Sentry Insurance Identifies Critical Fleet Benchmarks

Sentry Insurance ensures that fleet stays a main focus, from working with senior management for regular input in vehicle selectors and policy review, to identifying critical benchmarks and key performance indicators (KPIs) for fleet analysis. The small fleet team operates lean, which allows for a clearer picture of the total cost of the fleet, including all fixed and variable costs and expenses.

Headquartered in Stevens Point, Wis., Sentry has nearly 4,000 associates in 41 states, the company provides 660 leased vehicles to sales producers, claims appraisers, special investigations unit (SIU) field staff, safety services groups, and executives.

The fleet is comprised mainly (85 percent) of Ford Fusion models with the remaining vehicles a mix of other Ford and GM models, along with a number of brands operated by Corporate Facilities and Sentry associates as pool cars. The Sentry fleet organization operates within the finance division and is a part of the corporate purchasing team reporting up to the director of procurement and contracts, according to Steve Anderson, CAFM, fleet manager for Sentry.

“The fleet department supports our customer service objectives by providing safe, dependable modes of transportation to our associates, allowing them to concentrate on achieving the high levels of customer service that Sentry is known for,” he said.

Anderson added that the fleet department consistently adds value to the bottom line by effectively managing overall fleet lifecycle costs and providing superior customer service to company drivers.

As fleet manager, Anderson’s primary responsibilities include vehicle recommendation and sourcing, remarketing, budgeting, compliance, and management and evaluation of fleet-related vendors. He also handles corporate purchasing categories for rental vehicles, roadside assistance, corporate travel programs, in addition to overseeing all of the golf fleet vehicles for SentryWorld Golf Course.

Sentry maintains a lean staff led by Anderson, with two administrators — one full time for fleet and one that shares time between fleet and corporate purchasing. Anderson works closely with several key internal partners, including Barry Estes, director of procurement and contracts; the finance department for annual budget, vehicle cost, and program analysis, review, and approval of fleet vehicle recommendations; enterprise risk management for authorized driver requirements and company car policy, including Steve Ter Maat, risk manager; legal for company car policy and contract review; and HR for company car policy, MVRs, and vehicle assignments.

Externally, the fleet team works with GE Capital Fleet Services for fleet management and ancillary programs, Ford Motor Company for fleet vehicles, and Auto DriveAway for vehicle relocation and storage.

Additionally, and crucial to the fleet’s overall success, Anderson and his team coordinate with senior management to monitor policies and financials.

Founded in 1904 by members of the Wisconsin Retail Hardware Association, Sentry Insurance is one of the largest mutual insurance companies in the United States. With assets of $13.2 billion and a policyholder surplus of more than $4 billion, Sentry provides insurance coverage to more than 1.1 million clients. Sentry and its subsidiaries sell property and casualty insurance, life insurance, annuities, and retirement programs for businesses and individuals throughout the country.

Making Fleet a Top-Down Team Effort

Senior management has regular input on what vehicles are approved for the selector, as well as model options. They also approve exception vehicles for situations that may call for something other than the fleet’s standard vehicle and decide on award program vehicles and terms.

Sentry fleet policy is reviewed annually with legal, HR, and enterprise risk management prior to the January company car agreement acknowledgments. Budgetary issues are addressed with finance, and fleet maintains a spreadsheet comparing segmented monthly spend to budget.

“If exceptions are noted, we inform finance and prepare detailed reports explaining the variance, as we did this past year when resale proceeds started to slip from their recent historic highs and fell short of projections,” Anderson explained. “We’ve seen good results over the past few years as interest rates have held steady and fuel has become a bit more predictable.”

Sentry corporate purchasing also has a SharePoint site dedicated to fleet. To keep information at the fingertips of senior management, Anderson and his team regularly update fleet-related cost documents and budgets, as well as copies of the annual fleet review, which includes benchmarking and statistics on every aspect of the fleet.

