While an increasing number of businesses across the United States continue to "go green" in an effort to reduce their environmental footprint and lower fuel costs over the long term, remaining fiscally accountable while moving to more fuel-efficient vehicles challenges even the best management teams.
However, life sciences tools and technology provider EMD Millipore not only implemented a 30-percent (and counting) hybrid fleet into its North American operations, but also plans to save more than 140,000 gallons of gasoline and significantly cut CO2 emissions.
"EMD Millipore has positioned itself as a leader in corporate sustainability programs while also maintaining great profitability by reducing cost for environmentally preferable programs, like fleet," said Tom Hartner, manager, Global Indirect Procurement, who has spent the last 4 ½ years managing the Global Indirect Procurement team and more than two years leading a program to transition toward using more fuel-efficient vehicles.
Offering Innovative Solutions & Driving Customer Productivity
Since its founding in 1954, the company - recently acquired by Darmstadt, Germany-based pharmaceutical and chemical giant Merck KGaA - has provided innovative solutions that help drive customer productivity from research through development to production.
EMD Millipore provides cutting-edge technologies, tools, and services for bioscience research and biopharmaceutical manufacturing. In addition to its headquarters in Billerica, Mass., the company maintains subsidiaries or offices in more than 30 countries and a vast network of distributors and dealers.
Major manufacturing centers are based in Molsheim, France; Cork, Ireland; Jaffrey, N.H; and Temecula, Calif. The company's major research and development center is located in Bedford, Mass.
As a strategic partner, the company collaborates with customers to confront the world's challenging human health issues. From research through development to production, EMD Millipore's scientific expertise and innovative solutions help its customers tackle complex problems and achieve their goals.
Today, EMD Millipore offers an extensive portfolio of products and services in life sciences, drug discovery and development, lab filtration, lab water, upstream and downstream bioprocessing, and process monitoring. The company's global customers include private research institutions; analytical, academic, and clinical laboratories; and biotech, pharmaceutical, and contract manufacturing organizations.
Fleet Strives to Reduce Emissions & Maintain Value
With more than 6,000 employees worldwide - 2,800 in North and Latin America, 2,700 in Europe, and 470 in the Asia-Pacific region - the company leases a global fleet of 1,200 vehicles, 327 of which are utilized by sales, service, and facilities personnel within U.S. borders.
"Fleet is managed within the corporate procurement function, which is a shared service for all of EMD Millipore's primary divisions," said Gary Polito,
travel & fleet commodity manager.
Fleet's core mission and philosophy includes providing a vehicle that fits the intended use while reducing emissions and maintaining a total value approach. This philosophy is driven by the senior management team and wholly embraced by the company's sales and service teams.
As a result of an extremely diverse product line (microscopic antibodies to large scale filtration equipment), vehicle needs vary dramatically. The service team drives the Toyota Sienna minivan based on the large space requirements, and the North American sales team primarily uses the Toyota Prius, Camry Hybrid, and RAV4, depending on space and functionality needs.
EMD Millipore does not maintain a set schedule for vehicle replacements but instead, in conjunction with its fleet management partner Automotive Resources International (ARI), routinely reviews the market value for each vehicle to determine the optimal replacement time.
"The quality of the Toyota vehicles and their ability to hold their market value has made this proposition much easier for our drivers and finance group to understand," Polito said. "This does not necessarily mean that we are keeping vehicles on the road longer, only that we are matching to market conditions."
Formalizing & Expanding Sustainability Programs
EMD Millipore's corporate vision includes long-term operations sustainability by dramatically reducing the consumption of non-renewable resources, reducing waste, and adopting behavioral changes that support sustainability companywide. In 2008, the company decided to include fleet as part of it's corporate sustainability program.
The goal was simple: revamp the entire fleet program - the number of sedans in the fleet totaled less than 10 percent - with a specific emphasis on improving the environmental impact of fleet vehicles in the U.S. and Europe.
The company determined the large SUVs and minivans driven by the sales and service did not make sense from an economic or environmental standpoint.
Today, fleet incentivizes its eligible drivers to select a hybrid vehicle through a cash payment after they have taken delivery of the vehicle. This is funded by the fuel savings the company receives.
"Operating in a responsible way is critical to our business, employees, and customers," said David Newman, head of sustainability and EHS. "The goal of reducing our use of non-renewable resources has grown into cutting our total greenhouse gas emissions 20 percent over the 2006 baseline by 2011."
According to Newman, this included looking at emissions directly from company facilities, purchased energy, and fleet vehicles. At the end of 2009, the company operated 104 hybrid vehicles, which have contributed greatly to a 15-percent reduction in the total greenhouse gas (GHG) emissions - with many programs lined up to help achieve the ultimate goal of 20 percent.
After the 2008 "fleet shakeup," the team also moved to vehicles with better mpg and eliminated use of all-wheel-drive vehicles in warm climates by implementing a "Snowbelt" policy, further reducing consumption and saving money.
Another change came specifically within the company's European fleet. The majority of vehicles were part of the total compensation package for employees, and in 2006, EMD Millipore enabled employees to choose virtually any manufacturer and model of vehicle that met their budgetary constraints. This resulted in more than 25 different manufacturers and 80 models of vehicles - many of them with very high emissions and very high taxation for EMD Millipore. The vehicle variety also led to high variable operating expenses.
A change in policy was critical.
Today, the number of manufacturers and models are limited, the company better understands vehicle taxation, and the fleet team encourages employees to select vehicles with lower emissions.
