Running a Profitable Customer Driven Motor Pool Operation

Running a Profitable, Customer Driven Motor Pool Operation Mike Wilson, Fleet Manager University of Iowa Andrea Paxton, Technical Support Specialist CCG Systems, Inc.

Outline for Today’s Presentation • Overview of the University of Iowa’s Fleet • Vehicle Utilization • Cost Containment • Revenue Generation • Lifecycle Costing • Rate Setting

About the University of Iowa Fleet • We have 545 vehicles in our total fleet. (Another 105 on Campus that we fuel and maintain) – 58 in the daily rental fleet – 455 in the lease fleet – 32 awaiting sale • Operational Budget of $3, 000 • 5, 006 rentals in FY 07 – 4, 579 from my fleet, 427 outsourced • 12, 910 rental days – 11, 859 from my fleet, 1, 051 outsourced • 1, 664, 617 rental miles – 1, 504, 088 from my fleet, 160, 529 outsourced

More About University of Iowa Fleet • 600, 000 gallons of fuel in CY 2006 – 220, 000 gallons of B-10 diesel – 250, 000 gallons of E-10 – 130, 000 of E-85 • 11. 5 FTEs – 1 Mgr, 1 Asst Mgr, 1 Acct. Clerk – 1 Dispatcher, 1 Prep Person, 5 Students (2. 5 FTE) – 3. 5 Techs, . 5 Shop Manager • Self-Sufficient Entity

Our Facility 4/13/06

Our Facility 4/14/06

Our Home for 16 Months

Our Newest Facility

What We Learned • Focus on operations and priorities will become clear • Keep your server safe, you can replace workstations • Use your weight, be your vendors 1 st priority • Keep your keys safe

Vehicle Utilization • Daily Rental Fleet Size – Too Big – Too Small – Just Right (Maybe) • How Get More From the Motor Pool Calendar Applet – Minimize “Honeycombing” – Optimize Outsourcing

100% of Customers Served

Better?

Best (Maybe)

Optimal Rental Fleet Size

2 Vehicles needed from 10/15/07 to 10/17/07

Should you have a Daily Rental Fleet? • If not, then what do you do? – Driver Reimbursement – Outsourcing – Local Pooling

Keeping Your Daily Rental Fleet Profitable (or at least break-even) • Two ways to manage this: – Reduce costs – Increase Revenues • We’ll start with reducing costs since that is probably where your boss starts

Number 1 Operating Expense Your vehicles! – Don’t buy the low bid vehicle, buy the vehicle with the lowest Life Cycle Cost (LCC) • LCC Can Include: depreciation, fuel, maintenance, interest, insurance, • Use guides to help you project: Blackbook, NADA, Vincentric, EPA Mileage Guide More on LCC Later

Another Cost You Can Control The “stuff” you buy • Bid Everything!!! – Doesn’t have to be formal • Take Advantage of Buying Groups • State Bids Are Usually Open to Political Subdivisions • Don’t buy gold plated parts

Outsourcing Can Save You Money • What makes sense to outsource? – Try not to do anything low volume – Try not to do anything that requires expensive tools/equipment – Don’t take up valuable space – Don’t pay for talent when you can rent it – Try not to buy things when you don’t have leverage to negotiate good pricing

Don’t Overstaff • Don’t pay for skills you don’t need • When someone leaves STOP, this is an opportunity!! – Do you need to replace this person at the same skill level? – Can you change job to lower skill requirements?

Don’t Overstaff Cont. • Replace with person with higher skill set • Can you automate tasks/report • Can you reassign/redistribute workload • Can you eliminate work that no one would miss?

Share!! • Share part of your fleet with other agencies • Share staff • Share volume on contracts • Share resources

Stop (or limit) the Freebies!! • • • Free maintenance loaners Contract negotiation Accident reporting/subrogation Fuel settlements Shop rags, ice scrapers, safety kits, oil, tools, staff time, etc.

The Other Side of the Equation • Raising revenue does not mean raising rates • Surcharges – Parts (5 -30%) – Fuel ($0. 03 to $0. 36/gallon) • Credit card processing • Better yet a % of fuel cost – – – Sublets, towing Shop Expense (Flat or % of WO) Haz Mat Disposal Tire Disposal Vehicle Disposal

Revenue cont • Offer New Services – Cell Phone Rental – Navigation System Rental – Pick-up/Drop-off Service • Work with Shop also – – – Chauffer Service Tour Service New types of equipment in rental fleet Detailing service PM Service for employee cars

Revenue cont • Solicit New Customers – Other governmental agencies (VA, State, DNR, Prisons, County, GSA, Post Office, Sheriff, National Guard, Fire Dept) – Get your own agency employees to use your services • • Consistent Image Vehicle safety Employee Oversight Accounting Efficiencies Reimbursement is unfair to employees Your government at work Prove that other services are too expensive

Fleet Rate ($26/day, $0. 19/mile) vs. Federal Reimbursement Rate ($. 485/mile)

Better Resale on Your Vehicles • Any increased sale price goes to your bottom line • Manage your disposal – Manage your mix – Manage your volume – Manage your channel • Build your “Brand”

Lifecycle Costing • What is it? – A financial calculation to calculate the total lifetime costs of a piece of equipment. – One goal of lifecycle costing is compare different pieces of equipment against then acquire the piece with the lowest total cost.

What Is Included in Lifecycle Costing? • Any cost that affect the cost of ownership – Purchase price, rebates, interest, delivery cost, insurance, out of service costs, preventative maintenance, repairs, accident repair costs, management fees, resale price, etc.

Lifecycle Example

LCC at 36 Months