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T H E M A G A Z I N E F O R E X E C U T I V E V E H I C L E M A N A G E M E N T A B O B I T P U B L I C A T I O N
MAY/JUNE 2011 • VOL. 25 NO. 3WWW.FLEETFINANCIALS.COM
NESTLÉ’NESTLÉ’ss YEREM WINS YEREM WINS 2011 FLEET 2011 FLEET EXECUTIVE EXECUTIVE OF THE YEAR OF THE YEAR
‘BREAKING’ THE RULES‘BREAKING’ THE RULES TO OPTIMIZE PERFORMANCETO OPTIMIZE PERFORMANCE
TAKE FLEET TAKE FLEET PRODUCTIVITYPRODUCTIVITYTO THE NEXT LEVELTO THE NEXT LEVEL
FUEL EXPENSE FUEL EXPENSE REDUCTIONREDUCTION PROGRAMS THAT WORKPROGRAMS THAT WORK
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www.fleet.ford.comfl eet.ford.com* Optional, available on select models. **EPA-estimated 17 city/25 hwy/20 combined mpg (Taurus SHO/MKS); 16 city/22 hwy/18 combined mpg (Flex/MKT), EcoBoost AWD.
GREENER.At Ford Fleet, we believe in getting the most out of green technology. We’re continually working to improve vehicle performance while decreasing negative environmental impact. Our proprietary EcoBoost™ engine* can do just that for your fl eet. It combines turbocharging and direct-injection technologies to provide the performance of a V8 with the fuel economy of a V6.** Our ultimate goal is to go beyond producing a more powerful and greener fl eet — to ensuring every mile your fl eet drives barely leaves an impression at all. Ford Fleet. Get More.
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MAY/JUNE 2011 VOL. 25, NO. 3 Features Departments
Contents18 Yerem Named 2011 Fleet Executive of the Year
Communication, collaboration, and not to mention a number of highly successful initiatives led the three-year Nestlé veteran to the Fleet Financials honor.
24 Taking Fleet Productivity to the Next Level“Productivity” is a word bandied about in business all the time,
but what is it? How is it measured and achieved? In 2011, fl eet managers have little choice but to answer these questions.
30 ‘Breaking’ the Rules to Optimize Fleet Performance
Some call it thinking out of the box, pushing the envelope, or just plain breaking the rules. “Common wisdom” isn’t always the best way to
keep a fl eet running cost effi ciently.
38 Alternative Strategies for Reducing Fuel Consumption Fleets are exploring new strategies to lower their fuel expenses, such as
rightsizing vehicles, increasing driver training, improving fuel card compliance, and partnering with fuel management companies.
4 On the Web
6 EditorialUncontrollable Fleet OTD Component
10 LettersSourcing vs. Management Strategies
12 Fleet Briefs OEMs Reveal 2012 & 2013 Models
40 Automotive Financials Commercial Fleet Manager Salary Breakdown
On the CoverDean Yerem was named the 2011 Fleet Executive of the Year.
SEE PAGE 18
Fleet Financials (ISSN 1558-5719) (USPS 022-987) (CDN IPM#40013413) is published bi-monthly, by Bobit Business Media, 3520 Challenger Street, Torrance, California 90503-1640. Periodicals postage paid at Torrance, California 90503-9998 and additional mailing offi ces. POSTMASTER: Send address changes to Fleet Financials, P.O. Box 1068, Skokie, IL 60076-8068. Please allow 6 to 12 weeks for address changes and new subscriptions to take effect. Subscription Prices: United States $28 per year; Canada $34 per year; Foreign $75 per year. Single copy price $10. Bobit Business Media reserves the right to refuse non-qualifi ed subscriptions. Please address Editorial and Advertising correspondence to the Executive Of-fi ces at 3520 Challenger Street, Torrance, California 90503-1640. The contents of this publication may not be reporduced either in whole or in part without consent of Bobit Business Media. All statements made, although based on information believed to be reliable and accurate, cannot be guaranteed and no fault or liability can be accepted for error or omission.
18 24
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38
2 ■ FLEET FINANCIALS ■ MAY/JUNE 2011
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WHAT YOU’RE READING
NOW F L E E T F I N A N C I A L S . C O M
MERCEDES SHOWS THE 2012 E63 AMGUnveiled at the New York International Auto Show, the company stated that the model’s new high-performance engine provides a 22-percent increase in fuel economy, based on the European driving cycle. Go to fl eetfi nancial.com’s Vehicle Research channel for more information!
YEREM NAMED 2011 FLEET EXECUTIVE OF THE YEARPresented by Fleet Financials magazine and sponsored by CEI, Dean Yerem was recognized for delivering competitive advantage, value, and results to all Nestlé operating companies in North America.
AUDI REPORTS BEST FIRST QUARTER SALES EVERMarch 2011 marked the third-straight monthly record for 2011, with a 25 percent increase over February 2011, and a 14.3 percent improvement from March 2010.
CADILLAC LAUNCHES CTS-V BLACK DIAMOND EDITIONThis edition comes with a host of popular performance options and an exclusive tri-coat paint, also called “Black Diamond.”
2012 INFINITY M HYBRID OFFICIALLY RATED AT 32 MPG HIGHWAYThe vehicle is the fi rst V6 true luxury performance “driver’s” hybrid – and the only such vehicle to offer more than 350 horsepower and 32 mpg fuel economy.
Use the navigator on the fl eetfi nancials.com home page to browse the latest articles from the channels. Enter a channel to view in-depth news, articles, tools, calculators and more relat-ed to that specifi c topic.
May/June’s Web Channel Highlight: MOBILITYView strategies for how to increase real-time control and communica-tion within your fl eet. The resources provided in this channel will ed-ucate you on how to enhance the capabilities of your drivers and fi eld workers to meet customer expectations.
❍ How to Get Yourself Promoted ❍ Managing Your Off-Road Fleet from a Desktop ❍ Bright Ideas Energize Fleet Management ❍ 9 Mistakes to Avoid When Playing ‘Musical Cars’ ❍ How Can Telematics Help Your Fleet?
Industry Trendss Telematics Safety Remarketing Fuel
THE 5
THE FLEET CHANNELS
FLEETFINANCIALS.COM TOP 5 MOST POPULAR STORIES AS OF APR. 29,2011
1
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3
4
5
4 ■ FLEET FINANCIALS ■ MAY/JUNE 2011
What We’re Blogging About
➤ MARKET TRENDSBy Mike Antichwww.fl eet-fi nancials.com/blog/
market-trends.aspx
April 26
The Uncontrollable Component of Fleet OTD
April 18
The Ongoing Used-Vehicle Shortage Favors a Short-Cycling Replacement Strategy
April 1
Time to Add a New Component in Calculating Total Cost of Ownership
March 11
Beware of Expunged MVR Records
➤ FLEET BLOGSThe Voice of the Fleet Community (www.fl eetblogs.com)
April 29
Coming Together to Fuel Sustainable Changeby Elisa Durand
April 28
Something of Signifi canceby Joseph Thompson
April 28
Best Practices in Fleet Safety Policiesby Wayne Smolda
April 26
Stressed Budgets & Relationshipsby Anonymous Public Fleet Manager
April 22
How safe are hand held devices?by Jennifer Sutherland
Interested in starting your own blog? Go to www.fl eetblogs.com for more information.
ANTICH
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Letter from the Editor
The Uncontrollable Component of Fleet OTD
There are four components to the
fl eet order-to-delivery (OTD) cy-
cle: ordering, scheduling, produc-
tion, and delivery. Fleet vehicles
are particularly vulnerable to OTD delays
because most fl eet orders are concentrated
among a handful of models. Delivery de-
lays can occur because of quality holds or
component constraints for a high-volume
fl eet model. For instance, a single option
can delay OTD. This became abundantly
clear following the selective part shortages
resulting from the plant closures and energy
rationing that occurred in Japan following
what is now offi cially known as the Great
East Japan Earthquake of 2011.
However, the fourth component of the
OTD cycle is always out of the control of
the automotive industry. For the past 10
years, the nationwide rail car shortage
has been a factor for fl eet delivery delays.
Railroads are the primary long-distance
transporter of automobiles. Vehicles are
transported in specially designed, fully
enclosed rail cars that have either two or
three levels within them. Called bi‐level
and tri‐level autoracks, these enclosed
rail cars protect autos from damage by
falling or thrown rocks, bullets (trains
are frequent targets for amateur marks-
men), and other vandalism. The enclosed
autorack rail cars also curtail auto parts
theft and prevents “hobos” from living
inside the automobiles while in transit.
During the economic downturn, many
of these specialized rail cars were re-
moved from service as railroads right-
sized rail car capacity to vehicle order
volumes of the time.
In addition, the increased ratio of trucks
sold has compounded the rail car shortage
because fewer numbers of trucks, due to
their larger size, can be loaded on a rail
car than cars. In the early 1990s, approxi-
mately two-thirds of the rail fl eet was tri-
levels. The industry shifted to two-thirds
bi-level and one-third tri-level because of
the swing to larger SUVs, minivans, and
pickup trucks.
Allocating Rail Car ResourcesThe operation of the industry-wide
autorack rail car fl eet is managed by the
Reload Division of the TTX Compa-
ny, which is wholly owned by the largest
North American railways. TTX provides
rail cars to railroads on a usage basis to
allow them to conserve capital for infra-
structure needs. Authorized by the Inter-
state Commerce Commission (ICC) in
1981, the Reload Pool permits railroads
to pool their autorack fl eets for the trans-
portation of fi nished vehicles. TTX man-
ages Reload, which functions as a cooper-
ative venture between the railroads, TTX,
and auto manufacturers. Railways con-
tribute rail cars to a pool proportionate
to their volume of automotive shipments.
Under the Reload system, the automotive
OEMs provide their loading demand re-
quirements directly to TTX, which sched-
ules rail car disposition.
In addition to a rail car shortage, an-
other factor lengthening OTD is rail con-
gestion, primarily occurring at rail choke
points, which are comparable to freeway
choke points that exacerbate rush-hour
congestion. Two examples are Houston
and Richmond, Va. When train traffi c
backs up, it causes a ripple effect of delays.
These choke points occur in areas where
multiple railroad right-of-ways converge
or where trains are frequently handed off
from one railroad to another. One-third
of all rail freight passes through Chicago
since all of the six biggest North American
railroad company networks intersect there.
