Transcript Applying Industry Best Practices to Federal Fleet Management

Accenture Management Consulting
Applying Industry Best Practices
to Federal Fleet Management –
The Case for Total Cost of
Ownership
June 28, 2012
Federal Fleet Challenges
Presidential Memorandum: Federal Fleet Performance
“We owe a responsibility to American citizens to lead by example and contribute to meeting
our national goals of reducing oil imports by one-third by 2025 and putting one million
advanced vehicles on the road by 2015.”
GSA Guidance
Bulletin FMR B-15
Fleet Management Information System:
Implement a centralized system to
identify, collect, and analyze motor vehicle
data with respect to all costs incurred for
the operation, maintenance, acquisition,
and disposition of motor vehicles.
Copyright © 2012 Accenture All rights reserved.
Bulleting FMR B-30
Vehicle Allocation Methodology:
Annually provide a standard way to
ensure that each vehicle in your fleet is
correctly sized and is appropriate for
accomplishing the agency missions.
Bulletin FMR B-30
Fleet Management Plan:
Annually describe how your agency will
achieve its optimal fleet inventory,
alternative fuel schedule, sourcing
decisions, and incorporate in strategic
sustainability performance plan.
2
Total Cost of Ownership
By using a structured, diagnostic approach to calculate TCO, fleet managers
will have the information needed to make difficult changes
Copyright © 2012 Accenture All rights reserved.
3
Key TCO Drivers
TCO is an easy-to-understand, but tricky to calculate, number that fleet managers
can use to compare costs within their fleet, identify trends, and make replacement
decisions
TCO can be
offset or
reduced by:
Copyright © 2012 Accenture All rights reserved.
•
Optimizing
vehicle lifecycles
(in years)
•
Decreasing
individual vehicle
utilization
•
Increasing
disposal
reimbursements
4
TCO Example Metric
TCO metrics provide visibility into true fleet costs and provide justification
for Fleet Management policy decisions
Copyright © 2012 Accenture All rights reserved.
5
Mile Markers
Implementing World-Class Fleet Management is a multistep, interlinked set of
actions leading to lowest Total Cost of Ownership
Copyright © 2012 Accenture All rights reserved.
6
TCO in Action
Fleet: Major Telecommunication Provider
A Telecommunication company needed to develop and implement a fleet
transformation strategy. The company sought a centrally managed,
strategically focused fleet program with standardized processes across
the national fleet network.
Fleet Rationalization: Right-sized the fleet by
performing an Allocation Review (Needs vs. Wants)
and a Utilization Study (vehicle usage). This approach
ensures that Operational needs are met by the rightsized fleet.
New Fleet Model: Moved to central Fleet Management
operating under a central organization and on a single
platform for all fleet transactions using a Total Cost of
Ownership model to drive optimal replacement cycles
and disposition timing.
Copyright © 2012 Accenture All rights reserved.
Results
• Over $73M NPV Savings
through 8 years
• Newer and More Reliable
Fleet
• Universal Safety standards
• Improve vehicle to employee
ratio from 1:5 to 1:1
• Implement 1 fleet
management system
(migrating from 4)
7
Fleet Rationalization
Steps
Fleet rationalization considers utilization metrics as well as mission needs, as
should be considered in every agency VAM
Rationalization
• Rationalization will focus initially on non-service vehicles, with the focus
shifting to service vehicles to follow
• Non-Service Vehicles: Reduced by 50%
• Service Vehicles: Tech Veh to Tech ratio reduced to 1:1
Allocation Review
“needs?”
• Determine which job functions require
a vehicle
• Compare as-is/to-be allocation model
• Identify candidates for rationalization
Copyright © 2012 Accenture All rights reserved.
Utilization Review
“being used?”
• Gather and review odometer readings,
vehicle age and location information
• Identify and categorize surplus
vehicles
• Identify candidates for rationalization
8
TCO in Action
Fleet: Major Utility Provider
A multi-billion dollar utility company delivering electric and natural gas in
multiple states throughout the southwestern United States sought to
optimize its resource allocation across its entire service vehicle fleet.
Spec Rationalization: Reduced variation in standards
& specs to make for smaller number of larger classes;
Re-engineered specifications exceeding work
requirements.
