Tag: Management

Small adjustments can sometimes make a big impact. For those who work with utility trucks, details like properly placed steps, strategically placed handles, appropriately grippy surfaces and convenient storage can mean the difference between safety and injury. A careful eye toward work truck specs, then, can aid in ergonomics – and result in a happier, healthier workforce.

Chris Jolly, director of operations, fleet services, for Duke Energy Carolinas West Region, said that at one point, some of the utility’s trucks didn’t have appropriate storage locations for orange safety cones, and other storage locations weren’t working due to company-mandated changes in cone sizes. So, cones often were picked up and thrown in the bed of a truck. Workers who did this job after job, day after day, could have been exposed to stress injuries in the shoulder and back. But now all of the trucks have cone storage capabilities on or near the front bumpers, and the next generation of trucks will include further improvements.

Jolly also reported that as of late September, his entire region – including nine garage locations – has been injury-free for five years. That kind of accomplishment takes a decided focus on the company safety culture, and proper truck and equipment specs play a role as well.

Every year at Duke Energy, fleet services schedules a “Road Show.” These meetings, Jolly said, are intended to serve as places to gather ideas and improvement recommendations from customers, customer delivery (distribution), transmission, fleet services, health and safety, and OEM representatives. There’s classroom time, trucks on hand to inspect and touch, and opportunities for everyone to provide input. Jolly takes part to better understand what his customers are saying, and to be able to support them once trucks arrive and throughout the lives of the vehicles.

“We’ll go through line item by line item,” he said. “We get so many different ideas, and each idea is addressed and considered.”

Jolly has learned, for example, to consider the height of steps used to get in and out of a truck. Grab handles – including those for getting into and out of an aerial device – should allow operators and passengers to follow the three-points-of-contact rule, which states that with two hands and two feet, three of the four should be in contact with the ground or equipment until stability is established. Duke Energy has experimented with different surfaces on steps and the like, working to find solutions that are aggressive enough for boots to “stick” in adverse conditions but not so aggressive that they may catch pant legs and create a hazard.

Jolly also has gained a greater understanding of the importance of housekeeping in the backs of trucks – and around pedestals – with items properly stowed to avoid anyone tripping over them. In addition to helping prevent tripping, this allows technicians to better position themselves ergonomically when making repairs around the pedestals, torqueing bolts or making hydraulic repairs. One Road Show uncovered the importance of the truck’s toolbox configuration and placement to prevent line technicians from having to crawl under the boom or over material to access the toolbox, creating a safer overall work environment.

The Awareness Challenge
At Element Fleet Management (www.elementfleet.com), meanwhile, Ken Gillies, senior truck consultant, said that – in terms of ergonomics – he’s been hearing about reduced seat travel, the adjustment that allows for proper driver positioning and back support. Positioning and back support can be put at risk in certain circumstances, particularly when full-sized vans are replaced with smaller cargo vans.

“As the vans have gotten smaller, the driver compartment also has shrunk, especially when there’s a need for a partition in the vehicle,” Gillies said. “The problem with that is that a driver taller than 5’10” will be pretty cramped. The other challenge is that seats have gotten narrower along with the reduced seat travel. What you end up with there is that drivers have weight borne by the side of the seat rather than the cushion inside. That can lead to pinched nerves and numbness in the legs. I’ve had specific interactions with customers where this has been a problem.”

The good news is that Gillies is seeing more collaboration between company leadership and end users of equipment in general, including the use of on-site visits so that leaders can observe not just how a vehicle is being used, but also how the employee interacts with the vehicle.

“Awareness is a challenge for many fleet managers,” he said. “You can’t possibly know everything about everything. Some things just don’t hit their radar until they’re forced into it because of an unfortunate accident.”

In sharing what he’s seen work for others, however, clients have told Gillies they’re glad they’ve been made aware. In addition, input from the field “has to be taken to heart and analyzed,” he said. “Drivers may ask for the sun, moon and stars, but in my experience, they’re appreciative of someone taking an interest.”

About the Author: Fiona Soltes is a longtime freelance writer based just outside Nashville, Tennessee. Her clients have represented a variety of sectors, including fleet, engineering, technology, logistics, business services, retail, disaster preparedness and material handling. Prior to her freelance career, Soltes worked as a staff writer at newspapers in Tennessee and Texas.

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Reducing Injury Statistics
The U.S. Bureau of Labor Statistics reports that musculoskeletal disorders (MSDs) make up one in three cases of worker injury across the nation. The service sector – including the utility industry – accounts for one in for four work-related MSDs.

So, how can fleet work to reduce those statistics? Chris Jolly, director of operations, fleet services, for Duke Energy Carolinas West Region, said creating a safety culture requires making things “personal” with employees. “I always want to set the expectation that we work safely,” he said. “That’s our number one priority. But number two, we actively care about you as an employee. I want you to have that same philosophy for yourself, and that same caring attitude about your teammate. We want you to go home to your family every day the way you came in.”

Being a utility fleet manager today can be tough. How much tougher will it be tomorrow?

With the constant advancement of technology, the increasing need for communications savvy and leadership acumen, ever-decreasing budgets, and an aging workforce being replaced by a younger cohort lacking institutional knowledge and experience, it’s a nail-biter of a time.

So, how does a utility fleet manager prepare for the future?

Gary Lentsch, CAFM, fleet manager for the Eugene Water & Electric Board in Eugene, Oregon, said that people skills are huge, especially when it comes to the ability to “hold yourself accountable and focus on the things that matter most to the operation.”

Times have changed a lot since Lentsch started in fleet almost 40 years ago, and they’re only going to keep changing. It used to be that a fleet manager started as a mechanic and worked his or her way up. Today, however, with educational programs specifically aimed at the career and companies increasingly expecting relevant certifications and training, there can be additional emphasis on the “professional” side of being a fleet professional. That can mean higher-level presentations to management, greater participation with regard to company objectives and an elevated need to manage “up,” as well as manage down.

In addition, Lentsch noted that it is essential for a fleet manager to have the ability to use basic technology tools like Microsoft Office to create PowerPoint presentations and incorporate formulas into Excel spreadsheets.

“Excel is one that I see a lot of folks struggling with,” he said.

Paul Lauria, longtime fleet management consultant and president of Mercury Associates (https://mercury-assoc.com), took that a step further. The utility industry as a whole, he said, remains behind the curve when it comes to the application of data analysis to decision-making, forecasting and planning as it relates to managing a fleet.

Microsoft Excel is a very powerful and often-used tool, he said, “but the future is going to be about the Internet of Things and the integration of data from a wide array of sources – from your work order management system, your fuel management system, from National Weather Service, from a workforce management system, from a financial management system – to create much more of a real-time view of what’s going on with the fleet. That’s something that, I think, most utility fleet managers are not prepared for.”

Lauria sees three challenges bearing down on fleet managers that he often terms, collectively, as “the perfect storm”: ongoing advances in automotive technology, like the electrification of vehicles; advances in information technology, such as the Internet of Things; and the present and coming loss of institutional knowledge as the current aging workforce retires.

“Most utility companies today are highly dependent on the practical experience of fleet professionals, who, in many cases, worked their way up through the ranks,” Lauria said. “These are folks that often have strong qualitative skills. They don’t have good Microsoft Excel spreadsheet skills, but they have a very strong, intuitive grasp of what it takes to keep vehicles and equipment in service. They’ve built up relationships with business unit representatives, with suppliers, with mechanics, with operators, over decades. And much of that knowledge is in the process of being lost. These professionals are being replaced by a new generation of professionals who are more comfortable working with numbers, who are not afraid of being more transparent, more accountable and more objective in the measurement of performance. But they don’t have the practical experience of having turned a wrench or worked on a shop floor. For the next 10 to 15 years, in my opinion, industry after industry after industry is going to have to navigate this change that’s underway. … We’re seeing a lot of storm clouds gathering in a lot of the organizations that we’re working with. And it’s that human resources component that’s getting the least attention.”

About the Author: Fiona Soltes is a longtime freelance writer based just outside Nashville, Tennessee. Her clients have represented a variety of sectors, including fleet, engineering, technology, logistics, business services, retail, disaster preparedness and material handling. Prior to her freelance career, Soltes worked as a staff writer at newspapers in Tennessee and Texas.

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Organizational Prep
At the same time individual fleet professionals are ensuring they have the skills needed for a successful future, organizations may need to take steps to guarantee they’re ready, too. Paul Lauria, president of fleet management consulting firm Mercury Associates, said that includes several components.

First, although it may not be as much of an issue in utility fleets as elsewhere, a robust replacement program should be in place. This can help reduce demands for corrective maintenance and repairs, move toward more predictive repair and preventive maintenance, and reduce pressure on in-house maintenance and repair programs.

Next, fleet management practices must be institutionalized. All too often, Lauria said, knowledge about what needs to be done and the way it should be handled resides solely in the fleet professional’s head. The development of formal policies and procedures, awareness of key performance indicators and the process for benchmarking those KPIs should be considered. In addition to helping prevent the loss of institutional knowledge – especially after the retirement of a longtime fleet professional – the gathering of this information can help uncover and address any weak links in the chain, Lauria said.

And lastly, organizations must think about the employee skills that will be needed to complement technology in the days to come. The addition of new technology solutions such as telematics doesn’t lead to better decision-making on its own, Lauria said. Rather, software is simply an enabler; employees must be able to use it effectively. “At Mercury, we see organizations that have invested millions of dollars in information technology, but their decisions are not much more data-driven than they were 30 years ago,” he said. “They’re using the systems, essentially, as very expensive electronic filing cabinets.”

Workplace ergonomics have been on employers’ radar for 20 years, but even now, ergonomic-related injuries remain a costly expense – one that’s growing due to an aging workforce, current worker shortages and inexperienced industry newcomers.

“As the age composition of the workforce changes, that does affect industry,” said Eric Bauman, principal technical leader and program manager for the Occupational Health and Safety Program at the Electric Power Research Institute (www.epri.com). “Now that early Baby Boomers have retired and the middle Boomers are retiring, the industry has been hiring new workers who tend to be less experienced. We’ve seen an increase in injuries in this younger age group.”

The primary causes of employee accidents haven’t changed much in the past two decades. “It’s the slips, the falls, the trips,” said Mark Stumne, director of truck and upfit at Element Fleet Management (www.elementfleet.com).

Bauman agreed. “Sprains and strains showed up in the first year or two in our industry injury database as the largest single category of injuries,” he said. “It’s continued since 1999. Sprains and strains are something we can do something about, and this industry has supported ergonomic research since then.”

Despite the seeming intractability of these types of injuries, there are myriad products available in today’s marketplace designed to help alleviate them. Where is a fleet to start?

At Nebraska Public Power District, addressing ergonomics means navigating a balance between work truck needs and cabin comforts. “We let the work needs determine the lowest cost-trim level, then get all the comfort appointments available within that trim,” said Matt Gilliland, NPPD’s director of operations support.