It can take 24 hours to move 20 miles in
Chicago due to congested rail traffi c and
time-consuming coordination of numer-
ous inter-railroad train moves.
There is a seasonal peak in freight vol-
ume, which extends from mid-July to au-
tumn. The peak season is triggered by the
fall grain harvest, the high-volume shipment
of retail merchandise for Christmas, and
transporting new cars and trucks to dealers
at the start of the new model-year. The de-
gree of congestion within the rail network
is infl uenced by the strength of the econo-
my, the volume of new-vehicle sales, and
the bountifulness of the harvest.
Another factor contributing to rail con-
gestion has been staffi ng constraints due
to workforce reductions at railroads. Cur-
rently, 36 cents out of every dollar spent to
run the railroads goes to labor costs. As
part of cost reduction initiatives, many
railroads reduced their workforce, with
most of the cuts in operating staff. The rail-
road industry says it takes fi ve years to be-
come fully qualifi ed in most jobs. Even if
railroads started hiring today, it will take
years before they have a fully qualifi ed in-
crease in their workforce. In addition, fed-
eral work rules contribute to freight delays.
Freight trains sometimes must stop mid-
track to relieve crews who have reached
the federal maximum they are permitted
to work — a 12-hour shift. Trains sit un-
til new crews take over.
The Baton Pass to UncontrollabilityThe U.S. Department of Transportation
forecast freight transportation demand will
nearly double by 2035 from 2002 levels as
the economy and population grow, neces-
sitating even greater investment to expand
rail infrastructure. During the last three de-
cades, railroads invested more than $480
billion (more than 40 cents out of every rail
revenue dollar) to build, maintain, and im-
prove the national rail network. However,
it is not enough.
The “baton pass” to the railroads to de-
liver fl eet (and retail) orders causes OTD
to fall out of the control of OEMs, mak-
ing them vulnerable to the infrastructure
constraints of the rail system.
Let me know what you think.
mike.antich@bobit.com
6 ■ FLEET FINANCIALS ■ MAY/JUNE 2011
BY MIKE ANTI CH
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Get to Know the All-New Volvo S60 With City
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y SafetyTM Forward Collision Warning System.
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about the next genera-
tion of fl eet managers.
Will the fl eet function
survive when today’s
fl eet managers ultimate-
ly retire?
My fi rst reaction is
that fl eet managers at
small companies wear
many hats and the fl eet
function is combined with a host of
other things.
Large companies with large fl eets
understand the need for a subject matter
expert and while sourcing is very strong,
they realize the need for someone to
pull it all together with the FMC.
In terms of mid-sized companies,
this is where I would think consolida-
tion with sourcing would happen.
Because I am reaching a certain lev-
el of longevity in my company, it was
actually raised in a few discussions
that while they can’t ask me how long
I plan to work, they realize in the near
future I may not be there and they must
begin thinking about my replacement.
Truly, this was the fi rst such discussion
of this type in all the years I have been
here. They were looking at an assistant
type, but to me this means an admin, as
they are not going to pay the salary for
two of us. This is somewhat the way I
started, so only time will tell.
It is defi nitely true that technolo-
gy has changed our roles, but again,
depending on the size of the fl eet, re-
ports will only get you so far. When
outsourcing to FMCs, you must rely
on the FMC processes, which most
times do not conform to your in-house
systems.
I do not see the fl eet manager role
being elevated. It is too detailed and
time-consuming. It has too many mov-
ing parts, too many vendors involved,
etc. It is a middle management role. Any
manager higher up would not keep it
long! Could it move down the chain?
Sure. But you need some level of re-
sponsibility and accountability to ne-
gotiate with vendors, FMCs, and in-
ternal management.
Author wished to be anonymous
10 ■ FLEET FINANCIALS ■ MAY/JUNE 2011
Letters to the Editor
Sourcing Strategy vs. a Fleet Management Strategy
The editorial in the March/April
issue, entitled “Higher Raw Material
Costs Put Upward Pressure on Re-
placement Tire Costs,” highlights
an issue that is habitually ignored
by companies that insist on a com-
modity savings strategy in lieu of
fl eet management.
There are countless fl eet managers
who have been supplanted by com-
modity buyers adept at machine gun-
ning RFPs at the supply base, such as
OEMs, insurers, fuel companies, tire
manufacturers, etc. Many of us have
witnessed “savings” claims of these
one-off activities, which when briefed
as a distinct event to the uninformed,
bring accolades to the messenger. We
can recount meetings where limited in-
formation disclosure describes heroic
status to what historically has been one
iota of fl eet management.
In the pre-commodity era, this was
business as usual for fl eet managers,
who routinely reported the full scope
of lifecycle costing, measuring and re-
porting the total fl eet expense portfo-
lio — cost escalation and reductions
— to achieve a metric for fl eet man-
agement, cost per vehicle per mile or
cost per vehicle per year.
For commodity buyers who have
larded their coffers reporting one-time
savings, the gig is up. With rising raw
material costs across fl eet — tires,
fuel, tolls, taxes — it must be back to
basic fl eet management, namely cost
controls and lifecycle costs. The best
companies have shed the commodity
facade and adopted a lean six sigma
approach to fl eet management. Un-
doubtedly those that insist on a com-
modity approach will creatively claim
savings. Thanks for ringing the fl eet
management bell.
Charles SchottFleet Consultant
New York City
Will the Fleet Manager Role Survive in the Future?
There has been much discussion
Vol. 25, No. 3
PublisherSherb Brown
Editor/Associate PublisherMike Antich
mike.antich@bobit.com
Managing Editor Lauren Fletcher
lauren.fl etcher@bobit.com
Senior EditorGrace L. Suizo
grace.suizo@bobit.com
Associate EditorThi Dao
thi.dao@bobit.com
Web EditorGreg Basich
greg.basich@bobit.com
Field EditorBob Cavalli
Art DirectorArmie Bautista
Production DirectorKelly Bracken
Production ManagerBrian Peach
(310) 533-2548
Great Lakes Sales ManagerRobert Brown Jr.
1000 W. University Dr., Ste. 209Rochester, MI 48307
(248) 601-2005; FAX: (248) 601-2004
Regional Sales ManagerEric Bearly
(310) 533-2579
Sales & Marketing CoordinatorTracey Tremblay
Business and Editorial Offi cesBobit Business Media
3520 Challenger St.Torrance, CA 90503FAX (310) 533-2503
ChairmanEdward J. Bobit
CEOTy Bobit
Chief Financial Offi cerRichard E. Johnson
Editorial ConsultantHoward Rauch
Autom
otive Fleet
FF0511letters.indd 10FF0511letters.indd 10 5/3/11 6:32:25 AM5/3/11 6:32:25 AM
Choose the Sears Blue Automotive Crew for professional fleet maintenance. We offer competitive pricing and over 800 convenient locations. Plus, drive-in service and evening and weekend appointments allow drivers to schedule maintenance during down time.
We accept most national fleets.
Are you spending too much on fleet maintenance?
The Sears Blue Automotive Crew can save your company money
Learn more about Sears Fleet Maintenance Call 1-877-NOW-AUTO or visit SEARSAUTOCOMMERCIAL.COM
BRAKES
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DALLAS – AT&T’s compressed natural gas (CNG) vehicles helped reduce
the company’s petroleum consumption by 1 million gallons in 2010. The
company made this announcement on the heels of President Obama’s Na-
tional Clean Fleets Partnership. This initiative, supported by the U.S. De-
partment of Energy, is designed to help large fl eets across the nation reduce
petroleum use by 2.5 billion gallons by 2020.
AT&T has deployed more than 3,500 alternative-fuel vehicles, includ-
ing more than 2,400 CNG vehicles in 543 cities in 35 states and the District
of Columbia. The latest alt-fuel additions announced by the telecom com-
pany were 101 new CNG-powered Chevrolet Express Cargo 2500 vans for
its customer service fl eet.
NEW YORK – More than 10 new 2012 and 2013 model-year vehicles were introduced at the New York International Auto
Show in late April. The following are just a few of the vehicles revealed.
Additional information on these new vehicles and others highlighted at the show is available at www.automotive-
fl eet.com/news. Keywords: 2012-MY or 2013-MY.
AT&T Saved More Than 1M Gallons of Petroleum in 2010
2012 & 2013 Models Debut at N.Y. Auto Show
12 ■ FLEET FINANCIALS ■ MAY/JUNE 2011
President Barack Obama inspects an AT&T all-electric vehicle on display during a tour of a UPS facility in Landover, Md., April 1. (Offi ce White House Photo by Pete Souza)
The 2012 Mercedes E63 AMG now features the new 5.5L V-8 biturbo engine, called the M157 internally by Mercedes, which can produce either 518 hp or 550 hp. Fuel economy is improved up to 22 percent, according to the automaker.
The fuel economy-focused version of the new 2013 Malibu, the ECO Version, comes equipped with the company’s eAssist “light electrifi cation” technology. GM’s estimated fuel economy for the ECO version of the Malibu is 38 mpg highway, 26 city. The ECO version of the Malibu joins the three other trim levels (LS, LT, and LZ) announced during the introduction of the new Malibu.
The 2012 Volvo S60 R-Design sport sedan (shown above) and XC60 R-Design crossover will be powered by Volvo’s T6 en-gine, a turbocharged, inline six-cylinder that will now produce 325 hp and 354 lb.-ft. of torque. The standard T6 engine in both models produces 300 hp and 325 lb.-ft. of torque.
The 2013 Ford Taurus is the fi rst North American model to come equipped with the company’s advanced 2.0L EcoBoost engine, providing an estimated highway fuel economy of 31 mpg and delivering a company-estimated 237 hp and 250 lb.-ft. of torque.
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Visit fl eet-central.com to fi nd out more, or contact a Subaru fl eet professional at 1-800-879-8233.
*Based on ALG’s 2011 Residual Value Award for Midsize Utility Vehicles. †EPA-estimated hwy fuel economy for Outback 2.5i CVT models. Actual mileage may vary.
Driver made the meeting.CFO made the budget.And both made it here for a BBQ on a Saturday.
Happy drivers. Happy CFO. Happy fl eet manager. The
Subaru Outback, with Symmetrical All-Wheel Drive standard,
has been awarded ALG’s highest forecasted resale value for a
mid-sized utility,* is an IIHS Top Safety Pick and gets 29 MPG.†
Love. It’s what makes a Subaru, a Subaru.