Sentry has identified critical benchmarks and key performance indicators (KPIs), which are the baseline of the company’s fleet analysis. In addition to the Automotive Fleet benchmarking report, the Sentry fleet team has worked closely with its fleet management company GE Capital Fleet Services over the past few years fine-tuning the company’s benchmark report and uses both as part of the company’s annual review. When assessing fleet financials and benchmarks, the factors Anderson and his team take into account include:

• Total cost of fleet, including all fixed and variable costs
• Cost avoidance
• Total fleet cost per mile
• Depreciation cost per mile
• Maintenance cost per mile
• Fuel cost per mile
• Miles per gallon
• Effective depreciation rate
• Resale percentage of Black Book value
• Regular unleaded fuel percentage
• Personal-use percentage

“How Sentry’s fleet compares to other fleets on the KPIs we’ve identified is a focal point,” Anderson said. “If the fleet is under-performing in any area, we examine the possible causes, explore what can be done to change performance, and then implement change.”

According to Anderson, the team works closely with the business stakeholders and finance to accurately project annual expenses during the budgeting process. They also carefully manage cycle time and vehicle turnover and chart weekly resale market changes to help forecast optimal resale periods.

“We are very diligent in negotiating fleet contracts and auditing CAP charts to ensure the correct discounts are applied,” he added. “We track volume to ensure maximum return on contract incentives and renegotiate agreements when appropriate.”

Also, the team regularly reviews driver fuel charges and vehicle maintenance history to identify anomalies, such as super unleaded transactions, and to ensure vehicles are properly maintained.

The Sentry fleet department encourages its associates to recommend and implement changes to improve customer service and productivity. The fleet staff remains aware of the Sentry culture and has adopted a common goal of 100-percent customer satisfaction.

“Customer service is the first priority for the fleet department,” Anderson explained. “Our administrators have many years of experience at Sentry and, along with our company intranet, are the primary points of contact for the majority of driver inquiries.”

On-boarding of newly hired drivers is critical and presents an opportunity for the fleet department to showcase its customer service and welcome new associates to Sentry. An administrator personally calls each new associate-driver to make an introduction, review critical components, and explain program specifics.

To periodically assess its customer service, each year the fleet team surveys 25 percent of drivers and asks that they rate Sentry fleet department knowledge, professionalism, promptness of service, and attention to detail. The fleet department has averaged a 99-percent satisfaction rating over the past three years based on responses gathered from more than 1,200 individual ratings.

Annually Fine Tuning & Analyzing TCO

Anderson and his team have spent a number of years fine-tuning its internal total cost of ownership (TCO) analysis. The team begins each model-year by identifying vehicles that meet the company’s safety, size, availability, and efficiency requirements.

“The NAFA Fleet Management Association Lifecycle Cost Analysis was the platform for our TCO, which we’ve customized to include assumptions on fuel cost, interest rates, and contracted incentives,” Anderson explained. “It also includes a vehicle-by-vehicle TCO comparison based on number of units to be purchase, and the financial impact of selecting one vehicle over another.”

The TCO also allows fleet to forecast the impact of vehicle exceptions if the sourcing decision is limited to one vehicle for a given model year.

Also among the fleet team’s strengths is the communication with drivers. Sentry publishes and maintains an intranet Web page dedicated to company cars. As a one-stop shop for drivers, the Web page includes the fleet policy (Fleet Handbook); approved spouse process (including FCRA instructions); car condition report; fleet satisfaction survey; recall information; claim reporting information; link to GE personal mileage reporting; customized “message of the week”; driver safety articles; fuel trends; and a list of the past month’s 20 highest mpg fleet drivers.

“The Web page ‘message of the week’ is a great communication tool we use to push reminders on due dates for upcoming car condition reports, reiterate policy items, post helpful tips and information, or just wish drivers a happy holiday and remind them to always drive safely,” Anderson said.

Defining Key Policies & Procedures 

Sentry’s “Company Car Policy” requires that drivers agree to maintain and operate the vehicle in the manner prescribed in the Company Fleet Handbook and adhere to all other Sentry fleet policies and procedures. Drivers are required to re-acknowledge the “Company Car Agreement” annually through the company’s policy center. The acknowledgement is electronic and compliance reporting is generated monthly to ensure all active drivers acknowledge the agreement.

New hires are required to acknowledge the agreement manually and electronically at the time of hire. The “Company Car Agreement” is a collaborative effort involving legal, enterprise risk management, HR, and fleet and is reviewed in the fourth quarter each year prior to posting for the annual acknowledgement.