It then comes down to options. Gilliland’s focus recently has turned to added equipment, with an eye toward how a utility worker accesses that equipment. “Often it is counter to what the industry can offer, historically has provided or can allow via regulations,” he said. “This has created an entirely new dialogue and has really changed how we spec trucks.”

NPPD has zeroed in on how workers enter and exit vehicles, as well as how equipment is placed so that the workers do not have to reach or strain. “These things have resulted in extra handholds, more steps, mobile and movable steps, the relocation of toolboxes, ladder fold-down brackets and so on,” Gilliland said.

Shaking Up Tradition
Today’s utility fleet vehicles are bigger and taller than in the past. And that, coupled with the lack of agility that comes with a worker’s age, is driving changes to traditional steps out of the vehicles, Stumne said. “A stirrup step might have been typical in the past. But that’s one area where we’ve encouraged our clients to add proper steps at the right height.”

Of course, not every potential ergonomic injury has an equipment solution – at least not a cost-effective one. But while no fleet has an unlimited budget, equipment costs should not necessarily always be an organization’s greatest concern. “There’s a reduced workforce to pull from and utility is a tough business,” Stumne said. “Employees work hard and it’s hard to pull people into the industry. You have to focus on giving those drivers the best equipment possible.”

The Electric Power Research Institute has developed a series of handbooks designed to help workers avoid injuries, including one on upfitting and purchasing vehicles. A study also is underway focusing on safety aspects of using augmented reality displays, including ergonomics and situational awareness. In addition, a forthcoming handbook focuses on work methods and tools to reduce injuries from awkward postures.

The EPRI handbooks include simple and cost-effective implementations, such as purchasing new hand tools. “In some cases, the cost to implement these is minor,” Bauman said. “When you replace a tool, you look for a more ergonomic tool, or when you order new fleet vehicles, you include ergonomic features from the beginning.”

Operator feedback may be the best and quickest way to evaluate the ergonomic solutions currently available. “Yes, it is qualitative,” Gilliland said. “But awaiting the passage of time to evaluate an ergonomic investment and quantify its impact on injuries will simply take too long. There should be specification discussions after the new truck is placed into service, just like there are conversations before it is purchased.”

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The High Cost of Ergonomic Injuries
OSHA tracks ergonomic injuries under its musculoskeletal disorders category. In 2013, the most recent year for which statistics are available, OSHA found ergonomic injuries:

• Accounted for 34 percent of all workplace injuries and illnesses requiring days away from work.
• Had an incidence rate of 38 cases per 10,000 full-time workers.
• Required an average of 12 days of recuperation.

The length of recuperation varied based on where on the body the injury occurred.

• Shoulder: 24 days
• Stomach: 21 days
• Wrist: 18 days
• Leg: 17 days
• Arm: 17 days
• Multiple body parts: 17 days
• Back: 7 days

Following are the most injured body parts:

• Back: 36%
• Shoulder: 13%
• Knee: 12%
• Ankle: 9%
• Multiple: 8%
• Arm: 4%
• Wrist: 3%
• Neck: 2%
• Hand(s): 2%
• Foot: 2%

The most common causes of ergonomic injuries are:

• Overexertion: 63%
• Falls, slips and trips: 23%
• Contact with object or equipment: 5%
• Violence and other injuries: 5%
• Transportation accidents: 4%

Dale Collins, CAFM, fleet services supervisor for Fairfax Water in Virginia, faces an increasingly disturbing and familiar scenario in the next handful of years: Five of the eight people working in his two repair facilities will retire.

The good news is that his organization is “pretty attuned” to the so-called Silver Tsunami of aging baby boomers; a quarter of the organization will retire within the same time frame.

“So, we’ve been challenged to create some kind of succession plan,” Collins said, “to figure out the best way to approach this, so we can capture and transfer our institutional knowledge and technical expertise. Then have a good recruitment plan and hire top-notch technicians.”

Ask anyone in literally any industry today, and the story is the same: There simply aren’t enough willing and able workers to handle the roles currently filled by the older set. It’s particularly tough in skilled labor; there can be misconceptions about salaries, opportunities and advancement possibilities. There also can be lack of awareness about the need to attract and train students long before they graduate high school. Due to the dearth of candidates, companies are having to take on employees at ground level – and bump up salaries and benefits.

“There’s been a complete shift,” said Lucas A. White, interim associate dean at Madison Area Technical College School of Applied Science, Engineering & Technology. “Organizations are desperate and can’t be as selective now. The industry has had to increase wages, knowing that they aren’t going to find somebody for $10 to $12 an hour. The students know they can get that in fast food, without a skill.”

The school, then, has worked with partners in various industries to help students gain appropriate knowledge. Industry contacts work with the school’s faculty and career and employment center on both curriculum and internship opportunities. And White encourages anyone with skilled labor holes to fill to look for a chance to do the same.

“With the skilled labor gap, the partnerships between industry and higher education become more crucial,” he said. “It’s going to take all of us to overcome this shortage.”

On His Radar
Collins has this on his radar. He serves on the diesel advisory board of a nearby community college. He’s aiming to host a career day, and to hopefully set up an apprenticeship program. A summer internship already is in place at Fairfax Water, so there is precedent. Along the way, the department also is working with management and human resources to develop current technicians for advancement opportunities, reviewing job descriptions and adjusting as necessary. Current technicians are maintaining notebooks of details that might answer questions for future staff.

One of the challenges for utility fleets, Collins said, is that “you have to be so well-versed in so many areas.” It helps to have someone with a basic skill set – but technicians also must be willing to branch out with less-than-familiar equipment or systems.

“I think you’ve got to find the right fit, from the time they come in the door,” he said. And once they’re in, they may need additional incentive to stay, since the market is so competitive. Benefits at Fairfax Water include health, dental and vision insurance, retirement, federal holidays, annual leave and income stability. There also are in-house training opportunities and a generous education reimbursement plan.

“We’re great for people who want to find a home, a career, and be there for a long time,” Collins said.

Workers are encouraged to take training courses during the day if possible, rather than in their time off at night.

“We start early,” Collins said. “And when they have to go to school at night, after a long day of work, they’re not going to learn then. Coming in the next morning will be tough. We try to make it easy for them.”

“Easy” is not typically the word that comes to mind with recruiting and retaining quality technicians. But Collins, like many, is keeping one eye on today’s staff – and the other watching for tomorrow’s.

“We’ve been discussing this for some time,” he said.

About the Author: Fiona Soltes is a longtime freelance writer based just outside Nashville, Tennessee. Her clients have represented a variety of sectors, including fleet, engineering, technology, logistics, business services, retail, disaster preparedness and material handling. Prior to her freelance career, Soltes worked as a staff writer at newspapers in Tennessee and Texas.

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Big-Picture Recruiting
It’s one thing to maintain a small staff of technicians; it’s another to maintain 165 in 42 garage locations.

At Southern California Edison (SCE), the hiring strategy is to recruit high-caliber talent, which has led to “success, stability and less turnover,” said Robert Ruiz, principal manager, fleet operation and maintenance, transportation services.

So, how does that happen, while so many other organizations are facing challenges in recruiting and retaining quality employees?

• SCE seeks out employees who have a good work ethic, in addition to strong diagnostic skills, the ability to work well with others, and a willingness to learn beyond what they already know and to work safely.
• The majority of SCE’s newly hired technicians come from local auto dealerships and independent shops, Ruiz said. “We also try to recruit from local community colleges and trade schools.”
• SCE promotes from within. In addition, compensation includes health benefits, an inclusive work environment and compressed work schedules that candidates find appealing.
• SCE uses job employment websites and social media sites such as Instagram, Facebook, Twitter, Glassdoor and LinkedIn to reach candidates, and recently launched the SCE Talent Network at www.edisoncareers.com to help “track and nurture” prospective workers, Ruiz said.

In addition, Ruiz said, SCE offers wages and incentives that often are superior to those offered by other local companies in Southern California. Respect, he said, is one of the foundational values of the company, and it extends to all employees.

For organizations contemplating a fleet rightsizing effort that won’t anger end users, here’s some advice: use solid data, convey information clearly and seek understanding.

“At the end of the day, it’s ultimately about communication,” said Charlie Guthro, vice president of global strategic services for fleet management company ARI (www.arifleet.com). Prior to a rightsizing initiative, operators won’t necessarily be saying that the fleet has extraneous equipment, while others in the company may be focused on budget. But when fleet professionals get to know their internal customers and their needs, Guthro said, greater collaboration is possible.

“When you rightsize a fleet, it gives organizations more opportunity to hold on to their most critical resource: their people,” he said. “You have to approach it from, ‘We’re not here to do things to you, but for you, and we want you to be involved.’”

That’s easy enough to say, but it can be challenging to deliver, especially with new management – those who want to make a definitive mark through changes without perhaps fully surveying the landscape or considering long-term impact. This can affect productivity and diminish employee buy-in.

Imagine, for example, a utility fleet that cuts back on lesser-used equipment, believing it will be available as needed from external rental providers.

When discussions begin with a rental company, Guthro said, “those outsourced parties are cooperative, and say, ‘Yes, we can provide that for you, and here’s the price point.’ It’s a nice, pretty picture. But when you have to get that equipment, you have to understand that you’ll likely be competing with others who have the same expectation, and demand may outpace supply.”

When needed equipment is not available, challenges go beyond the immediate situation; employees have negative feelings because workflow is disrupted, which can disintegrate trust over time.

Matt Gilliland, director of operations support for Nebraska Public Power District, said there have been times he’s seen rightsizing efforts engender some pushback. But fortunately, NPPD is not an organization that “lends itself to pouting and complaining” once changes are made. The key, he believes, lies in having information readily available to back up what needs to be done, as well as sharing it with business leaders.

“It all boils down to access and readiness of the assets,” Gilliland said. “A lot of times, with rightsizing, you’re asking business units or end users to share assets or pool assets, and sometimes their work causes them to go in two different directions.”

The right data, however, separates reality and perceptions. But when considering that data, “you have to be ready to be wrong,” Gilliland said. “In general, the fleet person wants the contingent of vehicles to be as small as possible, whereas the end user wants it to be as large as possible. Somewhere in the middle is what’s right.”

He also said his first thought with any effort is the idea of “doing no harm,” which helps ease communications with business unit leaders and end users. Quite often, Gilliland said, when GPS or other measuring points are introduced to business leaders to support a cutback, the response is, “Yeah, we’re seeing that, too” or “We’re not surprised by that.” With proper evidence in the picture, he said, “they’re generally pretty supportive. At the end of the day, they’re trying to run a business unit, and just like our unit needs to run affordably, so does theirs.”

Proper language and phrasing also help. Gilliland is fond of the term “optimizing” to cast things in a better light. And this last suggestion is something Gilliland said he learned from his colleagues, such as fleet support specialist Rob Barbur: “One thing we’ve done – and Rob has done this consistently – is to also talk to the end user about what they need that they don’t have.” That way, Gilliland said, it’s not a one-way conversation of having to defend what’s already in place; fleet professionals and end users can work together on what could be.