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Fleet Briefs
14 ■ FLEET FINANCIALS ■ MAY/JUNE 2011
IRS Announces New 2011 Auto Depreciation LimitsWASHINGTON – The IRS has published new
guidelines for infl ation-adjusted depreciation
limits and lease inclusion amounts for passen-
ger vehicles. Revenue Procedure 2011-21 ap-
plies to passenger cars, vans, and trucks placed
in service in 2011 and to fi rst leases occurring
in that year. The guidelines also provide updat-
ed limits for vehicles placed into service in 2010
to which the 50- or 100-percent additional fi rst-
year depreciation deductions apply. Visit www.
irs.gov/pub/irs-drop/rp-11-21.pdf to download
the document.
Meurer Joins Mercedes-Benz Fleet TeamMONTVALE, NJ – Tedd Meurer has
joined Mercedes-Benz USA as the
national account manager for the
company’s South and Mid-Atlantic
regions for its fl eet sales division.
Meurer brings
more than 20 years of
management experi-
ence in new business
development, sales,
marketing, third party/
client servicing, oper-
ations, and fl eet. Dur-
ing his tenure in the industry, he
served in a variety of management
roles with The Hertz Corporation,
JM Family Enterprises, Automo-
tive Remarketing, Inc., National Car
Rental, and Alamo Rent-A-Car.
Audi Announces Diesel Lineup Expansion in U.S. HERNDON, VA – Audi of America
announced during its March 8 web-
cast that it plans to sell diesel ver-
sions of its A6 and A8 luxury sedans
and a diesel version of its Q5, in ad-
dition to its A3 and Q7 clean diesel
models. The company said its TDI
lineup will expand during the next
24-36 months.
Audi also announced the expect-
ed arrival of its electric e-tron sports
car in the U.S. in 2013.
MEURER
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MAY/JUNE 2011 ■ FLEET FINANCIALS ■ 15
Chrysler Adds Executive Series to 300 Lineup
THE BIG NAME IN FLEET MANAGEMENT SOFTWARE
So get on board with the big name in fleet management software. Contact Ron Katz to arrange a free systems review: call (781) 793-0788, email ron@chevinfleet.com or visit www.chevinfleet.com
We’ve decided it’s time to make a big noise about ourselves. In case you didn’t know, we deliver flexible enterprise fleet management software to provide a clear view of fleet performance. What’s more, we’ve been doing it since 1990. Across the country and around the globe. So when you need to manage your assets more effectively, reduce expenditure and ensure compliance, contact the big name in fleet software today.
FF0110chevin.indd 1 1/5/10 11:51:25 AM
AUBURN HILLS, MI – Chrysler has
expanded its 300 lineup with the
introduction of the all-new 2012
Chrysler 300C Executive Series.
The Chrysler 300C Executive Se-
ries combines ultra-premium leather,
improved handling, a range of safe-
ty and connectivity features, and the
363 hp 5.7L HEMI V-8 engine with
Company-Issued Vehicle Use on the RiseMIAMI – More individuals are get-
ting rid of personal vehicles with
leases because of company-is-
sued vehicles, according to data
from LeaseTrader.com. The online
lease transfer marketplace showed a
5.3-percent increase in transactions
due to company cars within a house-
hold, which comes on the heels of a
4.8-percent increase in February.
Many of the personal vehicle
lease transfers are taking place in
states such as California, Texas, Flor-
ida, and Michigan, which all showed
growth in jobs during March, ac-
cording to LeaseTrader.com. During
the recession and much of the eco-
nomic recovery, drivers would es-
cape vehicle leases out of need. Since
January, a growing percentage of
drivers have been escaping to shop
for a new vehicle lease deal at retail,
or choosing to drive their company
cars instead now that they have more
confi dence in keeping their jobs.
Fuel Saver Technology. Available
in rear-wheel or all-wheel-drive, the
2012 Chrysler 300C Executive Se-
ries models will arrive in Chrysler
dealerships this fall.
Features include a platinum
chrome exterior fi nish, 12-way
power-adjustable driver and front-
passenger seats (including four-
way power lumbar) with two-mode
ventilation, and two-mode heated
seats for front and rear passengers.
Olivier Francois, president and chief ex-ecutive offi cer − Chrysler Brand and Lead Executive for Marketing − Chrysler Group LLC, introduced the all-new 2012 300C Executive Series at the New York In-ternational Auto Show.
FF0511briefs.indd 15FF0511briefs.indd 15 5/3/11 2:47:18 PM5/3/11 2:47:18 PM
DODGE GRAND CARAVAN. VALUE-ADDED SAFETY AND VERSATILITY.
The minivan that can. Do. Everything. The new 2011 Grand Caravan is our
smartest utility vehicle yet. An impressive array of safety and security
standards, including the Electronic Stability Control (ESC)3 system and
Sentry Key® anti-theft system, make the Grand Caravan a ⇓ eet favorite.
Improvements rev up with the new Pentastar V6, featuring Flex-Fuel
capability and a new fuel economizer mode. Open any door and you’ll be
welcomed by an all-new interior with well-appointed design details and
friendly, intuitive features.
The ultimate “jack-of-all-trades” work vehicle is the GRAND CARAVAN C/V
(not shown). It offers a cavernous 144 cu ft of usable cargo area, compared
to just 135 cu ft for the 2011 Ford Transit Connect XL1,4 and it doesn’t
⇓ inch when it comes to performance, fuel ef⇒ ciency or comfort.
DODGE DURANGO. ULTIMATE UTILITY.
All-new inside and out, the 2011 Dodge Durango bursts onto the sport
utility scene with a kickin’ combo of capability, performance and comfort.
Three rows of seating convert for outstanding ⇓ exibility and comfort.
The new 3.6L Pentastar® with best-in-class V6 towing (6,200 lb)1 comes
standard, or you can choose the available 5.7L HEMI® V8 (capable of
towing up to 7,400 lb). Fuel ef⇒ ciency stretches 500 miles on a single
tank of gas.2
TAKING YOUR FLEET FARTHER.
FFIN_16-17.indd 16FFIN_16-17.indd 16 4/29/11 6:36:54 AM4/29/11 6:36:54 AM
DODGE JOURNEY. EMPOWER YOUR PORTFOLIO.
Awarded 2011 Top Safety Pick by the Insurance Institute for Highway
Safety (IIHS). 5 A remarkable combination of performance, styling and safety.
The 2011 Dodge Journey brings a refreshed car to your ⇓ eet: a totally
refurbished interior with 5- or 7-passenger seating and available Uconnect®;
the new 3.6L Pentastar Flex-Fuel VVT engine, offering a 20 percent boost in
power; and all-wheel drive availability. Safety and security includes six air
bags6 and driver knee blocker, plus ESC.3
DODGE AVENGER. MULTI-TALENTED SEDAN.
Awarded 2011 Top Safety Pick by the Insurance Institute for Highway
Safety (IIHS). 5 More than smartly styled, the Dodge Avenger is brilliant
everywhere — from the all-new interior to the redesigned exterior to what’s
under the hood. The new 3.6L Pentastar V6 with VVT applies some of the
most advanced automotive engine technology and fuel ef⇒ ciency.7 The
suspension is redesigned, re-tuned and re-engineered. Both driver and
passengers are treated to spacious seating and soft-touch resting points,
plus new or upgraded sound-deadening materials for a supremely quiet ride.
DODGE CHARGER. FISCALLY RESPONSIBLE, RICHLY DESERVED.
Awarded 2011 Top Safety Pick by the Insurance Institute for Highway
Safety (IIHS). 5 The all-new Dodge Charger re-de⇒ nes craftsmanship and
executive privilege. Notable fuel economy comes from the best V6 engine
in Dodge history — the all-new 3.6L Pentastar with Flex-Fuel and VVT
(up to 27 mpg hwy),8 standard, plus the available legendary HEMI V8 with
Fuel Saver Technology. The Charger combines performance with connectivity,
high style with roomy comfort and tops it off with must-have safety and
security features.
1When properly equipped. 2Based on 3.6L V6 engine with 16 city/23 hwy EPA estimated mpg and 24.6-gallon fuel tank. 3Always drive carefully, consistent with conditions. Always wear your seat belt and obey traf⇒ c laws. 4The comparator data is provided under license from Autodata Solutions, Inc. (Autodata). 5IIHS groups Top Safety Pick winners according to vehicle type, size and evaluations of crash test performance. 6Always sit properly in the seat with the seat belt fastened. Always drive carefully, consistent with conditions. Always wear your seat belt and obey traf⇒ c laws. 7Of⇒ cial EPA estimates not yet available. Results depend on driving habits and conditions.
82011 EPA estimated miles per gallon, actual mileage may vary with driving conditions. 9See your dealer for complete details and a copy of the 5-Year/100,000-Mile Powertrain Limited Warranty. Dodge, HEMI, Uconnect and the Pentastar logo are registered trademarks of Chrysler Group LLC. ©2011 Chrysler Group LLC.
g y
(up to 27 7 mpm g hwhwy),8 statandard, plus the availal ble legendary HEMI V8 with
Fuel Saver Technology. The Charger combines performance with connectivity,
high style with roomy comfort and tops it off with must-havev safafety yyy anananandddd
security features.
All Dodge vehicles are backed by the unsurpassed
5-Year/100,000-Mile Powertrain Limited Warranty.9
fleet.chrysler.com 800-999-FLEET
FFIN_16-17.indd 17FFIN_16-17.indd 17 4/29/11 6:36:57 AM4/29/11 6:36:57 AM
YEREMYEREM NAMED 2011 NAMED 2011 FLEET FLEET EXECUTIVE EXECUTIVE OF THE YEAROF THE YEAR
Communication, collaboration, and not to mention a number of highly successful initiatives led the three-year Nestlé veteran to the Fleet Financials honor.
By Shelley Mika
18 ■ FLEET FINANCIALS ■ MAY/JUNE 2011
Dean Yerem attributes the following to being named Fleet Executive of the Year:
■ Reducing fl eet size based on driver use.
■ Setting levels for personal use fees.
■ Collaborating with fl eet managers and fl eet management companies.
■ Communicating openly.
■ Listening carefully and making sure all sides are heard before making decisions.