“We have achieved 100-percent compliance over the past seven years since adopting the electronic policy,” Anderson pointed out. “System-generated reminders have greatly assisted in meeting the goal of 100-percent compliance.”

Sentry also requires drivers to complete biannual car condition reports and uses a Web-based survey to create the customized report. Anderson has found that the car condition report is also an excellent tool that can be used to reiterate policies such as the mobile device and no smoking policies, oil change guidelines, and the use of national account repair providers.

“We also ask a series of questions regarding the use of additional authorized drivers and whether written authorization from HR has been received,” he said.

In addition to the vehicle’s condition, drivers are asked if they have a current insurance ID card, when registration expires, and if they have the required GE Capital Fleet Services program materials. All exceptions noted in reports are followed up on by a member of the fleet staff.

Since moving to the Web-based survey in 2007, Sentry has achieved 100-percent compliance on all biannual car condition reports.

Fleet Initiatives Lead to Significant Cost Savings

For the 2009 model-year, Sentry moved from a six-cylinder to a four-cylinder model. Fuel prices had spiked to more than $4 per gallon and demand for high-efficiency vehicles was bringing a premium at auctions.

The fleet’s TCO analysis indicated significant cost savings could be achieved by moving to a four-cylinder model, which, at the time, was met by the Chevrolet Malibu. The company’s drivers overwhelmingly supported the decision.

In 2009, Sentry selected the Ford Fusion for 2010 model-year replacements. The financial crisis impact on many manufacturer incentive programs was a factor in the decision.

“The Fusion was a great fit for Sentry, and our drivers have responded favorably,” Anderson stated.

In 2010, Sentry adopted the personal mileage program offered by its fleet management company. Prior to adopting the program, drivers were required to record business and personal mileage through Sentry’s expense reporting tool. The fleet team coordinated Webinars for driver training and experienced positive results.

Resale values spiked in 2010-2012, prompting fleet to explore shortcycling many of its cars with 2012 models.

“We were also aware that our acquisition costs may be affected with a redesigned 2013 Fusion and decided that this was an opportunity to capitalize on a residual bubble and lock in favorable depreciation expense with the 2012 model at the same time,” Anderson said. “Our analysis indicated a potential savings of $148,000 and was quickly approved by senior management.”

Throughout 2011 and 2012, the company saw an alarming increase in toll violation notices in a few states. Many of the notices were from prior years, and negotiating settlements was seldom successful. Management analyzed its options and decided to implement the EZ-Pass program offered by its fleet management company for the states where it was having the biggest issues.

Lean Operations, KPIs & Leveraging Buying Power

Sentry has always run a pretty lean fleet, as illustrated by its high percentage of mid-sized sedans. Unfortunately, this does not allow the fleet to realize larger, year-over-year cost savings recognized when moving from a larger vehicle class to more efficient vehicles.

“We’ve focused on areas within our control, such as negotiating agreements that maximize our buying power and by achieving ‘best-in-class’ on the KPIs we’ve identified,” Anderson said.

Since moving to the EZ-Pass toll program, fleet has not had a single violation notice on a vehicle enrolled in the program. And, drivers are grateful in that the responsibility of managing the toll account has shifted to the company’s fleet management provider, saving the drivers’ time and allowing them to better service their customers.

In addition, implementing the personal mileage reporting tool has drastically increased compliance and accuracy. Drivers are e-mailed notices regarding missed months throughout the reporting year, and fleet runs reports after the October 31 reporting year concludes to ensure all drivers submit mileage by the mid-November deadline.

“We also run reports to filter out bad data so drivers can correct reporting errors and avoid unnecessary imputed income deductions,” Anderson said.

Changes in technology are continuing to provide positive impacts on Sentry’s business processes through improved efficiency and tools to manage resources, as well as by providing effective means of communication.

“I believe fleet will continue to be revolutionized through enhancements in technology,” Anderson said.

He also anticipates expansion of fleet mobile apps and predicts that Web-based ancillary programs will become easier to implement and more affordable as Internet access becomes more standard on vehicles.