About the Author: Fiona Soltes is a longtime freelance writer based just outside Nashville, Tennessee. Her clients have represented a variety of sectors, including fleet, engineering, technology, logistics, business services, retail, disaster preparedness and material handling. Prior to her freelance career, Soltes worked as a staff writer at newspapers in Tennessee and Texas.

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Making the Case for Rightsizing
Are you ready to back up your rightsizing argument but unsure how to do it? Consider these three tips.

1. Know what information to collect. Matt Gilliland, director of operations support for Nebraska Public Power District, said utilization rates from miles, hours and power-takeoff standpoints can be helpful. “And look at those over a particular term or period, whether nominalized by day, week, year or however else you want to do it.” In addition, he said, “reach out to other organizations that are like-minded and like-sized, and do some benchmarking and comparisons. I’ve found benchmarking to be a tremendous tool when it comes to having the right assets.”

2. Ensure the fleet is properly categorized in its utilization. “You can’t have an expectation that all equipment will be used 40-plus hours a week,” said Charlie Guthro, vice president of global strategic services for fleet management company ARI. “You have to understand the uniqueness of your fleet. You can’t broad-brush it based on what’s worked for another organization.” 

3. Get help if you need it. Fleet management companies such as ARI can assist in gathering and preparing data that will help fleet professionals “move from anecdotal to evidence-based decisions,” Guthro said. They also can help provide a window into the best practices of other companies.

As drivers and fleet professionals explore the possibilities and realities of vehicle subscription models, they’re in good company. Fleet management organizations also are kicking the tires of the concept – including how it might eventually apply to utility fleets.

Under the subscription model, subscribers have access to vehicles on demand, often with insurance and maintenance included, and can switch out vehicle models, too.

Eric Schell, product manager for driver tools at Element Fleet Management (www.elementfleet.com), and Jayme Schnedeker, Element’s director of fleet products, said they are in discovery phase with the idea and looking to Element’s experience with car sharing for cues.

“For companies like us, as well as for manufacturers, the question is, where do we fit into all of this?” Schnedeker said. “How can we provide services for our core customers that make financial sense for them?” The subscription model provides flexibility in areas where there hasn’t traditionally been any, he added, and with individual consumers increasingly using services such as Uber and Lyft, those expectations of convenience are being transferred to work life.

Traditional fleet pools and micro car-sharing markets give fleets a taste of multiple drivers using one vehicle fractionally, Schell said. Even so, he believes, adoption of the subscription model in a broader sense would require “a fairly significant cultural change of how our customers are looking to do business today.”

In addition, a variety of questions are yet to be answered: How long would a fleet need to keep a vehicle before swapping it out? What if a fleet needs immediate access to a particular type of vehicle, but it’s unavailable? What type of maintenance should be included in the service fee, and who would perform it? What about insurance, mileage limitations and/or usage limitations? And could the subscription model work as well for, say, a bucket truck and a lightly upfitted pickup?

So far, subscription models on the market generally involve higher-end vehicles. Brands like Porsche, Cadillac, Volvo and BMW offer options that are more accommodating than long-term leases. Programs like these allow drivers to use, for example, a sedan during the week but switch to an SUV for a trip. Porsche lets drivers switch as often as they like; BOOK by Cadillac lets subscribers rent different vehicles as often as 18 times a year. Currently these services are not available nationwide but could be in the future.

In the meantime, when it comes to fleets, there’s still much to be figured out. Schnedeker, for example, brought up the topic of safety related to driver behavior.

“The driver has to make sure they’re driving the vehicles safely, and that they’re not distracted,” he said. “That can have big implications on the cost of insurance. As we think about these models, it’s important to think about what role the driver plays and how that might impact either the price of the subscription or the type of vehicle that is available for that driver to use.” That also brings up questions about training for drivers on specific types of vehicles and equipment.

“What would make the subscriber eligible to participate?” Schell asked. “We’re potentially looking at a world where we might be giving traditionally non-fleet drivers access to fleet vehicles. There’s a certain level of vetting we do to ensure that the driver getting a vehicle is going to be responsible with that vehicle. Do these same rules apply to this new generation of subscribers or will adjustments need to be made? That’s another item that needs to be fleshed out.”

Finally, Schell and Schnedeker said, there’s a need to ensure vehicles and equipment would always be available at a standard the subscriber would expect, especially as those assets travel from fleet to fleet. It’s one thing with a luxury car that can be detailed, but what about a work truck that typically would see harsher use?

“It’s certainly going to be a challenge with the subscription model,” Schnedeker said. “Some asset types might not fit the model as well, just because of how they’re used.”

About the Author: Fiona Soltes is a longtime freelance writer based just outside Nashville, Tennessee. Her clients have represented a variety of sectors, including fleet, engineering, technology, logistics, business services, retail, disaster preparedness and material handling. Prior to her freelance career, Soltes worked as a staff writer at newspapers in Tennessee and Texas.

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BOOK by Cadillac Shows How It’s Done
It’s easy to see why a subscription offering like BOOK by Cadillac (www.bookbycadillac.com) would be attractive to users: They can switch between a variety of vehicles without a long-term commitment, drive up to 2,000 miles per month, and have maintenance, insurance, registration and detailing included in the flat fee. Since its launch in early 2017, more than 8,000 people have expressed interest.

The service also provides benefits for the OEM. For one thing, it exposes the Cadillac product line to a wide range of potential buyers who otherwise might not have considered the brand.

“In an early pilot in New York, a number of BOOK by Cadillac members ultimately decided to buy or lease a Cadillac from a dealer,” said Melody Lee, global director of BOOK by Cadillac. “We feel strongly that the program will have a positive overall effect on Cadillac, perceptions of the brand and, ultimately, the sale and lease of Cadillac vehicles.”

So far, the majority of program users have been “a younger demographic than the typical Cadillac buyer,” Lee said.

In the U.S., BOOK by Cadillac focuses specifically on the Cadillac portfolio. “That said,” Lee added, “we are exploring how to evolve this model based on what the market and consumer demand. For example, BOOK is in a pilot stage in Munich, Germany, and under that current model, Chevrolet Camaro and Corvette performance cars are included in that fleet.”

The potential for lower acquisition costs, greater control over resale pricing, no debt added to the balance sheet – these are a few advantages of purchasing vehicles outright, which traditionally has been the prominent fleet acquisition strategy for many utility companies.

But according to Paul Lauria, president of Mercury Associates (www.mercury-assoc.com), a fleet management consulting firm based in Rockville, Maryland, there’s also a big downside to cash: It can lead to “suboptimal decision-making” that undermines your fleet’s performance, especially in an era of low interest rates. Lauria contends that paying for equipment over time – whether with a loan or lease – or as needed with short-term rentals creates a more flexible structure where fleet departments can improve the age, condition and performance of their vehicles at a significantly lower total cost of ownership.

“Any organization that wants to optimize the total cost of ownership of its fleet has to figure out the right balance of capital and operating expenditures,” Lauria said. “A lot of organizations don’t do this; they underspend on fleet replacement costs, with the result that they overspend on fleet operating costs.”  

So, why has the utility industry traditionally resisted financing equipment purchases? In what ways does cash purchase impact fleet decision-making? And how can fleets strike a more optimal balance between capital and operating expenditures? During UFP’s recent conversation with Lauria, who has advised hundreds of government and utility fleets since 1985, we dug deeper into these questions. Here are edited highlights.

UFP: From your perspective, why have utilities tended to resist the idea of financing their vehicles?

Paul Lauria: Traditionally, investor-owned utilities have preferred to own their fleet assets because the amount of fixed assets carried on their balance sheet is one of the things that goes into setting rates. So, having assets on the balance sheet can be advantageous financially, even though it may be disadvantageous from a fleet management perspective. Leased assets are owned by the lessor, not the lessee, so switching from ownership to leasing might adversely affect a company’s rate base.

A company can finance the purchase and ownership of fleet assets with debt, which does not create this problem. However, many utilities have statutorily established or self-imposed limits on how much debt they can carry on their balance sheet. So, if they have to choose between borrowing money for infrastructure projects – such as building a new power plant or transmission line – and borrowing money to buy vehicles, it’s not surprising that they’re going to want to use their borrowing capacity for more expensive capital projects.

But when you say that cash can lead to “suboptimal decision-making” by fleet departments, what do you mean by that? In what ways?

The first thing you see with organizations that purchase vehicles outright with cash is that they tend to put off the replacement of vehicles as long as possible. That’s because, in the short term, from a financial impact standpoint, fixing an old vehicle is always going to require less cash than replacing that vehicle.

If the only way management will let me buy a new truck is to secure $50,000 in funds to pay for that truck up front, then it will always be easier for me to scrounge up $5,000 or even $15,000 to repair that truck than get $50,000 to replace it. This incentivizes fleets to put off purchasing replacement vehicles as long as possible, despite the ongoing costs from repairs and downtime. Decisions that make no sense from an economic or total cost of ownership perspective can make perfect sense from a short-term budgeting and cash flow perspective.

The second drawback of purchasing fleet assets outright with cash is that, once an asset is in the fleet, users of the asset tend to treat it as though that capital cost doesn’t exist anymore.

What do you mean?

Say two years ago we bought a $50,000 truck, but the mission of the business unit for which the truck was acquired has changed. They’re not using the truck very much anymore, but hey, it’s “paid for.” We paid for it two years ago, right? So, let’s hang on to it just in case we need it. Or maybe we’ll keep it and use it for some other purpose – even if it’s not necessarily the best type of truck for that purpose. This one’s paid for, so we’ll make do with it.

The problem with this type of thinking is that, in reality, a vehicle is not paid for until it is no longer in the fleet. The capital cost of a vehicle is what you paid to acquire it minus the proceeds you received when you disposed of it. In other words, this type of thinking ignores the fact that there is an opportunity cost – the cash that can obtained by selling an asset – that is incurred when a company holds onto that asset when it no longer needs it to fulfill a bona fide business need.

So, with outright cash purchase, you’re less inclined to get rid of that asset even though, in real economic terms, it is depreciating every day. In contrast to when you acquire an asset using a loan or lease, there’s not an awareness of the ongoing cost of having that piece of equipment sitting out in your yard.

But how does paying for the vehicle over time help change this dynamic?

When an organization leases or debt finances fleet replacement costs, it is better attuned to the management of the total cost of ownership of those assets than is the case when it purchases them outright. These financing methods make it hard to ignore the 40 percent or so of a fleet’s TCO that is depreciation. Spending $15,000 to repair an old truck doesn’t seem very logical if you can acquire a $50,000 replacement truck under a loan or lease where the capital cost of that truck in the next year is only $7,000 or so. So, whether we’re talking about a lease or a loan, those kinds of pay-as-you-go financing methods lead to better decision-making related to the allocation, repair and replacement of fleet assets.

Why do you think it’s important for utility fleet managers to explore alternative vehicle acquisition strategies in today’s market?

