Outlook Point of View, April 2005
By Brooks Bentz and Peter Clarkson
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Whether you are the U.S. Postal Service, a major city or state agency, a public utility or a construction company, effectively and efficiently managing your heavy vehicles and equipment fleet can drive substantial cost savings and service improvement for your business.
Fleet management and fleet operations have generally not been viewed as ripe for innovation by non-transportation businesses—many of which tend to focus on optimizing other, more readily visible stages of the supply chain. So it may not seem obvious that improving the effectiveness in managing fleets of non-transportation organizations, when approached rigorously, can contribute to achieving high performance and improving stakeholder value.
However, consider the following: Leveraging our industry expertise and business experience, Accenture has embarked on a major program to identify the characteristics of the high-performance business. As part of that effort, Accenture has aligned supply chain mastery behaviors with operational performance drivers to significantly enhance fleet operations. These include adopting leading-edge practices and technologies and executing effectively against defined goals and metrics.
In our experience, most organizations that do not primarily focus on transportation are missing the opportunity to apply leading practices and operational rigor to drive significant improvement in overall fleet management.
Total Cost of Ownership Takes Center Stage
 
By challenging the way vehicle and equipment fleets have been traditionally managed and run, executives can identify exceptional opportunities to create an integrated fleet management strategy. This strategy, supported by carefully structured business processes and enabled by technology, can offer near-term benefits of cost-savings and improved service. But more than these substantive potential early benefits, the development of a sustainable, re-engineered process can have results far into the future of a high-performance business by freeing up scarce capital while producing sustainable reductions in operating costs.
Accenture has deep experience in working with leading private and public sector fleet management executives in what we call maximizing fleet effectiveness. Our approach to fleet effectiveness focuses on ensuring that an organization’s fleet has the right number of vehicles designed and engineered to perform the right jobs at the lowest total cost of ownership (TCO)—which encompasses vehicle procurement, operations and maintenance, along with disposition and replacement—as measured by the appropriate metrics and key performance indicators (see Figure 1).
Conventional approaches to fleet management operate as traditional silos related to buying, operating and maintaining, and ultimately disposing of vehicles. Accenture’s innovative approach maximizes fleet effectiveness by managing across functions to the lowest TCO. The approach puts fleet management within the context of an organization’s overall supply chain performance. That is why we view TCO as one integrated and continuous process that can be colloquially referred to as “buy smart, deploy smart, run smart, sell smart.” Our experience shows that executing at a level anything short of this drives up fleet operating and capital costs and diminishes performance and stakeholder value.
Once you understand your optimal fleet size, operations, maintenance costs and service profile, it’s time to assess whether it makes sense to evaluate outsourcing options. Typical candidates that can be considered are maintenance and repair activities, warranty management, parts inventory management, and routine fleet administrative tasks.
Finally, while all aspects of buying, selling and running smart are critical to successful fleet management, the program still must be rigorously implemented. Only then can the true benefits be realized. This is also the hardest, grittiest, most detail-oriented, painful and demanding part of fleet re-engineering and often the downfall of programs large and small.
Complete Fleet Re-engineering Results in High Performance
Most organizations do not undertake a comprehensive fleet re-engineering program all at one time; rather, they focus on developing a coordinated and well-defined program that enables them to start achieving noticeable and high-value steps. In this way, they can implement a fleet management effectiveness program in pieces and parts as time, resources and budgets permit. The advantage of taking such an integrated approach is that a level of continuity and momentum is achieved that, once executed, can carry the program for years to come and provide optimum fleet efficiency—essentially building a new corporate culture of excellence in fleet and equipment management in their organization.
An example of an organization that took this approach illustrates the impact that can be generated through an integrated fleet management process. As part of its ongoing efforts to become a high-performance business, a large utility with a national scope of operations recently undertook a comprehensive fleet management effort in partnership with Accenture. This project combined the tasks of re-engineering fleet standards and specifications, while executing a companywide strategic sourcing initiative that led to single-sourcing with one vehicle manufacturer. A relatively modest investment has generated dramatic savings to date. The program’s achievements include: -
More than 20 percent reduction in the cost of acquiring vehicles.
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A drastic reduction in vehicle classes, from 450 to 32 in the core fleet.
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Standardization of vehicle life cycles.
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Improvement in maintenance and repair practices.
Prepared for the Future These kinds of dramatic results are not unusual when Accenture has collaborated with companies to help them maximize fleet effectiveness. Furthermore, the development of a sustainable, re-engineered process can have results far into the future—including freeing up scarce capital while producing sustainable reductions in operating costs. Moreover, the application of global positioning satellite technologies and predictive monitoring techniques to the tracking, deployment and maintenance of vehicle fleets is just around the corner. In fact, we are currently conducting a pilot with Metro St. Louis to incorporate a predictive monitoring system into its bus fleet. Sensors on the buses capture operating data. This information is then compared with that from “healthy” operating models to enable a shift from preventative maintenance to predictive maintenance—extending maintenance intervals, reducing costs and optimizing inventory and labor scheduling. In short, the sensors deliver real-time data that can help predict breakdowns and maintenance demands. Organizations that have an established fleet management process are positioned to seize the next generation of innovative solutions and accelerate their journey to high performance.
Brooks Bentz, associate partner-Accenture Supply Chain Management, assists fleet operations with analyzing and managing fleet effectiveness, cost-to-serve, life cycle cost analysis, vehicle pooling, procurement practices and reducing operating costs.
Peter Clarkson, associate partner-Accenture Government, helps government agencies and organizations implement enterprise-wide systems and processes based on leading practices to deliver enhanced operational effectiveness.
This article is adapted from “Maximizing Fleet Effectiveness” by Brooks Bentz and Kris Timmermans in Pushing the Envelope, which examines the revolution in business and technology within the postal industry. Published by Montgomery Research copyright 2004. For more information, visit http://www.postalproject.com.
“Connecting with the Bottom Line: A Global Study of Supply Chain Leadership and Its Contribution to the High-Performance Business.” The views and opinions expressed in this article are meant to stimulate thought and discussion. As each business has unique requirements and objectives, these ideas should not be viewed as professional advice with respect to your business.  To Top
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