Acquiring and Using a Fleet Management Information System to Manage Your Fleet

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1 Acquiring and Using a Fleet Management Information System to Manage Your Fleet Ashley Sowerby, Managing Director Chevin Fleet Solutions Paul Lauria, President Mercury Associates, Inc.

2 Chevin by Numbers Who are Chevin? Fleet software specialists 30 People and growing every year Headquartered in UK Regional office in US Global reseller network Private company with a customer, not shareholder, focus Focussed exclusively on delivering fleet solutions for over 17 years Copyright 2007 Chevin Fleet Solutions. All rights reserved.

3 International Solutions Over 500 clients in more than 30 Countries Multi-lingual solution FMS in your language! whatever it is Copyright 2007 Chevin Fleet Solutions. All rights reserved.

4 Our Products FleetWave Web-based enterprise solution for complex fleet operations, mobile workers, multiple workshops, sites or countries. RoadBASE PC based package to cater for varied fleets managed from a single location Copyright 2007 Chevin Fleet Solutions. All rights reserved.

5 Who are our customers? Local Authorities Blue Light Services Major PLCs Private Sector Utility Companies United Nations Non Governmental Organisations and Aid Agencies Copyright 2007 Chevin Fleet Solutions. All rights reserved.

6 FMS Position and Role Copyright 2007 Chevin Fleet Solutions. All rights reserved.

7 FMS Position and Role Finance Invoice consolidation Expense reporting and approval HR Driver management Compliance Expense claims Accident claims processing Copyright 2007 Chevin Fleet Solutions. All rights reserved.

8 FMS Position and Role Distribution/Logistics Vehicle availability Service history Fuel analysis Operations Workshop loading Spare parts management Copyright 2007 Chevin Fleet Solutions. All rights reserved.

9 FMS Core Modules Copyright 2007 Chevin Fleet Solutions. All rights reserved.

10 FMS Vehicles/Diary Vehicles/Assets Holds fleet details User definable Diary Plan inspections & PM Replacement forecast Copyright 2007 Chevin Fleet Solutions. All rights reserved.

11 FMS Motor Pool Motor Pool Full visibility of vehicle utilisation, colourcoded to your needs Availability tool, search by: Model Type Location Optional invoicing or recharging for vehicle usage Automated reminders for vehicle return Copyright 2007 Chevin Fleet Solutions. All rights reserved.

12 FMS - Fuel Fuel Electronic import of transactions or Manual tank management Fraud detection Invalid fuel types Tank capacity exceeded Out of hours refuelling Performance l/100km, KML Over-grading Premium vs. Regular Copyright 2007 Chevin Fleet Solutions. All rights reserved.

13 FMS - Repairs Repairs Increase warranty claims Integrated spare parts management Defect reporting and rectification Identify missed inspections or services Copyright 2007 Chevin Fleet Solutions. All rights reserved.

14 FMS - Workshops Workshops Effectively manage multiple workshops Touch-screen data capture of activity Bar-coding Copyright 2007 Chevin Fleet Solutions. All rights reserved.

15 FMS - Drivers Driver Management Vehicle usage history Licence validation Expenses Driver self-claim Manager Approval = Reduced claims! Copyright 2007 Chevin Fleet Solutions. All rights reserved.

16 FMS Document Management System DMS Provide remote access to important documents Library management of original documents Copyright 2007 Chevin Fleet Solutions. All rights reserved.

17 FMS PDA/Smart Phones Remote access to Fleet and operational data Driver trip reporting Proof of delivery Service desk Low deployment cost only requires Internet Explorer on the PDA/Phone Copyright 2007 Chevin Fleet Solutions. All rights reserved.

18 FMS Digital Dashboard Personalised for each user or department High visibility of key performance indicators Interactive with drill-down reporting User definable see only what s important to you! Copyright 2007 Chevin Fleet Solutions. All rights reserved.

19 FMS Hosted Solutions As a browser-based application, FleetWave is ideally suited to being hosted outside of your organisation. BENEFITS Easy of deployment SLA backed support Quick turnaround Avoid internal IT costs and delays COST SAVINGS Remote deployment no client installation Remote updates New releases installed centrally Global access via Internet Copyright 2007 Chevin Fleet Solutions. All rights reserved.

20 FMS Summary FMS It s a tool, nothing more. With the right tool however you can achieve so much more! Copyright 2007 Chevin Fleet Solutions. All rights reserved.