Fleet Sourcing: Applied multi-year Strategic Sourcing
of all major classes and sub-categories including
(OEM, up-fitters, tire, fuel Financing, and FMS.)
Finance & Admin: Performed Lease v. Own
evaluation and In-Source v. Out-source comparison
(Administrative functions, Titling, licensing, permitting,
In-servicing M&R Administration - Call center, Vendor
management.)
Copyright © 2012 Accenture All rights reserved.
Results
• Rationalized specifications
down from 246 vehicle types
to 35 vehicle types
• Quantified lease vs. own
decisions
• $10.1 million in negotiated
savings over five years;
exceeding targets by 55%
• Created a best-in-class
replacement schedule
• Consolidated supplier base
from 11 to 6
9
Workshop Overview
Agencies with a myriad different vehicle classes and types can find cost savings
through standardization
Class
Phase 2
Sedans
(1 hr/category)
Type
Key
Questions
& Issues
Can this class
be replaced by
another class
to reduce
overall
number?
Sub-Compact
Compact
Mid-Size
Full Size
Can any of
these vehicle
types be
combined with
another to
reduce the
total?
Phase 1
(30 mins/category)
Variations
Upfit
Package
“A”
Specifications
Standard Specs
Does this Upfit Package
meet all the
business and
operating
functions
required of the
vehicle?
• Which specifications
meet 95% of the business
needs of the operating
unit
• Which can be eliminated
or combined?
• Which need to be added?
Copyright © 2012 Accenture All rights reserved.
10
TCO in Action
Fleet: Major Telecommunication Provider
Company’s fleet is a 66,000 unit/$2B asset with approximately $500M in
annual operating costs. Objective was to Identify opportunities to
achieve the lowest Total Cost of Ownership (TCO) and define a long
term fleet strategy.
Fleet Rationalization: Conducted utilization study that
focused on reducing overall fleet size and age to best
practice standards by using Best Practice utilization
data and assessing the types of vehicles being used.
Pooling
Surplus or under-utilized vehicles
were identified in order to implement
appropriate corrective measures:
Vehicle pooling, Asset re-deployment
/ re-purposing, Asset disposition
through specialized auction venue.
Results
• Develop fleet strategy that
will deliver ~$90M in annual
benefits
• Decrease tech to vehicle
ratio from .9 to .84
• $11M in benefits for removing
excess and underutilized
units with the potential for
$22M over a 3 year period.
Disposition
Copyright © 2012 Accenture All rights reserved.
11
Mileage Utilization
Fleet diagnostics identify low performing vehicles that are prime candidates for
rightsizing and/or replacement
Vans
14,000
Light Splicer
Miles per Year
12,000
Diggers
10,000
Automobiles
8,000
6,000
4,000
2,000
0
1
2
3
4
5
6
7
8
9
10 11 12 13 14
Years of Service
Copyright © 2012 Accenture All rights reserved.
12
TCO in Action
Fleet: Major Utility Provider
The intent of the Fleet Outsourcing Feasibility Study was to perform a
study of fleet operations and maintenance to determine whether or not
the US / regional market for Fleet Maintenance Outsourcing is viable,
and to understand the high level economic and operational impact of
additional Fleet Maintenance Outsourcing.
Maintenance & Repair Operations:
Developed a model to determine
outsourcing feasibility by vehicle type and
maintenance activity based on three key
criteria. Baselined current maintenance
budget and modeled three outsourcing
scenarios to create business case. Also
designed high-level operating models,
outlined customer impacts, and
developed a roadmap for due diligence.
Copyright © 2012 Accenture All rights reserved.
Results
• Three scenarios, representing varying
degrees of outsourcing, were modeled
against the baseline cost structure to
determine potential savings associated with
outsourcing the additional maintenance
• Savings range from $1M to $4.5M annually
• Scenarios ranged from high-volume, nonbusiness critical vehicles which have easily
accessible commercial market support to all
maintenance activities
13
Fleet Maintenance Outsourcing
Industry Examples
Outsourcing fleet functions can lead to cost savings and improved performance
Outsourced Vehicles
Company
Industry
Company 1
Natural Gas / Electric
Company 2
Lawn Care, Home Maint.
