INSEAD Library

Digitized

Fleet Management Workbook Achieving Profit Potential in the New Millennium Table of Contents Table of Figures...................................................................... 11 Overview..................................................................................15 Introduction............................................................................ 19 Purpose of the Fleet Management Book............................................... 19 Definition of Fleet Management........................................................... 19 Benefits of Fleet Management.............................................................. 20 Benefits to the Dealership..................................................................20 Benefits to the Manufacturer............................................................. 21 Benefits to the Customer.....................................................................21 The Fleet Management Process.............................................................22 Preparing for Action.......................................................................... 23 1. Identifying and Profiling Target Accounts................................... 23 2. Approach Account..................................................................... 23 3. Perform Customer Analysis....................................................... 23 4. Developing Pricing.....................................................................24 5. Structure Proposal...................................................................... 24 6. Initial Actions.............................................................................25 7. Ongoing Functions..................................................................... 25 1. Identifying and Profiling Target Accounts - (Preparing for Action)............................................................................... 29 Overview............................................................................................... 29 Account Identification...........................................................................31 Customer Database............................................................................ 31 Information Services..........................................................................32 Your Own Research...........................................................................32 Segmenting Accounts............................................................................33 Segmenting by Size........................................................................... 33 Segmenting By Buying Phase............................................................35 Segmenting By Consumption............................................................. 38 Prioritizing Accounts..............................................................................42 High Priority Accounts....................................................................... 44 Medium Priority Accounts..................................................................44 Low Priority Accounts........................................................................44 Summary.................................................................................................45 2. Approach Accounts - (Sales Action Plan)......................... 47 Overview................................................................................................ 47 Dealership Capabilities...........................................................................47 Account Interest..................................................................................... 49 Case Study Presentation......................................................................... 50 Accumulated Account Data Presentation...............................................54 Account Change Agent Presentation......................................................58 Significant Size Increase.....................................................................60 Significant Size Decrease................................................................... 61 Company Relocation or Significant Industry Change........................ 62 Personnel Changes.............................................................................. 63 Operational Changes - Outsourcing....................................................63 Hoshin Program......................................................................................64 Summary.................................................................................................67 3. Performing Customer Analysis - (Sales Action Plan) ..... 69 Overview................................................................................................ 69 Gather Fleet Operation Data.................................................................. 70 Equipment Application and Operation............................................... 70 Current Fleet Mix and Condition........................................................73 Gathering Customer's Cost Data............................................................ 74 Acquisition of Fleet.............................................................................75 Depreciation.................................................................................... 75 Interest.............................................................................................76 Lease and Rental............................................................................. 76 Opportunity Cost of Investment......................................................76 Use of the Fleet................................................................................... 78 Equipment...................................................................................... 78 Operator Wages and Benefits........................................................... 78 Operator Training........................................................................... 79 Fuel................................................................................................. 80 Supervisory Salaries and Benefits..................................................80 Service............................................................................................ 82 Technician Wages and Benefits..................................................... 82 Technician Training....................................................................... 83 Supervisory Salary and Benefits.................................................... 83 Tools and Supplies......................................................................... 84 Occupancy Expense....................................................................... 84 Cost of Downtime.......................................................................... 85 Total Service Usage Cost............................................................... 86 Parts................................................................................................ 89 Inventory........................................................................................ 89 Inventory Carrying Expense.......................................................... 89 Personnel........................................................................................ 90 Supplies.......................................................................................... 90 Occupancy Costs............................................................................ 91 Total Parts Usage Cost................................................................... 91 Total Usage Cost............................................................................ 93 Fleet Administration........................................................................... 93 Purchasing...................................................................................... 93 Human Resource Expense.............................................................. 94 Purchase Order and Payment Processing......................................... 94 Other Costs..................................................................................... 96 Calculate Total Customer Cost per Hour............................................ 99 Gather Customer's Business Projections.............................................99 Present and Gain Consensus on Cost Analysis.................................... 101 Summary............................................................................................... 102 4. Developing Pricing - (Sales Action Plan)........................ 103 Overview...............................................................................................103 How To Determine The Appropriate Fleet....................................... 103 Determine Appropriate Fleet................................................................ 104 Benchmark Performance...................................................................... 107 Determine Acquisition Cost.................................................................108 Permanent Fleet Units...................................................................... 108 Rental Units...................................................................................... 109 Estimate Usage Costs...........................................................................110 Equipment.........................................................................................110 Service.............................................................................................. 112 Parts.................................................................................................. 115 Total Usage Cost.............................................................................. 116 Estimate Administrative Cost.............................................................. 116 Calculate Total Cost.............................................................................117 Cost per Unit.....................................................................................117 Cost per Fleet....................................................................................119 Develop Profit Expectation..................................................................121 Customer Cost Comparison..............................................................121 Scope of Proposal......................................................................... 121 Appropriate Pricing.......................................................................122 Develop A Proposal With Higher Pricing Whew.........................123 Develop A Proposal With Lower Pricing When:......................... 123 Summary.............................................................................................. 124 5. Proposal Structure - (Sales Action Plan).........................125 Overview.............................................................................................. 125 The Proposal Structure Outline ...........................................................126 A. Executive Summary.....................................................................126 B. Proposed Fleet Mix, Costs, and Pricing.......................................128 .1. Proposed Fleet Mix................................................................... 128 2. Current Costs............................................................................ 128 3. Proposal Pricing........................................................................ 128 4. Summarize Total Program Savings.......................................... 129 5. Cost Areas not Included in Proposal Pricing............................129 C. Program Objectives..................................................................... 129 D. Proposed Solution........................................................................130 1. Discovery.................................................................................. 