In a world of shrinking budgets and growing responsibilities, municipal fleet managers are often faced with the difficult task of downsizing their fleets. Though it may seem like a hardship, downsizing can turn out to be a blessing in disguise, allowing fleets to streamline their operation for maximum efficiency.

Downsizing doesn't mean that services need to be restricted or eliminated. By using vehicle resources more efficiently, fleet can improve service and save money. Riley Harrison, fleet manager for the city of Philadelphia, has had exactly those results.

"Through normal attrition and normal increase in vehicle availability, we were able to reduce the fleet from approximately 6,500 pieces of equipment and vehicles down to approximately 5,800," Harrison said. "I don't know if I would call it downsizing; I would call it 'rightsizing' the fleet. It's not just taking a 'meat axe' approach to vehicle management, just whacking vehicles out of the fleet. It's a combination of looking at the service provided by the departments and looking at the technology of the vehicle; you can get more for less that way".

Downsizing Allows Fleets to Control Spending

• Eliminating under-utilized vehicles and equipment increases a fleet's efficiency and reduces maintenance costs.

• Costs-utilized equipment is usually determined with a fleet size and composition study.

• Following recommended replacement cycles can help fleet managers downsize their fleets more effectively.

• Downsizing is a useful efficiency strategy for fleets of all sizes and applications.

The first step in downsizing is to determine which vehicles and equipment are under-utilized. This is generally accomplished with a fleet size and composition study, which can be done in-house or by an outside consulting firm. For smaller fleets, an in-house study may be appropriate and more cost-effective, but for larger fleets, sometimes use of an outside source is preferable.

"It's pretty hard for a fleet manager to go through a fleet size and composition study on his or her own because of the perceived lack of objectivity, and because it puts the fleet manager in the difficult position of potentially regulating or passing judgment on his customers' behavior," said Paul Lauria, vice president and national director, Fleet Management Consulting Services, for DMG Maximus in Rockville, MD.

Consulting Companies Offer Objectivity, Experience

"The advantages of using an outside company are the objectivity, the fact that it gives the fleet manager protective cover, and that it doesn't put him in the position of telling his customers what to do," Lauria said. "Another advantage to hiring an outside company that's done a number of these studies is that it will have tried-and-true methodologies that can be applied to this particular question; you're not reinventing the wheel, You have established data gathering procedures, survey forms, and screening techniques that were developed over the course of doing many of these studies."

Minneapolis Fleet Study Leads to Increased Funding

The city of Minneapolis took the approach of using DMG Maximus, an outside consulting firm. This firm has done fleet studies for many of the nation's largest cities, including Los Angeles, San Diego, Washington, DC, and Houston.

"The point of the study was to look at the fleet operation to see if it was achieving its objectives of client services, quality, and efficiency," said Chip Taggart, chief operating officer, DMG Maximus. The company examined the entire operation and made a number of recommendations, which included investment in a new maintenance facility, investment in a new information system, and renewing the fleet, devoting more money to fleet replacement, which was going to make it possible to reduce fleet size. In conjunction with that, the company suggested putting in a new rate structure for charging customers back for the services provided. Another point was to build a new central fleet maintenance facility, which was going to create efficiencies in the provision of maintenance repair services, making it possible to reduce staff levels. The third point was to close several small and relatively inefficient satellite operations and consolidate the provision of services in the new central maintenance facility.

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Los Angeles Study Suggests Central Fueling Agency

The city of Los Angeles, which operates, the nation's largest municipal fleet, also opted to have an outside firm do its fleet analysis.

"We had a big study done back in 1996 that came up with a number of recommendations," said Arleen Taylor, director of fleet re-engineering for Los Angeles. "We're now looking for the best ways to implement those recommendations."

One of those recommendations was the creation of a central leasing agency. Another recommendation was the creation of a central fuel agency to manage the purchasing and dispensing of fuel for all departments.

Once a study has been done and recommendations have been made, it's up to the fleets to carry out the changes. This is an ongoing process, which can take up to several years to fully realize. This was the case for Minneapolis, which has been implementing the strategies suggested in the initial study by DMG Maximus for several years.

"It was a very complicated plan, but it is going very well." said Taggart. The city council committed to invest in a new $15-million maintenance facility, which is currently under construction. In addition, the city put a significant investment into been downsizing staff, in terms of numbers of people. The city also implemented new policies and procedures, put together a strategic plan, and adopted a new rate structure.

"They have done a number of things that were in the initial report," adds Lauria. "Some of the things are being revised in the business plan. There was a major initiative that came out to increase the level of street sweeping and other services being provided, so the utilization of vehicles changed. That had an impact on some of the strategies that were included in the developed for the city. There was also some resistance to closing regional or satellite shops and consolidating all maintenance repair services in a new facility downtown, so that's being revisited. I think the bottom line there is the while a number of the major initiatives are underway, these are dynamic processes, and they're subject to revision over time," Lauria said.

Downsizing in an important technique to maximize fleet efficiency, but it is only part of the plan in many cases. Most fleet reorganization plans use downsizing in conjunction with other strategies. The plan will be different for every fleet, depending on its size, composition, and efficiency.

"There is a standard procedure that we would go through if we were engaged to work with a fleet manager, which involves developing a strategic business plan for the organization," Lauria said. "The No.1 goal may not be to downsize at all. There are situations in which the reverse is true; the fleet may actually need to grow. There may be other strategies that should be pursued that will have a much greater impact on the cost-effectiveness of a fleet management organization than simply reducing staffing is just one of many possible strategies that a fleet organization might pursue to improve its cost-effectiveness and cost competitiveness. It's not necessarily the first one they're going to pursue, or the one that will result in the greatest impact.

"For example, if a city, country, or private company has not done a good job of replacing its fleet assets, then downsizing staffing levels is going to have nothing to do with improving the cost-effectiveness of the fleet. What they need to do is renew the fleet, invest money in the replacement of vehicles," Lauria said.

Understanding Replacement Cycles Helps Fleets Downsize

The issue of downsizing is also closely related to replacement cycles. When vehicle are replaced in a timely manner, fewer of them are usually needed to provide a given level of vehicle availability and service. The requirement for spare or backup vehicle diminishes if a fleet renewal program is initiated. When fleet managers don't know when they will get money to replace a vehicle, they will err on the side of caution and keep more vehicles in their fleet, according to Lauria.

"A key to our downsizing strategy has been replacing vehicle on a regular schedule, so that the existing vehicles require less maintenance," said Taylor. "They're more reliable, and require less maintenance, so we can keep more of them on the road. There have also been commitments made by the fleet maintenance department to turn around the vehicles in a certain amount of time so they don't have to have as many spares. That's where most of the savings have occurred."

Downsizing Can Offer 10%-20% Savings

"The potential savings can be very significant," said Lauria. "When a 10%-20% reduction in fleet size, that can translate into a very large amount of money. For example, the city of Los Angeles owns $1 billion worth of motor vehicles. The annualized replacement cost of that fleet is about $120 million, so a 20-percent reduction in fleet size would translated into about $24 million in capital cost savings alone, per year. We've been involved in a number of projects where we've seen reduction in the order of 10 to 20 percent is realistic," Lauria said.

This type of savings is worth while for fleets of any size, not just the largest cities.

"It's safe to say that there are very few fleet operations that we have ever worked with that could not afford to make some changes in fleet size and compositions," Lauria said. "Can any fleet look at opportunities to downsize their number of vehicles? Yes, I think so."