We’re in the latter stages of a long economic expansion. At some point in the not-too-distant future, there will be another recession, and with that – as many fleet professionals know from painful past experience – there will be a cutback in fleet replacement funding levels. So, the time to be getting your fleet replacement house in order – to institute a multiyear replacement planning process, to determine appropriate replacement cycles for the key types of vehicles in your fleet, to assess the merits of alternative financing methods – is now, while the economy’s still good and interest rates are still low. Once that window closes, it will be too late for many companies to do these things until the next recession is just a memory.

When he’s off the clock, John Doyle, senior health and safety adviser at Florida Power & Light, drives a Ford Explorer as his personal vehicle. The SUV is equipped with a backup camera that audibly alerts him when he gets too close to an object.

When Doyle sometimes drives his wife’s car – which has a backup camera but no audible alerts – he still finds himself “waiting for the backup camera to tell me to slow down.”

Doyle’s experience provides a good example of an issue utility fleet drivers across the country are facing these days. They may have all sorts of tools and options on their personal vehicles that aren’t available on their work vehicles, which can potentially lead to a habit of relying on the tools and options – even when they’re not there. 

“People are gravitating towards using the technology to support the way they drive,” said Art Liggio, president and CEO of driver training company Driving Dynamics (www.drivingdynamics.com). “We see people come into our training programs who are looking at the backup camera monitor instead of the mirrors. If the monitor hesitates, they freeze. They don’t know what to do.”

Recent statistics back up the idea that the wealth of technology and safety features in today’s newer vehicles isn’t lowering accident rates. In 2016, 37,461 people died on U.S. highways, while 2015 saw the biggest jump in accident deaths in 50 years, according to the National Highway Traffic Safety Administration (www.nhtsa.gov).

It is, in fact, human error that is the cause of 94 percent of accidents, according to NHTSA data. In 2015, when the data was released, NHTSA administrator Dr. Mark Rosekind noted that the solution to reducing traffic deaths is a combination of improved human behavior and vehicle technology.

Liggio said there are plenty of other reasons for the higher rate of crashes, including poor infrastructure, longer commutes and driver distractions.

But Doyle needs to look no further than his own experience to say that perhaps we’re relying too heavily on technology to overcome poor driving habits – or, in some cases, allowing technology to cause them.

In a previous role at Florida Power & Light, he recalled that when backup cameras were installed on all the fleet vehicles, accidents dropped significantly – for the first year. “After that year, people became complacent with that technology and we started hitting things,” Doyle said.

He suggested that drivers be taught to “trust but verify. These vehicle technologies are computers after all, and we know that they do malfunction.”

Doyle noted that sometimes sensors can become covered with mud or dirt, affecting performance. He believes that training should be utilized to enhance the use of any technology and, for example, to teach drivers not to rely on backup cameras. They must remember to check the vehicle’s mirrors, too.

Even if a vehicle’s technology is working correctly, Liggio said, inadequate training on that technology often leaves the driver unprepared for the vehicle to take over. “When the car starts intervening, the driver jumps in and they’re fighting each other over what to do. Drivers get so focused on what the car is doing automatically that they stop focusing on their situational issues, and the incident occurs.”

He has noticed that, as fleet customers “load up their vehicles with the highest level of technologies,” often they experience slight increases in crash rates. “Is it risk compensation, or that the driver doesn’t know how to interact with the technology?”

Again, training can help overcome those issues. But ultimately, drivers must come to understand that the technology is there as a tool to heighten vehicle and driver safety – it will not prevent 100 percent of accidents.

About the Author: Sandy Smith is a freelance writer and editor based in Nashville, Tenn.

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Future Vehicle Safety Features
Over the next few years, more and more safety features will be added to new vehicles. Here is what to expect. 

Mandated Features

• Backup cameras. By May 2018, all new vehicles under 10,000 pounds will include a backup camera that shows a 10-foot-by-20-foot zone behind the vehicle.
• Automatic emergency brakes. In 2016, 20 automakers – virtually the entire U.S. market – joined the National Highway Traffic Safety Administration and the Insurance Institute for Highway Safety in announcing a pact to include these brakes in vehicles. This voluntary effort allows the new technology to become standard well before any regulatory requirement would mandate it. It is expected to be standard by 2022.

Gaining Adoption
These safety features are not mandatory, but they do factor into the NHTSA’s five-star safety ratings and are becoming increasingly available on vehicles.

• Forward collision warning systems warn drivers if they get too close to the vehicle in front of them.
• Lane assist, or a lane departure warning system, uses cameras to monitor lane markings and alert the driver when he or she is drifting out of a lane.
• Blind-spot detection lets drivers know when another vehicle is in their blind spot.
• Automatic crash notifications notify emergency responders that a crash has occurred and provides a location.
• While vehicle-to-vehicle communication is not yet mandatory, it is on the NHTSA’s most-wanted list. This, according to the NHTSA, would mitigate 70 to 80 percent of accidents not involving an impaired driver.

It’s no secret that today’s utility fleets have encountered difficulty finding job candidates with the appropriate training, experience and technical skills. And not only that – once qualified candidates are hired, those workers can be wooed by other companies offering greater salary and benefits packages.

So, how can you find and keep the right candidates for your fleet job openings?

Those in the know recommend partnering with area technical schools and colleges to ensure the right skills are being taught – and the right candidates are being snapped up early. On the other end of the spectrum, they recommend providing current employees with training and career development opportunities to keep them engaged.

“There’s a lot of poaching going on, especially on the utility side,” said Jason Ball, who worked as both a heavy-duty mechanic and fleet manager before taking the helm of Utility Training Group (www.utilitytraininggroup.com) less than two years ago. Specialized on-the-job training – delivered by someone like Ball or an OEM representative – sweetens the pot by helping workers learn new skills, gain confidence and stay up to date on the latest technologies.

But it’s important, Ball said, to make sure those conducting the training have the right experience, in addition to good references.

Understand Values and Priorities
Matt Gilliland, director of transportation and facilities for Nebraska Public Power District, said he’s seen individual applicant priorities change over time. Understanding new priorities and values can help attract the right crew members.

Individuals are no longer just looking for job security, he said, or somewhere to stay for a long period of time. Instead, it’s more about how the job can contribute to life balance – and possibly even how the job can impact social issues important to the applicant. They often want a seat at the table, and desire to engage in teamwork and successes that go beyond their individual job descriptions.

“It’s important to communicate not only about the position you’re looking to hire them for, but also the direction of the company,” said Gilliland, who is scheduled to speak as part of a hiring and retention panel at the 2017 Utility Fleet Conference (www.utilityfleetconference.com) in early October. That might include, for example, the company’s values related to sustainability and global impact.

For utilities in particular, one of the biggest challenges in terms of hiring is that there’s a wide range of equipment and a broad skill set involved in fleet work, yet very few places where individuals can learn to specialize in that work. Gilliland and his team have found value – and employees – by serving on the advisory boards of area colleges.

Ball said if he were the one in the recruiting seat today, he’d be “advertising as many places as possible,” as well as keeping an eye out for quality workers at other companies who may be interested in new opportunities and willing to grow.

Another tactic, gleaned from other industries: Don’t forget social media. The channel increasingly is being used for professional as well as personal reasons. Entrepreneur, in a 2015 guest blog written by Joe Budzienski, Monster’s vice president of product and technology, reported that more than 60,000 jobs were being tweeted about each day on Twitter, and that the platform was being used by 40 percent of overall companies to recruit talent (see www.entrepreneur.com/article/245295). In addition, 54 percent of recruiters were using Facebook.

No matter how a person comes to the job – or the length of the efforts made to get them there – it is always possible that they’ll still leave in search of greener pastures. But you can’t think in terms of just training them for someone else, Gilliland said.

“If you hire the correct individual, there’s a higher likelihood that you’ll have a long-term relationship with them,” he said. “And if they do go on to another job, you can still understand that you were part of the investment that made them able to do so. That’s still money well spent because the profession itself is advanced.”

About the Author: Fiona Soltes is a longtime freelance writer based just outside Nashville, Tenn. Her regular clients represent a variety of sectors, including fleet, engineering, technology, logistics, business services, disaster preparedness and material handling. Prior to her freelance career, Soltes spent seven years as a staff writer for The Tennessean, a daily newspaper serving Nashville and the surrounding area.

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Making the Grade with Technical School Recruiting
Ranken Technical College in St. Louis (www.ranken.edu) is one school that offers coursework including diesel repair technology and fleet management. But there are challenges; Dan Kania, Ranken’s dean of academic affairs, said that over time, fewer people have been applying for the field.

As a result, “Employers need to contact students well before they graduate to get them into the pipeline,” he said. “Companies who wait to recruit from graduating classes will find the students already employed with other companies.”

Utilities that want to build relationships with area colleges – and, therefore, put their hat in the ring early – can do so in a number of ways. Ranken, for example, conducts industry advisory board meetings twice a year.

“Attend the advisory board meetings, as well as Ranken’s monthly employer breakfasts, to become familiar with the college’s offerings,” he said. Utility fleet administrators also should attend open houses, he said, to present information to students and collect resumes.

Several years ago, when gas prices were higher and an industry need arose to reduce costs and seek alternative solutions, conversations about harnessing the sun intensified. Combined with advances in electric vehicle technology, the possibilities of what manufacturers and fleets could do in this realm began to grow.

Solar power began to be used to extend the range of some electric and plug-in hybrid electric vehicles. And a full-size electric pickup truck using solar to extend its range was introduced at the 2014 North American International Auto Show.

Given the evolution of solar power use in vehicles over the years, where are we today?

As it turns out, on a slightly different course than one may have assumed. Rather than focus on the use of solar to add range to electric vehicles, utility fleets are, for example, adding panels as components of larger energy management systems. Solar power may be used to recharge vehicle starting and auxiliary batteries. It also can supplement battery charging while a vehicle is being driven or while it’s stopped – a valuable feature where legislation may prohibit idling. Additionally, solar power paired with an inverter system converts DC battery power to AC household power to charge cordless tools, laptops, test equipment and other work truck loads that require AC power without draining the battery.

“It’s a very clean and silent way to create AC power without using a generator,” said Sean O’Connor, sales channel manager of Go Power! (www.gpelectric.com). His company, based in Victoria, British Columbia, has been in the industry since 2000, originally starting with solar and inverter systems for RVs. Go Power! introduced its panels and power inverters to the work truck market five years ago when the company recognized a need to greatly reduce battery replacement within fleets. Minimizing the frequent battery replacements typical among fleets can bring a fast return on investment.

Even on cloudy days, a solar panel still can generate power. Panels range from about 30 watts to 100-plus watts; regardless of the power produced, a solar power system can use a solar controller, which acts like a fuel shutoff valve, to protect the battery from overcharging and prolong battery life.

Mike Stephens, Go Power! division manager, said every fleet has a slightly different niche and need. The right combination might include an inverter only, or a solar panel for trickle charging, or solar panels and an inverter. Systems can be uniquely designed to meet a fleet’s requirements.

