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1 White Paper fall 2012 Saving Through Sustainability Initiatives

2 The Road to Going Green In today s economy, companies are constantly striving to identify opportunities that optimize their return on investment. As a result, saving money and how best to do so is at the forefront of every fleet manager s mind including, of course, the most efficient use of resources. The idea of whether or not initiatives should be taken to increase the sustainability of an organization s fleet should be considered. However, sustainability relies on a number of components that sometimes make the answer to this question more complicated. Sustainable or green initiatives are not a new topic. For many years companies have been introducing green strategies to their fleets for a variety of reasons, whether those be cost savings, social responsibility, marketing, or a combination of any of these. When gas prices began their steady climb in the early 2000s, green initiatives surfaced as a trending topic within the industry. Increasingly, vehicle manufacturers are positioning products to provide consumers with new technologies and model options that aid in improving sustainability. The pressure for companies to reduce their carbon footprint and increase fuel efficiency continues to keep both manufacturers and fleet managers searching for the right strategy. Benefits of Sustainability By making changes to a company s fleet toward increased sustainability, a fleet manager can expect to see significant benefits. Sustainability, in terms of fleet management, works to improve upon economic, environmental and social performance. Lowering emissions, maintenance costs and fuel spending are the most commonly attained goals that typically lead to overall cost reduction. Taking actionable steps to go green can also improve a company s impact on the environment while at the same time elevating their image in a way that appeals to consumers that are increasingly conscious of sustainability initiatives. 2

3 Considering the Factors To reach their goals, a fleet manager must evaluate the various factors that contribute to their fleet s performance. Understanding the importance of vehicle selection, fuel types and managed fuel card programs, as well as the use of telematics devices and the role driver behavior plays in efficiency are key components in developing an effective strategy. Vehicle Selection: Vehicle selection may be the most controlled variable within a fleet and also the most important when it comes to overall cost reduction. The goal in selecting vehicles that suit a company s culture and application should be to drive down fuel and maintenance costs while increasing residual values. With many new models and advanced technologies offered, fleet managers have many opportunities to choose vehicles that will aid in achieving their sustainability goals. Fuel Type: With new vehicle technologies come numerous fuel options that must be evaluated against each driver s application, range, geographic location and organizational goals. Multiple fuel types may be required to optimize each fleet s performance both on paper and day-to-day on the road. Managed Fuel Card Program: Managing spend and consumption is the key to measuring emission levels as well as understanding performance against organizational goals. A managed fuel card program provides vital inputs such as gallons purchased, fuel type and fuel grade in addition to providing numerous controls to curb unwanted spend and consumption. These inputs will drive each fleet s performance in terms of Miles Per Gallon (MPG), providing the ongoing controls required to optimize both emissions and cost. Telematics: Telematics is another critical factor in achieving sustainability goals. When it comes to fleet efficiency, the monitoring of emissions, driver routing, vehicle speed and idle times, system diagnostics and proper maintenance of vehicles is essential. Telematics devices give a real-time snapshot of the critical items a fleet manager needs to know about their fleet in order to decrease vehicle downtime and extend the fleet s longevity. Driver Behavior: Driver behavior drastically affects the performance of a fleet. Simply providing drivers with fuel-efficient vehicles like hybrids does not necessarily translate directly to high MPG. Driver performance, such as speeding and long idle times can easily drive down the efficiency of a vehicle. By monitoring these elements through a managed fuel card and telematics devices, fleet managers can make recommendations to improve driver behavior over the long term, in turn improving efficiency. 3

4 Determining What s Right for Your Fleet With a surplus of available vehicle technologies and options that improve on a daily basis, it s important to keep focused on what works best for each unique fleet. Where an electric vehicle may be right for one, it may not be suitable for another. A fleet manager must consider the company s culture when determining what strategies fit the profile of their fleet based on factors such as application, fleet size, location(s), and target audience including both the driver and consumer in many cases. In deciding what approach to take in developing a sustainability strategy, a fleet manager must also understand the historic performance of their current fleet. This is typically accomplished by measuring consumption and output as well as assessing vehicle mix, mileage and driver behavior. Creating this baseline helps a fleet manager to set realistic goals and apply a strategy that will produce the highest return on investment. Measuring Success Every company should work with their partners to build long- and short-term strategies that achieve both emissions and total cost of ownership reduction. To reach defined goals, fleet managers must put specific controls in place that allow them to measure success. The most common and accurate ways to measure a fleet s performance after taking steps to become sustainable are the use of telematics and fuel card programs. Telematics devices provide fleet managers with actionable data such as speeding and idle times two important factors when it comes to lowering overall costs and emissions. A fuel card program tracks fuel costs and consumption data two other valuable components in determining the success of a sustainability strategy. Individually or together, these programs assist in measuring a fleet s fuel economy and efficiency by providing the necessary data to calculate costs that show the return a fleet achieves by going green, as well as offering insight into areas where a fleet may further benefit from change. Depending on the activity of a fleet, impactful sustainability results can be seen within 1-3 years from the initial implementation of a green strategy. 4

5 LEASES Copyright 2013 Merchants fleet management. All rights reserved.

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