A few years ago in the midst of runaway oil prices, I was having lunch with a manager from another city and asked how his city was dealing with the issue of an under-estimated fuel budget. He replied that they had budget reserves to get them over the hump. Whether the reserves got them through that crisis or the next crisis isn't really the point. The point here is that the plan was "business as usual until things get better." This plan (also called "do nothing" or "wait and see") is prevalent in government agencies because of the guaranteed predictable revenue stream called tax dollars.
In my opinion, the choice of business as usual is no longer an option. The current economic situation demands that every tax dollar be spent efficiently. City council members, mayors, and citizens alike expect accountability for these limited funds, and rightfully so. The poor economy has resulted in a public outcry for more accountability in our government. This outcry should serve as ample warning that 2011 is the time for change, to increase efficiency, improve accountability, and add visibility.
Common sense tells us that every manager should be examining his or her area of responsibility and seeking to improve efficiency, but it should not stop there. Accountability means explaining to others how the operation is run, how dollars are spent, and why it is efficient. Accountability also means admitting where inefficiencies exist, where improvement is needed, and explaining what plans or actions will be taken or are currently under way for improvement.
City managers and heads of city departments are expected to accomplish the needs of the community within the budgets they are given. Citizens may not fully understand the impact the economy has on city services. Since they see little or no reductions in their taxes, they may underestimate the size of reductions in tax revenue. Presumably, any reduction in revenue requires an equivalent reduction in expenditure if a balanced budget is expected. This is where tough decisions enter the picture. Is it acceptable to reduce services to the public? At what point does a reduction in services mean a reduction in staff? What is the right thing to do? Is it possible to reduce expenditures and retain services at the levels citizens are accustomed to?
I believe it is possible, but not with a business-as-usual approach. It is time to do something different — time for a change.
It is far more palatable that we confess imperfection, establish a plan, and embark upon a journey toward improvement than it is to continue with business as usual, attempting to defend the operation as being "perfect as is" and beyond improvement. After all, if something is beyond improvement, it must be replaced when no longer considered perfect.
For possible improvement in the near future, it may be time for fleet departments to take an honest look at operations. Speak up about what is being done efficiently and why, then determine where room for improvements exist.
An examination, analysis, or audit of an organization, operation, or department may be accomplished using internal staff or by an uninvolved third party. An outsider's opinion may be more credible because he or she has no self-interest in the operation. Equal justification exists to perform such an audit with internal staff, as they have the advantages of organizational history, information security, and intimate knowledge of the operation. A combined effort may be employed using both methods. Whichever method selected, make sure to include staff training, operations policies, vehicle and parts inventory, fuel management, and fleet facility costs, as one or more can likely be improved on.[PAGEBREAK]
Ensure Technicians Receive Continued Training
Highly trained technicians not only increase the efficiency of an operation, but actually reduce the need for a larger staff. This is because they are able to diagnose problems quickly and correctly the first time. This equates to reduced comebacks, increased up-time, and a better maintained fleet.
Because the industry is so dynamic, technicians must continually update their skills. An important part of the fleet review should include technicians. Consider the current training level of technician staff, the continuing education available to keep their skills current, and the planning in place for their replacements. Review the written job descriptions from the Human Resources department and compare it to the industry's current demands. Look for items that are outdated. Consider involving current technicians in writing new job descriptions, preparing interview questions, and even assisting with interviews when the time comes. One training method to consider is implementing an apprenticeship or trainee program to allow top technicians to train their own replacements.
Finally, the organization should be aware of and address the issue of technician shortage, if it exists.
Express Clear Expectations in Written Policies
There is no longer room for unwritten rules or inconsistent standards. Does the fleet department have a policy manual specific to its operation? Is it current, available, and discussed and adjusted on a regular basis? Clearly defined performance standards and written procedures ensure employee expectations are understood, and fair, supportable evaluations become easier. Clear expectations and consequences will improve efficiency and drive home the need to change with the times.
One side effect of a poor economy is an increase in employee pilferage. This pilferage is rarely based on any "evil" motives, and the pilferers are not intending any real harm. They simply see the organization as an entity instead of individual people and think no one will miss a little something here and there. Watch out for increased instances of company vehicles used for personal use, such as grocery or Christmas shopping, or employees simply supplementing their pay by taking home facility supplies such as paper towels, antifreeze, oil, nuts, bolts, or other loosely tracked consumables.
There may also be an increase in taking care of personal business on company time. Policy manuals, as well as practice, must state clearly that such actions are not acceptable. The severity of an offense is only important when considering the level of discipline issued.
Written policies shouldn't be limited to fleet staff, but should also extend to users or customers. Are there clear procedures to justify replacements, take-home vehicles, minimum use, and additions to the fleet? Take-home vehicles are a taxpayer expense that should be limited and clearly justified to the public. Failure to inform the public why it is cost effective to provide transportation for a public servant practically guarantees someone will see it as a waste and bring it up in a public forum.