Harnessing Practicality
With regard to using solar power, there are some things that still aren’t completely practical – yet. But Dave Meisel, senior director of transportation and aviation services at Pacific Gas and Electric Co., has seen solar’s practical applications. His fleet employs an electric power takeoff (ePTO) system that uses a series of batteries to power onboard equipment at job sites, and truck-mounted solar panels have been used to charge those ePTO batteries.

Altogether, the system has helped increase productivity by extending the number of hours employees can work in noise-restricted areas because power no longer has to be supplied by a noisy generator. There also have been increases in safety because workers can now communicate by talking rather than having to use hand signals over the sound of that generator, and bucket truck operators – who traditionally sit in the back near the exhaust – have greatly benefited from reduced emissions on the ground. Meisel partnered with Altec (www.altec.com) to electrify PG&E’s worksites through the company’s Jobsite Energy Management System (JEMS), “and solar has been a part of that,” said Meisel, whose California-based fleet of roughly 15,000 assets has one of cleanest power generation mixes in the nation. “Electrifying the worksite has been a huge win for us.”

The way Meisel sees it, the biggest thing to remember about electrification is that the technology is still in its infancy. Its potential – and the full potential of solar power – remains to be seen.

“I don’t know that we’ve fully understood, at this stage of the game, how much this type of technology could benefit our industry,” he said. Meisel has one vehicle in his fleet, for example, that can act as a standalone generator with exportable power. “That technology is spreading relatively quickly. I’m sure there are some smart people out there who will move it further than we have. But we’re excited about potential. We’re excited about the opportunities that it presents,” he said.

About the Author: Fiona Soltes is a longtime freelance writer based just outside Nashville, Tenn. Her regular clients represent a variety of sectors, including fleet, engineering, technology, logistics, business services, disaster preparedness and material handling. Prior to her freelance career, Soltes spent seven years as a staff writer for The Tennessean, a daily newspaper serving Nashville and the surrounding area.

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Warming up to the idea of solar? Here are a few things to consider:
• Recognize that the benefits of using solar power may be difficult to quantify, said Pacific Gas and Electric Co.’s Dave Meisel. As part of a larger energy management system, there have been some obvious wins. But it’s important to look at the picture more broadly; gains don’t just stop “at the door of the garage,” Meisel said, and may expand to other departments and areas.
• If you’re considering a particular system, make sure it’s within the proper parameters of any anti-idling legislation in the state or states in which your fleet operates, and appropriate for individual requirements. In addition, understand that anti-idling legislation likely will keep expanding.
• Keep an eye on solar developments. There is much interest, for example, in the commercial trucking space. Through companies such as Go Power!, eNow (www.enowenergy.com) and Green Solar Transportation (www.greensolartransport.com), solar and electric vehicle technology continue to develop.

Developing an effective approach when it comes to a strategic replacement cycle is a challenge that every fleet manager faces, regardless of the kinds of vehicles or equipment they may manage. The ability to gather and analyze data about your fleet and understand exactly how your fleet is performing has made the run-a-vehicle-into-the-ground approach not only woefully out of date, but it also has revealed just how expensive it is when compared to a well-designed replacement cycle.

The goal for every fleet should be to replace a vehicle before maintenance costs and downtime begin to rise, and at a time in the vehicle’s life when resale values remain meaningful. Determining how to reach that goal can vary from fleet to fleet, but by implementing an optimal replacement cycle for each vehicle or segment of vehicles in a fleet, a fleet manager can realize tremendous benefits and advantages, ranging from minimizing downtime and lowering operating costs, to keeping up with the fast-changing safety and technology features in more recent models, ensuring the safety and comfort of the fleet’s drivers in the process.

So, what considerations and best practices should you adopt in order to get the most from your replacement cycle strategy and experience the benefits of lower operating costs and optimal total cost of ownership?

What Does Your Company Need?
Any good evaluation begins with knowing the needs of your business and assessing the fleet you have. Are there gaps that need to be filled? Alternatively, are there vehicles that are not being fully utilized or are sitting idle? Knowing the specific operational needs of each business unit and reviewing your existing specs to make sure the fleet aligns with the business requirements of the organization help to create a foundation from which to begin your analysis. If you have done an analysis in the past, but it has been a while since you have reviewed it, take the time to update it. Consider whether vehicles that are being underutilized need to be replaced at all. Take a hard look at your specs to see if they can be simplified or pared down. Knowing where you stand before you begin to develop or alter a plan will help to ensure the eventual result is sound and will have a positive impact.

Evaluate and Analyze the Data
Now more than ever, fleet managers have access to volumes of data as well as the tools to parse that data so it provides insight and understanding. Fleet managers can look at maintenance expenses, including both recent and year-over-year comparisons, evaluate fuel expenditures and assess downtime across different vehicle segments. The transparency provided by the ability to evaluate data in an increasingly granular yet valuable way empowers fleet managers to make better decisions. The red flags that appear as the result of a thorough evaluation of your fleet’s data should be folded into the larger effort of building a sound replacement strategy and guide you even as you take other factors into consideration.

Additional Factors to Bring Into the Mix
There are a variety of different approaches to replacement cycling; deciding which one to use is dependent on the kind of fleet (i.e., its use and application) and the vehicles in use. But there are some standard factors that should always be a part of the overall equation.

The Usual Suspects
Any good analysis will consider some basic factors, including model year, total miles, overall condition, cost per mile and repair costs over a fixed period of time. Considering any of these in isolation is not the best approach, and having a single, fixed trigger (e.g., replace all of a certain kind of vehicle when they exceed a certain mileage) is not always effective either. Consider this: You could have two vehicles, both the same model year, but one may need to run more often to power specific, specialized additional equipment that it carries. This would increase the wear and tear on all of its components, especially when compared to the non-upfitted vehicle. Evaluating both on model year alone would not provide a full or accurate analysis.

Specialization
As a general rule, the more specialized a vehicle is – especially with regard to an upfit or other specially installed equipment – the more likely it will remain in service for a longer period of time. The specialization likely required a larger upfront investment and that comes into play when determining total cost of ownership. And, of course, a replacement is likely to require that same kind of investment.

Remarketing Cycles and Retail Demand for Used Vehicles
While it can vary based on the kind of vehicle and the current demand, the spring – tax season – through the fall remains the best time to sell used vehicles. Unless you have a vehicle that is in high demand on the used market, it is always a good idea to take the seasonality of the remarketing market into consideration. If you do have a segment of vehicles that is in high demand, consider the benefits of adjusting your cycling to maximize the resale value and take advantage of a hot market.

Branding and the Company Image
It never helps an organization to have vehicles in poor condition on the road. Vehicles with rust, substandard paint or body damage can reflect on the company as a whole and do damage to the brand and public standing of the organization. While not a driving factor, it is something to take into account.

Taking the time to develop a sound replacement strategy can save a fleet money and improve the bottom line. There is not one correct way or a single formula; success depends on a variety of factors that can change depending on the kind of fleet being evaluated and the needs of the business. But by investing a little time and thought, you can have a positive impact and a fleet that is cost-effective and on the road.

About the Author: Partha Ghosh is the director of North American vehicle supply chain and remarketing operations for ARI (www.arifleet.com), a privately held fleet management company headquartered in Mount Laurel, N.J.

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Vehicle Replacement Considerations: A Checklist
• Evaluate vehicles by category or segment.
• Know the needs of your business and align vehicle specifications accordingly.
• Use the data your fleet returns to your advantage.
• There are standard factors to consider, such as model year and total mileage, but no single factor should drive the decision.
• Specialization and vehicles with a unique upfit may require additional consideration.
• Take the ebb and flow of the remarketing marketplace into account.
• The condition of a vehicle can affect your organization’s brand and image; be sure to keep that in mind.

Maintaining strong working relationships with vendors is critical to running a smooth fleet operation.

To find out what makes and breaks these relationships, UFP recently spoke with Ron Henne, transportation supervisor for Eversource in Connecticut and Western Massachusetts; Matt Gilliland, director of transportation and facilities for Nebraska Public Power District; and Mel Holloway, product manager for global fleet management company ARI.

For all three men, customer service stands out as a major factor in determining if a vendor is going to be a short- or long-term partner.

Nebraska Public Power District has been working with several suppliers for 10 to 20 years because they continue to meet the fleet’s customer service expectations, according to Gilliland.

“We look for a vendor who will fix or supply it right the first time, on time, and at a fair price,” he said.

In addition to great customer service, vendors that provide total support – including post-sales support such as training – help seal the deal for Henne.

But what prevents fleet managers and vendors from establishing effective relationships? Be cautious of these three pitfalls.

1. Placing Too Much Emphasis on Cost
One mistake fleet managers make is basing purchase decisions – whether for equipment or service – solely on cost. Expecting something for next to nothing is a bad way to start or maintain a strong relationship with a vendor.

“Don’t just look at price,” Henne said. “Do your due diligence. Equipment is not a short-term purchase. You’re making a 10- to 15-year decision. The purchase price could be great, but what’s it going to cost you down the road? For example, you might save $1,000 on a piece of equipment, but roadside assistance is not included with the five-year warranty and could cost $5,000 to have it delivered every time it has a problem. So you really have to check everything. It’s the total package – the parts, the training, the warranty.”

Gilliland echoed that sentiment. “Poor customer service, poor delivery timelines and shoddy work cost more in the long run than any money saved up front,” he said. “A wise man once told me this: There are three kinds of service: fast, cheap and good. Pick two because you can never have all three.”

He strongly recommends a matrix approach to vendor selection that includes inputs such as local presence, past performance, response time, cost, warranty and support systems.

2. Poor Communication
It is no secret that excellent communication is essential to any strong relationship, but fleet managers and vendors sometimes struggle to effectively interact with each other.

“Many fleet managers have their own preferred communication methods, but above all communication needs to be timely and efficient,” Holloway said. “[Fleet management companies] need to blend a variety of techniques ranging from proactive push reporting to phone calls and in-person communications to ensure they are meeting the client’s need for information.”

Both Henne and Gilliland prefer to communicate with vendors via email.

However, fleet managers and vendors should choose their communication method based on what’s happening within their operation at the time. “If you’re going to buy 50 new trucks, that’s not an email,” Henne said. “That’s when you need to schedule several meetings. For a high-risk or complex situation, you’re going to want to be face to face.”

Holloway advised fleet managers to communicate often. “Don’t wait until there is a problem to reach out to a vendor,” he said. “Treat vendors as if they are a valued part of your team. Communicating changes about the fleet or equipment will help your vendors to stay up to date on your company’s needs.

“Remember that your vendor also has a business to run,” Holloway continued. “Scheduling conflicts, deadlines, cash flow and business growth are problems faced by most vendors. Awareness of and responsiveness to each other’s issues can help build long-term, satisfying and beneficial relationships with vendors.”

