A fleet management program is a key business tool used by corporate P&L (profit & loss) centers to achieve their business goals. The question is how best to leverage fleet management to achieve these goals? At many nationally or regionally dispersed fleets, fleet management is delegated to local managers. In this context, some companies delegate fleet responsibilities to either different departments or to separate regional locations with local managers handling local fleet requirements. These managers and staff are given the authority to utilize their assigned fleet assets in ways they feel best suit their immediate needs and long-term goals to fulfill their fleet applications.
Decentralization has worked beautifully for cable providers, distribution companies, delivery fleets, and many other organization. For these companies segmenting fleet responsibilities is the most effective strategy. While it looks good on paper, for other companies decentralization sometimes leads to mismanagement and poor asset utilization, primarily due to lack of oversight and leadership. These companies discover that while decentralization worked for sales and manufacturing, their fleet operations weren’t optimized because, in many cases, they were being managed by inadequately trained regional fleet administrators who were juggling fleet management functions on top of their other job responsibilities.
P&L Centers Must be Key Partners
Managers of individual P&L centers within an organization continue to have a tremendous influence over the way fleet policy is executed within their area of control. Fleet managers must partner with these stakeholders and give them latitude to influence fleet decisions to maximize the opportunity to achieve their P&L objectives. But an overall fleet manager is necessary to promote compliance with fleet-related policies and processes without P&L departmental bias. Advocates say centralizing or unifying control of the fleet management function at the corporate level brings consistency to the organization. Decentralization creates the potential of inconsistent management of policies, which can put an organization in a precarious situation. Aggregating fleet responsibility centrally frees other departments and functional managers, whose core purpose is not in fleet, to concentrate their efforts in areas where they are truly the experts and to allow the fleet experts to manage the fleet.
Allowing input, and more importantly gaining fleet consensus, with field operations provides managers with the influence to properly manage their P&L objectives. If, for example, a branch manager, or a divisional manager, is responsible for their unit’s profitability, it is not out of line for them to have some level of influence over how dollars are expended. Many of the day-to-day activities required to run a vocational or complex fleet are best handled at the field level, such as vehicle maintenance and asset utilization. The corporate fleet function is better suited to manage interactions with vendors, the establishment of policy/procedures, driver communication, or management of fleet metrics. However, end-user feedback and participation in these important fleet decisions is critical and should be solicited.
Centralization doesn’t mean just issuing mandates to field operations. A fleet manager can’t sit in a corporate office and simply hand down orders. A fleet manager needs to view themselves as part of a team with field operations to solicit input from all parties, as well as carry out fleet policy and seek to achieve fleet metrics.
The Power of Cross-Collaboration
There must be cross-collaboration between fleet and other corporate spend categories, such as Environment, Health & Safety (EHS) and other departments. A key collaboration opportunity is in the area of fleet safety. EHS is responsible for employee safety issues elsewhere in the company, such as the factory floor and workstation ergonomics. EHS interacts with fleet because fleet drivers are one of the largest sources of workers’ comp claims.
The fleet department in collaboration with EHS and procurement, can play an even stronger role in bolstering a corporate safety culture for both internal end-users and external third-party contractors by collaboratively working with other departments that have overlapping safety interests. A collaborative approach with EHS is a logical extension for procurement when it is tasked with selecting third-party contractors, many of whom operate independent vehicle fleets. A collaborative venture with EHS allows procurement to assess potential safety risks with prospective third-party contractors early on during the RFP process. By employing EHS corporate safety guidelines, procurement can verify prior to hiring whether a contractor is aligned to corporate standards as set forth by EHS and outside regulatory agencies, such as OSHA.
Another example is driver-related ergonomics issues that result in workers’ comp claims, which are on the rise at truck fleets. OSHA requires an employer to provide a workplace free from recognized hazards and OSHA considers company vehicles to be a workplace. Vehicle ergonomics has a direct bearing on driver productivity, employee satisfaction, and frequency of workers’ comp claims. Resolving ergonomic deficiencies can have a significant impact on the bottom line by improving driver productivity, reducing workers’ comp costs, and reducing fatigue-induced operator errors. Procurement can contribute to improving ergonomics through its purchases. When total cost of ownership (TCO) is calculated, the cost-avoidance benefits of ergonomics must be monetized and the value factored into calculating a vehicle’s TCO.
In the final analysis, a fleet manager needs to make certain all stakeholders in the corporate fleet are involved in the fleet process to achieve P&L objectives.
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Originally posted on Automotive Fleet