Analysis
12 Nov 19

Revisiting the basics: IFMI 2019

Innovation, technology and mobility might be the buzzwords of Fleet Management anno 2019, the reality of the Fleet Manager is much more down to earth: dealing with budgets, cars, vendors and Employees.

This year’s edition of the International Fleet Managers’ Institute has therefore selected topics that are familiar, such as taxation, data and costs, but that are worth revisiting in the light of a changing world.

TCO is still relevant

One such topics was the relevance of the legacy TCO formula as the sum of (generically) lease, fuel, incident costs and tax. The IFMI members, most of them experienced Fleet Managers, were asked whether the formula needed updating and, if so, what the new components of a TCO formula would be. By extension, the question was raised whether TCO should be replaced by TCU.

Even if some of the participants anticipate a radical change of TCO in the near future, most of them agreed that TCO in its current status is still a valid option to measure cost and calculate budgets. Surprising however is the large spectrum of choices made within the TCO formula: for some, only purely car related costs (tyres, maintenance,…) are part of TCO, whilst for others costs such as parking and toll need to be included as they are caused by the usage of a vehicle. This leads to a first conclusion: even within the traditional TCO model, there are different approaches to measure cost, which can lead to

  • An error margin when comparing TCOs between different companies
  • An essentially different approach to savings as the scope and the baseline are not identical between companies

TCU or something entirely different?

The next version of TCO can be either TCU, for those who believe that the sharing industry will become important for corporate fleets, or a “TCO V2” for those who think that more elements need to be added to the current version of TCO. Interesting is the agreement amongst IFMI participants that, shortly, the cost of technology will need to be added to TCO. This technology is either necessary to connect vehicles, consolidate data or provide for telematics.

Costs generated by congestion or related to remote offices or alternative solutions that change the way vehicles are used (or not), are recognized as part of a future TCO, but not withheld for today’s version of the cost calculation.

Data? Yes, but how?

During the IFMI, the topic of data was discussed amongst the participants, not only from a privacy point of view, but also from a consolidation point of view. Fleet Managers shared with each other which tools they used to keep their data set updated: a surprising number of companies still use (be it ultra-developed) versions of spreadsheets whilst other have purchased or developed proprietary software. A second conclusion of the IFMI: it’s a pain to maintain data quality and extract useful and actionable information from the available data. This explains also the limited interest in telematics: how does one transform a massive amount of data into an action dashboard when the amount of data is too big to process?

The importance of fleet sizes and geographies

The IFMI participants were split into 5 groups and were asked to design a 3-year strategy for a hypothetical corporate fleet; they had to make decisions on policy, supply chain, fleet cell setup and a variety of other initiatives, such as mobility and powertrains. Each of the groups worked on a different type of fleet in terms of size and geographies: from a small European Fleet to a large global fleet.

Most strategies aimed to include at least policies and supply chain within the strategy of the first 3 years. Typically, fleets in more developed regions were confident to realize their strategy in 3 years’ time, whereas fleets with mixed regionality (mature / less mature) were less confident and preferred to focus on the “easier” regions first.

The basics depend on the geography, not on the fleet size

Even though, from a Western perspective, organization, policy and supply chain are the essential parts of Fleet Management, they need to make place for more important actions in less mature markets. In these markets, participants suggested to focus on safety and driver training, before putting in place formalized policies. Hence the third conclusion of the IFMI “Do first what is most important for the employees.”

Telematics, GDPR and works councils

Very few – according to some, none – corporate fleet clients in Europe have successfully installed telematics in benefit vehicles or vehicles with mixed tool of trade / benefit character. Telematics might be a difficult topic, most Fleet Managers however seem to agree that connectivity is inevitable: it will either come as part of the vehicle or installed as an aftermarket add-on. Connectivity has the advantage of not tracking the location of the vehicle user, as it is the case with telematics, but instead collecting data from the vehicle (mileage, consumption,…) and only these data that they user is willing to share, when they want to share them. Less private and easier to sell to works councils, connected vehicle data are more useful for the Fleet Manager than full-blown telematics data.

Conclusions

Even if mobility is a hot topic, the Fleet Managers appreciated revisiting basic Fleet Management topics. Especially the new generations of fleet professionals, who joined IFMI for the first or second time, had the opportunity to learn and ask questions.

Gradually, Fleet Management is modernizing and technology is making its entry. The fleet professionals agree that the future will bring other solutions, but they’re not necessarily in agreement with the tech and mobility sector when it comes to the urgency and timelines of these new services. Change will happen gradually.

Finally, we would like to thank sponsors ALD, ARVAL, Athlon and LeasePlan for their support in organizing IFMI 2019 and sponsor SEAT for the excellent diner and shuttle service.

Authored by: Yves Helven
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