3. Unclear Goals and Expectations
Fleet managers must avoid ambiguity about their goals, objectives and expectations, particularly when it comes to expressing them to their vendor partners.

“Make sound decisions,” Henne said. “Develop your spec – consult internal users and make sure it’s detailed with everything needed – and then set out to bid with all the requirements.”

Determine which one vendor can provide what you need, when you need it, and for the right price. Evaluate everything from response time to contract terms to costs. Relationships take time to develop, so select a vendor with whom you and your fleet will be able to grow. At the same time, train vendors to meet your needs if necessary.

When a vendor understands how important customer service is to you, for example, they will be encouraged to work harder in that area. An understanding of your goals will help them make the best decisions in your favor.

About the Author: Grace Suizo has been covering the automotive fleet industry since 2007. She spent six years as an editor for five fleet publications and has written more than 100 articles geared toward both commercial and public sector fleets.

In our increasingly shared economy, even some utility fleets are moving from “mine” to “ours.”

This certainly makes sense. In addition to the fact that utility equipment and vehicles often are costly, they’re also unlikely to be in constant use. Pooling and sharing resources, then, can help cut down on surplus, reduce expenses and streamline operations.

The even better news? As the sharing economy has matured – think of Airbnb, Uber and Lyft – so have the technology offerings that help make it possible. There’s online forum MuniRent (www.munirent.co), for example, which allows municipalities to share surplus goods and equipment. AssetWorks (www.assetworks.com) offers fleet management software along with an automated motor pool solution, and allows reservations through smartphones and tablets. And then there’s Agile FleetCommander (www.agilefleet.com), web-based fleet and motor pool software that has been used by fleets in virtually all categories.

Naturally, the argument can be – and often is – made that there’s a segment of a utility fleet that can’t be downsized because it’s used during emergencies and peak demand. It’s also true that some vehicles have specialized tools onboard that are assigned to a particular individual.

The key is in recognizing that “no vehicle sharing initiative should try to apply the same rules for all types of vehicles and equipment,” said Ed Smith, co-founder, president and CEO of Agile Access Control Inc., developer of the Agile FleetCommander software. Fleet managers must acknowledge that real obstacles are present, he said, but also that some constructed barriers to sharing “simply aren’t fact-based.” Technology can help fleet managers know who has custody of a vehicle – and its keys – as well as assist in reporting and chargebacks.

Dave Meisel, senior director of transportation and aviation services for Pacific Gas and Electric Co., said his department has tried sharing initiatives on multiple occasions, with varying levels of success. One of the challenges is that many first responders are dispatched from their homes, so their equipment is not at a central location. But there are trouble trucks, line trucks, dump trucks, digger derricks, directional boring equipment, cars and pickups that are shared across PG&E’s operating departments.

“When it’s reasonable and practical, you can have an asset in gas today and in electric tomorrow,” Meisel said. However, he doesn’t consider it a rightsizing effort as much as he does good business sense – especially when scaled to a fleet of 15,000 assets and a service territory of 75,000 square miles.

But yes, there has been pushback.

“Most of the people I know in this industry, they’re really conscious of trying to be responsive, trying to meet our customers’ needs as soon as possible,” Meisel said. “They’re great people and are really hard-wired for emergency and customer response. Sometimes that thought process leads them to want to keep equipment locally just in case something bad happens. But when you add that up over 100 locations, that can add up to a lot of equipment and a significant, unnecessary operating expense.”

Being able to make the case for the business decision has helped many come around, Meisel said, and if the needed equipment isn’t available through the pool, a rental follows.

Florida Power & Light Co. also has a pool of utility vehicles, the result of a utilization analysis several years ago. The organization, an Agile Access Control customer that uses the Agile FleetCommander software, was able reduce its fleet by more than 60 specialty vehicles, Smith said, while still providing a high level of service. “Not only did they receive $7.5 million when they disposed of the vehicles, they no longer had the costs associated with depreciation, replacement and maintenance,” he said.

So, where does a fleet manager even start? Meisel said it begins with a true understanding of how equipment is currently being used – and how it’s not.

Ultimately, though, the success of any effort may come down to the way it’s presented. Cost savings can lead to the purchase of newer equipment and a younger fleet overall. In addition, the ability to turn over reporting, cleaning and fueling to a central facility might help make sharing a winning proposition for all involved.

About the Author: Fiona Soltes is a longtime freelance writer based just outside Nashville, Tenn. Her regular clients represent a variety of sectors, including fleet, engineering, technology, logistics, business services, disaster preparedness and material handling. Prior to her freelance career, Soltes spent seven years as a staff writer for The Tennessean, a daily newspaper serving Nashville and the surrounding area.

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The Sharing Economy by the Numbers
Today’s sharing economy – also known as the on-demand economy, peer-to-peer economy or collaborative consumption – has stretched across numerous industries. Airbnb, Spotify, TaskRabbit, Uber and others all offer opportunities to share and share alike.

But how much is it catching on? In April 2015, PwC (www.pwc.com) released the following statistics in “Consumer Intelligence Series: The Sharing Economy.” At that time:
• 19 percent of adults surveyed had engaged in a sharing economy transaction; 7 percent had been providers.
• 86 percent agreed that sharing is making life more affordable.
• 83 percent agreed the sharing economy results in greater convenience and efficiency.
• 76 percent believed the sharing economy is better for the environment.
• 72 percent of adults were concerned that the quality of sharing economy experiences will be inconsistent.
• 89 percent believed the sharing economy is based on trust between provider and user, but 69 percent were concerned about putting their trust in these services.

To see the full report, visit www.pwc.com/us/en/industry/entertainment-media/publications/consumer-intelligence-series/assets/pwc-cis-sharing-economy.pdf.

It’s one thing to winterize your fleet, but what about the drivers who are expected to operate vehicles in harsh winter conditions to repair downed power lines or a broken water main? Are they winterized as well?

This is an important question because snow, sleet and ice impact how a vehicle accelerates, handles and stops. And if your crews aren’t prepared with the driving skills and mindset they need to safely navigate hazardous winter roads, they’re putting their health, the public and your utility’s reputation at risk.

So, how can your organization effectively winterize your drivers? UFP spoke with Art Liggio, president of Driving Dynamics Inc. (www.drivingdynamics.com), a Newark, Del.-based firm that provides companies with advanced performance driver safety training and fleet risk management expertise. He offered these three tips.

1. Reduce speed as conditions deteriorate.
“While you can actually move quite fast in a straight line on ice and snow, once you have to stop or turn, the laws of physics start to catch up with you,” Liggio said. “Drive responsibly by slowing down and staying vigilant in maintaining a sufficient safety zone.”

Liggio recommends that drivers avoid using the brake whenever possible in deteriorating weather conditions. “Slow down early enough, so you can roll up to a traffic light change without having to brake completely,” he said. “When coasting to slow down, it’s still important to engage your brake lights by lightly pressing the brake pedal so those behind you understand that you are in the process of slowing. But when you do need to stop or slow down, start braking early and gently to keep yourself and others behind you in control.”

2. Know where to focus your eyes.
How do you safely maneuver the vehicle when it begins to skid on ice? The answer starts with your eyes.

“When drivers sense the vehicle is skidding on ice, their tendency is to jerk the steering wheel frantically in all different directions, with their eyes focused on what they want to avoid, like oncoming traffic or parked vehicles, or pedestrians. But what happens is that where you focus your eyes, is where you’re actually pointing the vehicle – toward what you’re trying to avoid,” Liggio said.

This is called “target fixation,” and drivers should focus their eyes on targets that lead them to safety.

“Once you’re able to identify an acceptable escape route, get the wheels pointed in that direction, no matter which direction the vehicle is moving,” Liggio said. “This could be the side of the road or somewhere that would minimize harm to you and the public. Keep your eyes – and the wheels – aimed at where you want to go, not on what you’re trying to avoid.”

3. Adjust for fluctuations in weight distribution.
Weight distribution changes the handling characteristics of a vehicle. If a driver operates a fully loaded truck at the beginning of the day and then unloads it, the empty truck is going perform much differently in terms of center of gravity, acceleration, braking and traction on wintry roads.

“If the truck is fully loaded, that can help with the traction, especially in the rear of the vehicle,” Liggio said. “But as the truck is unloaded, there is less weight on the vehicle and that could increase the potential of slippage in icy conditions. Also, if it’s a rear-wheel-drive vehicle, you might find in slow-moving conditions that as the weather gets worse, you’ll have problems accelerating and can’t get the truck to move.”

How do drivers counter this phenomenon? The starting point is to be aware of how changes in weight distribution can impact the vehicle’s performance and handling, especially in snow and ice conditions.

“You have that muscle memory so ingrained that if you’re used to driving the vehicle at full load, you will likely revert to driving like that even if the vehicle is empty, unless you make yourself more attentive to the changes,” Liggio said.

Hardwiring Safe Winter Driving Skills
How often should drivers be trained for winter driving techniques to instill safe habits? Liggio recommends that drivers receive hands-on instruction – in a training vehicle on a closed course and/or in a simulator – at least once every three years, plus an online refresher course prior to winter in the intervening years to reinforce what they’ve learned.

So, if your fleet operates in an area known for harsh winters, are your drivers and crews ready? Have they been “winterized” – equipped with the enhanced driving awareness and skills they need to safely operate vehicles in snowy and icy conditions?

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Winter Weather-Related Crash Statistics
Winter weather can wreak havoc on road conditions and driver safety. Consider these statistics compiled by the Federal Highway Administration, which represent annual averages in the U.S.

Snow/Sleet: 211,188 crashes; 58,011 persons injured; 769 fatalities

Icy Pavement: 154,580 crashes; 45,133 persons injured; 580 fatalities

Snow/Slushy Pavement: 175,233 crashes; 43,503 persons injured; 572 fatalities

Own or lease – which vehicle acquisition strategy makes the most sense for utility fleets?

There’s no clear-cut answer, said Marcin Michno, project manager, strategic consulting for Element Fleet Management (www.elementfleet.com). “It’s impossible to define an ideal, uniform leasing scenario for an entire utility industry because there are too many variables, and every company has a different situation. Are they looking to preserve cash? What’s their tax strategy? Are interest rates favorable? What is the company’s risk tolerance? And not all vehicle applications should be treated the same. You have to look at the individual company’s situation and design a financial strategy around that.”

Bill Doman, department head, sales support at ARI (www.arifleet.com), agrees. “Conventional wisdom is that a regulated [public] utility is going to purchase everything, and an investor-owned utility is more open to leasing. But in reality, we know a few regulated utilities that lease 100 percent of their vehicles. And the vast majority of our utility clients – whether regulated or investor-owned – have a mix of owned and leased vehicles. They’re finding the right applications where they can take advantage of leasing and create a situation where they get the benefits of cash preservation, improved cash flow and potential tax advantages.”

Financial Flexibility
It’s a commonly used term, but what exactly is leasing?

