Maintaining Fleet Service Levels in a Shrinking Budget Environment

June 2012, Government Fleet - Feature

by Cindy Brauer - Also by this author

Vehicle return lanes have color-coded flags, pictured here during a "lean event." Vehicle dispatch packets are color coded so customers know in which lane to return the vehicle, which speeds vehicle return and detailing. Photo courtesy of the State of Oregon.
Vehicle return lanes have color-coded flags, pictured here during a "lean event." Vehicle dispatch packets are color coded so customers know in which lane to return the vehicle, which speeds vehicle return and detailing. Photo courtesy of the State of Oregon.

At a Glance

In the wake of severe budget cuts, Oregon's state fleet operations strives to maintain service levels through:

  • An entrepreneurial management approach.
  • Lean management principles.
  • Relationship building with customer agencies, executive management, and legislative decision-makers.

Oregon State Fleet Manager Brian King faced the same tough shrinking-­budget versus service-level-retention challenge plaguing other public sector fleet managers in April 2009. Oregon’s legislators, confronting drastically falling revenues as U.S. economic woes deepened, had carved $10 million from the state’s fleet vehicle acquisition budget and $3 million from fleet operations. Two fleet service facilities were shuttered. Stunning, across-the-board staffing cuts were implemented.

Today, King’s fleet operations serves 69 agencies and 40-50 intergovernmental agreements and manages a 4,000-­vehicle fleet, motor pool, and service shop — all with a bare-bones two-year budget of $35.7 million and, most startling, a staff of just 27, more than 50 percent fewer than five years ago.

How does a public sector fleet organization balance the mandates of an extreme budget weight loss with maintaining viable, responsive, and professional services? For King and his management team, which includes Kent Fretwell (operations), Ken Liedtke (business), and Carl Crowe (shop supervisor), progress has come with new management approaches, continual operational analysis, and strong relationship building with customers and decision-­makers.

Management Approach Looks to ­Customer-Focused Solutions
“Our department is venturing into entrepreneurial management, emphasizing a customer-focused business approach and ROI-based cost management strategies,” King explained. “It’s all about what we can do for the customer.”

An entrepreneurial management approach values proactive enterprise leadership, collaboration, and innovation.

According to King, this management approach prompted an important Department of Administrative Services (DAS) initiative to establish customer boards to collaborate on and review fleet services, pinpointing the essential and most useful.

Another significant result of this approach for Oregon’s fleet organization has been changing the rate structure to a “true charge-back model” to determine the actual costs of a service to a customer, King said.

The department’s 2013-2015 staggered rates for permanently assigned vehicles are based on monthly mileage and an eight-year-or-less depreciation schedule. “The higher and faster the vehicle usage, the higher the charge rate,” King said. The goal is accurate recovery of the cost for a replacement vehicle.

Under the staggered schedule, for example, a customer agency operating a permanently assigned compact sedan with expected 2,709 average monthly mileage will pay $436 per month for the unit.

Individual monthly long-term vehicle charge rates are determined based on the customer vehicle usage pattern. However, the fleet reviews vehicle use routinely, and the rate may be adjusted if the usage pattern history changes, King said.

Lean Events & Data Analysis Improving ROI and Efficiencies
Fleet operations was one of the first programs in the DAS to implement lean management principles, “looking at areas where return on investment is not there,” King said.

Through closely examining specific tasks, procedures, and policies, “lean events” thus far have streamlined the motor pool vehicle return process, eliminated unnecessary inspections, and simplified accounts payable processes. The results have opened up more time for team cross-training and reduced the motor pool by 30 vehicles. Other recent improvements have trimmed another 20 motor pool units. “We now meet more than 95 percent of customer requests for vehicles with the remaining 124 units,” King said.

Brian King is the fleet services manager for the Oregon Department of Administrative Services (DAS) State Services Division.
Brian King is the fleet services manager for the Oregon Department of Administrative Services (DAS) State Services Division.

When feasible, staff member-generated change opportunities are also implemented. For example, King noted, the billing coordinator eliminated nonessential — and generally unread — departmental reports, saving time and expense.

King and his team are also focusing on data and operational analysis to improve productivity and cost efficiencies. One critical area — improving vehicle utilization — is an ongoing process, King said. With the support of utilization data and cost-­benefit analysis, Operations Manager Fretwell works with customers to evaluate what size and model vehicle is required for its functional mission, King explained.

The downsizing efforts have eliminated 79 fleet vehicles and helped customer agencies reassign more than 150 units for improved utilization, King reported.

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