Communication with senior management.
Joy Global’s Fleet Utilized to the Fullest
Through its divisions — P&H Mining Equipment (P&HME) and Joy Mining Machinery (JMM) — Joy Global manufactures underground and surface mining equipment and offers aftermarket-related services.
P&H Mining Equipmentand Joy Mining Machinery are both leaders in the design, manufacture, distribution, service, and enhancement of mining machinery and equipment. Joy Global products and related services are used extensively for the mining of coal, copper, iron, gold, and other mineral resources. P&HME, headquartered in Milwaukee, as well as JMM, headquartered in Warrendale, Pa., operate separate fleets. While JMM’s fleet serves both service and delivery functions and includes sedans and light to heavy trucks, the P&HME fleet primarily serves the aboveground mining industry and is comprised of
100-percent truck vehicles, of which 75 percent are 4x4 F-150s/F-550s and 25 percent are F-650/ F-750 service bodies and flat-bed trucks.
“We now have a great program that matches vehicles to specific driver applications, which is very important in the sales and service business,” Hardwick said.
Matching Vehicle to Function Optimizes Company Fleet
A critical financial success for Joy Global’s two fleets has been cutting costs while actually increasing vehicle count. In spite of a 35-percent growth in fleet size since 2000, total fleet expenses have been cut by $10 million for P&HME and JMM. The two fleets total about 700 units in North America.
Mike Butsch, Joy Global’s fleet/alliance manager for North America,
manages both P&H Mining and Joy Mining Machinery fleets. He assumed
responsibility for fleet operations at P&HME in 2000 and in 2003 JMM.
Over the years, he has worked closely with Hardwick to get a handle on the company’s fleet financials.
In addition to reducing vehicle costs and right-sizing the fleets, other initiatives included aggressively negotiating with OEMs and optimizing replacement schedules.
At Joy Global, Butsch continues to establish solid vehicle selector baselines in an ongoing effort to improve fleet operations.
“The first task was to get the right vehicle for the right job to the right employee classification,” Butsch said. “We needed to maximize the useful life of our vehicles without spending too much time or money maintaining them before they are replaced and the cycle begins again.”
He standardized and narrowed the P&HME and JMM selectors from 25
to 12 models. Vehicle choices were closely aligned to conditions P&H
and Joy drivers encountered as they supported aboveground and below-ground mining operations.
“The vehicle selection now meets 100 percent of actual application
needs,” Butsch said.
According to Hardwick, “By choosing the right vehicle for the right
application, you naturally keep yourself away from undue downtime due
to repair work. Uptime equals more productivity.”
Butsch also replaced half of JMM’s primarily sedan fleet with F-150 pickups, which better serve employees who drive on rough access
haul roads and in below-ground environments.
Selecting pickups did increase capital costs by $6,000 per unit, but the company actually saved money by amortizing those cap costs over a greater period of time and reducing repair expenses.
“By narrowing vehicle selection, we can negotiate stronger discounts from manufacturers,” Butsch said. “And by not undersizing the vehicle for the job, maintenance issues are avoided. We are constantly evaluating our options to right-size the vehicle when possible.”
Joy Global Uses Dashboard Tool to Impact Fleet Performance
Another Joy Global best practice is streamlining data collection and interpretation. One recent partnership sending this initiative into overdrive is the company’s participation in PHH Arval’s InterActive Dashboard advisory committee.
Before implementing the Dashboard concept, one of Butsch’s biggest
challenges was providing senior and regional managers with meaningful and easy-to-digest fleet-related data. Assembling information for semiannual business reviews was particularly demanding.
“It’s important for me to create effective management reports linking trends that I see in the field to actual data and to recommend or make changes based on those patterns,” Butsch said.
When PHH Arval — Joy Global’s fleet management partner — introduced
PHH InterActive Dashboard in 2005, Butsch found an easier way to get the information he needed, act on it faster, and provide detailed analysis to his senior managers.
The Dashboard has significantly impacted how Hardwick and Butsch
manage and distribute P&HME / JMM fleet information. The Dashboard
enables management to conduct monthly, rather than semiannual, reviews of key business performance indicators. Not only has the frequency of analysis been increased, but Dashboard also uses fleet data to populate charts and graphs that reflect key components of fleet management.
It also provides a steady flow of realtime information to identify problems and execute solutions faster so that Butsch can easily demonstrate trends to senior management.
