Slashed budgets, hiring freezes, increased workplace stress - these are just a few challenges buffeting public and private fleets alike in the midst of economic headwinds.
"What keeps fleet managers up at night is the impact of the economy - the unknown, the uncertain," said John Rencher, a veteran fleet manager with the City of Ft. Lauderdale, Fla. "You're not sure how your department will be affected. In many cases, you're having to stretch out the lifecycle of a vehicle. But how long will the vehicle last? What happens if it breaks down? How do you keep your staff intact, especially if the budget gets cut even further?"
Under these conditions, fleet managers may feel overwhelmed with greater responsibilities and fewer resources (including staff) with which to fulfill them. If not managed effectively, the stress can lead to diminished job performance, health issues, and even burnout.
How can fleet managers cope in today's stressful environment? Here are 10 strategies to not only survive, but also thrive when under pressure to do more with less.
1: Lean on Vendors
OEM representatives, fleet management companies, and specialty equipment manufacturers (body companies) can offer knowledge and assistance to make a fleet manager's job easier - often at no additional cost. Consult them by asking such questions as:
- What vehicle changes (such as redesigns, available engine and transmission options, and new technologies) are on the horizon that could impact the fleet?
- What upcoming legislation or regulations could affect vehicle cost, maintenance, and operations?
- What adjustments can be made to chassis and/or body specifications to save costs without diminishing vehicle productivity?
- If the vehicle is in a leasing situation, are there options to restructure the lease in response to changes in budgets?
- What budget friendly resources do these vendors have available to create greater efficiencies and cost-savings for fleets?
- What challenges are other, similar fleets experiencing in this economy and how are they dealing with them?
Answers to these questions equip fleet managers with insight to navigate potential issues and keep their departments on the right track, especially when the margin for error is slim.
2: Demonstrate Fleet's Value
A common misconception by senior management is viewing the fleet department as a "necessary evil," a cost-center that does not seem to create tangible value to the organization as a whole. As a result, when companies are looking for areas in the budget to cut, fleet is often a primary target.
Fleet managers can counter this impulse by making their department more visible to senior management, advised Bret Watson, national fleet manager for Sprint Nextel Corporation. He recommended fleet managers put together regular reports on the impact of fleet.
"We put together a monthly score card that shows the value we're providing to the company, with the number of vehicles we have, miles we drive, and cost per mile, and benchmark that as savings versus reimbursement programs," Watson said. "We highlight the volume discounts on fuel we've obtained, and keep management informed of the value the department brings to the company."
Another strategy, suggested Watson, is considering creative ways to apply fleet incentives when purchasing new vehicles.
"Maybe, instead of having rebates deducted off the invoice, have the rebate applied in the form of a check to the company," Watson suggested. "The accounting department will say, 'Where did that money come from?' Depending on the situation, when they see money come back into the company, they might start seeing the value of fleet."
When fleet managers implement policies that create tangible cost savings for the organization, they become indispensible to the organization's operations, with greater credibility and expertise in the eyes of senior management.
3: Develop Leadership Skills
"Be a leader," advised Rencher of the City of Ft. Lauderdale. "You're managing more than assets and equipment, you're managing people. To achieve success, you must work through people."
Fleet managers must be team builders and master motivators, Rencher said. "When you're working with fewer staff or facing budget cuts, how do you communicate with employees to keep morale up?"
How do fleet managers develop the skills they need to lead in the midst of a challenging economy? Rencher recommended several leadership books that he said have impacted his career the most.
4: Focus on Developing Expertise
Rencher likened fleet management to a decathlon. Fleet managers have numerous areas of expertise to develop, including writing vehicle specs, negotiating contracts, communicating effectively with both upper management and drivers, handling crises, developing policies, and motivating staff.
"You may specialize in one or two aspects of fleet management, but you have to be competent in all of them. And you can't be ineffective in any of them," he said.
5: Leverage Technology
Bud Reuter, director of fleet and procurement for Comcast Corp., leans heavily on mobile devices to make his job easier.
