Given the explosive growth of smartphones, virtual conferencing and cloud computing technology, the need to effectively manage an increasingly mobile workforce is top of mind these days. But one of the old-school ways workers get around to do their jobs--driving--still is critically important for many organizations, and when integrated with corporate travel management, fleet management can yield savings and program efficiencies.
Corporate fleets are used for many reasons. They help to deliver goods, provide services, deploy sales representatives and serve as car rental alternatives. They often require program managers (or outsourced management), safety standards, vehicle financing, reimbursement programs and fuel agreements. At some companies, they are very large operations.
Fleet management isn't new. It predates and in some respects served as a precursor for corporate travel management. As the fields evolved, many organizations began to manage them separately, with responsibilities divvied up between departments. But what seemed old is new again, and an integrated approach is in vogue for some companies.
Runzheimer International, which provides employee mobility services and consulting, annually benchmarks business fleet program costs. For 2010, it found that cost per business driver rose (see table) while cost per business mile remained relatively stable.
[PULL_1]Scooter also has been making its fleet more fuel-efficient. It replaced more than 200 of its nearly 500 fleet vehicles, leading to an overall efficiency gain of about 3 miles a gallon, which in 2009 saved the company about $700,000. Lange said "much greater savings are expected moving forward given rising fuel costs."
The company also has realized about $40,000 in annual savings from fuel rebates. Lange explained that the company uses fuel card provider Wright Express for all fuel purchases and "they are able to negotiate some money off for us because we purchase a large amount of fuel with them. Savings comes out to be about 3 cents a gallon right now." That can add up quickly; Scooter anticipates its drivers this year collectively will cover about 23 million miles.
USAA's Holistic Program
Runzheimer also highlighted the United Services Automobile Association's employee mobility program. The Fortune 200 company of 22,000 employees, which provides financial products and services primarily to the armed forces and their families, is in the process of stitching together a holistic system encompassing commercial travel, business fleet and corporate aircraft operations.
Though a single tool linking the three still is a few months off, USAA already uses an interconnected travel policy that is "mutually supportive and can be accessed seamlessly from our intranet portal," said vice president of employee support services Mark Still, speaking during the March webinar. "All of those irritants and friction points that come up--when the policies in the flight department don't match with the policies in the travel department, and when nobody knows how to get access to a fleet vehicle--are gone. They disappear when you have an integrated approach. The ability to integrate all three modes of transportation--business vehicles, corporate aircraft and commercial aircraft--allows us to pick the best solution to fit the mission at the right cost."
Synergies have emerged. With a total fleet of about 1,000, USAA pools vehicles at major operating centers primarily to immediately deploy new claims adjusters. Through the company's U-Drive It program, those pools are made available "to all employees with a business need to rent or check out a car, from a couple of hours to 30 days," Still said. "All you need to do is send an email. You get a response with a description of the vehicle, the parking location and the keybox code. This cuts down on the use of rental cars. We track utilization on a monthly basis and analyze our break-even costs. These become money makers for us."
The connection works both ways. "We have relationships in our commercial travel department with several rental car companies for business travel, but we leverage those relationships to provide replacement rental vehicles for adjusters in field if their vehicles break down or are involved in an accident," Still explained. With these and other vehicle management measures, USAA generated "about $1.5 million in cost savings."
[PULL_2]Meanwhile, a "somewhat unique aspect" of USAA's travel program, according to Still, is the unrestricted availability of corporate jets. "Any employee in the company with a business need to travel can book a seat on a corporate jet," he said. "This rather egalitarian approach ensures that we maximize the benefit these assets bring to the company."
With a team of 15 pilots, schedulers, flight attendants and maintenance technicians, USAA operates two large-cabin jet aircraft that log about 1,200 hours of flight time each year. In 2009, they flew almost 4,700 passengers.
"We do a stringent analysis on return on investment on every flight we fly," Still continued. "We documented saving about $1.6 million in expenses and lost productivity equivalent to 7.1 FTEs." According to the Runzheimer report, USAA by 2009 had brought direct corporate operating costs under $2,150 per hour, "$400 per hour below the benchmark rate."
With about $15 million in annual travel expense, USAA's commercial travel operation is set up as an ARC-certified Corporate Travel Department staffed by four agents and a manager, according to Still. "Our key focus in the business travel department is ensuring our ability to rapidly deploy claims adjusters in the event of catastrophe," he added.
To that end, maintaining relationships with hotels is critical. "As you can imagine in a catastrophe, in many cases the infrastructure in those areas are broadly affected. So you could go onto the self-booking tool or any GDS and the hotel will show lots of rooms and everything is hunky-dory," Still said. "But if you call the hotel up, you'll find the first floor is flooded, electricity is spotty and there is no food within 40 miles."
Direct contact with local properties, therefore, is essential. USAA also uses relationships with car rental companies to "secure large blocks of cars to support our needs."