By: Pete Scarafiotti, Fleet Director, City of Mesa (Arizona Chapter)
What More Can Fleet Contribute to the Bottom Line?
I’m relatively sure that by now there isn’t a governmental fleet left in America that hasn’t been faced with the reality of deep budget cuts and possible lay-offs, in fact, the privatization issue may have surfaced once again in your organization. If you’re like me, I daily question “when will we hit bottom and what will be left when we get there?” As executive management struggles to control cost, they have once again focused upon fleet. Although this might be an uncomfortable situation, it does not necessarily mean that you have to reduce people or parts, but you do have to think outside the box. The goal is to reduce cost to the enterprise, most executive management teams will be open to innovative ideas to address the issue, in fact, modern fleet managers need to be aware and nimble enough to embrace this strategy to survive.
I’m going to give you a solution that has work for the City of Mesa and with a little tweaking, it just might be work for you.
Warranty Recovery and Reimbursement Program
Sounds like an old idea? well that could be said about such technical innovations as regenerative braking, an innovation from 1909, forgotten for almost 100 years and today used in most hybrid drive vehicles.
Remember what our mentors use to say about ideas? ”it’s all in the timing”…..well, the time has arrived.
Objective: Reduce fleet operational costs by exercising manufacturer warranty and policy programs
What is a Warranty: Warranty is an insurance policy expressed as a written guarantee of the OEM’s responsibility for repair or replacement of defective parts
City of Mesa’s Program:
How Does this Program Benefit Fleet?
City of Mesa - Magnitude of Annual Savings:
Valuable Reference Text:
Pete Scarafiotti has been in fleet management for the past 32 years, managing large fleets in both the private and governmental sectors. Pete has a BS in Mechanical Engineering and an MS in Engineering Management; he has also attained the four major fleet certifications. You can contact Pete at firstname.lastname@example.org
By: The Business Services Team
Do you sell fuel to other agencies?
UPDATE: As of the publication on this newsletter, the Office of Chief Counsel for the IRS has released a memorandum confirming that tax exempt jurisdictions MAY sell fuel to another with no tax liability.
There is a ruling from the Internal Revenue Service (IRS) regarding Federal Tax Exempt government agencies registered under one Tax ID# may not sell fuel to other agencies registered with the IRS under a separate tax ID#.
Internal Revenue Service, Publication 510 (Rev. April 2009), Cat. No. 150141, Excise Taxes, Definition of Nontaxable Uses, No. 14, reads, “Exclusive use by a state, political subdivision of a state, or the District of Columbia means fuel purchased by the state or local government for its exclusive use. A state or local government is any state, any political subdivision thereof, or the District of Columbia. An Indian tribal government is treated as a state only if the fuel is used in an activity that involves the exercise of an essential tribal government function. Gasoline, diesel fuel, and kerosene used by the American Red Cross is considered to be the use of these fuels by a state.”
Assistant Greensboro Attorney, Tom Carruthers said the IRS has taken a no-exception interpretation of the regulation. In a letter to Guilford County Attorney, Mark Payne earlier this year, Carruthers wrote “they (Brunswick County) informed us (Guilford County) that the IRS has taken a hard line on all sales of fuel that are not the ‘exclusive use’ of the purchasing entity”.
According to an article in the on-line publication, Rhinotimes.com, “County No Longer Getting Gas From City” , the City of Greensboro, NC sold gas to Guilford County for 15 years. The IRS didn’t notify the City of Greensboro that it had to cease this practice. However, after the IRS conducted an audit of Brunswick County, NC they sent notifications to other North Carolina counties and cities, making officials aware that the IRS now considered the practice of selling gas to other entities against regulations. Brunswick County received a penalty from the IRS of up to three years in back taxes.
We at RMFMA, as well as other Fleet organizations, are concerned about the impact of this interpretation of the ruling and will continue to monitor what the outcome is and report it to our membership. Many of you may not have heard of this discussion, so we thought we would share it with you. You may want your legal department to look into this as well.
We appreciate our fellow Fleet professionals monitoring this working to get a clear understanding for everyone. Christopher D. Amos, CAFM wrote a letter to the U.S. Internal Revenue Service Commissioner, Douglas Shulman. Here is an excerpt from his letter stating “In 26 USC 6416(b)(2), federal law defines specified uses of fuel where the excise tax will not apply, including fuel sold ‘to a State or local government for the exclusive use of a State or local government.’ (Emphasis added) The statue does not require that the fuel be for the exclusive use of the local government that purchased the fuel, but must be for the exclusive use of a State or local government.” He has also requested a meeting with the Commissioner and his staff.
