Partnership approach achieves huge fleet maintenance cost savings

Fleet Service GB was launched in spring 2015 led by Marcus Bray, who was approached by a number of industry-experienced colleagues to form a unique co-ownership fleet management company. He had previously been a member of the management team at privately-owned Fleet Support Group (FSG).

Confidence in the established FSG team’s ‘can do’ approach to fleet and maintenance management had led to Stannah, which outright purchases all vehicles, becoming a customer five years prior to the sale of the business.
Once Fleet Service GB had launched, Mr Carter who is in charge of the fleet, decided to invest his trust in the new company’s ability to deliver.

That led to it taking on the maintenance management of Stannah’s van fleet that has subsequently increased by 113 units and currently numbers some 423 vehicles (+36%).

He said: “FSG had been acquired and under the new ownership there was a significant transition period and a lot of upheaval. We wanted to spread our risk and the personnel at Fleet Service GB were a tried and trusted group of people and much focused on customer service and building partnerships.”

Development of a successful partnership with Fleet Service GB subsequently led to Mr Carter deciding to also transfer maintenance management of the company car fleet.

He said: “The decision to also switch the company car fleet to Fleet Service GB was a reflection of the great service provided in respect of the van fleet.

“The collaboration between Stannah and our supplier was working very well so it made absolute sense for the same organisation to manage our cars.”

The vast majority of Stannah’s all-diesel van fleet are Mercedes-Benz Vito and Sprinter and Volkswagen Caddy and Transporter models operated over a five-year/120,000-mile replacement cycle.

Stannah operates a four-grade company car policy with employees in the lower grade selecting vehicles based on whole life costs. Meanwhile, employees in other grades are user-choosers with an open choice linked to whole life costs and model carbon dioxide (CO2) emissions as the business seeks to reduce its carbon footprint. As company cars clock up close to 21,000 miles a year on average, the fleet remains predominantly diesel. Operated on a four-year/100,000-miles replacement cycle, Stannah reduced the age parameter from five years as a result of whole life cost modelling identifying potential savings coupled with the fact that vehicle technology is changing so rapidly it did not want to “get caught out” with a string of aging vehicles.

All company car and van maintenance is undertaken on a pay-as-you-go basis.

Vehicle SMR accounts for a high percentage of fleet operating costs – after vehicle funding/depreciation and fuel it is the third largest cost – so Fleet Service GB provides a bespoke solution that guarantees maintenance standards, controls costs and streamlines administration and all with a totally personal service.

Everybody knows that well-maintained vehicles improve a fleet’s efficiency and effectiveness. The big question is: what’s the best way to achieve it? The options are to manage in-house or outsource to an expert organisation such as Fleet Service GB.

Stannah chose Fleet Service GB because, while the organisation may only have been launched in 2015, its co-ownership founders and employees have many years of proven expertise delivering vehicle maintenance management and reducing costs.

There is no ‘one size fits all’ solution to managing vehicle maintenance. Nevertheless, the Fleet Service GB approach is to understand clients’ operational and other vehicle-related demands and then customise a service maintenance programme that satisfies those requirements and delivers a solution.

Underpinning Fleet Service GB’s Achieve Maintenance Management solution is a focus on maximising vehicle uptime by constantly challenging lead times and repair processes as well as:

• Interactive notifications, prompts, reminders and alerts
• Arrange bookings for SMR, with GPS-enabled location facility for drive-in while you wait services
• Rental vehicle booking facility, plus rental vehicle check sheets
• A facility to report an incident or breakdown, using GPS-enabled location services, which directly link to the Fleet Service GB support team
• Bespoke check sheets for vehicle condition reporting
• Image upload facility to capture vehicle condition or relate to a specific reported incident
• Update vehicle mileage in real-time
• Access to vehicle lifetime history
• Multiple vehicle management options
• Driver and vehicle profiles, as well as insurance information
• Driver Authority and a current live score which indicates, in real-time, a driver’s performance and whether company policy procedures have been followed.

Stannah was involved in the development and piloting of the app and Mr Carter said:
“It not only delivers a high level of convenience for our drivers but is also reassuring for compliance.”

Key performance measures indicate maintenance costs on the Stannah van fleet reduced a staggering 31% between December 2010 and January 2019.

