Developing a Strategic
Road Map for Your Fleet
Operation
Automotive Fleet & Leasing
Association
2008 Annual Meeting and Conference
Scottsdale, AZ
Paul Lauria
Chinese Proverb
If you don’t know where
you’re going...
any path will take you
there.
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Key Definitions
Strategy: The science of planning and
maneuvering into the most advantageous
position prior to actual engagement.
Tactics: The science of arranging and
maneuvering to attain short-range objectives.
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Why develop a strategic plan?
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To identify opportunities to improve
performance
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Vehicle
Fleet management
Fleet operation
To prioritize improvements
To guide activities aimed at improving
performance
To achieve improvements in performance
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Why do opportunities to improve
performance exist?
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The fleet operation usually is a cost, not a revenue or
profit, producer
Fleet management usually is an internal support
function whose immediate beneficiaries are employees,
not external customers
The contribution of the fleet to the fulfillment of
enterprise-wide mission(s) is not always clear or well
understood
Fleet costs are often small in relative, enterprise-wide
terms, even if large in absolute terms
Information on, the visibility of, and hence an
appreciation of the magnitude of fleet costs often is
lacking
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Why do opportunities to improve
performance exist?
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Fleet operation and fleet management responsibilities
and authority often are decentralized
Outsourcing fleet asset management functions is
sometimes confused with managing the fleet
Fleet management and operation are inherently
complex activities, requiring proficiency in many
different areas/disciplines
Many fleet management activities are affected by
policies, procedures, and decisions promulgated by
non fleet professionals
Fleet user needs and fleet operating conditions change
Fleet-related technology (vehicle, information,
telecommunications, etc.) changes
Most organizations are fundamentally myopic
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Overview of a Strategic Business
Plan Development Process
7. Measure Results
1. Define the
Business
6. Reengineer and
Implement
2. Identify
Improvement
Opportunities
5. Develop Action
Plans
3. Set Priorities
4. Define
8.Improvement
Refine/Define
New
Strategies
Strategies
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Step 1. Defining the Business of
Fleet Management
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Management
Management
Management
Management
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activities
roles
responsibilities
authority
Fleet Management Activities
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Fleet asset management activities
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Vehicle
Vehicle
Vehicle
Vehicle
Vehicle
specification, selection, acquisition
utilization and operation management
maintenance and repair
fueling
replacement and remarketing
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Fleet Management Activities
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Enterprise management activities that
affect the management of fleet assets
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Financial management
Sourcing and supplier management
Risk management
Human resources management
Information management
Facility management
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Sample Definitions of Objectives
and Scope of Management Activities
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Vehicle Specifications Development
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Ensure that vehicles meet user needs (functionality
and timing) cost effectively, take advantage of
technological advances, promote corporate
sustainability initiatives, comply with applicable
(e.g., environmental, safety) rules and regulations,
and facilitate standardization of fleet composition
Employee Performance Development
♦
Promote continuous improvement in employee
performance by providing regular, structured
feedback on the quality of fulfillment of job
responsibilities and rate of progress toward
attainment of specific performance improvement
goals and objectives
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Human Resources Management
Activities
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Organization structure definition
Definition of job responsibilities
Staff assignment and utilization management
Employee classification and compensation
Employee recruiting
Employee training and professional
development
Employee performance management
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Fleet Management Roles
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Ongoing execution/oversight of
management activities
Policy and procedure development
Best practices and technology monitoring
and educating
Goal setting and performance reporting
Fleet user advocacy
Executive management support
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Fleet Management Responsibilities
and Authority
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Fleet management organization
Suppliers
Fleet user organizations
Finance/Accounting
Human Resources
Risk Management
Information Technology
Purchasing/Sourcing
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Step 2. Identifying Improvement
Opportunities
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Review and assess the current quality of all
direct and indirect fleet management
activities
There are as many as 100 distinct
management activities involved in
managing a fleet
Use a simple scale for rating the current
quality of performance of each activity
(e.g., “Excellent, Good, Fair, Poor” quality)
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Step 3. Setting Priorities
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Establish criteria for prioritizing
improvements to specific management
activities
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Impact on vehicle performance
Impact on fleet management organization
performance
Impact on supplier performance