By: Casey Dunn, Texas Chapter Member
Whether you’re a private fleet, a government fleet, or even if you are a retail maintenance organization, proper parts/inventory management can and will impact your bottom line. Improper operation of your parts storeroom directly affects everything from technician productivity and repair times to customer satisfaction and your bottom line.
If you maintain vehicles, having a parts storeroom is one of the areas that can literally make or break your organization’s bottom line. Lack of parts increases service turnaround time, lowers technician productivity and the expediting of parts adds cost in at least freight charges not to mention buying it from the first vendor without checking your other vendors for price comparison. Too many parts add to your expenses and lead to obsolete parts on the shelf.
Proper inventory controls can help you keep these risks to a minimum and increase your bottom line. You will have to run reports to give you the data you need to monitor your movement (or turns), obsolescence, value and count, to name a few.
Ways to Reduce Your Risk:
Having professional parts personnel to manage the storeroom so technicians have their parts, those parts are correct, and parts are issued into FMIS or work order, is an absolute to properly manage your inventory. Communication between Service and Parts must be intact and lived as a team.
Fleet managers must face and manage inventory to have a chance to meet budgets as well as to set budgets for the upcoming year. Just when you thought your plate was full, I know. Be personally involved in fostering the relationship between Parts and Service with these targets on your radar. It is this writer’s opinion that, if your organization is not constantly monitoring inventory, you may be missing asset dollars in the coffers. In these lean times we have been facing, I hope this acts as a refresher, a focal point, and that you find some dollars you might have been missing.
By: Casey Dunn, Texas Chapter Member
What is the most important KPI in our business, Down Time, Fleet Availability, PM Compliance, Technician Productivity? What about Safety KPI’s, Number of Days Since Last Incident, Total Case Incident Rate, Number of Days Since Last Workers Comp?
Safety KPI’s are often overlooked and treated “as just a cost of doing business” but in fact accidents are preventable. Safety does not happen by itself; safety is a culture and must be groomed to become second nature by our employees.
If you are not monitoring your Safety KPI you should begin immediately. We measure our business with KPI’s and safety is no different, after all how are we going to make improvements if we do not know where we stand currently?
. How to implement a Safety Culture
In a down turn economy we might think “I can not afford to spend money on safety”. Now more than ever we can NOT afford not too! If we evaluate what we spend on safety incidents, lost time, lost productivity, workers comp we will find preventing safety incidents is far less expensive than we think.
We as managers have a responsibility to our employees and they deserve to go home in as good as shape as they arrived. Our employees have a responsibility to follow our Safety Policies, use PPE provided and advise their manager is something is unsafe.
We are in the business of both predictable and preventive maintenance, is it not the same when it comes to Safety?
By: Shawna Laird, Business Manager
Knowledge is power. To remain competitive, fleets must capitalize on their efficiencies and maintain full visibility into their operations. Fleet managers who have access to performance information when and where they need it have the power to make decisions that maximize their resources and effectively cut costs. In order to optimize productivity, management needs control over what information they receive, when they get it, and how it is delivered.
Instead of scrutinizing reams of reports and spreadsheets, fleet managers and analysts might consider using custom dashboards. Just like the dashboard in your vehicle gives you key information on your RPMs, oil pressure, and those blinking lights that tell you are running low on fuel or the engine needs to serviced, business dashboards can give managers a quick and informative look into how their maintenance operations are running. Demand for dashboard applications continues to grow as fleets increase the information available about their operations and look to provide their personnel with tools to conquer that volume of data.
Most dashboard applications fall into the category of business intelligence. They process and condense data into summary values and key performance indicators (KPIs) to provide an overview of your operations. Graphical displays are a distinct advantage and a valued alternative to traditional reports. Couple that quick view with the ability to “drill down” to get the details and you have all the information you need in a matter of seconds.
Dashboard applications aren’t just useful for the Fleet Manager, but also for shop supervisors, parts clerks, and even technicians. If technicians had access to customized dashboards (i.e. their direct vs. indirect labor), would they become more productive?
Dashboards that have flexibility in their reporting periods are an advantage because extended time periods enable trend analysis for spotting serious problem areas early. Automating the dashboards is convenient and practical. Information that is current and always available from any computer is the goal. Talk to the Information Technology Department about placing dashboards on the inter- or intranet.
For more information on Dashboard Applications, talk to your fleet software provider or contact a fleet consulting firm.
The FleetPros Blog is written and moderated by the Business Manager with contributions from the membership and Business Services Team.