In today’s workforce, it is often difficult to find people who are truly passionate about their job. For people in the fleet industry, this usually isn’t the case, since most fleet professionals really enjoy the sometimes chaotic world that is their chosen career. David Anderson, senior Fleet & Travel manager for Pamlab, reflects that passion for the job every day.
“Ever since high school, I knew I wanted to work in the automotive industry,” said Anderson, who began his quest by attending Northwood University, where he received degrees in automotive marketing and management.
After graduation, he worked at a Mazda dealership for a short time and then had a 14-year career with Enterprise Rent-A-Car where he ran the remarketing department for South Louisiana.
“I learned a lot, not only about the remarketing business, but the rental, leasing, and car sales side of the business in a fairly short time,” Anderson said.
He then switched gears and decided it was time to give the fleet side of the business a try. “Although the fleet industry was a little different than what I had done at Enterprise, many of the functions were similar,” he said.
In 2004, Anderson took the fleet manager job at Pamlab.
As senior Fleet & Travel manager, Anderson divides his time between managing the fleet, travel and hospitality, building facilities and mail room, and the front desk reception area of the company’s main office.
He reports to Julie Hayden, senior vice president of Finance, who oversees the company’s accounting & payroll departments, as well as Fleet, Travel, and building maintenance. The two have more than three decades of fleet experience combined.
“I am very fortunate that senior management has given me autonomy and their trust to run our fleet with the company’s best interest in mind,” Anderson said. “It is my fiduciary responsibility to make sure every dollar is spent wisely in the fleet department.”
He strongly believes there should be an open line of communication with senior management on any significant changes that financially impact the fleet department.
“Since I am the only person at Pamlab who handles the fleet, I am always interacting with senior management as necessary,” Anderson explained. “I believe it helps to have company-supplied vehicles for the executives to be able to keep ‘face time’ with them. They tend to be more understanding and empathetic to our fleet needs when their company cars are part of our fleet.”
The executives also understand the fleet vehicles are important tools for Pamlab’s sales reps to perform their job, and they have been flexible in the type of vehicles Anderson puts on the selector list.
“Maintaining the balance of cost of ownership and functionality is key in our fleet business,” he stated.
[PAGEBREAK]Proactively Managing Policy
Anderson and Hayden view the fleet department and the company’s vehicles as an essential tool for employees to do their job. They said the fleet department’s mission is to provide the safest, most efficient, yet functional vehicle for employees while focusing on keeping downtime to a minimum.
“Pamlab is committed to quality and unparalleled service in all aspects of our business, which is why our company adopted the Latin word veritas, which is translated to mean ‘truth’ and best represents our values at Pamlab,” Anderson explained.
Anderson takes a hands-on approach with all fleet functions. Because the fleet is somewhat small (200 units), he is able to keep an open line of communication with all of the drivers. He continually provides feedback on where to bring vehicles if something needs attention.
“It saves the company time and money since we are bringing a car to the right shop the first time,” he said. “Although we have a fleet replacement policy in place, we make adjustments when opportunities come up (e.g., a strong used-car market).”
The team replaces vehicles at three years or 70,000 miles. When new employees are hired, they are assigned a vehicle from storage. If that vehicle comes up for replacement within their first year of employment, they get to choose from two new vehicle types for their next vehicle. After their first year of employment, they can choose from seven different new models.
Only employees and their spouses are authorized to drive the company vehicle. If an accident occurs, employees are charged $300 for the first at-fault accident, $600 for the second, and $900 for the third. Employees can use their vehicle for personal use for a nominal monthly fee.
When assessing fleet financials, Anderson and Hayden focus on ongoing cost initiatives.
“Pamlab is committed to its belief in its people, purpose, and products,” according to Hayden. “Understanding what Pamlab needs to be profitable and constantly reviewing what we can do to make the fleet department run as efficiently as possible is our constant focus.”
The team strongly believes in having a diverse fleet. Just using one vehicle supplier is like putting all your eggs in one basket, Anderson pointed out. “By running a diverse fleet with a variety of manufacturers, you not only offset the cars that may have potential issues, but our drivers enjoy the bigger selection to choose from,” he said.
Generating Big Savings
The Pamlab fleet department saved more than $100,000 in 2012 as a result of several fleet initiatives. The changes included offering four-cylinder vehicles.
“We changed our selector list to offer four-cylinder vehicles that used to be equipped with a V-6, but we equipped them with some extra features,” Anderson said. “This was well received by the employees.”
While some six-cylinder models are still offered on the selector, the four-cylinder cars are more appealing because they come equipped with more features than the six-cylinder models. The drivers like the option, and the company saves on fuel expense. The company averaged fuel savings of $500 per vehicle by switching to the four-cylinder model.
Another cost-saving idea that the fleet team implemented involved only offering two-wheel-drive vehicles.
“For drivers in the snowbelt areas, we have found that a FWD with traction and stability control will get the drivers through the areas they are driving in. If they have an issue driving in the snow, it is usually traction related, in which case we will purchase a set of snow tires for the car if needed,” Anderson said.
The fleet team also found that by offering these drivers crossover vehicles, they have better ground clearance to handle going through deeper snow.