AT A GLANCE As purchasing manager for
Nestlé Business Services
(Nestlé’s Shared Servic-
es Organization), Dean
Yerem is responsible for
fl eet, fl eet management, small pack-
age, offi ce supplies, furniture, and of-
fi ce services for the U.S. and Canada,
and supports global and regional initia-
tives as well. Nestlé operates more than
5,000 vehicles in the U.S. and Canada
and close to 29,000 units worldwide.
Yerem supports several fl eet manag-
ers throughout the company, with the
goal of bringing value to the fl eet and
those managers.
In his three years with the com-
pany, he’s seen big results. Working
with fl eet managers on a daily basis,
they have streamlined Nestlé’s opera-
tions and improved the fl eet. In doing
so, they’ve not only helped the orga-
nization become a greener operation
but have also yielded savings for the
company.
Now, they have validation for all their
hard work: Yerem is this year’s Fleet
Executive of the Year, an award co-
sponsored by The CEI Group, Inc.
“It is a great honor to receive this
award,” he said. “I am in a unique posi-
tion being able to support the fl eet man-
agers on decisions behind the scenes,
and it is really great to be recognized
for the work we have accomplished
over the past couple years.”
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FF0511feoy.indd 18FF0511feoy.indd 18 5/3/11 6:30:23 AM5/3/11 6:30:23 AM
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20 ■ FLEET FINANCIALS ■ MAY/JUNE 2011
“Managing fuel costs is one of the
most critical and diffi cult challenges
facing fl eets. Dean Yerem has dem-
onstrated leadership and innovation
in tackling this problem on a glob-
al basis for Nestlé and has shown us
that it can be done. All the candidates
were worthy, but his selection sends a
particularly timely message to fl eets
around the world,” said Wayne Smolda,
CEO and founder of The CEI Group,
Inc. “CEI has been proud to be a co-
sponsor of this award with Bobit for
the last 10 years. It is a very fi tting way
to acknowledge that fl eet best practic-
es are achieved through the coopera-
tion among managers and executives
with different but complementary tasks
and skills.”
Yerem has implemented several
highly successful fl eet initiatives over
the last three years, and those initia-
tives are yielding major savings.
“My role at Nestlé Business Ser-
vices - Procurement allows me to be
in a great position to support the op-
erating companies in North America.
Many employees in Nestlé don’t have as
many opportunities to gain that unique
exposure in working with all the busi-
nesses,” he said. These operating com-
panies include Nestlé Nutrition, Nestlé
Purina PetCare, Nestlé USA, and Nestlé
Waters North America.
Prior to joining Nestlé, Yerem held a
similar role with The Walt Disney com-
pany for four years. “It was a wonder-
ful experience and really helped ready
me for working for a global company,
like Nestlé, with its many complexi-
ties,” he said.
Name-Making InitiativesYerem’s recognition as Fleet Execu-
tive of the Year is due in large part
to his leadership role in initiatives
that streamline overall fl eet process-
es and help promote greener opera-
tions, while also driving key savings
for the company.
“In my role, I need to continually
fi nd the best value and benefi t for the
company while being aware of the dif-
ferent needs of my stakeholders. Try-
ing to align opportunities and initia-
tives is one of the main things I do on
a day-to-day basis. Nestlé does an out-
standing job of always providing op-
portunities, training, and goals that al-
low the individual to succeed — and
contribute to the company’s overall
success, too.”
Yerem’s fi rst goal in his role was
to identify the differences between
the operating companies he supports
and look for ways to infl uence the cost
points for the fl eet. One initiative he
implemented was to convert a U.S.
fl eet from six- to four-cylinder units
over a three-year period. This transi-
tion has improved the performance of
the fl eet and saved on capital and fuel
expenditures.
This effort also resulted in a green-
er fl eet, an achievement Yerem took
advantage of promoting further. “We
made sure to communicate ‘green’
driving practices and followed up with
quarterly newsletters for reinforcement
of the success we were gaining. It not
only became a green initiative, but
these environmentally friendly driv-
ing habits have reduced our accident
rate as well.”
Overall, Yerem and his teams have
suggested adjustments in the selector
list and a focus on more fuel-effi cient
vehicles, which will lower CO2 by more
than 3,000 tons each year.
Another effort spearheaded by
Yerem in the last three years was an
evaluation of personal-use fees be-
tween the various operating compa-
nies. This led to a phased implementa-
tion of set levels for personal-use fees
for all drivers.
A third initiative Yerem led was to
reduce the number of vans in the fl eet
over time. By surveying drivers, Yer-
em’s team identifi ed those vans unnec-
essary to the fl eet and has now made
major reductions in the van fl eet and
cost over the past two years.
In 2009 alone, Yerem’s initiatives
in the U.S. and Canada have seen a re-
duction of more than 300,000 gallons
of fuel and a 15-percent reduction in
emissions, resulting in savings for the
company.
Yerem’s most recent success was to
tie in Nestlé’s global partnerships in a
bid process with a car manufacturer
that covered all of the U.S., Canada,
and Mexico. “We leveraged our posi-
tion with some of our partners and cre-
ated new partnerships along the way,”
Yerem said.
Collaboration Bolsters the WinYerem said his collaboration both
within and outside Nestlé helped him
CEI Founder and CEO Wayne Smolda (left) and Ed Bobit (right), founder and chairman of Bobit Business Media, congratulate Dean Yerem on his Fleet Executive of the Year win after the awards presentation at the NAFA I&E in April.
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FF0511feoy.indd 20FF0511feoy.indd 20 5/3/11 6:30:37 AM5/3/11 6:30:37 AM
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22 ■ FLEET FINANCIALS ■ MAY/JUNE 2011
AF0909leaseplan.indd 1 8/19/09 2:45:42 PM
accomplish his successful initiatives,
as well as his Fleet Executive of the
Year win.
His fi rst nod is to the backing he
receives from the fl eet managers he
works with on a daily basis. “They keep
me apprised of their needs and goals
and make sure we align ourselves as
a group to make the process success-
ful,” he said.
Secret to Success No. 1: CommunicationWhile the support Yerem has received
from his internal and external partners
has bolstered his success, his achieve-
ments are arguably due to his own man-
agement techniques as well. Yerem’s
personal work philosophy relies heav-
ily on good communication — both to
overcome issues and to work together
toward a common goal.
“We have established great lines
of communication at each operating
company and have given fl eet some
excellent visibility with more sustain-
able solutions (i.e., more “green”), ac-
cident reduction, and cost savings over
the past couple of years. I have month-
ly calls with all of the fl eet managers
where we identify any roadblocks or
future opportunities,” Yerem said.
What is his most critical success
factor? “I cannot stress how important
it is to ensure everyone is on the same
page and on board with what you are
trying to accomplish,” he said.
Yerem noted that communication
has helped him and his team members
overcome the natural challenges of dif-
ferent cultures and geography that exist
in a company of Nestlé’s size. “We are
a very large global company and it can
be complex taking into consideration
the different business needs and cul-
tures with every opportunity,” he said.
“I feel the key is communication. I send
out as much information as possible on
each project. We review the return on
investment (ROI) on everything, keep-
ing an account of each individual fl eet
need and the goals we agreed to at the
beginning of the project.”
Secret to Success No. 2: A Careful EarFor Yerem, listening is just as im-
portant as communicating. His ad-
vice to other fl eet executives? Listen
to everyone.
“Listen to your fl eet managers; fl eet
management company; other fl eet man-
agement companies; car manufactur-
ers; internal Human Resources; health,
safety, and risk; environmental; as well
as keeping in line with what is go-
ing on in the market,” Yerem empha-
sized. “Each initiative has its own set
of stakeholders, and my role is to en-
sure everyone is heard and part of the
decision-making process. I may have
a strong opinion going into a process,
but I can be quickly infl uenced by a
stakeholder with a specifi c need that
will ultimately alter the outcome of
the overall project.”
Yerem said listening carefully to
partners and stakeholders can reveal
opportunities that might otherwise go
undiscovered. “Fleet is a great cate-
gory and has many complexities to
deal with on a daily basis. I can tru-
ly say that my success is based on lis-
tening to the fl eet managers, my peers,
lease management, and everyone who
has an opinion on fl eet — which we
all know is everyone,” he said. “You
never know when and from where you
will get some great information that
will ultimately lead to your next op-
portunity.”
More Work Ahead — and a Little Bit of CelebrationYerem’s next initiative is to imple-
ment a comprehensive safety pro-
gram that establishes a baseline that
can only get better. “We realize the
driver is the most important asset in
fl eet, and we are taking steps to en-
sure we provide the necessary pro-
gram, training, and policy that refl ect
that goal,” he said.
While Yerem continues to be hard
at work, he has paused for just a mo-
ment to celebrate the success of his
Fleet Executive of the Year honor. “It
feels great,” he said. “It is a great hon-
or to receive this award.”
Yerem celebrated by sharing the
news of his — and the company’s —
success with those who helped him
get here. “I sent out an e-mail to all
my stakeholders in Nestlé (even my
non-fleet ones) with a link to the
online story about this recognition
and thanking them for their support
along the way.” ■
Dean Yerem (center) poses with (from left) Ed Bobit, founder and chairman of BBM, and LeasePlan USA executives Jon Toups, SVP, chief sales & marketing offi cer; Tom Casey, national vice president, client relations; and Mike Pitcher, president and CEO.
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AF0909leaseplan.indd 1 8/19/09 2:45:42 PMFF0511feoy.indd 23FF0511feoy.indd 23 5/3/11 6:30:50 AM5/3/11 6:30:50 AM
“Productivity” is a word bandied about in business all the time, but what is it? How is it measured and achieved? In 2011, fl eet
managers have little choice but to answer these questions.
Webster’s defi nes pro-
ductivity rather ob-
viously: “The qual-
ity or state of being
productive.” Drilling
down, productive is defi ned as “hav-
ing the quality or power of producing,
especially in abundance.”
So how does a fl eet manager make
his or her fl eet more capable of pro-
ducing abundantly? Better put, how
can you get more work out of the re-
sources given? Productivity is a key
element in any economic discussion;
it determines costs, prices, effi ciency,
and a host of qualities found in any
Productivity
24 ■ FLEET FINANCIALS ■ MAY/JUNE 2011
Increasing fl eet productivity involves:
■ Defi ning it in terms of vehicle and departmental aspects.
■ Determining how to measure it.
■ Identifying ways to improve it using all the resources available.
