Market Trends

Short-Sighted Management: What Not to Do in a Recession

May 26, 2009

by Mike Antich - Also by this author

By Mike Antich

Since the start of the recession in January 2008, I have been dismayed at the number of fleet managers who have lost their jobs. Reasons have ranged from position elimination, to delegating work to a lower-paid administrative employee, to switching to driver reimbursement, to sometimes, no reason given at all. I am amazed at the short-sightedness of today's senior management making these decisions without regard to the implications of lesser-qualified individuals managing one of the largest asset classes at a company. Fleet management is more than putting out "fires" or ensuring the executive fleet ordering process operates without a hiccup. True fleet management is really asset management and making the strategic decisions to most efficiently manage these assets.

As we near its end, this decade is shaping up to be the most tumultuous in the history of fleet management. When the history of fleet management is written, this will be recorded not only as a very challenging decade, but one, that in hindsight, validated the value of professional in-house fleet managers. Those companies that have downgraded the expertise of their in-house fleet management will be on the wrong side of history and they will serve as the poster children of what not to do during a recession.

Fleet management expertise is developed by years of hands-on experience. Veteran fleet managers have learned to proactively anticipate changes in their corporate environments. In today's weak economic environment, fleet managers are saving companies millions of dollars by implementing the right policies, selecting the right vehicles and suppliers, optimizing driver productivity, while reducing operating expenses. The sad part is that many fleet managers are not vocal about their achievements and sometimes senior management is not fully cognizant of the contributions they are making to the company's bottomline.


Taking the Long View

It is impossible to run a cost-effective fleet without long-term planning. It takes the expertise of professional fleet managers to develop strategies for cost containment while enhancing productivity. They set strategic goals and develop the tactics to implement them. These fleet managers are goal-oriented in all aspects of fleet management, including driver productivity, safety, accident management, and so forth. They strive to reduce not only hard costs, but also soft costs. They link fleet to the corporation's overall mission and keep management informed as to how fleet is helping improve the corporate mission. An experienced fleet manager validates his or her importance day-in and day-out by cost-effectively managing hundreds of thousands to millions of dollars of corporate assets and controlling the expenses associated with operating these assets. This expertise is beyond the scope of a neophyte fleet manager.

Long-time fleet managers have established a cooperative, working relationship with all internal corporate functions associated with fleet operations. These fleet managers keep the company's interests foremost in all fleet management decisions. They also work with suppliers and other partners to optimize performance.

Professional fleet managers practice strategic fleet management that stresses the importance of achieving objectives and the use of metrics to benchmark progress. They have the perspective to view vehicle acquisition, replacement planning, funding alternatives, and sourcing alliances with manufacturers and suppliers as high-level strategic corporate decisions.


Managing the Uncontrollable

When uncontrollable market forces drive up the cost of fleet operations, as they are today, it takes the expertise of a professional fleet manager to mitigate their financial impact. Trust me. Without an in-house professional fleet manager, things could be a lot worse and the cost of running a fleet much more expensive. It is during times of crisis that the value of a professional fleet manager is most apparent.

A strategic fleet manager focuses on fleet policy development, safety program initiatives, vehicle selector creation based on exhaustive lifecycle cost analyses, implementation of a corporate sustainability program, and the establishment of metrics to manage fleet suppliers. These fleet managers proactively seek to maximize the productivity and revenue-generating capacity of each company driver at the lowest possible cost to make their fleet operations more efficient. These fleet managers implement programs that contribute to the achievement of overall company goals.

Want to Lose Your Job? Become Complacent

Complacency is a real danger to fleet operations, especially well-run fleets. Most fleet managers will tell you the "low-hanging fruit" has been picked long ago and there are a diminishing number of opportunities to further refine fleet efficiency and reduce costs. There is truth in this statement, but sometimes it can be used as an excuse by some fleet managers not to stray from their comfort zone.

A great fleet manager constantly conceptualizes new initiatives, is creative in problem-solving, motivates staff and suppliers to excel, and is willing to experiment by implementing new technology-based fleet solutions. A fleet manager who gets too comfortable with his or her operation becomes complacent with his or her skill set. When operations are running smoothly, there is inertia to change. The conventional wisdom is to not change something that isn't broken.

In fleet management, it is necessary to push your horizon and implement "stretch goals."  Exemplary fleet managers are not complacent; they are strivers constantly pushing the envelope.

