The role of the public sector fleet manager has been changing over the past 20 years. The genesis of this change can be traced back to the privatization trends in government that emerged in the early 1980s during the Reagan Administration. A key factor was the elimination of federal revenue sharing, which caused budgetary shortfalls as the flow of federal monies to states and localities slowed markedly. This prompted many governmental entities to reassess how they were providing fleet management and other support services to internal customer groups. Our response was the introduction of fleet cost chargeback systems. Although today these are fairly common, that wasn’t the case 20 years ago.
Today, about 75 percent of government fleet organizations use chargeback systems whereas 20 years ago only about 25 percent of the public sector fleets did so. The adoption of chargeback systems was rooted in the need to create greater efficiencies in public sector fleet operations. However, this contributed to the transformation of the role of a public sector fleet manager.
“When you use a chargeback system, you are, in essence, selling your services rather than giving them away,” explains Paul Lauria, of Mercury Associates, a fleet management consulting company headquartered in Gaithersburg, MD. “Charging fleet users for services tends to make you pay more attention to service quality and cost. Historically, fleet managers managed assets, and they still do, but increasingly, they are in the business of managing services. the evolution from asset manager to service manager is a fundamental change in the concept of fleet management at public sector fleets,” adds Lauria.
Today, there is more emphasis on financial management than ever before and it is further changing the nature of the public sector fleet management profession away from managing assets and more toward managing services. Today, fleet managers need to know how to read and interpret a balance sheet, how to put together an income statement, and how to distinguish between the total and the marginal costs of services, and not just how to turn a wrench.
Another consequence of the growing use of internal service funds and chargeback systems is the increased scrutiny of fleet managers by fleet user organizations, who are paying increased attention to the costs of the fleet resources and services they utilize. These users often want to know why their internal charges are what they are and how they compare with costs charged by external service providers.
Automotive Complexity is Prompting Change
There are other forces that are changing the role of the public sector fleet manager. One of these is the changing nature of automotive and fleet maintenance technology, which is making it harder for governments to handle some asset management functions in-house. The complexity of today’s vehicles and equipment requires a full-service maintenance facility housing a whole host of special diagnostic equipment and computers requiring special technician training to use these tools, in a job market where there is a severe shortage of skilled technicians.
In addition, environmental protection laws and OSHA regulations have added to the complexity of operating in-house maintenance facilities. Such rules have been a catalyst for some governmental outsourcing decisions. For instance, the 1988 mandate requiring the upgrading of underground fuel storage tanks prompted many governmental agencies to outsource some fleet fueling functions.
“It is not as easy as it once was for government fleets to keep up with technological and regulatory change and the investments in fleet management infrastructure they require,” says Lauria. “All of this is very expensive and an increasing number of in-house fleet management organizations have outsourced certain types of asset maintenance as a result.”
However, Lauria cautions that there is a limit as to the responsibilities public sector fleet should outsource to third-party vendors.
“You can outsource a lot of asset management functions today, but there are a lot of fleet management responsibilities, such as customer relationship management and supplier management, that should not be outsourced,” says Lauria.
Let me know if you agree.
Originally posted on Automotive Fleet