Reengineerability
Compatibility with enterprise-wide priorities (e.g.,
sustainability)
Opportunity for innovation
Establish weights and rating scales for each
criterion
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Sample Management Activities
Improvement Prioritization Matrix
PRIORITIZATION FACTORS
MANAGEMENT FUNCTION
TIMING
QUALITY OF
CURRENT
USER
REENGINEER- REENGINEERAGENCY
ABILITY BY
ABILITY BY
PRACTICES
FMO
COMPANY
IMPACT ON
PERFORMANCE
QUALITY OF
CURRENT
FMO
PRACTICES
H
H
M
M
M
M
M
G
G
E
F
P
G
F
F
F
F
P
P
P
P
M
M
H
H
H
H
M
M
M
H
H
H
H
H
M
M
L
H
M
M
M
H
M
M
M
M
L
P
F
P
F
F
F
P
P
P
P
P
F
L
M
M
M
M
L
H
H
M
H
H
H
M
H
L
M
H
M
OPPORTUNITY
FOR
INNOVATION YEAR 1 YEAR 2 YEAR 3
VEHICLE ACQUISITION AND DISPOSAL
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VEHICLE SPECIFICATIONS DEVELOPMENT
CONTRACT ESTABLISHMENT AND MANAGEMENT
MANAGEMENT OF AD HOC PURCHASES
VEHICLE ACCEPTANCE, PREPARATION, AND DELIVERY
COMMERCIAL EQUIPMENT/VEHICLE RENTAL
VEHICLE DECOMMISSIONING
VEHICLE DISPOSAL
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DRIVER/OPERATOR CERTIFICATION AND RECORD KEEPING
DRIVER/OPERATOR TRAINING
PRE-TRIP INSPECTION AND RECORD KEEPING
VEHICLE MISUSE/ABUSE MANAGEMENT
ACCIDENT REPORTING, INVESTIGATION, AND REPAIR MANAGEMENT
CLAIMS MANAGEMENT AND SUBROGATION
VEHICLE OPERATION MANAGEMENT
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Step 4. Defining Improvement
Strategies
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State what about the management activity
needs to be improved
Explain why the improvement is needed
Recognize that some improvement strategies
may consist of fact finding and business case
analysis as opposed to outright business
process change
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Sample Improvement Strategy
Issues and Opportunities
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The motor pool’s short-term rental vehicle inventory may be larger
than necessary to meet customer needs.
Using commercial rental vehicles can be a cost-effective means of
supplementing an inventory of company-owned vehicles to meet
peaks in customer demand.
Utilizing rental vehicles as a back-up supply source might enable the
motor pool to downsize the company-owned rental fleet without
compromising vehicle availability or customer service.
The company currently has a contract in place for short-term vehicle
rental. However, the motor pool does not use this contract as a
secondary source of vehicle supply for its customers.
Improvement Strategy
Confirm the economic benefits of using commercial rental vehicles
to supplement an optimally-sized inventory of company-owned
short-term rental vehicles and, subject to such confirmation,
develop an integration strategy and plan under which the motor
pool would procure such vehicles on an as-needed basis on behalf
of its customers.
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Step 5. Developing Action Plans
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Define how you will improve the management
activity
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Specific tasks and subtasks to be performed
Responsibility assignments
Timeline and milestones
Work products, deliverables, outcomes
Resource requirements
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Internal (personnel hours)
External (dollars for products/services)
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Sample Action Plan
1. Identify and evaluate potential cost savings.
a. Analyze historical trip pool rental transaction data to determine average
daily and peak demands for rental vehicles.
b. Determine core rental vehicle inventory requirement based on analysis of
historical usage trends.
c. Quantify marginal avoidable costs of furnishing pool vehicles in excess of
core demand.
d. Compare avoidable cost per vehicle rental day with current contract rental
rates.
e. Determine if potential cost savings are large enough to warrant additional
investigation. If so, document analysis results and proceed to Task 2.
2. Implement commercial vehicle rental contract.
a. Develop service specifications.
b. Evaluate existing rental contract terms and conditions in consultation with
Procurement for consistency with new requirements. Identify needed
changes, if any.
c. Renegotiate and/or rebid contract as necessary to secure required services.
d. Evaluate bid results (if necessary) and award new or modified contract.
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Sample Action Plan (cont.)
3. Implement new policies and procedures for using commercial
rental vehicles to supplement trip pool.
a. Draft policy and procedure statement (PPS).
b. Solicit feedback from selected stakeholders and finalize.
c. Secure management approval for implementation.
4. Establish performance measurement process.
a. Define key performance indicator(s) (KPI's) for measuring motor pool
and commercial rental company performance in meeting contract
objectives.
b. Identify associated data requirements, data sources, analytical
procedures, and reporting methods.
c. Design and implement performance measurement and reporting
process.
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Key Considerations in Developing a
Strategic Business Plan
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Technical rigor
Stakeholder involvement
Publicity
Recognition of political realities
Achievable goals
Implementable strategies
Concrete action plans
Measurement of results
Plan maintenance
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Ancillary Benefits of Developing a
Strategic Plan
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Developing an understanding of the complexity of
the business of fleet management
Clarifying the mission of the fleet management
organization
Developing an understanding of the limits of the
fleet manager’s authority and responsibility
Identifying interdependencies between fleet and
other enterprise management activities
Strengthening relationships with fleet users
Promoting autonomy, self sufficiency, and stature of
the fleet management organization
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Questions
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For More Information
Paul Lauria
Mercury Associates, Inc.
16051 Comprint Circle
Gaithersburg, MD 20877
301 519 0535
plauria@mercury-assoc.com
www.mercury-assoc.com
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