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STRATEGIC FLEET AND TRANSPORT MANAGEMENT CHARLES COTTER HOLIDAY INN HOTEL, SANDTON 7-8 DECEMBER 2015
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STRATEGIC FLEET AND TRANSPORT MANAGEMENT
CHARLES COTTER
HOLIDAY INN HOTEL, SANDTON
7-8 DECEMBER 2015
TRAINING PROGRAMME OVERVIEW
• Defining the fundamental concepts
• Strategic Fleet Management – principles and practice
• Stakeholder Analysis - Fleet and Transport Management
• Risk Management - Fleet and Transport Management
• Internal Control – Fleet and Transport Management
• Performance Management - Fleet and Transport Management
• Strategic Fleet and Asset Management cycle/process
INTRODUCTORY LEARNING ACTIVITY
• How would you define Strategic Fleet and Transport Management?
• What are the critical success factors for Strategic Fleet and Transport Management? How are we performing in terms of these factors?
• What are the obstacles to effective Strategic Fleet and Transport Management in general?
STRATEGIC FLEET MANAGEMENT – DEFINITION AND BENEFIT
• Strategic Fleet Management stresses the importance of achieving objectives and the use of metrics to benchmark progress (Mike Antich)
• Strategic Fleet Management principles will help an organization to develop a fleet which is fit for purpose.
• Fleet management plans and practices should be aligned with the organizational strategic plan and objectives
RELATING FLEET MANAGEMENT TO THE BALANCED BUSINESS SCORECARD
OBJECTIVES OF STRATEGIC FLEET MANAGEMENT
• Increased efficiency
• Lower costs
• Optimal utilization
• Improved compliance
• Ecologically/environmental-friendly
• Increased sustainability
• Increased competitivity
• Higher levels of user/customer satisfaction
4-STEP STRATEGIC FLEET MANAGEMENT PROCESS
THE NATURE OF THE BUSINESS ENVIRONMENT – V-U-C-A
CONTEXT OF FLEET MANAGEMENT
P-E-S-T-E-L ANALYSIS
FLEET MANAGEMENT STRATEGY FORMULATION
LEARNING ACTIVITY 1
• Refer to page 21 in the Learner Manual
• Syndicate group activity:
• By means of SWOT and PESTEL analyses, apply step 1 of the Strategic Fleet Management process, to your current, organizational fleet management practice.
ROLE PLAYERS IN FLEET & TRANSPORT MANAGEMENT
• Fleet Management Stakeholder Management Process:
Step 1: Identify stakeholders (internal and external)
Step 2: Analyze & Prioritize stakeholders Step 3: Get to know stakeholders (engagement) Step 4: Stakeholder relationship management
STEP 1: IDENTIFY STAKEHOLDERS (INTERNAL)
• Department of Transport
• HoD (Accounting Officer)
• Head of Supply Chain
• CFO
• Transport Officer
• Drivers
STEP 1: IDENTIFY STAKEHOLDERS (EXTERNAL)
STEPS 2-4: STAKEHOLDER ANALYSIS, ENGAGEMENT AND MANAGEMENT (POWER-INTEREST MATRIX)
LEARNING ACTIVITY 2
• Refer to page 25 in the Learner Manual
• Syndicate group activity:
• Conduct a Stakeholder Analysis your current, organizational fleet management practice.
FLEET RISK MANAGEMENT
• Definition of Risk
• Definition of Risk Management
• Applying Risk Management principles to Fleet decision-making, policy and practice
• Applying the Fleet Risk Management Process
FLEET RISK MANAGEMENT PROCESS
• Step 1: Risk Identification
• Step 2: Risk Analysis
• Step 3: Risk Prioritization
• Step 4: Risk Response
• Step 5: Risk Evaluation
FLEET RISK MANAGEMENT PROCESS
FLEET RISK MATRIX
FLEET RISK RESPONSE STRATEGIES
LEARNING ACTIVITY 3
• Refer to page 37 in the Learner Manual
• Syndicate group activity:
• Apply the Fleet Risk Management process to your current, organizational fleet management practice.
FLEET INTERNAL CONTROL • Definition of Internal Control
• Internal control process
• Elements of the control environment
• Types of internal control
• Factors influencing the internal control process
• Internal control system
• Applying the internal control principles to fleet and transport management measures and practices
DEFINING INTERNAL CONTROL• Internal controls can be defined as all means devised to
promote, govern and check upon various activities for the purpose of seeing that institutional objectives are met.
• It can also be defined as the measures implemented in a public institution to improve the quality of management and to avoid or prevent mismanagement.
• Internal control is the management function that ensures the co-ordination and effective functioning of all institutional activities so that institutional objectives are implemented and pursued according to plan.
FLEET MANAGEMENT INTERNAL CONTROL PROCESS
INTERNAL CONTROL QUESTIONS AND REALITIES
• What exactly needs to be controlled?
• What environment does the control exist in i.e. is it a high vulnerability area, a high risk area?