“When you lease, you might be paying only for the usable portion of that vehicle,” said Steve Byrd, manager of truck excellence for Element Fleet Management. “In other words, you’re financing the spread between the capitalized cost of the vehicle and its residual value [the projected worth of the vehicle at the end of the lease term]. So, if the total vehicle cost is $100,000 and the residual is $20,000, you’re leasing $80,000 worth of truck – the amount of the truck you intend to actually use.”

One of the key advantages to leasing is the flexibility to customize the contract in ways that can minimize upfront cash requirements, reduce monthly payments and provide multiple options at lease-end – such as whether to turn in, purchase or sell the vehicle – based on the company’s finance and accounting objectives.

And although there’s no cookie-cutter profile, here are a couple scenarios where utility fleets could benefit from leasing.

High-Use Vehicles
“Generally speaking, it is possible to structure and tailor a lease to be advantageous for fleets with higher mileage and higher utilization,” Byrd said. “Vehicles that are more specialized [such as bucket trucks and digger derricks], with lower miles and longer life cycles, would have different, specific considerations for leasing and ownership. These structures will be different for each of these scenarios.”

What are some examples of high-utilization applications in utility fleets?

“Executive vehicle and meter-reader applications,” Doman said. “In these cases, fleet managers know exactly how many miles those vehicles will travel, and there’s a predictable driving pattern with them. They also tend to replace these vehicles on a shorter life cycle to ensure vehicles look new to maintain a clean public image.”

According to Byrd, “With any application, there should be a discipline to renew your fleet on a regular interval, so you can take advantage of the latest safety technologies, improved fuel efficiencies and lower maintenance costs. Working with your fleet management company will help in promoting that discipline.”

Accelerating Green Fleet Acquisition
Doman points to Edison Electric Institute’s fleet electrification initiative (see www.eei.org) as an intriguing leasing opportunity for utility fleets. As of late last year, more than 70 investor-owned utilities had pledged to devote at least 5 percent of their annual fleet budgets to electrified vehicles.

“Instead of taking the 5 percent budget to purchase two large hybrid-electric bucket trucks outright, utilities can structure leases that spread that budget over, say, 50 plug-in electric vehicles for meter-reader applications,” Doman said. “Beyond just getting substantially more vehicles with the same budget, there’s also the PR advantage to that. You can say, ‘We have 50 vehicles out on the road that operate on clean electric power’ and promote that on the sides of your vehicles to make a statement to customers about your investment in the environment.”

Keep an Open Mind
Whether you lean toward ownership or leasing, keep an open mind, Doman advised. “Don’t look at things the way you’ve always done them. There’s a lot of flexibility involved in all the different types of leases available. And look at certain segments of your fleet and explore where it might make sense to put your toe in the water if [leasing] is something you haven’t done before.”

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Dig Deeper
To learn more about vehicle leasing, visit these resources:
• “Lease a Truck – Pros and Cons” from LeaseGuide.com: www.leaseguide.com/articles/truckleasing.htm
• Equipment Leasing and Finance Association: www.elfaonline.org
• Automotive Fleet & Leasing Association: www.afla.org

Across the globe, there is a shortage of a very important resource that is reaching epidemic proportions. What’s worse, it’s a resource that is vital to your fleet operation and has a substantial impact on your bottom line.

This increasingly rare commodity is the engaged employee.

So, what is an engaged employee and why are they the most important asset your fleet operation can have? Generally speaking, an engaged employee is one who is psychologically invested in the organization and committed to getting the most out of his or her abilities and efforts for the sake of advancing the growth and success of the organization.

Research shows that the enthusiasm, positivity and proactive effort that engaged workers bring to the job have a real, measurable impact on the success of an organization. That’s because engaged employees miss fewer days of work, are more productive and are less likely to leave the company.

On the flip side, a disengaged employee can put a drain on your bottom line. This impact comes in many forms: increased demand on managers’ time, poor work quality, higher accident and theft rates, and more missed workdays.

Ultimately, the more engaged employees you have working within your fleet operation, the more successful it, you and your entire organization will be. Here are the top four things you can do to ensure you’re acquiring, developing and retaining engaged employees.

1. Measure Your Engagement Levels and Make a Plan
The best way to know how engaged your employees are is to ask them through a survey. An Internet search of the phrase “employee engagement survey” will return a number of resources and employee engagement templates to help you build a survey that is unique to your fleet operation. The primary goal is to get anonymous responses that measure whether or not your employees feel proud of where they work, are inspired by their management, trust the organization, feel valued and so on. The results will pinpoint the areas that are your organization’s engagement strengths and weaknesses. From there, you can build a strategy that improves upon each.

2. R-E-S-P-E-C-T, Find Out What it Means to Your Employees
Leadership expert Peter Economy recently reported for Inc. magazine that employees give their best to the company when you create an environment that makes them partners in the process. This means treating your employees as valuable members of the team by increasing your trust in their decision-making skills, letting them in on the big picture so they understand the company’s plan and strategy, and inviting them to participate in other areas of the company where their expertise can contribute to the success of the organization.

Employees also increase their engagement when their personal lives are respected. This can be accomplished by taking time to have conversations with employees that touch upon personal topics and implementing policies that respect work-life balance, such as providing flexible work hours.

3. Improve Leadership and Management Effectiveness
A Dale Carnegie Training study revealed that 80 percent of employees who were very dissatisfied with their immediate supervisor were also disengaged. That’s why it is so vital to hire and promote the best people for management positions and also ensure they receive training that empowers them to effectively engage their teams.

But proper hiring and training only get you so far. Your organization must also measure employee engagement and hold managers accountable for poor results. In other words, employee engagement must be made a formal responsibility for anyone who manages people.

4. Communicate and Show Appreciation
As with most people-management solutions, engaging employees begins with communication. Employees are more likely to be engaged when management and leadership not only clearly communicate goals and available job growth opportunities, but provide an environment in which employees can communicate their opinions and ideas.

Engagement levels also grow when employees are recognized for making contributions to the success of the organization. Whether it’s through personally thanking employees, providing monetary rewards or making acknowledgements in the company newsletter, it’s important to implement ways to show that you notice their accomplishments and appreciate their efforts.

In order for us to measure our fleet operation, we need to lay out numbers that illustrate our activity via activity-based costing. This gives us a picture of what is happening in terms of our fleet productivity and resultant profitability. The photo seen below is an excellent example of basic information that doesn’t make sense until it is explained, which is one way activity-based costing can assist your fleet. If we put our finger on the number 1 in the photo, we then look sequentially for 2, then 3 and so on.

Try this exercise: Give yourself 30 seconds and see how far you get sequentially during that time. After the 30 seconds is up, determine the number you achieved. Look at the sheet – how are the numbers laid out? Draw an imaginary line down the middle of the sheet. Note that odd numbers are on the left side; even numbers are on the right. Knowing this layout pattern, if we do the exercise a second time, we will focus on a 4-inch-by-10-inch layout rather than an 8-inch-by-10-inch layout. That should increase our productivity by 50 percent. Now, repeat the exercise and measure your productivity improvement.

Case Study Review
Next, review the case study below. Let’s go through the 22 line items to lay out the condition of this fleet. These categories will give us a picture of our fleet and its productivity. I’ll explain the meanings of each line item and, after that’s done, we can look at the overall condition illustrated by these categories and the numbered value for each line item.

Column 2, Line 1 shows we have 421 vehicles. Line 2 states the total operating expenses are $119,000 for the month of January. In Line 3, you can see the operating dollars budgeted for the month are $90,000. Line 4 highlights an important point – that we are 32 percent over the operating budget for the month. Since we spent it, we have to get the extra spent money from somewhere. The money could come from another department’s savings or an advance from next month’s budgeted items, or it could be borrowed from a lender.

Line 5 indicates that our actual cost-per-mile average for our 421-unit fleet is 82 cents. In Line 6, you can see that our budgeted cost per mile for this month is 64 cents. Based on those figures, we are 18 cents per mile over our operating budgeted mileage cost. Line 7 shows that our fully burdened labor rate is $83.12 per hour. That includes direct labor plus benefits and all overhead such as heat, electric, supervision and clerical costs. This tells us that if an outside organization can do our maintenance and repair work for less than this number, they should be hired. Our shuttle time also needs to be included in the analysis.

Line 8 notes that direct labor is approximately $53 per hour, so if we pay our staff $15 dollars per hour for 2,080 hours per year (52 weeks x 40 hours per week), a third of that time is spent working on maintenance and repair tasks. Line 9 tells us 320 of the 421 vehicles are power units; the remaining 101 units are nonpower. In Line 10, you can see that the average age of the 421 units is 8.2 years. According to Line 11, 185,000 miles were accumulated for the month. We want that number to stay high because those are revenue miles that deliver our product and thus make money for the company.

Line 12 tells us that on average, 75 percent of the 421 vehicles are operating day to day, while 25 percent are not used. Line 13 indicates that each of the 421 vehicles averaged 579 miles this month (185,000 ÷ 421). However, if you divide 185,000 by 421, that equals 439, not 579. Don’t presume all your numbers are always correct; before you accept their accuracy, test the numbers and believe nothing until you have verified their integrity.

Line 14 shows that, of the 75 percent of the vehicles in operation, 15 percent are down. That means a net of 60 percent of the 421 vehicles are running; the other 40 percent are not running and probably are not needed. Line 15 tells us there is a 20 percent backlog of work waiting to be done, which indicates that the backup is excessive. There is a road call every 2,500 miles based on the information in Line 16. As we address our problems, we want this number to increase to validate our maintenance and repair efficiencies.

In Line 17, you can see that there are 35 staff members. Preventive maintenance (Line 18) is 10 percent of our workload, and scheduled work (Line 19) accounts for 35 percent. Line 20 tells us our parts and materials inventory is increasing 10 percent each month. According to Line 21, we’re taking in 20 percent more than we issue, which is one reason why our parts and materials are increasing 10 percent per month. Line 22 lets us know that we are ordering more than we need, supporting the fact that our parts and materials inventory is increasing 10 percent more than we need each month.

Corrective Actions
Now, what’s wrong here? We’re 32 percent over budget, but there are three activity-based numbers that tell us what to do to help correct our situation:
1. Forty percent of our vehicles are not needed. If we remove 100+ unneeded vehicles, the fixed costs of these vehicles will reduce our expenses.
2. Hopefully, most of these targeted reductions will be our power vehicles, which are more costly to own and operate than nonpower vehicles.
3. The third pertinent number is the average vehicle age. We want to remove older units since they are the most costly and least reliable.

Column 3 Review
Let’s review Column 3 to follow up on our corrective actions. We removed 56 vehicles from the 421 units, leaving 365 total units – a 13 percent reduction. Depending on your expertise and experience, some of you will remove 35 to 40 percent or whatever you’re comfortable with. That is fine, too.

