Automotive Fleet

JAN 2014

Magazine for the car and truck fleet and leasing industry

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2014 FLEET TRENDS "Maintaining accurate feet and driver information is a challenge. When operating a feet of several thousand, it is difcult to collect every driver and feet change. It involves HR feeds for some of the data and cooperation with business leaders to keep you up-to-date on feld level changes," said Szymanski of PPG Industries. In addition, some feet managers are also reporting that driver morale is a concern. Fleet managers are being tasked with keeping drivers satisfed while making cost-efective decisions for the company. Senior Management Support Te perception of many feet managers is that feet management is not being taken seriously by senior management, who view it as a huge cash vacuum. "Operating as a 'commodity,' where TCO is not a primary decision lever, is still a very challenging position for us — as for most procurement-based operations," said one feet manager, who asked not to be identifed. Tis challenge was cited by many other feet managers. "My key challenge is communicating to senior management the value of feet management," said another feet manager who asked not to be identifed. Besides communication, ensuring senior management is aware of feet value also involves educating management about feet. "Tis avoids secondary approval requests by the driver and a re-do, especially in the replacement process," said Szymanski of PPG Industries. Tis sentiment was echoed by Anthony Foster, feet manager, corporate procurement for Pioneer Natural Resources USA, Inc. in Irving, Texas. "My challenge is educating management about the feet department function FOSTER and what responsibilities it should have." Tis is especially the case with new senior managers who have never had feet as one of their management responsibilities. Some feet managers bemoan the lack of vision senior management has about feet. "We are very decentralized with most feetrelated items, other than vehicle ordering. For example, the managers of safety, risk 20 AUTOMOTIVE FLEET I JANUARY 2014 Many feets are still playing catch-up with vehicle ordering after dramatically decreasing acquisitions in the wake of the the economic downturn that started in 2008. management, HR, and feet all handle different parts of feet — all with diferent ideas of what they want to accomplish. Tere is a lack of vision with no constructive debate on principles or how the industry has changed and is evolving," said one anonymous feet manager. Vehicle Acquisition Trends Many feets are still playing catch-up with vehicle ordering afer dramatically decreasing acquisitions in the wake of the economic downturn that started in 2008. "We are continuing to catch-up on vehicle replaceLIDDLE ment from our drastically reduced purchases in 2009–2011 and should be where we want to be in two more model-years," said Ginny Liddle, CAFM, buyer II for Terracon in Olathe, Kan. Another key acquisition challenge revolves around higher prices. "Rising cap cost impacts on our budget is a key issue," said Anderson of Sentry Insurance. Another challenge is feet incentive reductions, said Mike Butsch, director, global feet operations for Joy Global in Milwaukee. Lower incentives have prompted some feets to expand their selectors and BUTSCH look at non-traditional feet vehicles. Lower OEM incentives have also increased lifecycle costs making some models no longer competitive. Sourcing from multiple manufacturers provides more opportunities for savings and a larger selector for drivers. "Understanding the relationship between manufacturers, dealers, and distributers helps us fnd the most value for our feet," said Chris Tinajero, global category manager, straTINAJERO tegic sourcing for Ericsson Inc. in Plano, Texas. A common strategy to reduce feet cost is to downsize to smaller vehicles, but the line between downsizing and driver disatisfaction is a fne one. Other cost-control strategies include a shif to diferent vehicle classes. Tere is an ongoing trend to downsize feet vehicle sizes; however, there continues to be resistance at some feets. "I would like to introduce four-cylinder vehicles to the feet, but management appears to be apprehensive," said Don Woloszynek, manager, feet services for National Gypsum in Charlotte, N.C. Another concern cited by the surveyed feet managers dealt with the bundling of options. "Te bundling of upgraded features in vehicles is an issue. For example, I want hands-free capability, which forces ordering of back-up cameras and remote vehicle start," said one feet manager, who wished to remain anonymous. Most feets are reporting that CY-2014 will be a status-quo year in terms of vehicle replacement volumes. "Overall, 2014 should be a relatively stable year. All our long-term contracts are in place and we have no RFPs or any other bidding events. Tis is afer two years in a row of negotiations with difSCHREIBER ferent partners on new con-

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