Every once in a while, fleet managers discover a magic solution — a simple and straightforward fleet management practice that solves a number of problems all at once. For the states of Illinois and Indiana, that magic solution was a fuel card program. Implementing the new program helped these fleets reduce costs, improve reporting, and will ultimately help them become greener fleets.
Finding a Program that Fits
Prior to opting for a fuel card program, both Illinois and Indiana had fueling programs that didn't fit their fleets. For Illinois, state fuel transactions were spread across multiple vendors, which required manual processing and bill payment.
"There was very limited report capability due to the disaggregated spending," said Barbara Bonansinga, acting manager for the State of Illinois Central Management Services (CMS) Division of Vehicles. Paying bills was a costly and time-intensive process. Operating with several vendors and no central reporting system made it difficult for Illinois to closely track fuel purchases.
To minimize expenses, Illinois Governor Rod Blagojevich made it clear through a 2003 executive order that greater accountability for state fleet costs was expected. Since fuel is the top operating cost item, CMS Director James Sledge acknowledged, "Knowing fuel spend is key to compliance with the order and efficient overall management."
Indiana, however, tried its hand at a few fuel card programs, but found they offered limited capabilities. Previous programs offered cards for fuel, but didn't cover off-road vehicles or service and maintenance.
"In the past, the State focused the use of our fleet fuel card program on traditional passenger vehicles and their fuel usage only," said Michael Sturm, vendor manager for Indiana's Department of Administration Procurement Division. "As we changed to the Wright Express program, we realized we have a very diverse fleet, which includes your average four-door sedans, as well as everything from snowmobiles to airplanes, boats, and dump trucks. These vehicles need both fuel and services."[PAGEBREAK]
Fuel Card Increases Accountability
Through an RFP and competitive bid process involving a variety of fleet card vendors, both states chose the Wright Express fuel card program. With this program, each fleet vehicle is assigned a fuel card with individual PIN and equipment numbers. Each state agency then chooses which drivers are authorized to use the cards.
These cards allow drivers to obtain not only fuel, but also, in some instances, vehicle service and roadside assistance. Additionally, Wright offers both on- and off-road equipment cards, so units such as the State of Indiana's boats and dump-trucks can benefit from the card system.
"Putting fuel purchases for our non-traditional vehicles on a program helped us reduce petty cash purchases and allowed for greater accountability," Sturm said.
"In Illinois, having cards with unique PINs increases driver accountability and card security," said Bonansinga.
Fleet managers can also restrict fuel cards to certain purchases or purchase limits. "The fuel card system has the flexibility to allow each agency to choose which items can be purchased on the card and the single purchase limit, allowing agencies to customize the cards to both vehicles and agency rules," Sturm said. "The program has allowed the agencies to monitor speed outside of the policy more quickly, allowing them to minimize these types of purchases."
Sturm said this flexibility benefits all corners of its fleet. "For example, one agency does not allow service on its cards because it has an in-house repair shop. Another agency has boats with fuel tanks that hold several hundred gallons of fuel, so it set higher limits on cards associated with boats than its other cards," he said. "All changes to usage different from policies set by the Department of Administration are submitted for approval. This allows the Department of Administration, which monitors usage, to know why exceptions occur and that it is valid and conforms to policy."
The State of Illinois sets security limits globally — agencies are required to use exception reporting and alert tools to prevent theft and abuse.[PAGEBREAK]
Reporting Component Adds Value
In addition to making and managing fuel purchases easier, fuel card programs offer an associated reporting component.
Each time a vehicle fuels up, valuable metrics such as odometer reading, merchant information, fuel type, price per gallon, gallons purchased, transaction amount, and service type are documented. Once recorded, fleets can access the information via the online reporting system and purchase reports. Exception and standard business reports allow fleet managers to make critical decisions based on metrics.
"In the past, our state agencies were not provided comprehensive fuel use information in a timely and usable manner, which hindered fleet management abilities," Sturm said. "By obtaining purchase information daily, each agency can correct policy-violating purchasing habits as they occur."
The fuel card program reports also help fleets make smart choices about where to buy fuel. Fleet managers compare the prices at both local and regional stations.
"Automated report capabilities position a fleet manager to be better able to answer important questions on fuel costs, and more effectively use and manage the fleet," Bonansinga said. "We meet regularly to review the data and recommend cost-saving strategies."
Sturm said in addition to helping fleets find the best fuel prices, the fuel card program also issues his state rebates based on total fuel purchases.
"The fuel card program helped the State establish policies and procedures based on statewide needs, but allows individual agencies flexibility to customize the program to its business rules," Sturm said. "The Wright Express reporting system gives us the ability to monitor policies for compliance. The reporting system allows access to all information in a quick and timely manner."
The cards' security features also help prevent theft and abuse. While the reporting system helps fleets operate more efficiently on a daily basis, it has also benefited larger fleet initiatives. For Indiana, one important fleet initiative is fleet vehicle reduction without affecting day-to-day operations.
"The fuel card program has provided the division a valuable source of data on each vehicle in our fleet," Sturm said. "The information has helped us obtain a better idea of actual vehicle usage as well as repairs, which helps us make decisions about fleet size and make-up."
In addition, said Strum, "Agency fleet managers have mentioned being able to access all purchases from the system in an Excel format allows them to pay the invoice in a timely manner."[PAGEBREAK]
Positive Changes Internally and Externally
The fuel card program has allowed Bonansinga and Sturm to implement fleet management best practices. Sturm's team established a commodity user group that meets quarterly to discuss the fuel card program as well as trends agencies see as a result of the reporting.
Similarly, Bonansinga's team holds account review meetings with major fuel consuming agencies to help in cost reduction decisions. While the fuel card program has led to positive changes internally, both Bonansinga and Sturm see the program benefiting the greater good as well.
"In the future, information from the fuel card system will help us reduce Indiana's carbon footprint by allowing us to determine ways to decrease the State's overall fuel consumption," Sturm said.
Bonansinga agreed. "Fuel data is helping Illinois determine its carbon footprint and fuel spend. Illinois is a national leader in the use of sustainable E-85 and biodiesel.
The system has enabled Illinois to expand the use of E-85 fuel statewide. "Wright Express helped us identify vendors and develop reporting methods for use of alternative fuels. Illinois' commerce agency used fleet card data provided by CMS to identify stations that could be converted to E-85, based on where fleets' alternative-fuel vehicles were traveling. As a result, E-85 is now more available to the public."