Automotive Fleet

JAN 2014

Magazine for the car and truck fleet and leasing industry

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look for vehicles with lower cost and greater fuel economy," said Charles Szymanski, manager, global property casualty insurance and auto feet for PPG Industries in Pittsburgh. SZYMANSKI Reducing feet costs is a constant, never-ending struggle for all feet managers. For well-run feets, it is increasingly difcult to squeeze out additional cost savings. "We've exhausted most of our cost-saving opportunities," said Steven Anderson, CAFM, feet manager for Sentry Insurance in Stevens Point, Wis. "Our average cost per mile has increased for the frst time in fve years, primarily driven by acquisition cost." Tis sentiment was echoed by many other feet managers, as typifed by the observation made by Jim McCarthy, director, vehicle management service for Siemens Global Shared Services. "Tere are limited McCARTHY opportunities for savings. Tere is no low-hanging fruit lef, and new technologies are driving acquisition, collision repair, and maintenance costs higher, while ofering only minimal fuel and ancillary savings," he said. Many feet managers report they are given a specifc percentagereduction goal in annual feet costs and it is up to them to fgure out how they BIBBO are going to achieve it. As a result, feets are adopting a multipronged approach to cost containment. Industrywide, there is ever-increasing pressure to fnd creative ways to cut costs without impacting productivity and employee morale. One example is Novo Nordisk. "Tere is a new push at my company to contain costs, while still providing employees with the vehicles they want," said Donna Bibbo, CAFM, feet manager for Novo Nordisk in Princeton, N.J. A key factor driving feet cost increases is higher vehicle acquisition costs, while capital budgets remain static, or, in some cases, have decreased. In recent years, high re- sale values have helped mitigate some feet costs, in particular depreciation. However, with resale values forecast to stabilize, there is concern about the future. "I'm worried about increased budget pressures with a leveling resale market," said Shawn Dusosky, manager – feet fnancial services for General Mills Inc. in Minneapolis. "One complication deals with making TCO calculations and the uncertainty of resale market projections," said Don Trestrail, feet manager for Intel Corp. in Santa Clara, Calif. "Te pressure is always to do more with less. We have more initiatives, but a smaller budget," said Brett Switzky, feet, trucking, and record retention manager for American Family Mutual Insurance Co. in Madison, Wis. Te mantra directing many commercial feets is to increase value and decrease costs while still maintaining services and customer satisfaction. "We are looking at reducing costs wherever we can and including technology to ofset head count defciencies," said Dusosky of General Mills Inc. "Tis year brings DUSOSKY specifc challenges. Coming of back-to-back record cost savings years, we are now facing an upward trend in our budgets. We have been able to add driverbased benefts, such as increased vehicle choice, selector diversifcation, and a tolling program, but, now, I foresee having to tackle the driver eligibility issue head on for fscalyear 2015." Key Focus is Driver Management Driver behavior has come to the forefront as being one of the top challenges currently facing commercial feet managers. "Te key issue is driver compliance," said Carl NELSON Nelson, feet manager for AM-Liner East, Inc. in Berryville, Va. Other feet managers cited additional concerns. "Our top priority is managing driver risk assessment as part of the hiring process," said Sue Miller, CAFS, director, feet management services for McDonald's Corp. in Oak Brook, Ill. "Tis also includes managing driver behavior — particularly DUI/DWI and reckless driving. Other aspects MILLER include preventing driver fraud of gasoline purchases, having drivers respect the company vehicle — particularly at turn-in time — and managing compliance with policy." One manifestation of driver management revolves around driver communications. Tis is especially the case with new drivers. "My challenge is educating drivers new to THUR the program and working with our feet management company to communicate this," said Michelle Tur, feet manager for American Greetings in Cleveland, Ohio. Companies are also implementing programs to train employees to drive their vehicles more fuel efciently. Tis involves eliminating fast starts and hard stops and avoiding excessive idling. Studies have shown that fuel efciency can be improved by as much as 19 percent simply by reducing a vehicle's idling time. Encouraging drivers to drive within the posted speed limit, especially on highways, can also help with fuel efciency. One solution involves technology; however, some question the efcacy of this approach, especially in terms of modifying driver behavior. "Is technology always the answer to changing driver behavior?" asked Butch Christian, feet manager for Quanta Services in Houston. Another challenge is employee engagement. "Everyone I talk to, both in and out of the company is super busy. It's tough to keep everyone engaged when there are lots of fres to be put out," said Meisel of PG&E. "Tis also includes employee development and technical training. It's always a challenge to keep up with changing technology, cost efectively, when you have a large feld operation." Many of the issues involving driver management are administrative in nature. JANUARY 2014 I AUTOMOTIVE FLEET 19

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