AT A GLANCE
business endeavor. The fi rst two steps
in increasing productivity are fi rst to
defi ne it, and then determine how it is
to be measured. The third step, achiev-
ing it, is the real challenge.
Improving Fleet ProductivityFleet managers have two areas where
productivity can be enhanced:
■ The fl eet itself. The vehicles,
their costs, and the amount of
work the vehicles can do in
relation to the costs associated
with them.
■ The fl eet function. The fl eet
manager, his/her staff (if any),
and how much work they can do
relative to the time and resources
they have to do it.
Like employees, fl eet vehicles are
“hired” to do a job — provide trans-
portation, deliver products and ser-
vices, and perform tasks on a jobsite.
They have costs associated with ac-
quiring and holding them and costs
associated with operating them. Ve-
hicle productivity can thus be defi ned
as the relationship between the work
a vehicle does and the resources re-
quired to do it.
Departmentally, a fl eet manager
incurs costs associated with the ad-
ministration and management of fl eet
vehicles. Vehicles must be ordered; de-
livered; records and fi les kept; costs
tracked and analyzed; titles, registra-
tions, and inspections administered;
and vehicles sold. Some fl eet manag-
ers have staff to manage as well, while
others do not. Fleet departmental pro-
ductivity is defi ned in much the same
way that any business function is de-
fi ned: how much work can be done in
relation to the resources (people, mon-
ey, time) necessary to do it.
Thus, fl eet managers are challenged
to step up the productivity of the vehi-
cles they manage, as well as how they’re
administered and managed.
Maximizing Vehicle ProductivityManaging a fl eet of vehicles is an ex-
TAKING
FF0511productivity.indd 24FF0511productivity.indd 24 5/3/11 11:59:05 AM5/3/11 11:59:05 AM
MAY/JUNE 2011 ■ FLEET FINANCIALS ■ 25
ercise in productivity; in essence, the
job is that of squeezing as much pro-
duction out of company vehicles as
possible.
How is the productivity of a fl eet
vehicle measured? Fortunately, the in-
dustry has provided fl eet managers with
some very specifi c measures. All of
them, in one way or another, are time
or mileage/cost ratios, which makes
measuring vehicle productivity rela-
tively simple.
Fixed or holding costs, those costs
incurred in the acquisition and own-
ership/use of the vehicle, consist pri-
marily of depreciation and leasing or
fi nance (money) expenses. It is im-
portant to note that depreciation ex-
pense can only truly be measured af-
ter a vehicle has been taken out of
service and sold; during a vehicle’s
term in service, it is only an accrual
or reserve established to “cover” true
depreciation.
Reducing DepreciationBecause depreciation makes up 70
percent or more of holding costs, it
is a natural fi rst stop in stepping up
productivity. For purposes here, fl eet
depreciation is simply the difference
between the original cost of a vehicle
(either purchase cost or the cost cap-
italized into a lease) and the net pro-
ceeds when it is sold. Depreciation is
expressed (measured) in either dollars
per month or cents per mile (cpm) —
both are cost/use ratios. Merely re-
ducing the net depreciation number,
therefore, is an increase in productiv-
ity only if the use, expressed either in
cost (cents) or time (months), remain
the same or increase.
For example, if the original vehi-
cle cost $20,000, was kept in service
for 30 months accumulating 75,000
miles, and is then sold for $7,000,
the actual depreciation is expressed
as follows:
■ Net depreciation is $13,000 ($20,000 – $7,000 = $13,000)■ Cost per mile is $0.173 ($13,000 x 100 / 75,000 = 17.3 cpm)■ Dollars per month are $433.33 ($13,000 / 30 = $433.33)
Thus, if the depreciation dollars
decrease while achieving the same
mileage and time in service, or con-
versely mileage or time increase at
the same level of depreciation cost,
an increase in productivity has been
achieved. Most commonly, decreas-
es in depreciation are sought either
by decreasing the original cost or in-
creasing resale proceeds. There are
practical limits to the former (only so
many dollars are available in the orig-
inal cost), so most efforts to increase
productivity by addressing deprecia-
tion costs center on increasing resale
proceeds. This is not a bad idea at all;
there are a number of ways this can
be accomplished:
■ Employee sales.
■ Varying markets used (wholesale,
auction, broker, even retail).
■ Increasing condition report
follow ups.
■ Enforcement of preventive
maintenance policy.
How can a fl eet manager go from
the traditional to the next level? It may
sound like blasphemy, but keeping ve-
hicles in service beyond the usual re-
placement time and mileage criteria
can be done, and can result in addi-
tional savings/increased productivity.
Most auto and light truck fl eets keep
TO THE NEXT LEVEL
FF0511productivity.indd 25FF0511productivity.indd 25 5/3/11 11:59:06 AM5/3/11 11:59:06 AM
Productivity
26 ■ FLEET FINANCIALS ■ MAY/JUNE 2011
vehicles in service for 24-48 months
or 65,000-100,000 miles, whichever
comes fi rst. The common wisdom is
that beyond that, the fl eet risks major
component failure (as mileage accu-
mulates), decreased resale values, and
even reduced fuel effi ciency.
While these can indeed happen,
they don’t necessarily have to hap-
pen. Vehicles today are (despite com-
mon perceptions that “they don’t build
them like they used to”) far better en-
gineered, have more extensive war-
ranties, and retain value at a better
rate than did vehicles 25 or 30 years
ago. The key, of course, is a rigorous
preventive maintenance program,
coupled with detailed condition re-
ports for which follow-up and action
are critical.
The next level of productivity? It
could be extending the service life of
your fl eet vehicles beyond what the in-
dustry has historically recommended.
The depreciation curve tends to fl at-
ten out as time and mileage accumu-
late; the greatest period of depreciation
occurs in the initial weeks in service.
Once a new car has been titled, regis-
tered, and hits the road, it becomes a
used car and suffers its greatest drop
in value. Beyond the second, third, and
fourth years of service, all things be-
ing equal, the drop in resale value be-
comes less and less precipitous.
Extending replacement cannot, nor
should it, be done without testing the
waters for some period. Select vehicles
over a replacement period to keep in
service. If, say, the replacement mile-
age is normally 75,000 miles, keep a
handful beyond that. Extend one to
90,000 miles, another to 100,000,
and still another to 125,000. When
they are sold, run the full lifecycle
depreciation analysis and compare it
to that of vehicles replaced normally.
You may well fi nd that, on a cost-per-
mile or dollars-per-month basis, your
depreciation costs will actually de-
cline. The next step is to run the same
cost analysis for variable, or operating
costs (fuel, maintenance/repair, tires,
oil). If those at least remain steady,
you have a winning strategy for tak-
ing a major portion of your fl eet pro-
ductivity to the next level. Naturally,
if the test vehicles don’t pan out cost-
wise, it is a simple matter to shut the
test down.
Incurring Variable CostsVariable or operating costs are those
incurred in the operation of a fl eet ve-
hicle. They include fuel, tires, main-
tenance and repair, and oil. Variable
costs will tend to “ratchet” upwards as
mileage accumulates. Initially these
costs consist primarily of simple pre-
ventive maintenance, such as oil and
fi lter changes, wheel alignments, tire
rotation, winterizing, and the like.
At somewhere between 30,000 and
50,000 miles, the two major variable
costs that are predictable — tires and
brakes — will need replacement. This
will cause variable expense to spike,
then decline as accumulated mileage
dilutes them. This process tends to re-
peat itself, with overall cost per mile
slowly increasing.
Today’s fl eet manager enjoys some-
thing fl eet managers 30 years ago did
not have: more extensive, and extended,
warranties. While the typical vehicle
back in 1980 might have a warranty
of 12 months or 12,000 miles, today’s
vehicles are often covered bumper-to-
bumper for three years/36,000 miles
or more, with powertrains covered as
long as 100,000 miles. Repairs that
would have added variable costs back
then are now covered under warran-
ty, and thus the overall lifecycle vari-
able costs are lower today (in addition,
tire and brake life have both also been
lengthened). With that in mind, what
action could possibly take productiv-
ity to the next level, given that vari-
able costs have declined?
It could be that vehicles are be-
ing over-maintained from a preven-
tive maintenance perspective. It is
easy to be locked into the common
practice of, for example, changing
oil and fi lters every three months or
5,000 miles. For years, vehicle own-
er’s manuals would provide a “severe
use” exception to an oil change inter-
val, usually around 7,500 miles, due
to the increased mileage accumulat-
ed in fl eet usage (the typical person-
al car runs about 12,000 miles per
year or less; fl eets regularly accumu-
late 20,000 or more miles each year
in service).
Let’s take a look at what this might
mean in increasing productivity. In a
1,000-vehicle fl eet with vehicles driv-
en 25,000 miles per year each, total
annual mileage is 25 million. Chang-
ing the oil every 5,000 miles adds up
to fi ve oil changes per vehicle per year
or 5,000 oil changes. Extending the
interval to 7,500 miles reduces this to
3.3 oil changes per vehicle per year,
or 3,300 oil changes. At $25 per oil
change, productivity is as follows:
■ At 5,000 miles: 5,000 oil changes @ $25 each = $125,000 or 25 cents per mile.■ At 7,500 miles: 3,300 oil changes @ $25 each = $82,500, or 11 cents per mile.
A decrease of 14 cents per mile in
oil change expense results in total sav-
ings of $42,500 per year. Can this be
done? In the same way that the depre-
ciation test is done, so too should this
go forward. Take a handful of vehi-
cles and extend the oil change inter-
val to 7,500. Keep close track of any
other maintenance or repair issues that
may arise during the test. If no major
component failures occur and fuel ef-
fi ciency remains static, slowly roll out
the change to the rest of the fl eet. Run
your standard lifecycle cost analyses
as the change matures and you may
well see the productivity of your fl eet
increase, squeezing the same or more
miles out of your PM dollar.
Minimizing Fuel ExpenseAs depreciation is to holding costs, so
fuel is to variable costs. It is the 800-
lb. gorilla, eating up as much as 70
percent or more of variable cost. And
when fuel pump prices spike as they
did in 2008 and are today, this can
FF0511productivity.indd 26FF0511productivity.indd 26 5/3/11 11:59:06 AM5/3/11 11:59:06 AM
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keep your fuel costs in check. It will also keep your worries low. Because our entire
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1Whichever comes fi rst. See dealer for details. 2Whichever comes fi rst, provided the service is performed within 2,000 miles of the recommended service interval.