What standards exist and what are the consequences for frivolous use and vehicle neglect, abuse, or damage? Driver/operator training is said to be the No. 1 method of improving fuel economy, but no one seems to want to estimate the cost of untrained operators or unreported damage. Clear policies help supervisors hold operators accountable. Reporting unsafe, unprofessional, or less-than-courteous operation of a fleet vehicle gives supervisors the ability to manage risk through discipline prior to — or instead of — responding to a lawsuit resulting from a crash.
If written policies exist, are they known by customers? Information does not spread by osmosis. Distribute policies to new hires as part of an employee package, post files electronically for the entire organization, circulate information at tailgate meetings where it can be discussed, and modify policies as needed to address new circumstances.
Match Vehicle Inventory with Customer Needs
Inventory the fleet's vehicle mix and determine if it is currently matched to customer operations, and amply used. Underused equipment costs more than it seems. Performing some basic return on investment (ROI) calculations on construction equipment may prove that a backhoe used less than 100 hours per year is not only not justified for replacement or ownership, but may be costing money in the form of labor to inspect, maintain, load, transport, unload, and store. Consider whether a rental delivered to the jobsite would be more cost effective. If off-road equipment is disposed of, are all the trailers still needed?[PAGEBREAK]
Can some assigned vehicles be shared or placed in a pool for group use? If downsizing vehicles, ensure the customer is provided a vehicle that will efficiently serve his or her needs. A unit that must be retired earlier than planned or that spends an abnormal amount of time in the shop because it was too light-duty is not an improvement in efficiency. On the other side of the coin, purchasing a 4x4 that rarely goes off-road is also inefficient.
Avoid wasting fuel by carrying around more equipment than needed. The worst examples of this may be with service-bed trucks. Make sure drivers are not using the truck as a warehouse. A few minutes in the morning planning for the day's work and a few minutes to restock at the end of the shift is better than storing more than what is needed on board all the time.
Take a look at how vehicles are disposed of, as this is a negotiable area, especially in a down-turned economy. Used, well-maintained vehicles are in higher demand, so fleets may be able to negotiate with auctioneers for a better percentage or free pickup, or an electronic auction may fetch a better value.
Properly Manage Fuel Use & Fuel Sites
Fleet managers can consider these questions when evaluating fuel use and fuel sites: Are fuel use and fuel sites properly managed? Is it cost effective to provide fuel at the current locations, or is it merely convenient for users? Is fuel marked up to compensate for costs of permitting, upgrading, repairing, testing, and — knock on wood — paying fines associated with storing and delivering fuel? Are bulk purchase discounts applied at all sites or only those that can take double-tanker deliveries? Are the bulk discounts sufficient to offset the operating costs of the fuel sites?
Does the fleet manage fuel cards, keys, or other physical passes that must be issued to customers? Does the fleet have to provide billing to customers for fuel used? Would it be beneficial to get into the fuel business? Can the fleet privatize its fuel sites at a profit? Fleets may want to explore this option with their fuel suppliers.
Right-size Parts Inventory
Does the fleet overstock on parts? Are there parts on inventory shelves for vehicles that have been disposed of? Is the fleet getting the best overall price for parts, including just-in-time delivery? Is inventory suffering from shrinkage?
Look into bulk purchasing and consolidated purchases with neighbors. Look into what the department considers consumables, and account for them more closely. Are parts marked up enough to pay for parts staff salaries as well as floor space?
Do technicians over-involve themselves in the parts process? Technicians should be busy diagnosing, servicing, and repairing, not chasing parts. Techs should request the parts they need through the parts request process and continue with their work. Technicians should not be ordering or even removing their own parts from the storeroom, and they certainly should not be driving to the parts house. If this is occurring regularly at the fleet operation, privatizing should be considered.
Reduce Facility Costs by Consolidating, Subletting
To reduce facility costs, consider the number of shops in operation and their size and operating expenses. Is the department paying for square footage that is not or cannot be used? Can the fleet reduce operating cost of the facility by installing solar panels, insulation, or highly efficient lighting? Can part of the facility be sublet to produce revenue? Are there many satellite shops that could be consolidated into a central location? Do you have many small fuel sites? Does the operation run multiple shifts? Should the operation run multiple shifts to get better value from the facility? Repair facility costs are generally included as part of overhead, but the place is worth examining for efficient use.
Make Fleet Efficient, Affordable & Professional
After considering the points discussed, fleet operations may find that excess vehicles and equipment will need to be surrendered and disposed. It may be that fleet inventory is reduced to a point where the workload can be handled with fewer staff. Be ready to address this issue honestly, and if transfers or layoffs are warranted, then do so and publicize the fact that staff excess is the result of reductions in equipment and improved efficiency due to recent action. Do not allow the mistaken assumption that employees were retained when there was not sufficient work to justify their employment. Citizens are experiencing staff and budget reductions in their own lives and, right or wrong, they'll feel better represented seeing the same thing occur in their local government.
Fleet managers should find where they excel and apply best practices to other areas. Share findings with others and discuss ways to reduce waste and increase efficiency in the operation. Form a plan and rally supporters. Government can be efficient, affordable, and professional, if we make it that way.
About the Author
David Mills is a retired fleet supervisor for the City of Oceanside, Calif. He currently provides fleet consulting through Mills & Associates. He can be reached at firstname.lastname@example.org.