Complacency is the enemy of excellence. A great fleet manager always believes additional cost savings can be achieved. They recognize the need to be creative. These fleet managers stay current with industry best practices and network with industry-respected fleet managers. However, there are other sources of best practices. One underutilized resource is prospective suppliers. Many fleet managers make themselves inaccessible to prospective suppliers. They are missing a wonderful opportunity to pick their brains, to learn of new developments in the industry. You need to continually ask suppliers what they have seen among their client base that is successful. Could these practices be implemented in your fleet operation?

Getting out of your comfort zone forces you to view fleet management in a new way. It stimulates you to think new thoughts and see solutions in a different light. Be willing to experiment. Not all problems have a silver bullet solution; many times problems are resolved through incremental enhancements. Be proactive. Great fleet managers confront deficiencies before they become problems. But more importantly, they don't rest on their past laurels. They always believe more can be done.

Some managers of well-run fleets will tell you it is getting harder and harder to find significant cost reductions. The easy fixes have been done long ago. Fleet budgets remain flat for consecutive years, while costs go up annually. Plus, many outside factors, over which fleet managers have little control, conspire to thwart fleet cost reduction initiatives. These uncontrollable costs of doing business require the expertise of a professional fleet manager to mitigate their impact on the corporation.

Exemplary fleet managers rise above the level of simply managing day-to-day work. When uncontrollable market forces drive up the cost of fleet operations, it takes the expertise of a professional fleet manager to mitigate their financial impact. Show me a well-run fleet, and I will show you a top-notch fleet manager.


Fleet's Greatest Asset

In the final analysis, the greatest fleet asset is not the "metal," but rather the in-house professional fleet manager. An in-house fleet manager will always be needed, and the role is strengthened when a strategic and proactive management style is implemented to run the corporate fleet. Senior management must view its in-house fleet manager as a valuable member of the company's management team, if for no other reason than the fact they are managing a multimillion dollar asset.

It takes years of hard work to develop fleet management expertise. This is specialized expertise and institutional knowledge that senior management cannot simply discard as a cost-cutting measure. This strategy is counterproductive.

Sometimes you don't know what you have until it is gone.

Let me know what you think.

[email protected]



  1. 1. Bob Adamsky [ May 26, 2009 @ 01:41PM ]

    What a great article. As a in-house Fleet Manager that has cut it's budget in half. You must have yours hands on and in everything again, including repairing trucks in the shops. Finding ways to reduce cost are always out there, being there is how you find them.

  2. 2. Jan Allison [ May 27, 2009 @ 05:42AM ]

    Excellent article! I own a Fleet Servicing Company so we have experience with 100s of fleet managers - the expertise of the fleet manager is definitely invaluable!

  3. 3. Rosalie Falato [ May 27, 2009 @ 06:22AM ]

    A few years ago I opted to take my current position. As I was the only one in the company who understood fleet (due to downsizing), I gave ample notice to allow the company to let me "speed train" a replacement. The company opted not to fill the position. The lack of knowledge of when to flip which vehicles resulted in high maintenance costs and a negative residual value rather than a break even or better.

    Letting the leasing company handle it all without "supervision" from the fleet manager makes money for the leasing company. It does not save time and money or valueable man hours in the long run.

  4. 4. Al Cavalli [ May 27, 2009 @ 07:40AM ]

    Mike, couldn't agree with you more! In particular, your comment:

    "The sad part is that many fleet managers are not vocal about their achievements and sometimes senior management is not fully cognizant of the contributions they are making to the company's bottom line."

    While some fleet managers, unfortunately, may have lost out through no fault of their own, too many did not solidify their position with management with, perhaps, a "don't rock the boat" mentality. It does take time to both become a professional and to educate management in the fine points of fleet management & what it can add to the bottom line.

    Much effort is exerted in squeezing the manufacturer, dealer & supplier to reduce costs, invariably at the expense of adequate service which in turn increases operating cost.

    Mike, well said!


  5. 5. Richard Battersby [ May 28, 2009 @ 04:17PM ]

    I couldn't agree more with the article and the comments above. It is no longer good enough to be average. Fleet managers should be looking to quantify and make known their contributions, while constantly seeking to become more integrated into other operations. Now is the time to prove your worth to your customers and those you support. Seek out partnerships, projects, and collaborations with others. These are not burdens or additional workloads- these are the foundation to strengthen the need for your organization.

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Mike Antich

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Mike Antich has covered fleet management and remarketing for more than 20 years and was inducted in the Fleet Hall of Fame in 2010.

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