Company 3
Natural Gas / Electric
Company 4
Electric
Company 5
Water
LD
MDHD
Equip
Outsourced Maint.
PM
Repair
Degree of Outsourcing
Min
Full
Partial
X - Maintenance outsourcing is a growing trend in the US
with fleets across industries.
“Concerned with economics in a changing
environment, fleet managers might find themselves
considering outsourcing vehicle maintenance
services. Allowing professional vehicle
maintenance organizations to purchase, maintain and
retire equipment, fleets can take advantage
of an outside organization's expertise in maintenance
and economic control of resources.”
- John Dolce, “Outsourcing Strategies for Fleet Maintenance”
Source: Accenture Research
Copyright © 2012 Accenture All rights reserved.
14
Key Takeaways
Mile 1 – Data collection and validation
• Does your agency have an FMIS that captures not just FAST data but other, relevant TCO
metrics?
• Can you easily pull your data to run diagnostic analytics?
Mile 2 – Fleet Rationalization
• Does your agency have a standardized method for rationalizing your Green Fleet decisions?
• Does your agency’s Vehicle Allocation Methodology consider both quantitative cost factors
(vehicle utilization, vehicle lifecycles) and agency-specific factors (mission criticality, equipment
needs)?
• Has your agency been able to identify rightsizing opportunities without sacrificing agency
mission needs?
Mile 3 – Spec Rationalization
• Are your agency’s vehicle specifications in alignment with mission requirements? Do you have
vehicles that are “over-qualified” for their need?
• How many vehicle classes and types are in your agency’s fleet? Is there opportunity to
standardize?
• Do you consider a specification matrix before sourcing for a vehicle?
Copyright © 2012 Accenture All rights reserved.
15
Key Takeaways
Mile 4 – Pooling
• Is there opportunity at your agency to use the same vehicle for multiple purposes?
• Does your agency take advantage of geographic or local motor pools?
Mile 5 – Disposition
• Does your agency have a way to calculate the vehicle lifecycle’s effect on your TCO?
• Do you seek out public auction venues to obtain the highest proceed returns (for your fleet
vehicles that qualify for resale)?
Mile 6 – Fleet Sourcing
• Does your agency use a levelized replacement calendar to minimize TCO?
• Has your agency completed strategic sourcing analysis across your various fleet categories
(OEM, Up-fit, Tire, Fuel, FMS and multi-year)?
Copyright © 2012 Accenture All rights reserved.
16
Key Takeaways
Mile 7 – Maintenance & Repair Operations
• How does your agency set your preventive maintenance schedules? Are they optimized?
• Has your agency analyzed the costs and benefits of Internal vs. External maintenance?
• Is there opportunity within your agency to consolidate maintenance operations?
Mile 8 – Finance & Administration
• Does your agency complete a Lease vs. Own evaluation for different vehicle types?
• Has your agency completed an In-Source v. Out-Source analysis for:
– Administrative functions: Titling, licensing, permitting; In-servicing
– Maintenance & Repair Administration: Call center; Vendor management
Mile 9 – New Fleet Model
• Does your agency’s fleet management plan comprehensively consider Mile Markers 1-8?
• Is your fleet model standardized and communicated to all affected departments? Are practices
and policies consistent?
• Does your agency’s plan include iterative improvement programs to reanalyze data and
continuously optimize your TCO?
• Have you developed a multi-year strategy roadmap to align with agency strategic objectives?
Copyright © 2012 Accenture All rights reserved.
17
Contact Info
Bob Pitts
Senior Principal
Accenture Management Consulting
[email protected]
+1 678 657 9627
Improving Fleet Efficiency
and Compliance Through
Best Practices
http://www.accenture.com/usen/Pages/insight-simplifying-federalfleet-conundrum-summary.aspx
Karl Dedolph
Senior Manager
Accenture Management Consulting
[email protected]
+1 703 947 2505
About Accenture
Accenture is a global management consulting, technology services and outsourcing company, with more than 246,000
people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities
across all industries and business functions, and extensive research on the world’s most successful companies,
Accenture collaborates with clients to help them become high-performance businesses and governments. The company
generated net revenues of US$25.5 billion for the fiscal year ended Aug. 31, 2011. Its home page is
www.accenture.com.
Copyright © 2012 Accenture All rights reserved.
18