Comparing data over a snapshot 18-months between July 2009 and December 2010 when FSG was managing maintenance costs and the 35 months (March 2016 – January 2019) when Fleet Service GB had taken over reveals:

• A fleet expanding from 310 vans to 423 vehicles an increase of 113 units (36%)
• The age of the fleet reducing by 10 months from 42 to 32 months
• The average age in miles of vans reducing 32% from 77,189 miles to 52,496 miles
• The average mileage per van a year reducing 14% from 24,427 miles to 20,939 miles
• Pence per mile cost per vehicle reducing 41% or 1.83p from 4.51p to 2.68p
• The cost per van per year reducing 49% from £1,102 to £561
• Total fleet mileage increasing from 7,572,370 miles to 8,857,197 miles
• Total cost of the fleet reducing from £341,620 to £237,303, £104,307 (31%).

What’s more, a detailed month-by-month analysis of the figures since Fleet Service GB took over maintenance management of the van fleet reveals that as vehicles have clocked up more miles – averaging 13,319 miles per van in March 2016 rising to 20,939 in January 2019 – so the key pence per mile cost has reduced over the same period from 3.05p per van to 2.68p per van.

Notwithstanding an overall reduction in the average miles travelled per year per van from 26,315 in July 2009, which would positively influence costs as the pence per mile figure then was 4.47p, the savings are significant.
Mr Carter said: “The cost of most products and services increase year-on-year but, remarkably, the pence per mile vehicle operating costs on the Stannah van fleet have reduced since Fleet Service GB took over management responsibility.

“Pence per mile is widely recognised as the most accurate measure of a vehicle’s maintenance expenditure. The three key measures are: total sum spent, total miles travelled and achieved pence per mile. The fact that over the periods measured – the 18 months ending December 2010 and the 35 months ending January 2019 – that pence per mile costs have reduced 41% is very significant.”

The Fleet Service GB data also shows that in the 12 months January 2018 – January 2019, pence per mile figures have averaged 2.7p highlighting a consistency of vehicle performance that is critical to aid accurate budget decision-making.

In part, it has to be acknowledged, that cost consistency is due to improved vehicle manufacturer reliability, but it is also a reflection on the overall management approach to identify and then manage maintenance costs. As a result, over the measured period the cost per vehicle per annum reduced by £541 or 49%.

Additionally, while overall van fleet mileage has increased by 1.28 million miles (17%), the fact the average miles travelled per vehicle per annum has reduced over the two measured periods by 3,488 miles (14%) will positively influence fuel and crash costs, residual values and emissions.

While the 2.68p per mile per van cost is a figure that would be the envy of virtually every fleet, both Stannah and Fleet Service GB acknowledge that the 41% cost saving achieved, coupled with a further 113 models being added to the fleet is slightly offset by a reduction in both average age and mileage – 10-months (24%) and 24,693 miles (32%) respectively.

Mr Carter said: “We are adhering much closer to our five-year/120,000-mile policy. We used to let some vans run on, but using Fleet Service GB’s data we looked at the pence per mile operating costs over a period of time and it was obvious that above 120,000 miles there was a clear increase in SMR expenditure.”

Fleet decision-makers invariably work in their own silo and, while Mr Carter believed the pence per mile figures were good he had little idea as to how they compared with similar fleets.

“As a result, over the measured period the cost per vehicle per annum reduced by £541 or 49%.”
He said: “We asked providers, including Fleet Service GB what the benchmark pence per mile figures were and they showed that we are out-performing the van sector. Benchmarking is key, although it is only a reference point.”

However, Mr Carter added: “As time goes by, data extracted from the Fleet Service GB system becomes much more accurate. Stannah benchmarks are beginning to appear which will become very useful in supporting internal business discussions surrounding fleet.”

Breakdown and recovery is excluded from Fleet Service GB’s total maintenance cost formula. However, if it was included, the difference would be just 2-3% of additional cost.

Key performance measures indicate that maintenance costs on the Stannah company car fleet have reduced a staggering 51% between October 2011 and January 2019.

