are presented with these alternatives to the traditional supply chain, they will have to manage the impact these changes have to the creation and adoption of new fleet policies. Fleet maintenance behavior will need to change to actually get the value improvements that these alternatives promise. And once again, driving this change falls on the fleet manager to sponsor within their business.
All of these trends coming together in the fleet industry are creating an unprecedented and dizzying amount of new tools and offerings available to the fleet manager. Yet without an ability to manage a program of fleet improvements within the business, many of these tools and the companies that offer them cannot bear the fruit that they promise in their sales materials.
In short, through these technical innovations, the fleet manager has more insight on “what” to do than ever before in our industry. But the key challenge for the fleet manager has to do with the “how” of actually making changes in fleet policy to capture the value to which these new tools point.
Complicating the ability to monetize these technical and data insights are the other constant demands on the fleet manager’s time that simply maintaining current fleet policy entails; the pressing issues around supplier management, correcting vehicle defects, maintenance approvals, the vehicle cycling process, providing driver service. The fleet manager always has urgent issues filling up their days. The important projects that can really drive change, can be easily pushed into an always near but never present future.
The future looks bright for the fleet manager that can monetize these new technologies through the implementation of a strategic and prioritized approach to fleet policy improvements that are perpetually informed by the ever growing data and technology insights.
Driving Successful Fleet Process and Policy Improvements
Step 1: Consider the Stakeholders
While acting on the insights afforded by the explosion of innovation insights, the fleet manager also has to be cognizant of the business environment in which they work. The fleet leader’s enterprise has a diverse number of internal customers and collaborators for which any change must be evaluated relative to other strategic priorities.
Any proposed change has to consider the specific business environment of the enterprise, and the fleet manager must consider the improvements they suggest with the feedback and perspective of the many constituents within their business environment. Fleet managers have to not only weigh the value of the improvements they want to suggest, but also assess the ability of the organization to consume those changes without distracting from the overall business strategy.
As an experienced fleet product and marketing executive in the FMC space, I have frequently heard from fleet manager customers about this challenge. I have talked with individuals that have spent years attempting to build a case within their business to drive specific changes to fleet policy that will drive fleet efficiencies and lower business costs.
Many fleet managers I speak with are frustrated about this challenge. Yet, it is only through the fleet manager’s successful efforts to influence and drive these changes that our industry can turn these mounting technical insights into monetized value. But successfully gaining buy-in from senior management is only the beginning of the influencing process required to drive enterprise wide changes. There are many other constituents that need to be managed in order to drive sustainable and lasting change.
Drivers: The play a key role in determining fleet policy based on their ability to accomplish their business tasks while working within the scope of the fleet policy.
Many fleet managers are judged based on the satisfaction that comes from their drivers. Any change in policy must consider both the impact on drivers and how such changes are perceived as beneficial.
Feedback from drivers also should play a role in shaping the fleet manager’s understanding of the problem to be solved as well as the efficacy of the solution. Staying close to drivers and their perspective can lead to a better understanding of the problem, and can illuminate elegant solutions when determining the change to policy.
Field Based Managers: In decentralized fleets, key P&L owners in the field have tremendous influence over the way fleet policy is executed within their span of control. And they often possess a certain latitude to customize the fleet policy to maximize their P&L.
A fleet manager will need to partner with and consider this important management layer when present in their business.
Environmental Health and Safety Personnel: As safety tools continue to get better, it is becoming increasingly important to coordinate changes in fleet policy with changes in safety policy.
These resources can be powerful advocates for change, and getting them on board early and partnering with them can build momentum for the change across the entire business.
HR Leadership: Fleet policy has always been closely tied to employee policy. After all, drivers actually account for most of the variation we see in fleet policy. Partnering effectively with this important community will be key to driving effective change, and ensuring they are aligned on the improvements will prevent potential people related roadblocks to implementation downstream.
Financial Planning & Analysis (FP&A) Resources. These are the individuals who have the responsibility to plan for any financial adjustment in the organization as a result of the changes the fleet manager is implementing.
Not only is it important to engage and build credibility with these resources at the inception of any fleet policy improvement project, these individuals are important resources to help the fleet manager think through all the implications of the project and ensure that the business case for the change is credible so that any proposed project can be ranked and prioritized appropriately.
Many times, changes driven by fleet managers have the impact of shifting costs from one category to another; a project to increase preventive maintenance compliance or a change to more frequent service interval can lead to more costs in the short term, but achieve lower longer term costs. Or a project might not consider the non-fleet costs associated with the change; a fleet cycling project might lower overall fleet costs, but may have balance sheet implications that prevent it from being prioritized within the business. FP&A resources can help the fleet manager understand the broader business cost/benefit of the fleet change, and help them rank the opportunity appropriately given the financial situation in the rest of the organization’s business model.
