How to put together your North America fleet policy

Developing an efficient fleet policy can be quite a challenge across large regions, especially in the competitive market of North America where total cost of ownership (TCO) is of utmost importance.

To get a better idea on how to do this, Global Fleet acquired insight from executives representing the largest vehicle leasing and fleet management companies in the United States and Canada.

Although some differences exist between the two countries such as climate associated issues, your overall approach should remain the same. 

“Focus should start by initiating and enforcing policy across all levels, and then carry out ongoing periodic reviews to ensure regional changes or regulations are captured and implemented in a timely manner,” says Bradford Burgess (pictured left) who is VP of Commercial Operations, Marketing, and Global Partnerships at Element Fleet Management.

And, according to Wheels Donlen LeasePlan CEO Shlomo Crandus (pictured right), “A successful fleet policy should reinforce the core values of your company, otherwise it won’t be embraced and followed by the people who “live” it.”

Finally, do not forget to balance offering management autonomy with hands on support. 

“Although we are constantly evolving our customer website by adding more content for our fleet operators who want to be more self-reliant, the important fleet decisions on lifecycle considerations, such as when to buy or sell vehicles, will always require a very strong relationship with our account managers,” says Enterprise Fleet Management president Brice Adamson (pictured below).

Optimizing TCO

The key to monitoring and optimizing costs is ensuring that your efforts align with your company’s strategic business vision and budgetary goals. Everyone agrees that they want to control costs, but the strategies will vary by fleet. 

For some, optimizing cost means reducing maintenance costs, while for others it could mean lowering downtime. One factor to be observed in the North America market recently is the availability of vehicles and its impact on the “aging fleet”. 

“According to AAA, the average age of a vehicle in the U.S. was 10.6 years in 2010 and it is 12.1 years in 2023. We foresee this trend continuing for the near future and anticipate higher downtime, resulting in higher TCO,” Mr. Crandus told Global Fleet. With that said, given the “fleet aging” trend and other volatility in the market – higher interest rates, cost of electric vehicles, and parts – it is more important than ever to monitor your replacement cycles. 

The North American model allows for the flexibility to match market timing, take advantage of spot opportunities, and/or set a varied depreciation rate. Don’t just “set and forget” – a strong fleet management partner will identify cost trends and partner with their clients to actively manage and advise.

“Also remember that maintenance management efficiency is key. Our Auto Integrate system is a great tool for this as we can reduce driver downtime. By setting pre-approved limits, we can liaise back and forth in real-time with our repair shops in a more efficient way,” says Mr. Adamson.

Moreover, keep in mind that actively managing replacement projections allows fleet operators to take advantage of the resale market and improve order budgeting.

“Our Strategic Consultants proactively employ advanced analytics, various data models, and other tools to analyze TCO; helping clients strategically identify and implement initiatives to drive cost savings. 
Continuous monitoring and benchmarking are key to ensuring TCO visibility and driving accountability for expected cost savings trends,” Mr. Burgess told Global Fleet. 

Keep an eye on data

Data management is key, according to Holman President Bob White (pictured left), and the biggest challenge for most fleet operators is monitoring how all the different facets of a fleet lifecycle – buy, drive, service, and sell – influence each other. 

“There are dozens of variables in this equation and those variables are complexly intertwined. In today’s analytics driven business landscape, data overload is very real and trying to interpret mountains of data to assess performance can feel like trying to get a sip of water from a firehouse,” Mr. White told Global Fleet.

At Holman, “we are focused on delivering actionable insight about fleet performance to our customers and ensuring this information aligns with their organization’s overall measures for success. By providing proactive recommendations that allow customers to achieve meaningful improvement, we help them transform their fleet from an operational necessity into a valuable business asset.”

It is crucial to create TCO modeling so that fleet operators can choose the most optimal vehicle for their fleet as well as map out the most efficient cycling behaviors. As for Merchants Fleet, it assists clients with supply chain navigation so to ensure they receive optimal allocation, and it also has plans B and C ready at a whim if all vehicle acquisition needs are not met. 

“We work with clients to develop a multi-year strategy for vehicle cycling optimization, not only looking at the near-term but also the mid to long-term needs and fleet goals,” says Merchants Fleet Senior VP of Fleet Sales and Consulting Tom Coffey (pictured right).

Developing KPIs

Measuring TCO requires the right KPIs, and this can vary depending on the industry as well as the fleet owner’s business needs and objectives. Keep in mind that each company is different and may have access to a variety of different metrics but KPIs common in fleet management today are those associated with safety.

“Everyone is focused on safety, so putting the latest safety enhancing technology in the hands of a driver as soon as it’s reasonably practical is something that regularly comes up at our advisory board meetings,” says Adamson. 

The safety metrics Element Fleet Management identifies today are event rates regarding: percent of driver fault, cost of repair, and precent of repeat offenders. 

Vehicle Selection and Driver Management

“Besides implementing connected vehicle data, we recommend routinely replacing vehicles to benefit from safety feature enhancements, continuously monitoring motor vehicle records (MVR), and utilizing various driver training methods,” says Burgess.

According to Mr. White, most organizations typically rely on a single safety KPI such as collisions per million miles (CPMM) which could mean simply monitoring the number of safety incidents by way of telematics.

As for Holman, it has a Driver Scorecard which provides a holistic view of driver behavior by seamlessly integrating data from accidents, MVRs, fuel usage, telematics data, and risk assessment results. 

“With this simplified consolidated view of driver performance, fleet operators are able to quickly identify and address high-risk drivers before incidents occur, assign online training modules specific to a driver’s needs, and measure the impact of corrective action and training,” says White.

Safety KPIs can be broken down into Connected Vehicles and Accident Management, according to Merchants Fleet.

“For Connected Vehicle, there are driver behavior KPI’s and Vehicle Health KPI’s that include but not limited to speeding, harsh acceleration and cornering and diagnostic code readings. And for accident Management, KPI’s are measured through accident reasons, preventable vs non-preventable, and more,” Mr. Coffey told Global Fleet.

“These KPI metrics are tracked in multiple ways, including scorecards to see trend analysis with recommendations for improvements by benchmarking activities compared with similar fleets within our porfolio, in addition to ad-hoc analysis.” 

These are just some of the tips from vehicle leasing and fleet management players in the region. For more insight on fleet operations in the United States and Canada, don’t miss the first-ever Global Fleet E-book on North America. 

photos source (handouts)