Running a Profitable, Customer Driven Motor Pool Operation

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Running a Profitable, Customer Driven Motor Pool
Operation

• Mike Wilson, Fleet Manager
• University of Iowa
• Andrea Paxton, Technical Support Specialist
• CCG Systems, Inc.

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Outline for Todays Presentation

• Overview of the University of Iowas Fleet

• Vehicle Utilization

• Cost Containment

• Revenue Generation

• Lifecycle Costing

• Rate Setting

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About the University of Iowa Fleet

• We have 545 vehicles in our total fleet.
  (Another105 on Campus that we fuel and maintain)
• 58 in the daily rental fleet
• 455 in the lease fleet
• 32 awaiting sale

• Operational Budget of 3,000,000

• 5,006 rentals in FY 07
• 4,579 from my fleet, 427 outsourced

• 12,910 rental days
• 11,859 from my fleet, 1,051 outsourced

• 1,664,617 rental miles
• 1,504,088 from my fleet, 160,529 outsourced

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More About University of Iowa Fleet

• 600,000 gallons of fuel in CY 2006
• 220,000 gallons of B-10 diesel
• 250,000 gallons of E-10
• 130,000 of E-85

• 11.5 FTEs
• 1 Mgr, 1 Asst Mgr, 1 Acct. Clerk
• 1 Dispatcher, 1 Prep Person, 5 Students (2.5 FTE)
• 3.5 Techs, .5 Shop Manager

• Self-Sufficient Entity

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Our Facility 4/13/06
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Our Facility 4/14/06
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Our Home for 16 Months
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Our Newest Facility
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What We Learned

• Focus on operations and priorities will become
  clear

• Keep your server safe, you can replace
  workstations

• Use your weight, be your vendors 1st priority

• Keep your keys safe

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Vehicle Utilization

• Daily Rental Fleet Size
• Too Big
• Too Small
• Just Right (Maybe)

• How Get More From the Motor Pool Calendar Applet
• Minimize Honeycombing
• Optimize Outsourcing

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100 of Customers Served
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Better?
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Best (Maybe)
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Optimal Rental Fleet Size
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2 Vehicles needed from 10/15/07 to 10/17/07

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Should you have a Daily Rental Fleet?

• If not, then what do you do?
• Driver Reimbursement
• Outsourcing
• Local Pooling

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Keeping Your Daily Rental Fleet Profitable (or at
least break-even)

• Two ways to manage this
• Reduce costs
• Increase Revenues
• Well start with reducing costs since that is
  probably where your boss starts

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Number 1 Operating Expense

• Your vehicles!
• Dont buy the low bid vehicle, buy the vehicle
  with the lowest Life Cycle Cost (LCC)
• LCC Can Include depreciation, fuel,
  maintenance, interest, insurance,
• Use guides to help you project Blackbook, NADA,
  Vincentric, EPA Mileage Guide
• More on LCC Later

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Another Cost You Can Control

• The stuff you buy
• Bid Everything!!!
• Doesnt have to be formal
• Take Advantage of Buying Groups
• State Bids Are Usually Open to Political
  Subdivisions
• Dont buy gold plated parts

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Outsourcing Can Save You Money

• What makes sense to outsource?
• Try not to do anything low volume
• Try not to do anything that requires expensive
  tools/equipment
• Dont take up valuable space
• Dont pay for talent when you can rent it
• Try not to buy things when you dont have
  leverage to negotiate good pricing

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Dont Overstaff

• Dont pay for skills you dont need
• When someone leaves STOP, this is an
  opportunity!!
• Do you need to replace this person at the same
  skill level?
• Can you change job to lower skill requirements?

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Dont Overstaff Cont.

• Replace with person with higher skill set
• Can you automate tasks/report
• Can you reassign/redistribute workload
• Can you eliminate work that no one would miss?

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Share!!

• Share part of your fleet with other agencies
• Share staff
• Share volume on contracts
• Share resources

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Stop (or limit) the Freebies!!

• Free maintenance loaners
• Contract negotiation
• Accident reporting/subrogation
• Fuel settlements
• Shop rags, ice scrapers, safety kits, oil, tools,
  staff time, etc.

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The Other Side of the Equation

• Raising revenue does not mean raising rates
• Surcharges
• Parts (5-30)
• Fuel (0.03 to 0.36/gallon)
• Credit card processing
• Better yet a of fuel cost
• Sublets, towing
• Shop Expense (Flat or of WO)
• Haz Mat Disposal
• Tire Disposal
• Vehicle Disposal

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Revenue cont

• Offer New Services
• Cell Phone Rental
• Navigation System Rental
• Pick-up/Drop-off Service
• Work with Shop also
• Chauffer Service
• Tour Service
• New types of equipment in rental fleet
• Detailing service
• PM Service for employee cars

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Revenue cont

• Solicit New Customers
• Other governmental agencies (VA, State, DNR,
  Prisons, County, GSA, Post Office, Sheriff,
  National Guard, Fire Dept)
• Get your own agency employees to use your
  services
• Consistent Image
• Vehicle safety
• Employee Oversight
• Accounting Efficiencies
• Reimbursement is unfair to employees
• Your government at work
• Prove that other services are too expensive

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Fleet Rate (26/day, 0.19/mile) vs. Federal
Reimbursement Rate (.485/mile)
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Better Resale on Your Vehicles

• Any increased sale price goes to your bottom line
• Manage your disposal
• Manage your mix
• Manage your volume
• Manage your channel
• Build your Brand

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Lifecycle Costing

• What is it?
• A financial calculation to calculate the total
  lifetime costs of a piece of equipment.
• One goal of lifecycle costing is compare
  different pieces of equipment against then
  acquire the piece with the lowest total cost.

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What Is Included in Lifecycle Costing?

• Any cost that affect the cost of ownership
• Purchase price, rebates, interest, delivery cost,
  insurance, out of service costs, preventative
  maintenance, repairs, accident repair costs,
  management fees, resale price,etc.

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Lifecycle Example
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LCC at 36 Months