FF0511productivity.indd 27FF0511productivity.indd 27 5/3/11 11:59:08 AM5/3/11 11:59:08 AM
Productivity
28 ■ FLEET FINANCIALS ■ MAY/JUNE 2011
move higher still. Even small moves
to increase fuel productivity can reap
large rewards.
Sometimes, it seems as though we’re
at the mercy of prices, as they move up
and down “fueled” by events that cannot
be controlled. Yes, fl eets use fuel cards,
track data, and place strict controls on
what can be bought (when, where, by
whom, and how much). All of these are
good actions and are critical to the pro-
ductivity of fl eet fuel dollars. Is there more
that can be done? Yes, and it can take fuel
productivity to the next level.
Fleets press suppliers for rebates,
elimination of fees, and even discounts.
But there are actions that can be taken
at the regional and local level that can
have an even greater effect. Most fl eet
fuel cards are “universal;” that is, they
are accepted by nearly all merchants,
so when drivers need to fuel up, they
can conveniently pull into the next sta-
tion they see and do so. Branded oil
company locations, convenience store
outlets, and other retailers accept fl eet
cards. However, asking your suppli-
er to seek and manage discounts only
takes the effort so far.
There are literally hundreds of local
and regional fuel retailers that can be
approached for discounts. Your branch
and regional offi ces can fi nd them; it is
likely they already use many of them.
Many, if not most, of these retailers
are open to providing discounts at the
pump in exchange for brand loyalty.
A branch manager who contacts the
corporate offi ces of a regional conve-
nience store chain, for example, with
an offer to send his or her drivers to
the brand in exchange for discounts, is
likely to encounter a great deal of in-
terest; the same goes for fl eet manag-
ers. The fuel card supplier can then be
notifi ed of the agreement and should
be able to pass the discount through to
the fl eet in full on each month’s bill-
ing. Let’s look at the effect.
Take the 1,000-vehicle fl eet, driv-
ing 25 million miles each year and get-
ting an average of 20 miles per gal-
lon. Productivity, at $3 per gallon, is
as follows:
■ 25,000,000 miles / 20 mpg = 1,250,000 gallons per year■ 1,250,000 gallons X $3 per gallon = $3,750,000 in annual fuel spend■ $3,750,000 X 100 / 25,000,000 = 6.6 cents per mile
Every penny per gallon discount ne-
gotiated will save $12,500. The percent-
age isn’t great — 3 cents per gallon, at
$3 per gallon at the pump, is a mere 1
percent. However, because the dollar
spend is so great, the dollars saved can
be substantial. Remember that produc-
tivity gains don’t need to be huge to
result in substantial savings.
Departmental ProductivityThere are also things that fl eet man-
agers 30 years ago had that fl eet man-
agers today don’t — staff tops the list.
The old rule of thumb that a fl eet de-
partment needs three people for every
1,000 vehicles in the fl eet has long be-
come obsolete, as fl eet managers have
been forced to do more with less, and
outsourced programs have expanded. In
spite of this, some fl eet managers haven’t
taken full advantage of technology and
are often timid in outsourcing.
Taking departmental productivity to
the next level begins with technology.
Is the fl eet manager taking full advan-
tage of all the tools available for com-
munications, administration, record-
keeping, and data mining? Time spent
on the telephone, for example, can better
be used in more strategic management
and decision making. Do drivers call to
ask how they can renew a registration?
What do they do when their vehicle is
up for replacement and they need to or-
der a new one? How do they report an
accident? They don’t need to call if a
fl eet manager uses the technology avail-
able. Make certain that the company in-
tranet site contains the company fl eet
policy, along with an FAQ (frequently
asked questions) feature and remind
drivers it’s there at every opportunity.
Many drivers now have Internet access
via smartphones and other devices, and
they should be able to answer any ques-
tion they have without calling the fl eet
manager on the phone.
Use social media (Twitter, Facebook,
LinkedIn, etc.) to get the message out
that drivers can fi nd answers to ques-
tions themselves, and where they can
do it. Set up a company LinkedIn or
Facebook group, where you can check
to see what drivers are saying, and an-
swer questions without spending time
on the phone at work.
Don’t be afraid to outsource what
should be outsourced. The fl eet manag-
er (or staff, if there is any) should not be
handling license renewals, paying park-
ing tickets, or directing drivers to repair
shops. Remember that clerical and ad-
ministrative tasks can and should be out-
sourced, but management decision-mak-
ing should not. If a fl eet manager does
have staff and fi nds that he/she can do
without, it’s better to take action than to
have someone else do it for you.
The Next LevelTaking fl eet management to the next lev-
el is not always the most glamorous pro-
cess. It can be the result of simple common
sense, of using the resources available to
their fullest advantage, and yes, sometimes,
bucking the common wisdom.
■ Take advantage of local leverage. Ask your regional and
branch locations to assist in the
search for better productivity.
■ Take a second look at what is considered the “right” way of doing things. Question the
common wisdom, and don’t
hesitate to test new processes and
policies.
■ There is a whole world otechnology out there, and it ischanging every day. Look for ways
to use it all. Stay current on what is
going on. Apply it wherever and
whenever it makes sense. Use it to
do more.
■ Be creative. Don’t dismiss any
idea out of hand.
The key point in taking productivity
to the next level is this: If you don’t do
it yourself, if you don’t make it a part of
every working day, someone else will
do it for you. ■
AF0411greenfleet_mag.indd 1 3/18/11 10:08:18 AMFF0511productivity.indd 28FF0511productivity.indd 28 5/3/11 11:59:09 AM5/3/11 11:59:09 AM
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AF0411greenfleet_mag.indd 1 3/18/11 10:08:18 AMFF0511productivity.indd 29FF0511productivity.indd 29 5/3/11 11:59:10 AM5/3/11 11:59:10 AM
FF0511toyota_sienna.indd 1 4/29/11 8:33:07 AM
Some call it thinking out of the box, pushing the envelope, or just plain breaking the rules. “Common wisdom” isn’t always the best way to keep a
fl eet running cost effi ciently.
There has never been a bet-
ter time to break the rules
than today. Resources are
being slashed, staff elim-
inated, and fl eet manag-
ers are scrambling like never before
to meet the never-ending demands to
reduce costs.
If you’ve tried everything — if
you’ve data mined and scolded and
cajoled until your keyboard catches
Management
30 ■ FLEET FINANCIALS ■ MAY/JUNE 2011
Common adages fl eet managers should reconsider include:
■ Vehicles must be replaced in three years/65,000 miles (or thereabouts) — otherwise, there is risk of major component failure.
■ Leased vehicles should be amortized at 2 percent per month to most closely proximate actual depreciation.
■ Fleet needs certifi ed technicians to authorize vehicle repairs beyond preventive maintenance.
■ Large fl eets need more than one supplier to keep them honest and compete for business.
AT A GLANCE
fi re — maybe it’s time to forget tra-
ditional fl eet management and take
a step out of the box. The payoff can
be substantial.
‘The Way It’s Always Been Done’Let’s fi rst take a look at some of the
more common adages that have guid-
ed fl eet managers for decades.
■ You must replace your vehi-
cles in three years/65,000 miles
(or thereabouts) — otherwise,
you run the risk of major compo-
nent failure.
■ Amortize your lease vehicles
at 2 percent per month; this will
most closely proximate the actu-
al depreciation.
■ You’re not a mechanic; you need
certifi ed technicians to authorize
vehicle repairs beyond preventive
maintenance.
■ Your fl eet is a big one; you need
more than one supplier to keep
them honest, and they can com-
pete for your business.
There are more, but you get the pic-
ture. Try to buck that common wis-
dom and you’ll be laughed out of the
room — and possibly out of your job.
Then again, perhaps not. Let’s take a
look at each of these adages, and how
stepping out of that comfort zone can
help fl eet realize savings previously
thought impossible.
Replacement Cycling ‘Rules’It is one of the oldest adages in the fl eet
industry. Fleet automobiles should be
replaced on a cycle of time and mile-
age, 36 months or somewhere be-
tween 65,000-75,000 miles, whichev-
er comes fi rst (light trucks and vans,
a bit longer). Why? For a number of
reasons. Exceeding this mileage range
will signifi cantly reduce resale value.
Replacing at that point will avoid the
additional expense of the next round
THE RULES THE RULES TO OPTIMIZE TO OPTIMIZE
PERFORMANCEPERFORMANCE
‘BREAKING’‘BREAKING’
It may be time to forget traditional fl eet management and take a step out of the box. The payoff can be substantial.
PHOTO: ©ISTOCKPHOTO.COM/FPM
FF0511strategies.indd 30FF0511strategies.indd 30 5/3/11 2:48:03 PM5/3/11 2:48:03 PM
“ Mommy Like. Daddy Like. CFO Like.”
–––InInIntetetelllllll iCiCCiCChohohohooicicicicce eeeee sasasas ysysyss tttthehehe SSSieieieennnnnnaaa hahahas s s ththe e “H“H“ igighehestst ReReReReetatataaininininedededededd VVVVVValalalalueueue””””111 iiin n n ititits s s clclclasasass.s..
The Toyota Sienna.
There’s plenty to like. Including a big interior that’ll give you more than enough storage to fit just about anything for your business. And when it comes to bottom-line efficiencies, consider this: According to IntelliChoice, Sienna has the “Highest Retained Value”1 in its class. And what’s not to like about its low operating costs and high resale value. You like? We thought you and your bottom line might. To make Sienna a fleet vehicle and an asset to your business, call 1-800-732-2798 or go to fleet.toyota.com
Options shown. 12011 IntelliChoice, www.IntelliChoice.com; Minivan. ©2011 Toyota Motor Sales, U.S.A., Inc.
FF0511toyota_sienna.indd 1 4/29/11 8:33:07 AMFF0511strategies.indd 31FF0511strategies.indd 31 5/3/11 2:48:08 PM5/3/11 2:48:08 PM
Management
32 ■ FLEET FINANCIALS ■ MAY/JUNE 2011
of tire and brake replacements. Keep-
ing vehicles longer increases the pos-
sibility of major component failure.
These and other reasons are given
when the question of when to replace
vehicles arises.