"The laptop, BlackBerry, iPhone, and iPad all can be your friend. When used with the right discipline, they are the best assets imaginable," Reuter said. "I could not accomplish nearly what I can today without the ability to work at home, airport, hotel, on the train, and vacation."
However, Reuter offered a word of caution about being constantly "connected" that busy fleet managers should heed: "Have the discipline to 'put it down' and enjoy the family, go for a walk, or enjoy an activity. Don't let it take over your life."
6: Manage Stress
"If you look at everything you have to get done in its entirety, on any given day, that can get overwhelming," said Rencher of the City of Ft. Lauderdale. "Ask yourself: What do I have to do right now and focus on that. You save energy accomplishing that one task and your stress level will go down. Think of it this way: I've got all these targets out there, but I can only shoot at one target at a time. So it is the same with a fleet manager's task list."
Rencher also recommended that no matter how large their workload, fleet managers should find time for exercise and other activities that contribute to overall work-life balance. This will keep the mind fresh to tackle the challenges at hand.
7: Rightsize Fleet
When faced with budget cuts at the City of Ft. Lauderdale, Rencher and his team identified vehicles in the fleet that they could reassign or phase-out altogether to achieve nearly $5 million in capital expenditure savings over the span of a few years. He said this also contributed to lower operational costs because of fewer vehicles to maintain. According to Rencher, the total cost savings generated by rightsizing the fleet has, so far, enabled the fleet department at the City of Ft. Lauderdale to avoid layoffs.
"The key is creating an environment where everyone on the team is looking to save money, saying 'Hey, we can do without this truck, let's turn it in,' " Rencher said.
8: Rightsize Vehicle Specs
As budgets shrink, fleet managers must find creative ways to shave costs, without diminishing fleet productivity. Vehicle specification is a good area to start the search.
Watson of Sprint Nextel estimated that switching from six-cylinder to four-cylinder sedans for sales reps saves almost $2,000 per vehicle in acquisition costs, in addition to reducing fuel consumption. At the same time, Watson said Sprint experienced very few driver acceptance issues by moving to the smaller engine, making the transition a "win" for all parties involved.
When "right-sizing," make sure the decision strikes the right balance between price and performance and is not based on price exclusively, cautioned Rencher of the City of Ft. Lauderdale.
"There's a difference between buying economical vehicles and buying cheap vehicles. Spec them to operate in their 'sweet spot.' The right spec allows for a longer lifecycle and is a lot more economical to operate the vehicle," he observed.
9: Extend PM Intervals
The general rule of thumb has been to change a vehicle's oil every 3,000 miles. However, newer vehicles are offering longer drain intervals, which can lead to substantial cost savings from fewer oil changes, especially when spread over several hundred or thousand vehicles in a fleet.
"We revised our PM schedule to make it requisite with the manufacturer's recommended change cycle," Rencher said. "The change in PM schedule has created savings in labor cost. Now, I have more time freed up for my technicians to focus on other issues."
10: Look for 'Upsides' to a Down Economy
"If you look at it, the cost of funds is probably at an historic low right now," said Mike Butsch, fleet manager, P&H Mining/Joy Global. "This means lower leasing or financing rates, potentially making new vehicle acquisitions cheaper on a cash-flow basis."
Another upside: High used-vehicle market prices, driven by tighter supply of new vehicles, are allowing for cost savings from short-cycling vehicles, according to Watson of Sprint Nextel.
"It's a matter of taking advantage of the economy," Watson explained. "We're still purchasing off of contracts signed a few years ago, when incentives on new vehicles were much higher than what's typically offered today. So, we're taking 20-month-old vehicles, remarketing them, and actually making money off of them. Short cycling could really be beneficial, if you're doing proper analysis."
Butsch agreed. He said that since P&H Mining/Joy Global started reducing its vehicle replacement cycle from 45 months to 36 months over a decade ago, it not only substantially lowered depreciation costs, but also cut maintenance expenses fleet-wide by 15 percent.
The Bottom Line
While the economy may be putting many fleet managers under greater pressure to do more with less, they don't have to feel powerless. They can take steps today to reduce stress by increasing their industry knowledge, developing their professional and leadership skills, and uncovering tangible cost savings that add value - and profit - to their organizations.