Even though Sheri Bonsall, assistant vice president, corporate travel services, was new to the fleet industry, when she took over fleet operations for Chubb & Son in 2004. She was tasked with finding ways to minimize fleet costs and provide immediate cost savings to the organization. With a background in business management and accounting, as well as some help from her fleet management company, she was able to do just that.
Breaking down fleet cost components into logical categories and determining which expense levers could be addressed for the most immediate savings impact, Bonsall then partnered with her fleet lessor to pull the appropriate levers. Thus, the evaluation of the 800-plus vehicle fleet began.
In light of the existing vehicle type and used-vehicle market conditions at the time, the first fleet component analyzed was the amortization schedule. Bonsall worked with Chubb's strategic budget and planning department to build a business case with best- and worst-case scenarios based on the current amortization schedule.
"Putting a strategy behind the process rather than amortizing all vehicles in the same manner, the findings led us to decide upon an amortization based on the specific useful service life of the vehicle," said Bonsall. Therefore, the overall schedule was shortened from 60 months to 45 months on most vehicles, bringing the residual value at the end of the lease term in line with projected fair market value.
Shortly thereafter, Bonsall performed a thorough assessment of vehicle selectors and manufacturers. She looked closely at each manufacturer's offering based on Chubb's specific application needs, focusing on driver safety and overall lifecycle costs. After considering all options, she switched manufacturers, significantly reducing overall acquisition and depreciation costs, as well as total cost of ownership.
Evaluating Management Providers
A significant factor of running an efficient fleet can be enlisting the assistance of a fleet management company. Recognizing its value, Bonsall conducted a complete market evaluation of fleet management providers. Bonsall said, "I realized Chubb was not taking full advantage of services that my current lessor provided."
Bonsall elected to fully utilize her current provider, LeasePlan USA, and outsourced driver calls to the LeasePlan FleetDesk, thereby allowing better utilization of her limited internal staff. In addition, she outsourced personal mileage reporting to LeasePlan, resulting in less administrative work for Bonsall's fleet team.
"While it's important that your fleet is comprised of the correct vehicles, reducing and even eliminating unnecessary vehicles can be a huge cost-saver as well," said Bonsall. She identified shortfalls within the Chubb fleet by conducting an internal vehicle usage study. The study results led to a 12-percent reduction in the overall fleet size. From 2003 to 2006, 115 vehicles were eliminated across the board, reducing capitalized costs by 10 percent.
Benchmarking Personal Use
A growing trend for companies that provide vehicles to employees is assessing a personal use charge to recoup some fleet costs. To determine the appropriate personal use charge for Chubb, Bonsall benchmarked against the industry and aligned the company's personal use charge accordingly. The outcome led to a significant reduction in Chubb's overall fleet costs.
"I felt the implementation of the change in the personal use charge went smoothly because we had a solid plan in place and carried it out successfully," said Bonsall.
The rollout involved obtaining buy-in from Chubb's senior management, field managers, and finally, drivers. Everyone was given more than three months notice, ensuring that no one caught unaware by the change.
Instituting Additional Initiatives
Bonsall took on several other initiatives that added to containing fleet costs for Chubb. "I expanded the quarterly review process, increased focus on national account usage, monitored fuel expenses, and altered replacement parameters to order only in the fall," said Bonsall. She also implemented driver ordering through ePlan, LeasePlan's online fleet management solution, streamlining the process. In addition, out-of-stock orders went from 25 percent in 2002 to less than 1 percent in 2006 through regulating ordering practices.
In the end, all the hard work paid off. In two short years, Bonsall has completely revamped the Chubb & Son fleet management department, establishing greater operating efficiencies and providing measurable cost savings. Her future projects include implementing a comprehensive safety program to promote safer driving, reduce accidents, and ultimately, lower costs.
With all these fleet initiatives, does Bonsall now feel comfortably familiar with the industry? "While my job encompasses more than just fleet, the past three years have opened my eyes to the complexity of fleet management," responded Bonsall. "While there are still expenses to be examined and cost savings to be found, I feel that we have come a long way and I look forward to future fleet initiatives."