Like similar common wisdom, it
has its origins decades ago when ve-
hicles were not nearly as well built
as they are today — warranties were
nowhere near as long or comprehen-
sive, and model years were clear-
ly defi ned. Today, vehicles routinely
last well over 100,000 miles, provide
many years of cost-effi cient, reliable
service, and retain signifi cant value
on the used-vehicle market.
That said, before considering step-
ping out of the replacement cycle box,
a fl eet manager needs to ensure that
it’s done carefully. Ensure that:
■ A vigorously enforced preven-
tive maintenance regimen is in
place.
■ Vehicle condition reports are
completed, endorsed by a super-
visor, and submitted several times
each year. Conditions requiring at-
tention must be addressed.
■ The change is phased in slowly,
stretching out the time and mileage
on selected vehicles, and lifecycle
costs are calculated and tracked.
Provided vehicles are cared for,
there is little reason to believe that
either performance or resale value
will fall off a cliff if replacement is
stretched out to four years, or 100,000
miles or more.
Amortization is Not ‘One Size Fits All’For fl eet vehicles leased under an
open-end TRAC lease (the most com-
mon lease transaction among mid-size
and larger fl eets), a key part of the
lease rate factor is the rate at which
the original cost of the vehicle is am-
ortized. This rate will determine not
only the size of the lease payment,
but the “book” value of the vehicle
at lease term, against which the re-
sale proceeds are applied.
Again, decades ago, it was gener-
ally accepted that for a “typical” fl eet
auto, in service for the aforementioned
36 months or 65,000 miles and re-
placed with that mileage in approxi-
mately 2.5 years, the proper amortiza-
tion rate was 50 months, or 2 percent
per month. After 30 months in ser-
vice, for example, this would result
in an unamortized value equal to 40
percent of the original cost.
AF1010jobfinder.indd 1 9/21/10 9:04:40 AM
Replacement cycling is an important component in managing a fl eet. Provided vehicles are well cared for, replacement cycles can be adjusted without impacting performance or adversely reducing resale value.
Amortization is a key part of a lease rate factor. For a national fl eet, with vehicles in several different roles carried out in many different venues, amortizing at one rate is counterproductive.
Today, vehicles provide many years of cost-effi cient, reliable service and retain
signifi cant value on the used-vehicle market.
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➞
FF0511strategies.indd 32FF0511strategies.indd 32 5/3/11 2:48:08 PM5/3/11 2:48:08 PM
Think the grass is greener somewhere else?
It just might be
Search for jobs in your fi eld at www.fl eetjobfi nder.com
AF1010jobfinder.indd 1 9/21/10 9:04:40 AMFF0511strategies.indd 33FF0511strategies.indd 33 5/3/11 2:48:11 PM5/3/11 2:48:11 PM
Management
Few fl eets, however, are so ho-
mogenous that a “one-size-fi ts-all”
amortization rate properly fi lls the
role the process requires. The purpose
of amortization is to reduce the orig-
inal cost to the point when, at antici-
pated replacement, the unamortized
value will approximate the market
value when the vehicle is sold.
For a national fl eet, with vehicles
in several different roles carried out
in many different venues, amortiz-
ing at one rate is counterproductive.
Urban vehicles generally run lower
mileage than do rural vehicles. Job-
site trucks accumulate harder, tough-
er miles than do delivery trucks, etc.
Smart fl eet managers should use
amortization rates appropriate to
the usage: lower-mileage vehicles
amortized over a longer period, and
higher or harder mileage vehicles, a
shorter period. This will more accu-
rately refl ect the actual depreciation,
and smooth out cash fl ow. Remem-
ber, there is not real “gain” or “loss”
from the sale of a vehicle lease under
a TRAC lease. It is merely an adjust-
ment required as a result of amortiza-
tion that doesn’t properly match the
actual depreciation. It’s not unlike a
tax return; you aren’t really getting
money from the government when
you get a refund. You’re getting your
own money back that was taken from
you during the year. The ideal with-
holding, like the ideal amortization
rate, will result in an adjustment as
close to zero as possible.
Maintenance ManagementMore often than ever before, fl eet
managers’ backgrounds include fi -
nancial experience such as fi nance
or treasury, corporate functions such
as purchasing or general administra-
tive, or operational functions such as
corporate services. Fewer have back-
grounds in the automotive business,
particularly vehicle technology and
mechanics. Thus, it is said, you need
the expertise provided via a mainte-
nance management program, where
you have certifi ed vehicle technicians
at your service to discuss, negotiate,
and manage maintenance and repairs.
Makes sense, doesn’t it?
To some extent, it does. But once
again, the maintenance management
programs available today, in essence,
are little different than those of 30
years ago. And their purpose, back
then, was a function of the vehicles of
their time. The company pays a sup-
plier a per-vehicle, per-month charge,
and the supplier provides a number
of resources and services:
■ A national network of mainte-
nance and repair facilities.
■ The means by which drivers
can purchase preventive mainte-
nance, emergency road service,
and repairs when needed.
■ The previously mentioned certi-
fi ed vehicle technicians who pro-
vide expertise and assistance in dis-
cussing repairs with the shop.
■ Reporting tools, which enable
the fl eet manager to mine data,
track operating costs, and take
action when needed.
■ “Extended warranty” servic-
es, where the supplier submits
repairs performed beyond pub-
lished warranty to the manufac-
turer for consideration.
The technology has certainly
changed from 1981, but the essence
of the programs has not. What have
changed, and changed dramati-
cally, are the vehicles themselves
and the warranties covering them.
While in ’81, most warranties ran
for 12 months or 12,000 miles, today
they cover fi ve years, 50,000 miles
(bumper-to-bumper, save wear items
such as tires, brakes, belts, and hos-
es), with some powertrains covered
up to 100,000 miles. With the typ-
ical fl eet vehicle running as much
as 25,000-30,000 miles per year, a
12,000-mile warranty ran out after
as little as six months or less, leav-
ing the fl eet manager to fend for
him or herself if repairs were need-
34 ■ FLEET FINANCIALS ■ MAY/JUNE 2011
While technology has certainly changed over the years, the vehicles themselves and the warranties that cover them have also changed dramatically. Today, an engine or transmission failure is a rarity, and more often than not occurs under warranty and is thus covered.
Smart fl eet managers should use amortization rates
appropriate to usage: lower-mileage vehicles amortized
over a longer period, and higher or harder mileage
vehicles, a shorter period.
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FF0511strategies.indd 34FF0511strategies.indd 34 5/3/11 2:48:12 PM5/3/11 2:48:12 PM
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No matter which steering wheel your drivers sit behind,
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And with Volkswagen’s no-charge Carefree Maintenance™
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**The Volkswagen Carefree Maintenance™ Program covers the vehicle’s scheduled maintenance for three years or 36,000 miles, whichever occurs first on all 2009 or newer models. Coverage during the term of the new vehicle limited warranty at no additional charge. Some limitations apply. See dealer or vehicle maintenance program booklet for details.
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FF0511strategies.indd 35FF0511strategies.indd 35 5/3/11 2:48:16 PM5/3/11 2:48:16 PM
Management
ed. However, a 36,000-mile warran-
ty covers the fi rst two or so years of
fl eet use, and thus, the large major-
ity of trips to the shop are for sim-
ple preventive maintenance items. In
1981, a fl eet of 1,000 vehicles could
expect to replace several transmis-
sions as well as some engines each
year. Today, an engine or transmis-
sion failure is a rarity, and more of-
ten than not occurs under warranty
and is thus covered.
That said, is paying $4-$6 per ve-
hicle per month (as much as $48,000-
$72,000 per year for a 1,000-vehicle
fl eet) worth the cost, when the large
majority of maintenance activity is
preventive maintenance, or covered
under warranty?
Think about leaving the mainte-
nance management cocoon and man-
aging the function yourself. You may
even be able to negotiate with your
supplier for a fee-for-service type
program, where you can avail your-
self of the technical expertise only
when needed and requested, for a
per-occurrence fee. It may seem a
bit frightening — what do I do if a
shop calls and says a vehicle needs
brakes? However, items such as tires
and brakes are safety items, and it
isn’t likely that even a supplier will
decline them and risk liability if either
fails. Two tires or four? Give drivers
a tread depth gauge, teach them to
use it, and have the driver check the
tread depth when the shop wants to
replace them. You may be surprised
to fi nd that maintenance and repair
costs don’t skyrocket, vehicles don’t
break down in droves, and you end
up saving money.
Multiple SuppliersYou manage a fl eet of 500, 1,000, or
5,000 vehicles. It’s smart not to put
“all your eggs in one basket,” right?
You need to have two or three fl eet
suppliers to split the business, which
creates the kind of competition that
will provide the highest level of ser-
vice, at the best prices, as these sup-
pliers compete for your business.
Think again, and think outside the
box. Say you manage the 500-vehicle
fl eet. If you think that the prospect
of getting 250 of those vehicles and
having to compete for more orders
every year will get you the best rates
and better service from a fl eet suppli-
er than competing for all 500 vehicles
will, you’re probably wrong.
Just like anything else, the more
you buy, the lower the price, and just
because you’re buying more doesn’t
mean your service will be any better.
Fleet suppliers compete relentlessly for
any business, provide the best level of
service they’re able to, and price ser-
vices according to the volume of busi-
ness they get. The only thing splitting
the business gets you is multiple bill-
ings, two account executives, two dif-
ferent systems to use to manage your
fl eet, and the possibility of confusion
among your drivers.
This does not mean that the pro-
cess known as “best practices” isn’t
of value. You can seek the best pric-
ing on a lease, the best for mainte-
nance assistance, the best for acci-
dent management, etc., since there
are companies that specialize in each
of these areas.
Be BoldIt is easy to follow the crowd, to rest
comfortably in the practices the in-
dustry has held are the “proper” ones.
It’s also daunting to leave that crowd,
break some rules, and try some cre-
ative management techniques. As
long as you measure the risk, de-
velop a plan, and implement change
carefully, breaking the rules of fl eet
management can be a rewarding ex-
ercise, in more ways than one. ■
FF0710green.indd 1 6/28/10 3:56:12 PM
36 ■ FLEET FINANCIALS ■ MAY/JUNE 2011
Splitting up business across multiple suppliers for one particular product can cause multiple billings, numerous vendor contacts, multiple systems to use, and the possibil-ity of confusion among drivers.
There has never been a better time to break the
rules than today. Resources are being slashed, staff
eliminated, and fl eet managers are scrambling to meet the never-ending demands to reduce costs.