Butsch had previously spent many hours analyzing and reporting on the diverse P&HME and JMM fleets. Now, the Dashboard application generates the data to quickly demonstrate the fleet’s performance in a format others can easily understand.
“In today’s business environment, managers require easy-to-understand information that they can readily act on,” Hardwick said. “We now have these reports in place; they are critical in optimizing our fleet management program.”
Advisory Board Participation Helps Shape Online Data Tool
Butsch’s service on PHH’s Technology Advisory Board helped PHH develop
and beta-test the Dashboard, providing insights and suggestions to ensure the summary reporting tools delivered what clients needed, including historical data that allows users to compare months, years, quarters, or a rolling flow of time segments.
“Information in the form of dashboard graphics effectively allows our managers to quickly gauge fleet performance and identify anomalies or trends that require attention,” Hardwick said.
“The main benefit of the tool,” according to Butsch, “is educating stakeholders about where costs are surfacing and explaining how to control or eliminate those costs. And I can get buy-in at the local level more easily because I can show trends as pictures that make sense.”
The biggest difference is that it is much easier for him to focus on other fleet processes and issues rather than on writing reports.
A critical change in fleet data breakout was converting to a rolling 12-month cost comparison.
“The level of data detail and the ease of moving that data in a form that can be easily interpreted by field managers was a key to our success,” Hardwick said.
Depreciating by Lifecycle Management
When Butsch assumed fleet management responsibilities at Joy Global,
depreciation was an area of concern. However, with the multiple lease-term approach based on driver activity, JMM / P&HME were able to better manage the working capital.
Currently, Butsch relies on total lifecycle management to accurately depreciate Joy Global’s fleet vehicles.
“I turn them in at the peak for resale and have realized 40-45 percent recovery of capital costs for pickup trucks, which typically have about 100,000 miles on them, and more than 30 percent for sedans at 70,000 miles,” Butsch said.
Hardwick and Butsch have managed to keep the company’s fleet costs
essentially flat from a depreciation standpoint since 2003.
These results stem from a more aggressive lifecycle process that includes a better preventive maintenance program and realistic replacement schedule.
“We manage a number of different lease terms based on driver activity and their independent driving habits,” Butsch said. “The multiple lease terms allow us to meet a net present value target.”
Because fleet data is viewed on a monthly basis now, the team can
respond more quickly and alter cycle times. What used to take one to three years to recognize, can now be evaluated in 90 to 120 days.
“By identifying requirements by the individual driver, we can customize depreciation period to synch-up residual value to market value,” Hardwick said.
Measures That Improved Fleet Performance
Other important measures implemented into the Joy Global fleet included vehicle specification changes, fuel restrictions, greening fleet vehicles, and technology research.
The company’s fleet has gone to work trucks with power options (windows, locks, and mirrors) and all-wheel drive in sedans. The fleet’s makeup is primarily Ford vehicles, about 95 percent, which has changed over the past few years.
“We found stronger resale values with these vehicles,” Butsch said. “We select vehicles based on value and ease of service because we operate in remote locations. So, we need equipment that is easily serviced and maintained.”
Basically, Hardwick and Butsch are getting the best bang for their buck, resulting in higher residual values.
Another change in the fleet was switching to regular fuel instead of diesel. In 2002, the fleet moved away from diesel fuel use in F-350 and smaller-class vehicles.
“We found that gas engines were less expensive to operate and maintain,”Butsch said. “We requested PHH develop a diesel-versus-gas comparison. The data from the study demonstrated that diesel had to be at least 25 cents per gallon less to compete with gasoline from
a total cost standpoint. Further, we were concerned with the changing diesel emissions regulations for 2008 and 2010 with diesel vehicles/ fuel and the impact of increased expenses.”
The company is currently researching alternative-fuel options. Propane is being evaluated for its environmental benefits and savings potential. Currently, all gasoline-powered vehicles are now being replaced with E-85-compatible vehicles as they come up for replacement.
“Right now about 30 percent of our vehicles are flex-fuel ready,” Butsch said. “Professional fleet management never ends,” Hardwick said. “We have come a long way and are continuing to find ways to minimize our fleet’s capital and operating expenses while providing
vehicles to our employees who rely upon them to perform their sales
and service duties.”
Looking to the future, the company is evaluating several additional costcutting measures, including:
