Kate Vigneau is Director of Professional Development at NAFA and this month's guest blogger.
I have a friend who is a District Manager for a pharmaceutical company. He drives the long way to the airport for his weekly commute because it adds 10 miles a trip which allows him to squeak by the monthly utilization threshold set by his company; and keep his car. I have seen government organizations strive to justify dedicated vehicles for employees who operate them less than 5,000 miles per year. Once, I visited a utility for a vehicle review and it snowed heavily the day I arrived. Five days later, doing a site tour of their satellite locations, I counted more than 160 rental vehicles still covered in snow – they hadn’t move in a week. Annual reviews and utilization thresholds definitely help, but what organizations really need is to change the way users look at utilization and the culture that covets the car.
Most fleets have 10 to 20% more vehicles than they need and many retain vehicles after they have been replaced to supposedly be used as spares. Few fleets have the data they need on hand to understand utilization nor do they conduct regular studies to evaluate utilization. In fact, in a recent fleet review of a Canadian municipal fleet of 500 vehicles, I discovered an additional 150 vehicles that had been retained in excess of requirement – these excess vehicles were not on record anywhere and form a “shadow fleet.”
The starting point to addressing this issue is to know your fleet requirements for both primary vehicles and spares. Vehicle allocations should be based on documented need and substantiated through metrics. Holding vehicles to augment your fleet for peak requirements or to replace vehicles that are in the shop for regular or unscheduled maintenance is a practice that makes sense if the number and type of those vehicles has been planned for. In addition to this, all fleets should regularly monitor and conduct utilization studies consisting of the following steps:
- Implement automated methods for capturing utilization data. Where automated utilization data is not available, require regular utilization reports from users giving the asset number and odometer readings and a log of vehicle usage for each day of their reporting period.
- Identify vehicles in each vehicle class that are significantly above or below the average mileage/hours of use for that class.
- Ask users to explain/justify lightly used vehicles.
- Calculate, based on utilization data, the maximum number of vehicles of each class that are in use at any given time to identify your organization's real needs,
- Based on needs, identify opportunities for eliminating vehicles, pooling, or perhaps renting during periods of peak demand only.
This approach seems self-evident, but often flounders due to three main reasons: data deficiency, the affinity towards having an assigned vehicle, and the retention mindset. Yes, even in today’s age of fleet technology, telematics, and a full range of affordable tools to capture odometer readings and key utilization metrics, this information is often improperly recorded and unavailable to decision-makers. What do you need to know to do a complete utilization review? The following list covers the minimum:
- Vehicle type, class, purpose, and location
- Vehicle expected life cycle (mileage or hours of use and years)
- Vehicle age and current utilization (odometer or hour meter, and time-based trip records)
- Vehicle monthly/annual utilization (for life of vehicle)
- All maintenance records
- Fuel consumption
Policy should ultimately be the driver for key utilization decisions. However, even with the necessary data on hand and policies in place, users employ creative tactics to justify the surplus. We change this mindset by understanding total cost of ownership (TCO) increasing accountability for retention decisions and ultimately shifting the culture to one of sharing. When people understand the consequences of retention decisions, they make different choices about keeping old vehicles. When vehicle pools are properly structured so that the right type of vehicle is readily available to cover downtime, departments are less reluctant to part with spares. And, when employees know the full range of alternate mobility sources available, be it pools, rentals, personal reimbursement, public transit or ride share; they may be more likely to let go of the vehicle ‘fat’.
This explains why the most successful utilization reviews are paired with education and aim at changing the mindset from “keeping what you can” to sharing and alternatives to vehicle ownership whenever possible. As with most change, if you can clearly communicate ‘what’s in it for them’ with respect to eliminating vehicles and opting for pools, your chances of success are higher. For example, with pooling, show how drivers will have access to more types of vehicles (a van and a SUV), newer vehicles, etc. Show them the cost differential of paying for a vehicle full-time versus only when they need it. And lastly, make vehicle sharing easy. You’d be surprised at the buy-in you get once drivers realize what’s in it for them.