Strategic Fleet and Transport Management - principles, practice and process

1. STRATEGIC FLEET AND
TRANSPORT MANAGEMENT
CHARLES COTTER
HOLIDAY INN HOTEL, SANDTON
7-8 DECEMBER 2015

2. 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

3. 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?

4. 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

5. RELATING FLEET MANAGEMENT TO THE
BALANCED BUSINESS SCORECARD

6. 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

7. 4-STEP STRATEGIC FLEET
MANAGEMENT PROCESS

8. THE NATURE OF THE BUSINESS
ENVIRONMENT – V-U-C-A

9. CONTEXT OF FLEET MANAGEMENT

11. P-E-S-T-E-L ANALYSIS

12. FLEET MANAGEMENT STRATEGY
FORMULATION

13. 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.

14. 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

15. STEP 1: IDENTIFY STAKEHOLDERS
(INTERNAL)
• Department of Transport
• HoD (Accounting Officer)
• Head of Supply Chain
• CFO
• Transport Officer
• Drivers

16. STEP 1: IDENTIFY STAKEHOLDERS
(EXTERNAL)

17. STEPS 2-4: STAKEHOLDER ANALYSIS, ENGAGEMENT
AND MANAGEMENT (POWER-INTEREST MATRIX)

18. LEARNING ACTIVITY 2
• Refer to page 25 in the Learner Manual
• Syndicate group activity:
• Conduct a Stakeholder Analysis your current,
organizational fleet management practice.

20. 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

21. FLEET RISK MANAGEMENT PROCESS
• Step 1: Risk Identification
• Step 2: Risk Analysis
• Step 3: Risk Prioritization
• Step 4: Risk Response
• Step 5: Risk Evaluation

22. FLEET RISK MANAGEMENT PROCESS

23. FLEET RISK MATRIX

24. FLEET RISK RESPONSE STRATEGIES

25. 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.

27. 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

28. 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.

29. FLEET MANAGEMENT INTERNAL CONTROL
PROCESS

30. 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.

31. ELEMENTS OF THE FLEET CONTROL
ENVIRONMENT
• Sound management characteristics
• Efficient organizational structures
• Effective internal audit function
• Acceptable personnel policies
• Written procedures

32. 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

33. FLEET INTERNAL CONTROL SYSTEM

34. 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

35. 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.

36. FLEET PERFORMANCE METRICS AND
MANAGEMENT

37. 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

38. 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.

39. 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

40. FLEET PERFORMANCE EXCELLENCE

41. VALUE FOR MONEY CHAIN

42. TOTAL COST OF OWNERSHIP (TCO)

43. OPERATIONAL ACTIVITY - FLEET
EFFICIENCY METRIC

44. FLEET PERFORMANCE METRICS

45. 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

46. 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

48. 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

49. 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

50. EXAMPLE: FLEET KPA/KPI/TARGET
KEY 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%

51. 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.

53. 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

55. 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.

56. STEP 2: PROCUREMENT/ACQUISITION
EVALUATION CRITERIA
• Viability
• Feasibility
• Sustainability
 Profits
 People
 Planet

57. SUSTAINABILITY (TRIPLE BOTTOM LINE)

59. 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)

60. STEP 2: EVALUATION OF VEHICLE TYPES
(BY MEANS OF DECISION MATRIX)

61. 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.

62. 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

63. 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

64. 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.

65. 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

66. 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

67. CATEGORIES OF MAINTENANCE

68. 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.

69. 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.

70. 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

71. 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.

72. CONCLUSION
• Key points
• Summary
• Questions

73. CONTACT DETAILS
• Charles Cotter
• (+27) 84 562 9446
• charlescot@polka.co.za
• LinkedIn
• Twitter: Charles_Cotter
• http://www.slideshare.net/CharlesCotter