Managing the Financial Side of Commercial Fleets

Taking Standardization to the Next Level

September 2015, by Chris Wolski - Also by this author

Wessel, photo credits to Jeff Walton. 
Wessel, photo credits to Jeff Walton.

Operating a large, diverse, global fleet can be a daunting task, but AGCO’s fleet team, led by Ralf Wessel, manager of global security and global fleet, has standardized operations across its global fleet of 2,100 vehicles in 24 countries.

Headquartered in Duluth, Ga., a suburb of Atlanta, the agricultural machinery manufacturer operates 600 vehicles in North America — its largest single concentration of vehicles in the world — with the rest spread out throughout every other inhabited continent.

The fleet is diverse and covers every vehicle class. “We operate anything from executive vehicles to small SUVs, passenger vehicles, some vans, to F-350s, all the way up to a couple of big rigs with trailers,” Wessel explained.

The primary function of the fleet throughout the world is supporting sales and service functions. “We have sales staff going out and visiting the dealerships, working at customer events, as well as service people who are servicing these accounts as well,” Wessel said. “We have F-350s, which go out into the field and test different equipment and/or prototypes. For example we have combine headers, which pull header trailers and need to comply with DOT regulations.”

The company also operates a special support team that goes out during harvesting season, which stretches from June to October, to support customers in the field.

“We have two big rig trailers with repair facilities onboard and parts inventory and dedicated support staff, who maintain the combines as they are pushed through the country for the harvest,” Wessel said. “As you can imagine, some of the technical issues will be resolved by the dealers, but many of these high-specific and very strong technical things have to be supported by our specialists, and this is where these F-350s and big rigs come into play, where we have the knowledge and the equipment where we can work on things.”

At a Glance

AGCO, a manufacturer of agricultural machinery, operates a global fleet of more than 2,100 vehicles. The fleet:

  • Consists of 600 vehicles in the U.S.
  • Is made up primarily of Ford vehicles in the U.S. operation, ranging from Taurus up to F-Series Super Duty models.
  • Allows for personal use for drivers and their spouses or partners.
  • Has a strict safety program.
  • Operates in 24 countries, including the U.S.

Maintaining the Right Image

As part of its standardization process, Wessel said that the company is careful to project the right image to its customers.

“One of the biggest issues in that respect is that we are producing the farm equipment within the region, which is then sold in the region,” he said. “And, the perception, a lot of times, from the farmers is you cannot come with a company car and try to sell me a combine made in Hesston, Kansas, if you’re driving a Subaru. You need to have a vehicle that is mirrored to whatever country you are within. From the aspects of how we operate our fleet within the different regions is, of course, the image. You have to have a certain image when you operate the vehicles.”

The North American fleet is equipped with Ford products, primarily Ford Edge, Taurus, Escape, and F-150 models.

While Wessel and his global staff of 11 (six in the U.S. and five spread throughout other global regions) oversee the fleet, AGCO uses LeasePlan International to manage its U.S. and most of its global operations. One of the unusual aspects of the AGCO fleet is that Wessel reports directly to the head legal counsel within the company.

Standardizing Operations

While standardizing operations is a recurring theme for Wessel, who has been managing AGCO’s fleet for the past decade, he is sensitive that there needs to be flexibility in the fleet operations. Much of this is borne out of the realities of managing a globally dispersed and diverse fleet.

“The American way is sometimes to just come in and dictate standards and then leave and then say, ‘Well, everybody is doing the same thing,’ and a lot of times, that doesn’t happen,” Wessel said. “It’s building the relationship with the region, understanding the regional variances of how things are applied, and then applying something in the viewpoint of the global standards. How can you apply this to make sure it really is applied and it’s adhered to? That’s one of the biggest challenges.”

While flexibility sometimes is key to implementing standards, other times an iron clad approach is the solution. This was the case when the company revised its personal-use policy, particularly outside the U.S.

“One of the biggest problems we had when I joined the fleet was that our fleet program was wide open,” Wessel said. “We were letting spouses, children, pretty much everybody in North America drive the vehicle. In other countries, it was even worse. You could potentially have a neighbor drive your company vehicle.”

The solution was a global standard that only allows an employee’s spouse or common-law marriage partner to drive the vehicle. In addition to the employee, an MVR must be run on the spouse/partner before he or she is allowed to drive the vehicle.

After the initial check, the spouse or partner’s MVR is run sporadically. Employee drivers have their MVRs checked annually.

Setting the Safety Bar High

Safety is a subject near to Wessel’s heart. Originally from Germany, Wessel spent six and a half years as an accident investigator for the City of Duluth Police Department immediately prior to joining AGCO.

