Consulting » Fleet management – Information highway

Internet-based services and new technology can bring massive cost savings and much greater control of fleet operations to companies. Every area of company transport stands to benefit from an online revolution that brings fleet management into the 21st century, even if the car itself hasn’t changed much in the past 100 years.

Fleet acquisition, vehicle monitoring, maintenance authorisation, parts ordering and disposal can be handled from the comfort of any modern computer.

The result could be lower acquisition and maintenance costs, better residual values, and reduced accidents, which together could wipe hundreds of thousands of pounds from a fleet’s annual spend. And, as more suppliers compete to offer the best online services, the experience of using the internet should be less traumatic than pioneering companies that experimented with online services several years ago.

Some of the most pro-active supporters of doing business over the internet are contract hire and leasing companies, which supply more than half of all the new cars that fleets take on each year. According to Danny Clenaghan, managing director of fuel and business mobility at Arval PHH, the secret to a successful system is making it simple for the user, no matter what process is involved, and offering the vital ingredient of added value.

His company’s own research has shown that at least 40% of companies with managed fleets now use a web-based facility to transact some or all of their fleet operations. The most common uses are for getting updates to obtain quotes on new cars and for management reports. The use of an online platform is more prevalent among larger fleets, the firm points out.

“We expect this 40% figure to continue rising,” says Clenaghan. “Controlling costs is all about getting and managing information, and many fleet managers have realised that any information flow is best handled online. Taking advantage of the internet is a giant leap forward in making fleets operate more efficiently.

“A successful online fleet system has to provide knowledge, not just management information. Fleet decision makers, including financial directors, want the raw data on their fleets tailored into a format that allows them to make informed decisions,” he explains. “That could mean, for example, analysing where their drivers buy fuel and determining if they could cut costs by using other petrol stations on the same routes.

“By the same token, these platforms should also provide swift access to the data needed to manage external factors. With a host of EU directives and tax changes either already here or soon to arrive, employers need easy access to information on areas such as vehicle histories, fleet composition and carbon dioxide emissions,” says Clenaghan. This is a tough challenge, but many fleets now swear by the online systems that have transformed their cost base.

Sandy Duckett, fleet business manager for Scottish Power, used the internet to slash vehicle acquisition costs through a reverse auction. Manufacturers put in bids for providing vehicles to the firm during the online auction.

The winner wasn’t simply chosen on price, because other factors had already been taken into account before bidding started.

An ironic twist, according to Duckett, is that introducing online services created a large amount of paperwork, even though the potential savings were huge. “We needed effective and comprehensive training for ourselves and the tenderers, and full testing of reverse auction software,” he says.

He also warns that reverse auctions don’t guarantee up-front savings, as prices could go up as well as down, so it is almost impossible to be certain of any additional benefits.

The auction was held in partnership with United Utilities, with a final deal for 10,000 vehicles worth £150m being struck with Vauxhall, although the companies have not listed what savings this deal achieved.

But David Bricknell, managing director of SynerDeal, a specialist in online auctions and acquisition systems, claims immense savings are possible.

The firm has managed more than £1.5bn-worth of online auctions, with one reverse auction for the supply of car batteries, bringing in 100 bids in less than one hour. “One oil filter auction achieved a 50% reduction on the targeted price,” Bricknell says. “Overall, I believe we have achieved £300m in savings through our auctions.” Furthermore, the same method could be used for air and train tickets, hotel, car rental and communications costs.

The internet can also help cut down on bureaucracy and paperwork. For example, the simple task of informing drivers what company car their monthly allowance can buy causes huge amounts of paperwork, with reams of faxes covering different options and cars flying between fleet decision-makers, suppliers and drivers. Tim Holmes, head of HSBC Vehicle Finance, says: “The average ordering process takes eight weeks, during which time it takes an employee over eight hours to order a company car – quite apart from the fleet department’s efforts in researching the various quotations.”

Doing quotations by email can slash costs, but a simple internet-based quotation service could remove costs almost immediately, and it is one that virtually every fleet management company and leasing supplier offers today. According to HSBC, transferring the labour-intensive task of vehicle quotations from fleet managers to drivers, using the internet, could save some companies almost £170,000, or the equivalent of 10 company cars on a 1,000-vehicle fleet. The company has launched its own system, DriverQuote, which provides drivers with details of the cars for which they qualify.