Comparing data over a snapshot 33-months between February 2009 and October 2011 when FSG was managing maintenance costs and the 14 months (December 2017-January 2019) when Fleet Service GB had taken over reveals:

• A fleet expanding from 264 to 285 cars, an increase of 21 units (8%)
• The age of the fleet reducing by two months from 32 to 30 months
• The average age in miles of the cars reducing 10% from 54,373 miles to 48,868 miles
• The average mileage per car a year reducing 12% from 23,597 miles to 20,672 miles
• Pence per mile cost per car reducing 37% or 1.65p from 4.49p to 2.84p
• The cost per car per year reducing £707 (55%) from £1,294 to £587
• Total fleet mileage reducing from 6,229,608 miles to 5,891,520 miles
• Total cost of fleet reducing from £341,616 to £167,295, £174,321 (51%).

The comparative results since Fleet Service GB took over car fleet maintenance management reveal a “positive direction” influenced by a combination of factors including vehicle selection and improved model reliability as well as the application of good management.

Indeed with average annual miles per car largely steady at between 20,000 and 21,000 in the months since June 2018 and the growing impact of the Achieve Maintenance Management programme, Fleet Service GB believes further savings in driver influenced costs are likely.

Mr Bray said: “Driver influenced costs covering areas such as wearing components – tyres being a particularly good indicator – present further opportunities to reduce overall maintenance expenditure. Therefore, I am hopeful that, as a result of implementing Achieve Maintenance Management, these areas of cost will be easier to identify and then reduced.”

Furthermore, with average annual company car mileage reducing, Stannah will achieve spin-off benefits in a number of other areas including lower fuel bills, improved residual values, fewer crashes and a reduced carbon footprint.

Mr Carter said: “Managing maintenance costs starts with vehicle selection and then we use a range of tools at our disposal to identify costs and we seek to manage those. It is all about marginal gains and we seek to make savings wherever we can.”

Achieve is Fleet Service GB’s umbrella brand with a range of components – Achieve Driver Management, Achieve Crash Management, Achieve Maintenance Management, Achieve Fleet Manager, Achieve Management Services, as well as Achieve Fleet Service Partnership.

Fleet customers, like Stannah, are able to ‘pick ‘n’ mix the tools in the Achieve box to provide decision-makers with a single silo of live and dynamic online data to further improve vehicle, driver and journey management.

Critically, the effective management of SMR and thus the achievement of fleet maintenance cost savings can only be delivered by stamping out driver abuse of vehicles and Stannah uses a suite of fleet management tools to ensure vehicles are in tip-top condition.

Each vehicle is allocated to an individual driver – including van drivers who work from home – with Mr Carter explaining: “That means every vehicle is completely traceable and it makes a major difference compared with an employee who travels to work each day and collects a van from a depot before returning it at the end of their shift. At Stannah each driver effectively ‘owns’ their van, exactly the same as it is with company cars.”

Efficient fleet and driver management at Stannah starts with buying the ‘right van and car’ for the job required. Each vehicle is then equipped with telematics that records and delivers to Mr Carter a raft of data notably relating to driver behaviour and how a vehicle is driven. Additionally, any incident is reviewed in detail with, potentially, driver training the result.

Furthermore, with drivers logged on to the Fleet Service GB app it brings a significant element of self-management to both the company car and van fleet.

Mr Carter said: “Stannah has a responsibility for the safety of all of its drivers irrespective as to whether they drive a company car or van. Therefore, the tools and processes we use are exactly the same and we require the identical level of back-up and support from Fleet Service GB across the whole fleet and entire driver population.

“The level of driver management and the tools used to undertake that task is irrelevant to the type of vehicle being driven.”

He continued: “Many employees at other companies drive around in vehicles and their employer has no idea what their behind-the-wheel performance is. We ask our drivers to provide information and we give them data and they react. It makes our job easier and is having the desired effect. The result is that the majority of our drivers do not have crashes and drive sympathetically, which all helps to deliver maintenance cost savings.

“We used to be reactive, but the tools available through Achieve enable us to be far more insightful and predictive in our approach to driver management, which aids maintenance management.

“Data identifies potentially higher risk drivers and any cars and vans where costs are outside of what is expected is the signal for an investigation and ultimately for Stannah to take action.

“The fleet management tools that we use generate cost reductions through savings in SMR and fuel and a reduced number of crashes.”

The raft of data generated from in-vehicle telemetry allied to the information collected by Fleet Service GB means, as far as Mr Carter is concerned, that it makes totally logical sense for management of the fleet to reside with him, an IT professional.

He said: “I spend about one day a week on fleet-related work, but there is complete synergy with the rest of my job: Fleet management is becoming increasingly digitalised and vehicles are becoming increasingly connected.”