• Fleet cars are always a high risk due to them being a highly sought after commodity, easily camouflaged, and cash generating
• Fleet equipment is not as high due to their conspicuous nature, but still highly sought after.
ELEMENTS OF THE FLEET CONTROL ENVIRONMENT
• Sound management characteristics
• Efficient organizational structures
• Effective internal audit function • Acceptable personnel policies
• Written procedures
TYPES OF INTERNAL CONTROL
• Financial and accounting controls
• Budgetary control
• Authorisation of expenditure
• Security of assets
• Accounting controls
• Administrative controls
• Managerial controls
• Informational control
• Operational or Procedural control
• Physical and mechanical controls
FLEET INTERNAL CONTROL SYSTEM
FLEET INTERNAL CONTROL MEASURES • Map the current systems
• Ascertain the current control points
• Evaluate each control measure
• Ascertain whether:
the cost of control justifies the measure of control it produces it achieves it control objectives, it could be substituted with a more effective means of control
• Decide where extra control points are needed, i.e. where no control exists, or where control is
over-controlled for it’s intended purpose
• Develop and Implement Control measures:
Trip Authorizations
Pre and Post inspections
LEARNING ACTIVITY 4• Refer to page 50 in the Learner Manual
• Syndicate group activity:
• By referring to the elements and types of fleet internal control, evaluate the degree of compliance of your current, organizational fleet management practice.
• Identify gaps and recommend fleet control improvement strategies.
FLEET PERFORMANCE METRICS AND MANAGEMENT
OPTIMIZING FLEET PERFORMANCE• Considering the fleet as an asset
• 3 E’s – efficiency, economics and effectiveness
• Components of fleet performance – inputs, process, outputs and outcomes
• Value-for-money chain
• Total Cost of Ownership (TCO)
• Performance Efficiencies
• Performance Indicators
• Fleet Performance Management process
FLEET PERFORMANCE MANAGEMENT
• Objective: It is important that vehicles are managed effectively, efficiently and economically to ensure that a prompt and speedy service are delivered.
• There are a number of measures used to assess asset performance:
the asset’s physical condition its utilization its functionality its financial performance
• This information (business intelligence) is then used to determine the current and projected economic return of the asset or portfolio. Discounted Cash Flow analysis can be used to provide a measure of the Net Present Value and the Internal Rate of Return for assets.
THE 3 E’S OF FLEET PERFORMANCE
• Economy - can be defined as the lowest cost for a given quality and quantity of inputs
• Efficiency - can be defined as the extent to which inputs are used optimally to produce outputs
• Effectiveness - can be defined as the maximum outcome by the selection of the optimal mix of outputs
FLEET PERFORMANCE EXCELLENCE
VALUE FOR MONEY CHAIN
TOTAL COST OF OWNERSHIP (TCO)
OPERATIONAL ACTIVITY - FLEET EFFICIENCY METRIC
FLEET PERFORMANCE METRICS
FLEET PERFORMANCE EFFICIENCIES
• Fleet use:
Vehicle availability Vehicle downtime Vehicle utilization
• Compliance:
number of accidents number of vehicle defects number of DoT failures (vehicle safety, roadworthiness and exhaust emissions) or first time passes
FLEET PERFORMANCE EFFICIENCIES
• Operational:
Fuel usage CO2 emissions
• Costs:
maintenance cost per vehicle tyre cost per vehicle insurance cost per vehicle operating cost per vehicle
KEY PERFORMANCE INDICATORS• These indicators can mainly be divided into two types, namely
those having relation to cost and those having relation to quality:
• Cost indicators:
Cost-effectiveness
• Quality indicators:
Fitness for purpose Consistency Customer satisfaction
FLEET PERFORMANCE MANAGEMENT STEPS
• #1: Set defined Key Performance Areas
• #2: Set measurable Key Performance Indicators
• #3: Set achievable targets
• #4: Maintain accurate and up-to-date records of actions
• #5: Compare actual results to set performance criteria
• #6: Compile action plans where necessary
EXAMPLE: FLEET KPA/KPI/TARGETKEY PERFORMANCE AREA KEY PERFORMANCE INDICATOR TARGET
Cost Fuel Cost Per KM Less than R7.50 X total kms travelled
Total Monthly Repair Cost Less than 5% of initial cost / 5 years / 12 months
Customer Satisfaction Appropriateness of vehicle for the purpose it was required for Less than 5% dissatisfaction
Problems experienced with the vehicle during the trip
Less than 10% customers experiencing problems with the vehicle
Repeat problem reports Less than 2% repeat problem reports
Safety Number of safe trips Less than 2% incidents
Number of vehicle thefts Less than 2% vehicle thefts
Fleet Utilisation % hours vehicles are underutilised Less than 20% dormant vehicles
Number of times vehicles could not be supplied Less than 15% unavailability
Fleet Appearance Number of times vehicles were dirty Less than 20%
Number of vehicles with bumps and dents Less than 15%
Number of vehicles with bad paint jobs Less than 5%
LEARNING ACTIVITY 5• Refer to page 66 in the Learner Manual
• Syndicate group activity:
• By referring to the 3 E’s of the value-for-money chain and other fleet performance indicators and metrics, evaluate the performance of your current, organizational fleet management practice.