21 Common Misconceptions About Fleet Management Fleet management is not important Fleet management is not complicated

22 Fleet management is perceived as not important because... It is not the core mission of most organizations Consumers of fleet management services are internal (i.e., fellow employees) Fleet expenditures are relatively small Acquiring and caring for vehicles is believed to be simple

23 Effective fleet management practices are important to... Customer service Customer confidence Organization image Employee productivity Employee safety Public safety Cost control and profitability Growth

24 Fleet management is complicated because... It involves performing two distinct but interdependent types of activities: Asset management Business management

25 Asset Management Processes Dispatching Vehicle Assignment Routing & Scheduling Vehicle Acquisition Fuel Card Management Mileage Reimbursement Accident Management Vehicle Disposal Licensing & Titling Vehicle Selection/ Specification Sound Vehicle Performance Replacement Planning Operator/Driver Training Vehicle Maintenance & Repair Bulk Fuel Procurement & Dispensing Parts Procurement & Supply Vehicle Utilization Control Outsourcing Motor Pool Management Vehicle Operation Mechanic Supervision

26 Business Management Processes Business Planning Focus Groups Professional Certification Training Customer Relationship Management Service Level Agreements Annual Reports Customer Surveys Information Systems Billing & Collections Sound Fleet Management Management Analysis & Reporting Cost Analysis & Control Fund Management and Accounting Performance Reviews Charge-Back Rate Development Purchasing Performance Measurement & Benchmarking Contracts Budgeting Personnel Management

27 Information is critical for... Managing day-to-day fleet service delivery activities Understanding Monitoring Measuring Scheduling Assigning Deciding Communicating and educating

28 Information is critical for... Managing the long-term direction and performance of the fleet management organization and the fleet it manages Forecasting Budgeting Analyzing and evaluating Planning Policy setting Communicating and educating

29 Traditional Sources of Fleet Management Information Personal experience First-hand observation Second-hand reports Intuition / speculation Past practice / tradition

30 Limitations of Information from Traditional Sources Unavailable Inaccessible Unsuitable Inaccurate Incomplete Not timely Biased

31 Measuring Performance Executive Manager Fleet Manager Maintenance Manager Parts Manager Vehicle availability or downtime rate In-service breakdown rate Ratio of actual to budgeted expenses Accident rate PM schedule adherence rate Work order turnaround rate Average maintenance and repair backlog Mechanic productivity rate Direct/billable hours by mechanic Efficiency rate by mechanic Repair comeback rate by mechanic Parts order fill time Parts order fill rate Inventory turnover rate Percentage of inventory with no movement in last 12 months

32 Determining Optimal Vehicle Replacement Cycles Where: EAC = NPV r(1+r) n (1+r) n -1 EAC NPV r N Is the equivalent annual cost of a stream of future costs is the present value of a stream of future costs Is the discount rate less inflation Is the length in years of the stream of costs

33 Determining Optimal Vehicle Replacement Cycles REPLACEMENT CYCLE Mileage at replacement 10,578 21,156 31,734 42,312 52,890 63,468 74,046 84,624 95,202 CAPITAL COST Total Residual Value $ 161,500 $ 83,978 $ 57,991 $ 44,977 $ 37,176 $ 31,991 $ 28,304 $ 25,556 $ 23,436 Annual Depreciation $ 28,500 $ 77,522 $ 25,987 $ 13,013 $ 7,801 $ 5,186 $ 3,687 $ 2,748 $ 2,120 Cumulative Depreciation $ 28,500 $ 106,022 $ 132,009 $ 145,023 $ 152,824 $ 158,009 $ 161,696 $ 164,444 $ 166,564 OPERATING COST Mean Annual M&R Cost from FMS $ 15,021 $ 28,137 $ 38,610 $ 66,007 $ 100,808 $ 79,229 $ 124,926 $ 150,313 Extrapolated Annual M&R Cost $ 19,951 $ 26,806 $ 36,017 $ 48,392 $ 65,020 $ 87,361 $ 117,380 $ 157,712 $ 211,904 Annual Fuel Cost $ 8,881 $ 9,239 $ 9,611 $ 9,998 $ 10,401 $ 10,820 $ 11,256 $ 11,710 $ 12,182 Total Annual Operating Cost $ 28,831 $ 36,045 $ 45,628 $ 58,390 $ 75,421 $ 98,182 $ 128,636 $ 169,422 $ 224,086 Cumulative Operating Cost $ 28,831 $ 64,876 $ 110,503 $ 168,894 $ 244,315 $ 342,497 $ 471,133 $ 640,556 $ 864,641 TOTAL COST Annual Total Cost $ 57,331 $ 113,567 $ 71,615 $ 71,404 $ 83,222 $ 103,368 $ 132,323 $ 172,170 $ 226,205 Cumulative Total Cost $ 57,331 $ 170,898 $ 242,513 $ 313,917 $ 397,139 $ 500,506 $ 632,829 $ 804,999 $1,031,205 NPV of Cumulative Total Cost $ 54,086 $ 161,225 $ 228,786 $ 296,148 $ 374,659 $ 472,176 $ 597,009 $ 759,433 $ 972,835 Equivalent Annual Cost $ 55,709 $ 84,258 $ 80,883 $ 79,672 $ 81,809 $ 87,162 $ 95,824 $ 108,186 $ 124,945

34 Computing Internal Vehicle Rental Rates Where: R i = TC i / U i R i TC i U i Is the rental rate for a vehicle (or piece of equipment) of type i Is the projected annual total cost of providing all vehicles of type i Is the projected annual utilization of all vehicles of type i

35 Computing Mechanic Staffing Requirements Where: M H A N A P M = ΣH A N A P Is the number of FTE mechanics needed Is the average number of direct in-house M&R labor hours per year to maintain and repair each vehicle of type "A" Is the number of assets of type "A" typically receiving all inhouse maintenance and repair services at the maintenance facility for which staffing requirements are being computed Is the average number of hours per year that each mechanic working in this facility can devote to direct M&R activities

36 Evaluating Preventive Maintenance Program Effectiveness PM Compliance 96% 2004 PM Compliance 94% 2003 PM Compliance 88% 2002 PM Compliance 62% 2001 PM Compliance 64% 2000 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 $400,000 $450,000 Brakes Transmission Engine

37 Understanding Vehicle Utilization 140,000 Patrol Unit Age and Utilization (Average age = 2.5 years; Average utilization = 48,000 miles) 120,000 Utilization (miles) 100,000 80,000 60,000 40,000 20, Months in Service

38 Demonstrating Impact of Vehicle Age Maintenance Costs $ 6,000 5,000 M & R Cost 4,000 3,000 2,000 1, ,000 40,000 60,000 80, , ,000 LTD Mileage

39 Demonstrating Impact of Vehicle Age Maintenance Costs Cost per gallon of fuel consumed $6 $5 $4 $3 $2 $1 $0 Truck Maintenance and Repair Costs In 2004 as a Function of Vehicle Age and Usage Age in years

40 Assessing Effectiveness of Different Capital Financing Methods COMPARATIVE DISTRIBUTION OF VEHICLES BY MODEL YEAR Percentage of Vehicles 30% 25% 20% 15% 10% 5% 0% Model Year

41 Assessing Effectiveness of Different Capital Financing Methods COMPARATIVE DISTRIBUTION OF VEHICLES BY MODEL YEAR 30% Percentage of Vehicles 25% 20% 15% 10% 5% 0% Model Year

42 Making the Case for Increasing Fleet Replacement Spending $120 $100 Replacement Cost (Millions) $80 $60 $40 $20 $ Fiscal Year Recommended Current

43 Making the Case for Increasing Fleet Replacement Spending $120 $100 Maintenance Cost (Millions) $80 $60 $40 $20 $ Fiscal Year Probable Preferable

44 Making the Case for Increasing Fleet Replacement Spending $180 Total Cost (Millions) $160 $140 $120 $100 $80 $ Fiscal Year Status Quo Fleet Renewal Program

45 Key Considerations When Buying Computerized Systems and Tools Defining functional requirements Understanding product functionality fits and gaps Determining willingness of your organization to tailor current business practices to new system functionality Determining willingness and propensity of product developer to customize or not customize Determining internal technical support capabilities and priorities Using new system acquisition as an opportunity to reengineer outdated business practices

46 Questions to Consider Do you have the right number of vehicles and pieces of equipment in your fleet? How do you know? Is this number growing? Shrinking? Do you have the right types of vehicles? Are they reliable? Are they safe to operate? Are they safely operated? How much do you spend on your fleet? Are these expenditures increasing or decreasing? Are they reasonable? Can they be reduced? Which ones? How? Will cost reductions affect fleet performance? Customer service?

47 Questions to Consider What information is needed at each level of your organization in order to manage your fleet? What information is actually available? Used? How well do you employ and disseminate information to help others understand fleet performance and fleet management practices? In using a management information system to manage your fleet, do you focus on processing data or on analyzing information and creating knowledge? How confident are you in the accuracy and completeness of the data in your FMS? How has new information technology changed the way you make fleet management decisions? Do decision makers base important decisions about your fleet on information you provide them, or on information from other sources? What are these other sources?

48 Questions

49 For More Information Ashley Sowerby Chevin Fleet Solutions Paul Lauria Mercury Associates, Inc.

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