Giacchi Nets $22.7 Million in Savings for Lorillard’s Fleet

Sal Giacchi, director, fleet operations and travel for Lorillard Tobacco Co. in New York, NY, says he feels very fortunate to have gotten hired at Lorillard when he did.

"Lorillard realized the value that a fleet manager could bring to an organization," says Giacchi. "It had $10 to $12 million worth of assets on the road and wanted someone to evaluate the fleet operations, institute programs and cost controls, and manage the fleet."

That was in 1981. Today, Giacchi is still with Lorillard, and was just honored with the 11th Annual Professional Fleet Manager of the Year Award presented by Automotive Fleet magazine.

Good Vendor/Supplier Relationships Net $10.5 Million

Giacchi's most successful area of fleet management was in vendor/ supplier relationships, saving Lorillard more than $10.5 million in the past 15 years.

Great partnerships and strategic alliances with manufacturers and vendors is Lorillard's best asset. "A lot of those are long-standing relationships," he says. "Lorillard evaluates several suppliers and leasing companies, but the company has always taken the philosophy that we're not going to move a vendor for a small amount of savings. It has to be substantial, and our vendors know that so they make sure we get the most competitive price possible."

Lorillard holds appreciation lunches for vendors to recognize outstanding performance. Giacchi also felt it was beneficial to sit down with vendors to discuss with them Lorillard's goals and objectives.

Safety Awareness Program Saves Lives and Dollars

Giacchi became involved with Lorillard's safety awareness program in 1984. The sales force had just dropped the previous safety program, and Lorillard witnessed a dramatic increase in accidents. At that time, Wheels in Motion was developed, a quarterly safety newsletter that was used to communicate with the sales force on maintenance, used cars, and other issues that could affect driving. Sal Giacchi, director, fleet operations and travel for Lorillard Tobacco Co. in New York, NY, says he feels very fortunate to have gotten hired at Lorillard when he did.

"Lorillard realized the value that a fleet manager could bring to an organization," says Giacchi. "It had $10 to $12 million worth of assets on the road and wanted someone to evaluate the fleet operations, institute programs and cost controls, and manage the fleet.

"That was in 1981. Today, Giacchi is still with Lorillard, and was just honored with the 11th Annual Professional Fleet Manager of the Year Award presented by Automotive Fleet magazine.

Once-a-Year Ordering System Increases Productivity 

Lorillard has also instituted a once-a-year ordering system to increase productivity.

The fleet department used to place fall orders in August and spring orders in December. The downside to this was that if there was a price increase in January, then Lorillard also incurred that price increase for the spring deliveries.

Giacchi can also put the exact dates on the vehicle orders to meet his cycling parameters. If there are any price increases, he will be price-protected. If the manufacturer decides to delete a special discount package, Lorillard would still be entitled to that package.

In tracking the cost savings of its once-a-year ordering program in 1995, Lorillard saved about $1 million.

Benchmarking and Lifecycle Costing Prove Savings

Lorillard found that lifecycle costing helped it evaluate the best vehicle at the best cost for the fleet.

"It also helps you express to management a logical way to look at the total vehicle costs, and not only from what the car is going to cost you," says Giacchi. "In my case, Grand Caravans cost almost $20,000. If that was strictly the criterion I was looking at, we'd probably be in other vehicles that cost less money."

Lorillard benchmarks its fleet costs against other fleets in the tobacco industry. In 1994, Lorillard's maintenance cost was 2.02 cents per mile compared to an average 2.40 cents per mile that was benchmarked against two to three tobacco fleets that are managed or under the administrative programs with GE Capital Fleet Services. The GE Capital Fleet Services' composite was 2.15.

Benchmarking helps Giacchi examine fleet programs and measure performance against industry standards and composites developed by leasing companies and other suppliers. Tracking Lorillard's performance is a way of showing value to management, says Giacchi.

"Today you need it more than ever. Companies are looking at outsourcing and they don't realize the value the fleet manager brings. Benchmarking helps show your value," he says.

Associations Helped Round Out Giacchi as a Fleet Manager

Giacchi says he learned the basics of the industry by going to seminars, trade shows, the National Association of Fleet Administrators' (NAFA) chapter meetings, along with other fleet-related events.

"I got tremendous benefits from both NAFA and the Automotive Fleet and Leasing Association (AFLA), by being a leader of both, learning how to make presentations, how to run conferences, meetings, and setting plans for travel and banquets. I never realized that those benefits would come back to me when I got promoted five years ago to travel and meeting planning," Giacchi says.

Giacchi feels that NAFA and AFLA provide training in many areas. "Being able to get up and speak in front of a group of people really helps you when you have to go to a board meeting and make a presentation to management," he says.

Trust of Management Helps Build Success

From the day Giacchi started work at Lorillard, his manager said: "I want you to manage the fleet." He gave Giacchi the confidence to be creative. If Giacchi needed to travel, he was provided with the resources to travel. Lorillard gave him additional people when he said the fleet department was understaffed and allowed him to outsource certain administrative fleet responsibilities.

"A lot of companies wouldn't give you that benefit of the doubt," Giacchi says. "The support Lorillard gives me encourages and motivates me to keep looking at areas where I can save them more money and be more cost-efficient. Management has always been on my team, and that's why I attribute my success to them, because they've stood behind me in every decision."

Giacchi Moves Up, Lorillard Moves South

During his acceptance speech for receiving the Automotive Fleet 1996 Professional Fleet Manager of the Year Award, Giacchi announced that he had just been promoted. He will now be the director of corporate support services for Loews Corp. in New York, NY, the parent company of Lorillard Tobacco Co.

Lorillard Tobacco will be moving to Greensboro, NC. in spring 1997, where the company's manufacturing plant is located.

Giacchi's replacement has yet to be announced; however, his entire staff will be recognized for their performance and additional responsibilities they will undertake.

"They're a dynamic group of people, probably one of the best in the industry. A lot of my success is because of them," says Giacchi. "Leaving Lorillard is really difficult, but I go to the parent company that has been equally supportive, and I look forward to working with another dynamic group of professionals."

How Giacchi Saved Lorillard $22.7 Million From 1981 to 1996

READ MORE ABOUT PREVIOUS WINNERS OF AF'S ANNUAL PROFESSIONAL FLEET MANAGER OF THE YEAR AWARD WINNERS.