Pamlab also uses the latest mobile computing technology to save money. Sales reps use PDAs on each call. When they leave samples, they must have each doctor sign the PDA. This also acts as the fleet’s “GPS” to verify each rep’s daily schedule. Pamlab is looking into offering iPads to replace the PDAs in the near future to further enhance the use of technology.
“We are saving the cost of installing GPS in each vehicle,” Hayden pointed out.
Another cost-saving idea involves how the fleet team transports vehicles and the limited number of cars it puts in storage.
When Anderson knows a new driver is to be hired, he first looks at the cars currently in storage and then at the vehicles in the process of being replaced. When drivers drop a vehicle at a dealership when picking up their new car, Anderson has the dealership service and detail the car. Then he utilizes a trucking company to transport the vehicle straight to the driver.
“We have cut our transportation and storage expense in half using this method,” he said. “The longest we will keep a vehicle in storage is about 60 days. After that, if the vehicle meets the holding requirements and can be sold for at least the reduced book value, we will sell it.”
This allows the fleet department to not only keep storage costs down and have a newer fleet, but also effectively maintain business relationships with the manufacturers by ordering more than the minimum number of vehicles.
Every vehicle is a factory order, and none are purchased out of stock. The exception to this has been for some of the executive vehicles. Anderson looks at what the dealer/manufacturer is offering compared to any fleet incentives. Timing and convenience are also factored in the decision.
“We find that we get better ‘service after the sale’ when we lease a vehicle directly from the dealership, which is particularly important to our executive drivers,” he said.
Increasing Savings Further
Anderson advises company drivers to schedule their service and maintenance ahead of time, if possible. Rather than having them bring their car in for an oil change on a busy afternoon, they are asked to call the shop to schedule a time when they can do it quickly or on weekends.
“Some drivers don’t like getting their cars taken care of during their personal time, until they see how much it affects their work productivity and performance,” Anderson explained.
Every vehicle coming out of service is offered for sale to all employees. Anderson publishes a quarterly list to show the vehicles coming up for sale over the next few months. The fleet department offers vehicles at fair market value with the option of adding an extended warranty.
“It is a great deal for the employee, since they can usually save $1,000-$3,000 compared to buying the same vehicle at a used-car lot,” Anderson said. “Plus, we have all the damage and maintenance history on each car.”
Selling cars to employees has helped the fleet department’s bottom line by not only getting a desired price, but having the car sold within days, not weeks or months. In fact, Anderson and Hayden significantly reduced the fleet’s bottom line over the past two years by taking advantage of the strong used-car market.
“This was a great opportunity for us to cycle out more cars than normal during this time. This is also a time where many fleets started to become more flexible in their replacement policies,” Anderson said. “I took advantage of the strong used-car market by cycling half the cars in our fleet. It was a win-win for everyone involved!”
Pamlab made more money on its cars being sold, maintenance costs decreased because the fleet team sold the cars before they required more maintenance, fuel economy improved because fleet could switch drivers into more fuel-efficient cars, and leases were set up on lower interest rates when the fleet department switched into new leases.
Also, the drivers liked the fact that they were getting a new car sooner, and Anderson was able to order more cars from the manufacturers, which, in some cases, brought the fleet to the next tier, increasing its incentive money.
Anderson recently introduced an online e-learning course that new drivers can access. The course covers an overview of Pamlab’s vehicle policies, frequently asked questions, and information on purchasing new and used vehicles at discounted prices.
Anderson is also working on revising the fleet vehicle policy manual and adding defensive driving training to the fleet’s e-learning program.
[PAGEBREAK]Meeting Challenges Head On
While the Pamlab fleet continues to implement cost-saving initiatives, challenges still exist, such as rising fuel costs, depreciation, and increasing vehicle prices.
“Unfortunately, in the fleet world there are many challenges that are beyond our control,” Anderson explained. “But, by thinking outside the box, considering a variety of vehicles that are more efficient to run than others, and really looking at our replacement cycles, we have the ability to make a financial impact on our fleet.”
Every vehicle in the Pamlab fleet has been through a cost analysis to see where the optimal delete point is. Sometimes that point varies from the standard time of year or mileage limit set. And, although the fleet has a three-year/70,000-mile replacement policy, it flexes that number in either direction (earlier or later) to do what makes best business sense for the company.
“The fleet world is a fast-moving business that is constantly changing. You must be up-to-date on current trends and changes within the industry,” Anderson said. “That is why I am a member of the NAFA Fleet Management Association and the Automotive Fleet & Leasing Association (AFLA) and attend their annual meetings every year.”
Anderson emphasizes that by having a proactive attitude, fleet managers can avoid any surprises that could cost a company money. He also stressed the need to be aware of what is going on in the automotive industry, both new and used.
As the Pamlab fleet continues to grow, Anderson realized that many of the procedures he currently has in place will need to be streamlined to accommodate the increased demand. In fact, he envisions the Pamlab business becoming more automated with more driver involvement.
“By instilling the procedures we are using now, our hope is that our drivers can maintain their focus on how to keep our business running as efficient in the future as it is now,” he stated.