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FF0511strategies.indd 36FF0511strategies.indd 36 5/3/11 2:48:17 PM5/3/11 2:48:17 PM
AF0
5-39
.10
AT BOBIT BUSINESS MEDIA, WE’RE KEEPING THINGS
You can feel confi dent that within our magazines, websites and trade shows, Bobit Business Media is doing our share to maintain a “green” working environment.
As individuals and as a company, we are dedicated to maintaining green initiatives and strive to be good
citizens of this planet. Finding new and innovative ways to reduce our carbon footprint is always a priority for Bobit Business Media.
AT BOBIT BUSINESS MEDIA, WE RE KEEPIN
Here are a few of the ways we’re keeping GREEN:
RECYCLED PAPER PROGRAM: • 5,000 lbs
per month
RECYCLED CANS & BOTTLES PROGRAM: • 40 lbs per month
WINDOW TINTING: reduces energy loss • by 75%
VARIABLE SPEED CONTROL ON HVAC • UNITS: 7500 kWh saved per month
RETROFITTING OLD T-12 FLUORESCENTS TO • NEW T-8S: 3400 kWh saved per month
EFFICIENT BOILER/HEATER: • 3000 thermssaved per month
PARTNERING WITH OUR PRINTER: developed • a “green” game plan, saving paper,
ink and energy
RECYCLED TONER CARTRIDGES AND • BATTERIES PROGRAM
AND OUR• ENVIRONMENTALLY FRIENDLY
Digital EditionsAF0
5AF0
539-39.1010
HHeerree aarree aa ffeeww ooff tthheeee wwwwaayyssss p gwe’re keeping GRREEEN:
RECYCLED PAPER PROGRAM: • 55,0000 llbsper month
RECYCLED CANS & BOTTLES PPROOGRAMM: • 40 lbs per month
WINDOW TINTING: reduces eeneergy losss • by 75%
VARIABLE SPEED CONTROLL ONN HVAC•UNITS: 7500 kWh savedd per month
RETROFITTING OLD T-12 FFLUOORESCENTTS TO •NEW T-8S: 3400 kWh ssavedd per monnth
EFFICIENT BOILER/HEATEER:• 30000 theermssaved per month
PARTNERING WITH OUOUR PRINNTER: develloped•a “green” gameme plan,, saving papper,
ink and energyyene
RECYCLRECYCL ONER CARTRIDCLED TO IDGES AND • BATTE GRAMERIES PROGRAM
AND OOUR• ENVIRONMENTALLY FRIENNDLYY
Digitital Editions
We care about the environment and are setting a positive example.
FF0710green.indd 1 6/28/10 3:56:12 PMFF0511strategies.indd 37FF0511strategies.indd 37 5/3/11 2:48:31 PM5/3/11 2:48:31 PM
Fleets are exploring new strategies to lower their fuel expenses, such as rightsizing vehicles, increasing driver training, improving fuel card compliance, and partnering with fuel management companies.
Implementing a new fuel management
program isn’t always a fast process,
but with the rising cost of fuel, fl eets
are looking at various strategies to
reduce fuel spend, including right-
sizing vehicles, working with drivers,
and implementing fuel caps.
Fleets Reduce Fuel SpendThree years ago, tests at General Parts,
an automotive replacement parts, sup-
plies, tools, and equipment distributor,
showed that 85 percent of its vehicle cargo
loads did not need to be transported in a
pickup truck. The fl eet team decided to
change its truck-buying habits, replacing
many pickups with Nissan Versas.
“That’s been a tremendous amount of
savings for us [in 2010] and well into this
year,” a company representative said.
The change was initially met with hes-
itation from long-time employees. Store
managers had a hard time overcoming
the perception that cars would be able
to do the work pickups did. After show-
ing drivers that 19.9 aggregate mpg was
standard across the delivery fl eet, the 28
mpg on the smaller vehicles was more
than enough to convince them.
For LKQ Corporation, a national
parts and replacement products pro-
vider, close monitoring of fuel costs
helps the company ensure no abuse or
fraud is taking place, according to Mike
Lahr, director of Logistics. Fuel for ve-
hicles is purchased using an assigned
fuel card, and a PIN gives drivers ac-
cess to any truck.
The gallon maximum per day per fi ll,
fi ll-ups per day, and hours of use of each
card can also be limited, Lahr said.
Fuel Management
38 ■ FLEET FINANCIALS ■ MAY/JUNE 2011
A list of drivers no longer employed
with the company is provided daily to
ensure their PINs are deactivated and no
unauthorized charges are incurred. In ad-
dition, drivers must enter the odometer
total, which enables mpg to be tracked
for discrepancies. Weekend and after-
hours fuel use is also tracked.
For many years, Safelite AutoGlass,
a national auto glass repair and replace-
ment service provider, has managed an
anti-idling campaign called “Turn it off,
idling gets you nowhere.” It was recently
revamped with new “green” signage and
goals, as well as enhanced mileage and
exception reporting and fi eld training to
support Safelite AutoGlass’ overall 2011
fuel initiative to reduce consumption by
10 percent, according to Erin Gilchrist,
fl eet manager.
In efforts to achieve this goal, Gilchrist
worked with Safelite AutoGlass’ fuel
card provider to develop a Web seminar
focusing on the key components neces-
sary to maximize overall fuel economy.
With the help of its risk management
solutions company, new “green” driv-
er training modules and policies have
been added to ensure all individuals un-
derstand their role in maximizing fuel
effi ciency. All drivers were required to
complete the new modules by April 15.
Gilchrist estimated these initiatives will
help reduce CO2 emissions by 9,000
metric tons.
Explore Fuel Purchase AgreementsFleet managers can also curb fuel ex-
penses by working with a fuel man-
agement company that can provide a
customizable price cap. According to
Liat Rorer, vice president of market-
ing for Pricelock, a fuel price cap is an-
other way for fl eet managers to reduce
fuel expenses.
Managers should look at “improv-
ing the mpgs of the vehicles [and] im-
proving the driving pattern of their driv-
er,” before selecting a protection price,
Rorer said.
A cap covers a set amount of fuel over
a specifi ed time period, both of which are
determined by the fuel manager. Manag-
ers can use caps to cover the duration of
a single project or a whole year.
Rorer warned against using fuel locks,
which can cost fl eet managers extra mon-
ey if fuel prices unexpectedly drop.
Whether making major purchas-
es or minor adjustments to offset high
fuel expenses, fl eet managers must do
their research before making any sud-
den changes. The best fuel management
strategy for any fl eet will ultimately be
the option that best suits a fl eet’s partic-
ular needs. ■
ALTERNATIVE STRATEGIES FORREDUCING FUEL CONSUMPTION
The EIA reported average national retail gasoline prices at $3.88 per gallon and die-sel at $4.10 per gallon at the end of April.
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Automotive Financials
40 ■ FLEET FINANCIALS ■ MAY/JUNE 2011
Average National Fuel Price Per-Gallon Trend Gas Diesel
Salary Breakdown for All Commercial Fleet Managers
How Are Personal Use Charges Collected?36%
69%
56%
$35,001-$40,000
2%3%
7%
15%
18%
12%
10%
13%
8%
12%
$40,001-$50,000
$50,001-$60,000
$60,001-$70,000
$70,001-$80,000
$80,001-$90,000
$90,001-$100,000
$100,001-$110,00
$110,001-$120,000
More than$120,000
2%
2010 OPERATING COSTS - COMPACT CARS
TOTAL UNITS:24,797
<24,000 MILES 24,001-48,000 MILES 48,001-80,000 MILES
CENTSPER MILE
DOLLARSPER
MONTH
CENTSPERMILE
DOLLARSPER
MONTH
CENTSPERMILE
DOLLARSPER
MONTHGASOLINE 0.0911 $143.94 0.0869 $157.82 0.0805 $188.76
OIL 0.0065 $7.30 0.0056 $8.82 0.0054 $8.50
TIRES 0.0042 $5.63 0.0170 $14.22 0.0101 $15.75
MAINTENANCE/REPAIR 0.0105 $10.80 0.0173 $29.80 0.0253 $45.75
WARRANTY RECOVERY (0.0001) ($0.15) (0.0015) ($0.29) (0.0005) ($0.87)
TOTAL OPERATING COSTS 0.1122 $167.52 0.1253 $210.37 0.1208 $257.89
Apr. 10 May 10
$2.84
$3.04
$2.84
$3.07
June 10
$2.71
$2.96
July 10
$2.71
$2.93
Aug. 10
$2.71
$2.96
Sept. 10
$2.95 $2.96
Nov. 10
$2.84
$3.14
Oct. 10
$2.78
$3.06
Jan. 11
$3.08
$3.38
Dec. 10
$2.97
$3.24
Mar. 11
$3.53
$3.89
Feb. 11
$3.16
$3.54
Percent of fleet managers receiving performance-based
compensation incentives.(Down from 48 percent in 2008)
Percent of fleets thatperform annual personal-use
reconciliations.
Percent of fleets that perform MVR checks on non-employees driving
company provided vehicles.
88%
1%
8%3%
■ Payroll deduction
■ Expense account deduction
■ Employee check
■ *Other
*Other includes: additional taxable income on W-2 and expense account
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FF0511financials.indd 40FF0511financials.indd 40 4/29/11 6:41:18 AM4/29/11 6:41:18 AM
Celebrating 25 Years of Exceptional
Customer Service
#USTOMIZED�&LEET�0ROGRAMS
s Accident Management
s Maintenance Management
s Rental Services
s Subrogation
s Safety Solutions
800.338.0619 www.fleetresponse.com
FF0511financials.indd 993FF0511financials.indd 993 4/29/11 6:41:22 AM4/29/11 6:41:22 AM
THE CHALLENGE: MANAGING A FLEET EFFICIENTLY
OUR SOLUTION: PUTTING TECHNOLOGY TO WORK
| 2011 CHEVROLET SILVERADO
| 2011 CHEVROLET EXPRESS
The latest GM technology can help maximize your fleet’s productivity. Whether
it’s getting directions, gaining peace of mind, staying connected, monitoring
costs, or all of the above, GM provides a wide range of innovations designed
to help you work more efficiently. For more solutions, visit gmfleet.com.
©2011 General Motors LLC
FF0511cover.indd 994FF0511cover.indd 994 4/29/11 6:24:36 AM4/29/11 6:24:36 AM
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