It also informs them of personal cost implications, including monthly benefit-in-kind tax liability and personal fuel costs, as well as the total cost to the company.

Once a company has signed up to DriverQuote, its fleet policy is installed within HSBC’s secure online system. The fleet manager then allocates each driver a user ID and password. When the driver has made a final decision he/she will submit an order for authorisation to the fleet manager. This type of service is not unique, but it gives a valuable indication of the financial power behind such a simple, internet-based idea.

Indeed, one leasing supplier, Tuskerdirect, now specialises in purely online fleet services. Customers have included The Royal National Lifeboat Institute and Del Monte. When the Del Monte deal was signed, a spokesman commented: “Managing the car fleet was often a laborious and thankless task. With Tuskerdirect it is virtually all done for you online. All the information you need is at your fingertips. I give the drivers their budget and they get on with choosing the car they want on the system, including any extras. I can then order the car at the click of a mouse. It is very easy and saves us time.”

Vehicle servicing and maintenance is another key area that can benefit from internet-based management. Services such as 1Link from Epyx aim to create electronic links between vehicle servicing agents and fleets, allowing instant, real-time management of work costs, along with online booking of services.

Peter Scholfield, head of strategy and marketing for the country’s largest contract hire supplier, Lloyds TSB Autolease, believes that unlike traditional methods, where garages risked waiting several hours on the phone for the fleet department to agree to work, the internet can reduce the time needed to minutes. Bookings can also be directed to the nearest cost-effective supplier. “The way forward is through online service booking and integrated electronic billing and payment, removing the need for a paper invoice,” says Scholfield.

Greg Connell, managing director of Epyx, says companies can save between 50% and 60% on processing costs for service maintenance and repair by moving operations online. For fleets, it could be possible for 80% of work on vehicles to be authorised automatically by computer, without any human intervention using modern systems, which would offer supplier productivity improvements and faster supplier payment. Managing director of Drive Software Solutions, Martin Drake, says: “The real benefit is combining e-business with automation to change business processes.”

Other services available online include rental booking, tyre ordering and even windscreen replacement, while myriad reports can be made available through online access to suppliers’ systems, including fuel costs, accident costs and rental charges. Even selling vehicles is now an online experience for the forward-thinking fleet, with operations such as BCA Europe and Manheim Auctions offering internet-based sales alongside their traditional physical auctions. And while physical auctions remain the most popular methods, online sales have consistently achieved high resale values for cars, according to Manheim.

The benefits fleet decision-makers, including finance directors, should be looking for from their system are summarised by Clenaghan, who adds: “Fundamentally, any internet-based fleet service has to add value. After a client uses it for 10 minutes, you want them to wonder how they ever got by without it.”

The internet can bring cost savings and greater control to fleet operations, according to a leading fleet. By using internet-based technology, medical products giant GlaxoSmithKline slashed more than £1m from fleet running costs in a single year. It helped pioneer the use of key supplier Arval PHH’s InterActive service on its 4,800-vehicle fleet.

The service is used as a reference for billing information, to check the status of ordered vehicles, as the home of the driver database, as a bespoke reporting tool and for creating fuel use analysis reports.

By providing information to drivers online and minimising unnecessary paperwork, the fleet department has taken on two new roles – covering insurance and driver training – without having to take on more staff.

A spokesman said: “The internet can help streamline your processes and cut down on paperwork. It can also help improve efficiency.

“You have access to information that can be turned into reports, and because it is internet based, that can be done anywhere in the world.”

The internet and the company intranet have become the first point of contact for all fleet-related enquiries. Driver information, handbooks, choice lists, driver manuals and safety manuals are all intranet-based, while the firm also offers used vehicles for sale through the site. Accident management information is also electronic.

The next step for the firm is telematics technology, which will allow it to ensure that drivers are using their time on the road efficiently.

The firm is also using technology to reduce the need to travel altogether, with teleconferencing facilities at many of its offices throughout the world. ?: