How to Prevent Total Fleet Privatization

November 2005, Government Fleet - Feature

by Fred DeBono

Outsourcing has become a growing trend in municipal fleet operations. And while outsourcing certain fleet functions can be a valuable and cost-effective alternative to in-house management, total fleet outsourcing poses a danger to municipalities and their customers.Aside from in-house jobs being lost due to outsourcing, mismanagement of equipment can have devastating effects on the cost of the total fleet operation. These costs can result in unacceptable levels of services to the community. Weighing Cost Savings vs. Customer Support
Management functions include planning, organizing, staffing, leading, and controlling. In-house fleet managers are experts at these functions. For municipal fleets looking for cost savings, outsourcing - or privatizing - the entire fleet operation is not always the correct answer. In some instances, outsourcing can “hollow out” a municipality, weakening the organization by making it completely dependent on others. However, negotiating contracts with outside vendors for services such as towing, alignments, collision repairs, transmission and engine rebuilding, and parts acquisition are sometimes more cost-effective than doing them in-house.The important analysis to make when determining whether to outsource a function is to ask, “How will this affect my fleet customers, as well as the municipality’s customers?”Municipalities possess large inventories of vehicles, motorized equipment, and supporting items. These items constitute a large investment totaling several million dollars; therefore, it is the responsibility of employees at all levels to ensure that this equipment is properly maintained in order for each department to function properly and efficiently.Manage Budget Cuts by Being Prepared and Well-ResearchedEvery year at budget time, department heads in today’s municipal government are directed to reduce costs while still providing the high level of services that constituents expect. From the fleet division to the public works department and the office of the city manager, officials are constantly struggling to do more with less money, and at times it can seem an insurmountable task.Managing a municipal fleet has become a very complex and demanding profession. Today’s successful in-house fleet manager reviews and incorporates a variety of factors into the fleet program. Fleet management requires insight, planning, and organizational support at all levels. For a fleet manager to succeed, he or she must constantly address areas of development, implementation, sound communication, effective utilization, and modification of departmental functions and responsibilities.To meet these responsibilities and minimize the chance of total fleet outsourcing, develop a well-researched and well-communicated Fleet Management Standard Operating Procedure (SOP) guide. The focus of this SOP are policies and procedures for a comprehensive fleet program. This program will cover the following elements:
  • Responsibilities
  • Fleet operational policy.
  • Equipment acquisition.
  • Vehicle assignments.
  • Preventive maintenance.
  • Equipment abuse.
  • Equipment repair.
  • Equipment appearance and markings.
  • Equipment safety.
  • Equipment disposal.
  • Defensive driving.
  • Fuel disbursement and control.
  • Field management support.
  • Employee’s involvement.
  • Detailed record keeping.{+PAGEBREAK+}Eight Areas in Which an In-House Fleet Manager Excels
    The government fleet manager daily faces challenges and roadblocks. Forecasting industry trends or roadblocks and responding appropriately are two areas where the in-house fleet manager excels. Because in-house fleet managers really “knows the business,” their presence is essential to manage the following eight functions:1. Fuel Consumption
    This is the single largest expense associated with a fleet operation. Mismanagement of fuel disbursement can result in a devastating fuel bill.Fleet managers can properly control the large volume of fuels by providing stringent supervision and control at all levels of management. Equally as important is the attention that each driver/operator uses in attempting to reduce costs through proper data required in tracking fuel dispensing.2. Automotive Parts and Inventory
    In today’s technology, the second highest expense associated with a fleet operation is automotive parts. Costly computerized and electronic devices control major components. A well-stocked automotive parts warehouse costs thousands and, in some cases, over a million dollars in inventory; this significantly impacts the fleet operation. Unnecessary replacements of these parts equates to a high cost of repairs. Well-trained technicians and updated trouble-shooting equipment are necessary to keep this cost to a minimum.3. Technician Management and Retention
    The shortage of qualified technicians combined with the fast technological changes in the automotive industry presents another challenge. In a diverse fleet operation, hiring highly qualified heavy trucks, heavy equipment, fire trucks, and small engines mechanics is very difficult. Competitive wages and benefits are always a problem. Most municipalities compare their wages with those of the “league of cities” instead of local businesses. This practice takes away the hiring power and excludes fleets from the competitive job market. Cross-training plays a big part for teams to be successful. To enhance this program, a fleet must include three or four levels of pay grades and implement a cross-training program to assure the availability of qualified mechanics. An incentive program for advanced training and certifications motivates employees to try harder.4. Preventive Maintenance
    Every employee who operates or repairs vehicles, or supervises those who do, plays an equal role in seeing that preventive maintenance is performed as required. Scheduled preventive maintenance reduces future costly repairs, extends the life expectancy of vehicles and equipment, and assures reliability and safe operation.The successful delivery of services provided to the community is completely dependent on the availability of vehicles and motorized equipment. It is mandatory that all department heads, managers, and supervisors with this type of equipment under their supervision ensure that an aggressive maintenance program is pursued. Every effort must be made to standardize this function throughout the organization.5. Equipment Abuse
    There is no limit to the reasons and ways that equipment can be abused. The incorrect or improper use of equipment is extremely expensive to a fleet operation. Abuse is by far the most expensive form of equipment failure. The source of abuse is also difficult to pinpoint because it can take many forms and some may overlap. A large amount of all fleet maintenance repair costs stem from one or more forms of equipment abuse. Only through concentrated education, supervision, and proper reporting can the percentage be reduced.6. Equipment Acquisition
    An organizational coordinated effort involving all departments is necessary to obtain equipment that will be economical in operation, low in maintenance cost, and produce a good return upon resale. This must also be coupled with rapidly changing technological advances, which make many things cost-effective today that might not have been some years ago.Vehicle utilization impacts the cost of a fleet operation. All vehicles and equipment must be evaluated to ensure that they are being utilized to best advantage. Vehicles not meeting the minimum requirements are to be considered excess and must be re-assigned or eliminated.7. Accident Management
    One accident may cost a municipality large sums of money in terms of personnel and equipment loss. It is therefore imperative that all personnel, whether operating, driving, maintaining, or just working around equipment, know the basic safety rules as well as specific guidelines established by the equipment operating manual. Accidents increase the level of liability and inflate insurance costs.8. Policy Communication
    Organizations must have effective communication to succeed. These communications depend on day-to-day exchange of information among employees. Performance objectives, job instructions, financial data, customer order requests, inventory data, production problems, and employee production reports illustrate the range of internal communication exchange in the course of business.It is of the utmost importance that employees at all levels understand that municipal operations must be as competitive as private businesses. In-house managers who are successful understand and manage the human side of the organization.
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