In light of this experience, Wessel has developed an extensive and rigorous safety program that is designed to keep drivers safe and limit exposure to the company. The process starts with an intensive background check during the hiring process, including pulling the driver candidate’s MVR.

“After we eliminate or determine that a person is potentially eligible to drive the vehicle, we will set up an interview, where we will provide them the fleet policy and we’ll actually quiz them on the knowledge of the fleet policy,” Wessel said. “My personal experience has been that, in a lot of cases, once you’re in a hiring process, you provide people a lot of information and a lot of forms to sign. They will pretty much sign anything that you give them. So, we want to make sure that our drivers are actually reviewing our fleet policy.”

The fleet policy is updated annually. The employees must take and pass an interactive test in order to be allowed to drive.

Currently the fleet policy prohibits texting, but allows drivers to make limited, hands-free calls. All of the U.S.-based Ford vehicles are equipped with Sync.

Phone calls are limited to what Wessel refers to as “directional” calls, which means phoning in for clarifications about a customer location.

“We tell our drivers not to be on the phone for their weekly conference calls with the managers. All these kind of phone calls should be avoided,” Wessel said.

AGCO is currently reviewing a no-phone-call-while-driving policy, which could mean that a future iteration of the policy will eliminate the ability to make any phone calls while driving.

Wessel and the rest of AGCO’s leadership take the safety policy very seriously.

“If a driver exceeds certain parameters, he will then be placed under probation, which also can lead up, depending on the severity of the accident, to termination,” he said.

If a driver is in violation of the safety policy, he or she may be placed on probation — which lasts a year — and means having an MVR pulled every six months and being monitored with telematics, though Wessel said, that, too, is being revisited to determine if it should be extended to drivers who are not having issues. Drivers on probation must also immediately report any violation that occurs during the probation period.

It’s not just driving a company vehicle recklessly that could cost a driver. Violations while driving their personal vehicle may also trigger consequences for drivers.

“We have a zero tolerance policy with DUI,” Wessel said. “If a driver has a DUI while driving their personal vehicle, that can affect his driving privilege with the company.”

Approaching Safety Hands-on

While AGCO’s FMC LeasePlan International handles accident management for the company, Wessel takes a hands-on approach to reviewing every single accident that occurs involving a company vehicle, using the experience he gained as a law enforcement officer to determine liability.

“This is even if, in the case of an accident, the police didn’t find our driver at fault,” Wessel said. “We always look at the contributing factor like texting while driving, phone calls while driving, and so forth.”

This more detailed review process by Wessel involves not only reviewing the police report, but getting a statement from the driver, which is then compared to the official record.

“I have had several occasions where a police report has found the driver at fault, when, in fact, he was really not, and I can only encourage other fleet managers to make sure that they check the materials provided by the drivers, because sometimes police officers will reflect the circumstance of an accident wrong,” Wessel said. “So, you need to have some kind of review process.”

On the flip side, this process is also used to weed out drivers who have a potential to expose the company to bigger liability either by terminating them or counseling them so the same incident — or worse — doesn’t happen again.

The company doesn’t currently have a safety rewards system in place for drivers who have a good driving record, but it is currently under review, Wessel said.

Managing a Diverse Fleet

In addition to overseeing light- and medium-duty vehicles, part of Wessel’s duties involve DOT compliance. This involves staying abreast of an ever-changing array of regulations.

“The biggest challenge for DOT compliance is that there are so many rule changes and law changes, that it’s very hard to keep track of,” Wessel said. “We rely on some of the publications published by J. J. Keller and so forth to give us the latest updates.”

The other major challenge involves the strict compliance for drivers.

“It’s a lot of information, a lot of regulations and now everybody is trying to cut corners to see how they don’t have to comply,” Wessel observed. “So, to have drivers complying with it and enforcing it, it’s one of the biggest challenges we have there. And, also, again, you have regulations which are one year this way and then next year, they change to the complete opposite because heavy lobbying has been going on, trying to change rules.”

Adding another level of complexity for AGCO and its drivers are the many state-specific DOT regulations. Wessel has solved this challenge by going the extra mile.

“Whatever the DOT regulations are, we have reviewed them and we have actually set ourselves to higher regulations than the DOT regulations normally would be, to achieve full compliance for our drivers,” Wessel explained.

Going Global

In addition to the U.S., AGCO operates vehicles in Canada, Mexico, Brazil, Argentina, Zambia, South Africa, Spain, France, the UK, Germany, Switzerland, Italy, Poland, Norway, Finland, Sweden, Denmark, Russia, China, Australia, New Zealand, Turkey, and Austria. The company is continuously expanding into other regions.