The savvy fleet manager will consider the needs of all relevant stakeholders when crafting the plan to make improvements. The more significant and potentially valuable the change, the more time the fleet manager will need to spend ensuring alignment to that modification.
This can be tough work, and once we consider what is necessary to drive real and lasting change within an organization, it is no surprise that many of the technical innovations made possible through these megatrends fail to impact the bottom line. Fleet policy improvements are made more difficult due to the widely cross-functional stakeholders that must be coordinated and aligned in order to gain buy-in and execute the fleet policy changes that are suggested by these new technological insights.
Step 2: Document the Fleet Improvement Opportunities
This is a process to catalogue, prioritize, and sequence potential fleet policy changes that have been suggested by the fleet technologies. Use of this or a similar process will allow the fleet manager to create an operating mechanism to repeatedly and reliably generate fleet savings/revenue through active policy management.
A simple project plan can be created for each identified opportunity that contains:
- A clearly defined problem statement that answers the following questions: What is the deficiency in fleet policy that has been identified? How pervasive is the deficiency? What are its annual costs to the organization?
- A description of the project scope: What is the start and stop of the fleet process that will be improved? What precise policy will be changed? Conversely, what related processes will not be touched? Who will be impacted by this change? How much of the problem will be solved by this effort? Will it be necessary to implement the change in phases? If so, how can the first phase maximize the value that will be incrementally improved by subsequent phases? This section should clearly spell out the precise focus of the project.
- An assessment of the effort required: How many functions in the organization will be required to execute this project? Will this project likely be a distraction that could jeopardize the overall business model objectives? Will any non-fleet functions be required to execute and prioritize against their core objectives? In addition, this section should lay out the quantified costs to execute the project, both from the time required to complete as well as any additional technology costs to monitor and maintain the change.
- The anticipated impact/benefit of the project: This section provides a quantitative benefit that can be expressed in real dollars and cents in terms of the short- and long-term value of the project. This can be done in concert with FP&A resources and should be updated continually as the project progresses. It represents the benefits that should be tracked and promoted as the goal of the project.
Step 3: Prioritize and Sequence the Projects
Once the fleet improvement opportunities have been properly documented, it is necessary to consider each project, prioritizing and sequencing the proposed changes to the fleet policy.
Oftentimes, the project group can complete a simple two-by-two matrix expressing the amount of effort on one axis, and the projected benefit on the other, in order to plot all potential projects. To get the most accurate prioritization process and to best align leaders, stakeholders should be involved in this activity in order to provide broader perspective and insight.
Stakeholder involvement also tends to produce better buy-in to the change. Where possible, this activity should be aligned with the corporate planning calendar that is in place within the business; potential changes can be planned in the overall budgets of the organization. In addition, a further benefit to this timing is that the fleet manager’s goals can be affirmed by the project improvement plans that have been considered.
Step 4: Approve and Manage the Projects
Once a fleet improvement plan has been socialized, prioritized, and aligned by all stakeholders, the fleet manager can put an operational mechanism in place to review progress on these prioritized fleet changes. What looks great on paper sometimes does not work out exactly as planned in reality, so a metered approach to approvals should be used.
Placing tollgate approval meetings in place to review projects regularly with stakeholders can allow the team to catch any unanticipated challenges and modify the policy changes based on real-life implementation insights. Perhaps the impact of a certain project has too much impact on drivers and creates a distraction from their core duties.
Perhaps the benefit of an adjustment in preventive maintenance intervals produces more than the cent per mile savings that was targeted. Regular review of the projects can make sure that stakeholders stay engaged and that the project plan is adjusted continually to get the biggest benefit for the lowest amount of effort.
It is an exciting time to be in fleet. At no point in history has the fleet manager had so many tools available to drive precise improvements in fleet policy. But these tools can not monetize the value without a program to identify, prioritize, and execute the changes to fleet policy to which these powerful tools point.
It will take a fleet manager with innovative organizational planning, confident change management skills, and the ability to drive effective project management to maximize the full value created by these megatrends. For the courageous fleet manager who is willing to take on the challenge, career-making fleet achievements can be realized.
About the Author: Brian Wright describes himself as a Growth Executive with proven ability to deliver sustained revenue growth in large organizations. He is a 25-year veteran of the commercial fleet management industry with a diverse background in marketing, product management/development, and vehicle life management.