• Identify performance gaps and recommend fleet
performance optimization and improvement strategies.
FLEET/ASSET MANAGEMENT CYCLE/PROCESS
• Step 1: Planning/Needs Analysis & Specification
• Step 2: Acquisition/Procurement
• Step 3: Operations/Running
• Step 4: Maintenance
• Step 5: Replacement/Disposal
LEARNING ACTIVITY 6
• Refer to page 68 in the Learner Manual
• Syndicate group activity:
• Apply step 1 of the Fleet Management cycle to your current, organizational vehicle fleet practices. Indicate what means and/or sources and methods you will utilize for the needs analysis and the required vehicle specifications.
STEP 2: PROCUREMENT/ACQUISITION EVALUATION CRITERIA
• Viability
• Feasibility
• Sustainability
Profits People Planet
SUSTAINABILITY (TRIPLE BOTTOM LINE)
STEP 2: EVALUATION OF VEHICLE FINANCE OPTIONS
• Financial and numerical metrics:
Cost-Benefit Analysis
Payback period
Return-on-Investment (ROI)
Net Present Value (NPV)
Internal Rate of Return (IRR)
STEP 2: EVALUATION OF VEHICLE TYPES (BY MEANS OF DECISION MATRIX)
LEARNING ACTIVITY 7• Refer to page 70 in the Learner Manual
• Syndicate group activity:
• Apply step 2 of the Fleet Management cycle to your current, organizational vehicle fleet practices. Indicate the vehicle options, selection criteria and weighting and decision-making process.
• By means of building a business case, justify the selection – type and number of vehicles.
STEP 3: OPERATIONS/RUNNING
• Effective Utilization and Maintenance of Fleet Resources
• Fuel Cost Management:
Storing Fuel, Consumption and Cost Fuel Cost Analysis Monitoring Pricing Trends Payment Methods
• Fuel Sourcing Options
STEP 3: OPERATIONS/RUNNING
• Fleet Management and Road Safety:
Vehicle tracking Mechanical diagnostics Driver behaviour
• Advantages of Effective Road Risk Strategies by Fleet Managers
• Technology and the possible impact on Fleet Management and Road Safety
LEARNING ACTIVITY 8
• Refer to page 77 in the Learner Manual
• Syndicate group activity:
• Apply step 3 of the Fleet Management cycle to your current, organizational vehicle fleet practices. Indicate the fuel cost management strategies; road safety measures how vehicles will be safeguarded and the technology-enabled monitoring and tracking devices.
STEP 4: MAINTENANCE MANAGEMENT
• Why have a Maintenance Plan?
• What needs to be taken into consideration?
• Objective: The purpose of maintenance management is to maintain a fleet of vehicles, using both preventative maintenance and corrective maintenance, in such a manner that the time the vehicle is off the road is minimised (vehicle downtime) whilst ensuring that maintenance costs are kept as low as possible.
• Benefits of a well-maintained vehicle
MAINTENANCE MANAGEMENT FOCAL POINTS
• Maintenance schedules
• Maintenance authorization
• Tracking maintenance history
• Monitoring pricing trends
• Invoice scrutiny
• Payment methods
• Cumulative maintenance cost analysis
• Warranty control
• Outsourcing option
CATEGORIES OF MAINTENANCE
LEARNING ACTIVITY 9
• Refer to page 85 in the Learner Manual
• Syndicate group activity:
• Apply step 4 of the Fleet Management cycle to your current, organizational vehicle fleet practices. Indicate the maintenance category, schedule and sourcing option/s.
STEP 5: REPLACEMENT & DISPOSAL
• How often should vehicles be replaced?
condition: mileage; age; ‘whole-life’ costings; and environmental targets
• Replacement Cycle Management:
Age of the vehicle being replaced; Odometer reading of the vehicle being replaced; Operating costs of the vehicle being replaced; Stock availability of the replacement vehicle; Market demand for the used vehicle to be sold.
MAIN SELLING/DISPOSAL METHODS
• Retailing
• Employee sales
• Trade-ins
• Auctions
• Public tender
• Transfer and/or sale to another entity
• Controlled dumping, specialized disposal (for items that have a low value or are unhygienic)
• Professional valuations
LEARNING ACTIVITY 10
• Refer to page 89 in the Learner Manual
• Syndicate group activity:
• Apply step 5 of the Fleet Management cycle to your current, organizational vehicle fleet practices. Indicate the vehicle replacement and disposal criteria and procedure.
CONCLUSION
• Key points
• Summary
• Questions
CONTACT DETAILS
• Charles Cotter
• (+27) 84 562 9446
• Twitter: Charles_Cotter
• http://www.slideshare.net/CharlesCotter