The biggest challenge that Wessel said he has operating in these diverse countries is the application of standards.

“Here in the United States, we are exposed to a lot of liability and lawsuits. Some of these exposures are not equally bad in other countries. So, when you try to apply standards, which you have implemented across North America and will apply to other regions, it’s very difficult to understand the legal ramifications of all the standards you’re trying to apply,” Wessel explained. “So, sometimes, for example, the driver approval process, which is very firm here in the United States, is very loose in other countries, because of things like MVRs, which you have as a standard operating procedure here, are not widely available in countries in Europe because of the strict privacy laws.”

And, it’s not just laws — there are cultural differences that make setting global standards complicated.

“The perception of a company car is very different. For example, in the United States, a company car is more seen as a utility to perform your job. In a lot of the other countries, it’s perceived as a status symbol,” Wessel said. “So, if you want to apply standards to vehicles in other countries, you could potentially get complaints from people who, for example, are used to getting an Audi A4, and now they’re getting a Passat, because a Passat is a standard, which is perceived for them as a lower-level vehicle.”

Solving this quandary isn’t always as simple as mandating a new policy or standard.

“For existing employees, particularly with the employment contract, you are challenged because people, once they have something in their employment contract, it’s very hard to take it away,” Wessel said. “Also, keep in mind AGCO as a company grew through acquisitions. When we purchase another company or a possible joint venture and you apply your standards, what’s in the employment contract is not something you can take away. ”

Changes in standards can be made over time as new employees are hired, but it isn’t something that can be implemented overnight.

“For existing employees, you will find a lot of the exceptions or you have to find compromises with the site leaders and say, ‘Hey, I understand in the past you used to put everybody in an Audi A6, but, from now on, the Audi A4 is the standard.’ But, instead of putting them in a four-cylinder vehicle, you’re putting them in a six-cylinder vehicle.”

There have been other unforeseen challenges as well.

“For example, in China, you have to have a Chinese license to be able to drive in the country. So, this is one of the biggest challenges too as you implement processes or send experts over there. You actually have to hire Chinese drivers for these experts to be able to move within a country,” Wessel said.

Implementing a fleet safety program in other countries can be complicated, again, by local cultural norms and laws.

“We do have a global safety program. The application, due to some of the privacy laws, is sometimes difficult,” Wessel said. “And, the other problem, too, is the understanding of law, and the application of law is very, very different in some of the European countries in particular versus how it is in the U.S.,” Wessel said.
For instance, the way liability is handled in other countries differs significantly than in the U.S. model. “The limitation to some liability in countries in Europe or in other countries you operate is very limited to the insurance amount you’re covered by the company, where here, you have always the personal liability or the additional liability which can kick in at any point in time,” Wessel said.

While there are certain challenges that can sometimes face global fleets, this worldwide reach gives AGCO distinct advantages as well.

“The biggest advantage is you can negotiate on a global basis with some of the manufacturers,” Wessel said. “Not all the manufacturers are willing to go with global contracts, as most of the manufacturers have their own profit and loss center per region. So, the guidance you get from some of the manufacturers in negotiating on a global basis is somewhat limited, as every country is pretty much fending for itself. But, you get slight advantages there where you get guidance, for example, based on a North American contract, where you can put into place something for other countries, where the North American contract can be taken as a guideline.”

Charting Successes

While there have been some challenges faced by AGCO’s fleet over the past decade, its successes have more than eclipsed them.

“One of the biggest successes, I would say, has been somewhat creating a global standard for fleet levels within all regions,” Wessel said. “Where you have a clear definition of vehicle levels, what’s within the region, what is the work, what is a perk vehicle versus a job-allocated vehicle.”

Wessel also pointed to the company’s safety program as a major success, including “eliminating nuisance, casual drivers. Implementing procedures where you limit it only to spouses, and having an accident review process to determine fault.”

Going hand-in-glove with strengthening the safety program has been a reduction in insurance costs.

“This is particularly the case in North America,” Wessel said. “We have reduced a lot of the insurance layout and have limited our exposure in some of these areas as well.”

Stronger DOT compliance has been another big success. “A lot of times, in the past, before I joined the company, a lot of people were saying that we’re DOT-compliant, but the limited knowledge of these people, because it was self-administered, the DOT compliance, it was really not compliant at all. We have full DOT compliance now, or at least nearly full. Full is always difficult to say, but we have nearly full DOT compliance with all regulations,” Wessel said.

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