Ultimately, the introduction of hybrid vehicles into the fleet not only helped dramatically reduce carbon emissions, it also reduced the total cost of ownership.
"In addition to the hybrid vehicles, introducing a 'total value' approach provided a methodology to look at the cost of all facets of the program, i.e., fleet management, fixed and variable costs, and market value," Hartner said. "The new fleet program reduced costs while also providing a highly visible program that increased EMD Millipore's image and reputation to our employees and customers."
Remaining Fiscally Responsible While 'Going Green'
Companies across the globe struggle to implement an effective, efficient, and cost-friendly "green fleet" program. EMD Millipore's move toward more environmentally friendly vehicles shines as an example of "what to do" when implementing an eco-friendly fleet.
The organization's "total value" approach enabled management to look at all facets of the fleet to implement its program in a fiscally responsible way. To do this, the team challenged and changed virtually every facet of its program, including moving to a new leasing company.
"ARI has a great focus on environmental responsibility, as well as systems and processes to help us reduce cost," Hartner said. "We changed our lease structures from closed-end to open-end, which helped reduce cost (while also increasing our financial risk - an acceptable risk for EMD Millipore)."
A move was also made to Toyota vehicles as they provided the best vehicle lineup, excellent market value, and historically low maintenance costs.
"We only enable drivers to order vehicles that fit the form and function of their job," Hartner said. "All of these changes enabled us to put a fleet on the road that operates at a lower cost per mile than our peers. We know this since we benchmark our fleet costs against similar fleets, and we continue to outperform them."
Research and obtaining buy-in at all levels for the sustainable fleet initiatives proved another key factor to EMD Millipore's successful alternative-fuel vehicle initiative.
During the planning process, a cross-functional team of stakeholders came together to talk about what "could be." Shortly thereafter, the team collected data and information to better understand its current fleet and developed a vision for the new fleet program, including a compelling sales pitch on the total value that an environmentally preferable fleet program could bring.
They also conducted two surveys among the drivers and their management team to identify specific needs, which were then included in the proposal.
"When the team started the internal communication with our field teams, the end-users were very enthusiastic," said Tom Cicale, director of global procurement. "Senior management approved the proposal because we listened and translated feedback from drivers into a sensible program."
While transitioning the fleet to a more fuel-friendly operation was quite seamless for the company, it did encounter a few roadblocks along the way - particularly in the U.S., where the limited hybrid offerings and a lack of infrastructure for alternate technologies at a competitive cost proved intimidating.
"Small SUV, crossover, and minivan hybrids are limited," Hartner said. "This space has largely been left untouched by the manufacturers, but there appear to be more models coming available."
The company also hopes to see infrastructure for alternate-fuel technologies (propane, CNG, and electric) advance at a quicker pace.
"For fleets that do not have a central garage or are scattered around the U.S., the cost to purchase vehicles equipped with these technologies is prohibitive given that the fueling infrastructure is not available yet," Hartner added. "In Europe, there is less of a push for hybrid and alternative-fuel vehicles because vehicle manufacturers continue to rely on improvements in diesel technology to improve fuel efficiency."
Hartner emphasizes that the primary hurdle for EMD Millipore is the creation of the "right value proposition" to consider alternative-fuel technology vehicles.
EMD Millipore Remains Proactive
To assure that the fleet continues to stay in line with company goals, the management team consistently reviews data and policies through quarterly updates with major U.S. and European fleet management companies (FMCs).
"We review trends in data and make adjustments as necessary, and we also look for our FMCs to continually provide new opportunities for cost savings or to improve performance," Polito said. "Our approach is that the FMCs are the experts, and we need to leverage their knowledge to help us improve."
And while EMD Millipore's U.S. fleet, which is now comprised of more than 30-percent hybrid vehicles, the fleet team continues to seek out opportunities for vehicle improvements and efficiencies, especially as new models become available and new technologies are introduced.
For example, the company is looking to the manufacturers to introduce direct replacements for the Toyota RAV4 and Toyota Sienna minivan to reduce their overall cost and environmental impact. Also, the facilities team is assessing propane and CNG trucks for their operation.
"Availability and infrastructure are the two areas that prevent EMD Millipore from moving forward with more changes," Newman said.
In response to requests from employees who are office-based or do not qualify for a fleet car, Millipore introduced an incentive program to change employee's behavior outside of work. If an employee purchases a vehicle classified as "Smartway Elite" by the U.S. Environmental Protection Agency (EPA), EMD Millipore provides a monthly cash benefit for up to three years. Additionally, employees who drive hybrid vehicles in the U.S. enjoy special parking at each EMD Millipore facility.
"Our U.S. employee incentive program shows employees are are excited about adopting the company's values outside of work," Newman added. "Employees have responded enthusiastically to the program. One of our engineers even built his own fully electric vehicle, which he now uses to commute to work. And, yes, we provide a charging outlet for him!"
The Future Looks Promising for Continued Green Fleet Growth
As EMD Millipore continues to move forward with its green fleet approach, the company ultimately hopes to globalize its alt-fuel vehicle program.
"Ideally, we'd like to see the globalization of the green fleet program into Europe and into the Merck KGaA family of companies," Cicale said. "What EMD Millipore has done to 'green' the fleet has been very well received, but there is so much more to do."
He specifically points to new alternative-fuel technologies coming available and the continued introduction of hybrids.
"Given the pace of these changes, we need to be proactive or we will fall behind, our costs will increase, and we will become uncompetitive," Cicale concluded. "We are just scratching the surface of possible opportunities." FF