Line 2 indicates expenses have dropped from $119,000 in January to $109,000 in April based on the reduction in vehicles, and in Line 3 you can see that the operating budget has been lowered an estimated $8,000. Line 4 shows that we’re still 33 percent over budget, but we’ll catch up next month – we have to reduce our budget for our reduced fleet. In Line 5, note that the actual cost per mile has gone down 2 cents, while Line 6 shows the planned cost per mile is steady.

The fully burdened labor rate has now dropped $1.02 per hour (Line 7) and direct labor is down 63 cents per hour (Line 8). In Line 9, note that power units are down by 43. Thirteen units are nonpower, which is good because power units are more expensive than nonpower units.

In Line 10, you can see the average age has dropped 1.5 years. That signifies the majority of the 56 units removed were older units. In Line 11, the revenue miles are holding relatively steady, so we’re not negatively impacting revenue. The percentage operated (Line 12) has increased 9 percent. More of our vehicles are being used, but we have more units to remove. Of 40 percent, 13 percent have been cleared out, so we have 27 percent to go. Usage per unit (Line 13) has risen from 579 miles (after testing the numbers, this should actually be 439 miles) to 650 miles. You will notice in Line 14 that downtime is still a problem; we need to take the time to prioritize and sequence our workload. However, backlog (Line 15) is down 10 percent, a positive event.

Road calls, per Line 16, now occur every 2,800 miles, a step in the right direction. Since a reduction in work requires fewer staff members, we are down two people since January (Line 17) who have hopefully been reassigned within the company. Line 18 shows that preventive maintenance is up from 10 percent to 30 percent of our workload. Scheduled work (Line 19) remains steady. Because Lines 20, 21 and 22 have not moved, we have to get the parts people up to speed. The fleet reductions are reducing the average age of the fleet, thus requiring fewer parts.

All in all, the numbers are falling in line with our corrective action. There are many problems that are responding to one corrective action – reducing the fleet by getting rid of older vehicles, thereby lowering the fleet’s average age.

Post-Audit Action Items
Generally, when an operational audit is completed, the following are common items that require corrective action. These items are listed in order of priority.
• Written policies and procedures are needed.
• Work standards and productivity measures are needed.
• Fleet size is too large.
• Management practices need improvement.
• Utilization and availability criteria are needed.
• Supervisors need training in participatory methodology.
• Communication upgrade on each level is needed.
• Quality must improve.
• Vehicle purchasing and procurement procedures need improvement.
• Transportation organizations need to look at centralization and decentralization strategies.
• Work scheduling needs to be quantified and upgraded based on frequencies, time, mileage and fuel use.
• Technical training is needed.
• Management by objectives needs to be implemented and upgraded.
• Look at in-house and outsource maintenance balance.
• Cost control systems need to be established and implemented.

About the Author: John Dolce is a fleet facility and maintenance specialist employed by Wendel Companies, an architectural and engineering firm. He is an active consultant, instructor and fleet manager with more than 40 years of experience in the public and private sector. Dolce has written three fleet-related textbooks and teaches fleet management courses at the University of Wisconsin’s Milwaukee and Madison campuses.

A valuable resource for utility fleet managers, the industry’s providers of rental and leasing services use their understanding of each fleet’s unique needs and objectives to match the most appropriate financing and acquisition strategies to particular operations.

For most fleets, a balance of ownership, rental and leasing is an effective choice. Utility Equipment Leasing Corporation (UELC) points out that understanding the benefits of those options is an effective way to run a fleet. Ownership is the clear choice for fleet managers, but gaps in fleet portfolios are a reality. Rental units maximize the immediate demand necessary to fill current gaps while leasing can be structured for longer-term, fixed and potentially lower payments that preserve capital for investment in a business and may not impact existing lines of credit. Depending on their structure, lease payments may offer a tax advantage and leasing can also avoid the risk of equipment obsolescence that comes with ownership through upgrade, trade-in and return provisions designed to provide flexibility.

In business since 1967, UELC provides utilities, municipalities, contractors and other fleets with a single source for their equipment rental and leasing needs. UELC has a complete rental fleet to meet daily, weekly, monthly or long-term needs. Late-model equipment in the nationwide rental operation averages 2.5 years old. This equipment is offered at a fixed cost without hidden charges for mileage or hours of use. The all-inclusive rental rate also includes maintenance for hassle-free utilization of the equipment. Customers are only responsible for fuel, lubricants and daily inspections to ensure safe operation.

Lease programs from the company include standard packages or customized solutions for long-term lease options toward the purchase of new or late-model equipment. Through DUECO Inc., a UELC sister company, Terex bucket trucks, digger derricks and cranes can be built to each fleet’s specifications. UELC structures financing programs for the equipment using capital, operating, municipal and split lease solutions.

Other UELC rental options include a rental purchase agreement that gives fleets the option to purchase or return the vehicle at any time during the term of the rental. This enables operations to test equipment prior to purchasing and to leverage the payments already incurred toward the purchase of the vehicle.

To learn more about UELC, visit www.uelc.com.

Empowering Solutions for Utility Fleets
When the cold winter winds whip across the prairie, folks there count on NorthWestern Energy to supply the gas and electricity they need to heat and light their homes. And the folks at this innovative and award-winning utility company count on ARI to help them manage a complex fleet of nearly 1,000 vehicles – from passenger cars and pickups to service vehicles to bucket trucks and digger derricks – ensuring vehicle readiness and reliability while providing up-to-date reporting, visibility, accountability and significant savings.

“We picked ARI because of the services they offered, their software and the way they managed vehicles,” said Ron Anderson, manager of fleet and equipment for NorthWestern Energy. Throughout its expansive service area, customers count on NorthWestern for dependable service – and ARI helps keep NorthWestern’s fleet on the road so the company can maintain its reputation for reliability.

The relationship dates back to 1995, when ARI began providing fueling and maintenance services for a South Dakota utility that NorthWestern later acquired. As NorthWestern grew into the company it is today, its relationship with ARI grew. Today, ARI provides a comprehensive range of fleet services for NorthWestern, including accident management for leased vehicles, licensing and title management, fuel management, renewal management, fleet administration, preventive maintenance and more.

“NorthWestern is a growing company, and we’re always looking for ways to support them, whether by reducing fleet-related costs or by helping make sure their vehicles are always ready for the road,” said Rob Hoysgaard, a utility fleet expert at ARI.

Recognized by Forbes as one of the nation’s 100 most trustworthy companies, and a five-time winner of the utility industry’s prestigious ServiceOne Award, NorthWestern operates in 121,000 square miles spread across Montana, Nebraska and South Dakota. For vehicle maintenance, the company often relies on vendors throughout the area, in towns large and small. In-house mechanics can’t always check up on shops in outlying towns. As a result, it can be difficult to ensure that preventive maintenance is done on schedule and to maintain high quality standards. To address this issue, ARI recently implemented its Garage Management System (GMS) application, customizing it to meet NorthWestern’s needs.

“We took a look at the system and said, ‘What if …?’” said Anderson. ARI responded by streamlining the process of opening and closing work orders, eliminating functionality not essential to NorthWestern’s operation, like scheduling, and making other changes to reflect the way NorthWestern works. ARI customizes all of its technology solutions in this fashion to meet clients’ needs.

A part of ARI’s Integrated Fleet Solution, the Web-based GMS combines maintenance data from internal and external sources for more efficient, accurate, up-to-date reporting and – ultimately – lower operating costs. It feeds cost information into the ARI insights system and tracks parts.

The GMS increases productivity, streamlining the maintenance process by helping the company manage technicians, vehicle preventive maintenance schedules, unscheduled repairs and parts inventories, while consolidating all vendor-in/vendor-out data with other fleet activities.

Using ARI insights, NorthWestern can capture all vehicle activity, including new vehicle delivery, licensing renewal, IFTA/IRP, DOT and ANSI inspections, accident repairs, and used vehicle removal and remarketing. The ARI fuel management program automatically captures fuel transactions and uploads them within 24 hours. All the company’s fleet information is available on the secure ARI portal – vehicles, preventive maintenance fuel costs and more.

“When I open the ARI website, I can take a look at the alerts we’ve established, look at fuel costs on an ongoing or monthly basis. It’s very helpful for my budgeting,” said Anderson. “If someone calls me about maintenance, I can put in the vehicle number and the information is all there – the last service, what was done. When we get ready to sell, if we take the vehicle to a local auction, we can print out a complete record from the day the vehicle came into the system.”
The site is easy to navigate and customize. Most important, NorthWestern can use ARI insights to improve operations, enhance productivity and, ultimately, reduce costs – and that all supports a better bottom line.

ARI is committed to its partners’ success, and it demonstrates that commitment every day. Robb Zavitz, ARI’s Minneapolis-based account manager, is often in touch with NorthWestern. Dave Robinson, the account coordinator, provides a daily single point of contact within ARI to ensure that everything is working smoothly. Jerry Allen, an ARI regional manager, served NorthWestern from 1995 until he retired from ARI in December 2009. That longevity is unusual in fleet management, but typical for ARI. In fact, most of the ARI team has more than 20 years of vocational fleet experience.

Whether it’s handling the paperwork for licensing and titling in every county in the three states where NorthWestern has operations, or providing insight into vehicle specifications, ARI does what it takes.

“If we have a question on specs, we can go to one person at ARI, and it gets taken care of,” said Anderson. Once the company, which has a contract with a vehicle manufacturer, finalizes the specs, ARI handles the ordering and then provides updates on the status of production and delivery, including everyone from the chassis manufacturer to the upfitters of bucket trucks or digger derricks. When it’s time to look at replacements, NorthWestern relies on a unique vehicle replacement analysis model (VRAM) designed to save maintenance dollars and ensure that mission-critical vehicles remain up and running. In addition to age and mileage, VRAM incorporates maintenance costs, model year, criticality and other factors that impact life cycle – all based on data already in the ARI insights system. VRAM then ranks each vehicle in the fleet for replacement priority.

“We can tell you which vehicle is No. 1 for replacement, and which is 956,” Anderson said. A faster, more accurate vehicle replacement model delivers value by helping companies like NorthWestern optimize their assets, lower their cost of ownership and ensure that mission-critical vehicles are available when they need them.

For more information, visit www.arifleet.com.

Expert Advice
Each fleet has unique financing needs, notes PHH Arval, a provider of fleet management services. At the company, consultants work with fleets to tailor lease financing to meet needs while also making sound economic sense. Among the many variables considered are the expected service life of vehicles, current interest rates, and a company’s risk profile and business culture.

PHH offers multiple fleet lease structures to best meet each operation’s requirements. Included are fixed or floating rates, open or closed-end leases, and self-funding or bank plan options.

PHH integrates its experience with information provided by vehicle manufacturers, safety-rating agencies, and its own data to help select and order fleet vehicles appropriate to each set of needs. Online tools make it easy to perform side-by-side comparisons of fleet vehicles, and analyze life-cycle costs based on replacement policies.

PHH also offers a pool of fleet vehicles ready for immediate delivery and an out-of-stock vehicle locator system, which finds vehicles in existing dealer inventories.

For more information, visit www.phharval.com.