130 2. Dealer Buyout of Customer Fleet............................................. 131 3. Fleet Replacement.....................................................................131 4. Fleet Maintenance and Repair..................................................132 5. Timing and Implementation Plan.............................................133 E. Future Enhancements.................................................................. 133 1. Product Technology................................................................. 133 2. Employ Communications Technology.....................................133 3. Inclusion of Other Customer Equipment................................. 133 4. Customer Layout and Instillation Consulting.......................... 133 F. Formal Acceptance...................................................................... 133 1. Letter of Intent (LOI)............................................................... 134 2. Execute Formal Contract......................................................... 134 3. Specify Project Launch Team.................................................. 134 4. Dealer and Customer Jointly Announce the Project................ 134 Summary..............................................................................................134 6. Initial Activities - (Performing to Contract).................. 135 Overview............................................................................................. 135 Repurchase............................................................................................136 Equipment........................................................................................ 136 Identifying the Equipment............................................................136 Establishing Value of the Equipment...........................................138 Dealer Sales Department..............................................................138 Change In Ownership...................................................................138 Payment........................................................................................139 Parts Inventory.................................................................................139 Steps in Repurchasing Parts Inventory........................................ 140 Accounting for Parts.................................................................... 141 Plans for Parts Disposition........................................................... 142 Re-Rent (Equipment).......................................................................... 142 Staffing................................................................................................ 143 Acquisition Staff Requirements.......................................................143 Purchasing.................................................................................... 143 Equipment Usage Staffing............................................................... 143 Equipment.................................................................................... 143 Service Department......................................................................144 Parts Department............................................................................. 145 Administrative Staffing Needs........................................................ 146 Initial Service (PM) on Equipment..................................................... 147 Training Operations............................................................................. 148 Driver Training.................................................................................148 Schedule of Training........................................................................ 149 Recognition For Operators Who Have A Good Record.................. 149 Training Dealership Employees ..........................................................149 Ownership Responsibilities .............................................................150 PM Schedule................................................................................. 150 Selection of Parts..............................................................................150 Identification of Repair Needs......................................................... 151 Summary.............................................................................................. 152 7. Ongoing Functions - (Performing to Contract)..............153 Overview..............................................................................................153 Equipment Replacement Cycle............................................................153 What Equipment To Retire.............................................................. 153 Purchase Cycle Of New Equipment.................................................156 What To Do With The Units Coming Off The Contract................. 157 Service .................................................................................................157 PM Scheduling................................................................................. 157 Frequency..................................................................................... 158 Ways to Maximize the Schedule.................................................. 158 Reporting Information for PM......................................................159 Repair and Dispatching.................................................................... 160 Define Priorities............................................................................160 Create A Procedure For The Customer To Contact You............. 161 Train Staff on Procedures............................................................. 163 Abuse Repair.................................................................................... 163 Definition of Abuse and Repair Procedure.................................. 163 Billing Abuse................................................................................ 164 Reporting Abuse Service.............................................................. 164 Parts Management................................................................................164 Inventory Investment in Parts.......................................................... 164 What Is The Method Of Keeping The Right Mix Of Parts?............ 165 Expectations for The Parts Department........................................167 Rental.................................................................................................... 168 Administrative .....................................................................................168 The External Billing Process ........................................................... 170 Multiple Income Locations........................................................... 170 Single Income Center....................................................................170 Terms and Timing of Billing ....................................................... 171 Controls and Control Numbers..................................................... 171 Details That Must Be Kept........................................................... 172 Overtime Billing........................................................................... 172 Internal Billing..................................................................................173 Monitoring and Dealer Reporting....................................................... 174 Internal Reports.............................................................................174 Warranty Recovery....................................................................... 179 Abuse And Other Non-Contract Service...................................... 180 External Reports........................................................................... 183 Comparison to "Guaranteed Save"............................................... 184 Comparison to Performance Standards........................................ 185 Summary.............................................................................................. 188 Conclusion.............................................................................. 189 Hoshin Program.....................................................................191 Overview.............................................................................................. 193 Targeting Seminar Participants............................................................197 Characteristics Of Target Accounts................................................. 199 Grouping Target Accounts............................................................... 201 Determining the Appropriate Mix.................................................... 203 Identifying Target Participants.........................................................205 Meeting Planning................................................................................. 207 Choose a Meeting Location..............................................................209 Booking Meeting Space................................................................... 211 Catering Needs................................................................................. 215 Sample Menu (Special Notes and Comments).................................217 Breakfast....................................................................................... 217 Lunch............................................................................................ 217 Break............................................................................................. 217 Meeting Materials.............................................................................221 Promoting the Seminar........................................................................ 223 The Seminar Brochure..................................................................... 225 Present Program to Salespeople and Dealership Employees..............227 Contact Target Participants..............................................................229 Invitations ........................................................................................231 Final Follow-Up............................................................................... 233 Preparing Seminar Materials .............................................................. 235 Dealership Seminar Responsibilities ...............................................237 Participant Materials........................................................................ 241 Seminar Follow-Up..............................................................................243 Attendee Follow-up..........................................................................245 Inquiry Follow-Up............................................................................247 Meeting Space Comparison Form....................................................... 249 Checklist - Hoshin Program.................................................................251 Checklist For Contracts....................................................................... 254 Seminar Cost Worksheet..................................................................... 259 Biographies............................................................................ 261 Bob Currie -Senior Partner.................................................................. 261 Michelle Currie - Managing Partner....................................................262 George Keen - Partner......................................................................... 264 Matthew Hicks ­Consultant ................................................................265 Jeffrey R. LaBonte - Consultant........................................................... 266 Felix Vanholsbeeck ­ Partner (European Office)................................267