Corporate executive management is not keeping pace with one of the biggest challenges today: the need for additional professional fleet management within their own organizations.

An accurate appraisal of Automotive Fleet research shows that many executives have failed to assign capable personnel or even provided for the development of responsible fleet administrators. Yet, proper management of the company's fleet calls for the application of scientific skills!

During the last five years the car fleet market has more than doubled in size. Not only has the market doubled, but one out of every 12 new cars built domestically now goes into the fleet market. In this same period, leasing has grown at an even stronger rate; ranging between 15 to 21 percent each year.

While the primary reason for leasing is the utilization of capital (connected with a company's cash flow and marketing investment opportunities), a secondary reason has been the lack of professional personnel available to manage the company's fleet.

Today, in companies operating 100 cars or more, leasing accounts for well over half of these cars. Since the great majority of today's leases are of the finance type, there is a definite responsibility within the company to both coordinate and scrutinize the lessor. This is a major reason for developing a professional fleet man.

Defining the Function

The fleet managerial function takes in the complete administration of the motor vehicle requirements within the scope of a particular company's operation. Included in the responsibilities are the obvious purchase and disposal demands.

Very important other elements are:

• Liaison with finance accounting and taxes

• The work surrounding insurance

• Licensing

• Accessory purchasing

• Leasing

• Operation

• Safety, accident prevention and processing

• Field management liaison

• Budgeting and specifications

Add to this the analysis and development of long range programs to augment more effective and more economical cost-per-mile or cost-per-vehicle operation.

The number of companies that are defining the responsibility and authority for the fleet managers is increasingly steadily, but too often this important function is relegated to or spread over many departments or individuals without primary fleet responsibility.

Management Responsibility

Ideally, executive management should recognize the basic need for transportation for company executives and the field force. General guidelines should be set, and a fleet manager should be appointed who has both the confidence and ability to run the department.

Establishing a job definition is difficult enough when the tasks to be performed are clear cut. It is a challenge to describe the basic qualifications for a fleet manager. Capable, well-trained fleet administrators working in the field today are dedicated men-the kind who will move up in an organization.

A good fleet administrator must be:

• Able to analyze and interpret cost figures, accident trends and used car trends - and he should be able to deal with his management with total costing confidence.

• Above average in ability to sell his program not only to management but also, more importantly, to department heads and the drivers themselves.

• Able to demonstrate sensitivity and understanding in his daily contacts with dealers, factory men and the clerical staff.

Obviously the size of the fleet is a primary consideration in determining the staff size and the kind of administrator. Stewart G. Stewart, with Allstate Insurance Company (which operates 2,600 cars), points out that an increase of one cent per-mile-of-cost could amount to a half million dollars annually for his company. Similarly, a reduction of cost by even a fraction of that penny can more than substantiate his annual salary and even a raise.

Management engineering firms, business consultants and industry experts generally agree that a company with 25 cars needs a man assigned with specific fleet managerial duties; and at least part-time application to its requirements.

Assuming a complete fleet function responsibility, a full-time man can be justified somewhere between 50 and 100 vehicles, depending upon how often they are traded and the costing complexities involved.

According to a National Association of Fleet Administrators survey of its membership, the following guidelines may be set up as a benchmark for the size of a fleet department:

If today's company management were alert to the opportunities for cost saving to their company through effective fleet administration, there would be little need for the fleet manager to spend so much time and effort in building respect and understanding for his function. What executive management should know is that, except for salesmen's salaries, the automotive expense is probably the largest single item incurred in sales activities each year.

Selling Management

The average fleet manager spends close to $1,500 each year per vehicle. Multiplying this figure times the number of cars in a fleet quickly indicates to an executive or shareholder that good fleet administration can easily be justified. This is particularly true since the fleet administrator's function is well beyond that of simply purchasing.

Purchasing on bids with certain specifications can be relatively routine compared to the complexities of finding and transacting sales (both purchase and resale) with dealers over the country. It is not unusual for the professional fleet manager to come out with $25 to $50 more per car at trade-in-time-if he has rapport with the dealer, has purchased a high resale car initially (with the "right" color) and has influenced his drivers to maintain the cars in good condition through proper servicing.

That amount, projected for an entire fleet is a startling figure for a company to consider as a gain-or a loss.

The right insurance package, safety and driver training, warranties and engine and tire maintenance are but a few of the very real areas where cost can emerge as a plus or minus factor for a fleet.

Operating costs can accelerate! Automotive Fleet research indicates that the average fleet car travels more than 28,400 miles each year or three times the national average. Cost-per-mile is thus magnified. On gasoline alone, field reports show that a 150-car fleet will spend $100,000 a year. A saving of even 1/10 of a cent per mile can result in a $4,000 saving-a nice salary raise for anyone!