The half-way point of the year has arrived, but for many fleet professionals it may feel like it has been longer than a mere six months. While states begin to reopen and fleets feel out the “new normal,” it’s like we are entering a new age rather than the second half of the calendar year. You may be looking at your current fleet strategy and realizing it doesn’t address some of the key issues of today, such as sanitization protocols, extended order to delivery timeframes, backlogs in DMV processing, cash flow restrictions, and changing fuel prices. Yes, the change has been significant – and so your fleet strategy needs to evolve, too. Here are some ways to look are your fleet with fresh eyes so you can get back on track for the remainder of 2020.
- Take the time for a formal mid-year strategy evaluation. The mid-year point is a natural time to take stock of what your goals for the year were and how you are tracking to those goals. However, this year has been exceptional, so simply measuring progress against your original goals will likely not be enough. A full evaluation of your goals may be more appropriate.
Don’t be afraid to give yourself a blank slate if needed. You likely spent a significant number of hours at the end of last year and early this year laying out your strategy and goals for the year. It’s possible that the best thing you can do to move forward is to throw out your original plan and start again. Do not allow the sunk cost fallacy to take over – cut your losses if necessary and evaluate your fleet operations with fresh eyes in light of new realities.
- Evaluate your vendor network and seek their expertise. Now is the time to take stock of your vendor network and observe how they have handled and adapted to the recent changes. Some vendors may have had to shift focus or reduce capacity while others may be thriving, so you may have to adjust your sourcing strategies. Talk to your vendors about how their strategy has changed for the year and their business continuity plans so you can be better informed about how they are aligned to your business needs going forward. This is also the time to lean on vendor expertise to help update your policies and tactics across areas like maintenance, safety, lifecycle, and more.
- Adjust your budget. Company budgets have been drastically impacted, so it’s time to sit down with finance and other internal stakeholders to update your budget. Updating forecasts is going to be particularly critical to determine how to revise your cycling policy, which units should remain in service and which should be disposed of in order to maintain or improve cash flow. With low fuel prices during the pandemic and reduced fuel spend due to idle vehicles, updating your fuel cost forecast is especially important. If needed, reach out to your fleet management partner about programs that can provide cashflow relief, such as extending amortization terms through a sale and leaseback, possible extension of lease terms, or remarketing unneeded assets.
- Adjust your timelines. In addition to updating your budget to reflect new financial realities, timelines need to be updated to reflect new supply chain realities. While OEMs have re-opened, it is important to note that order to delivery times will be extended and delays are going to happen. Your strategy should be adjusted accordingly, whether that means bringing in short-term rentals to fill gaps or adjusting your cycling cadence to account for longer order to delivery times. Many other fleet services like maintenance locations have continued to operate throughout the pandemic as essential businesses but implemented policies to maintain social distancing that may impact number of appointments or drop-off procedures. Continue to call ahead for service appointments and prioritize which units should receive maintenance first in case it takes longer to service vehicles. There are likely to be backlogs at DMVs as well, so be prepared and equip your drivers with in-process letters.
- Definitions have changed – update your policies accordingly. Perhaps no definition in fleet has changed more than that of driver safety. What was once viewed through the lens of driver behavior has expanded to include disinfection and safety protocols. Ensure that your current driver policy aligns with recommendations offered through the CDC and Department of Labor website. If your fleet uses pool vehicles, consider limiting the group of drivers who share the vehicle, and ensure that all driver record-keeping processes are tested and updated accordingly. Apply this same holistic eye to your whole fleet policy, updating where needed to accommodate new definitions, scopes, and best practices.
- Ensure you’ve looked at your fleet holistically. As you are updating your policies and strategies, make sure you follow a methodical process so you address each aspect of your fleet. The result of any policy and strategy updates should be a complete, harmonized picture of how the various aspects of your fleet operations will effectively work together to produce the desired results. A checklist, flowchart, or other visual may be useful to ensure no area is overlooked and to map any overlaps.
Most importantly, enter this phase of re-strategizing with a healthy dose of patience. Delays and backlogs are a reality of the re-opening process, so it is important to be understanding and adaptable as much as possible. Stay flexible, communicate with both internal and external stakeholders, and you will be able to seize new opportunities and successfully adapt to make the remainder of 2020 a success.
If you are wondering how to best adapt your strategy or need programs and solutions to put your changes into action, visit Merchants Fleet’s page dedicated to this topic.
By Adam Secore, SVP of Operations