The Division of Fleet Operations (DFO) within the Department of Administrative services has embraced increased performance. By rethinking business processes, DFO has cut operating expenses by 30% while launching efforts to improve utilization, reduce emissions, ensure customer access to quality cars, and right-sizing maintenance costs.
While the DFO team negotiates and influences price as much as they are able (and have some fantastic contracts in place that allow for reduced rates), car and fuel prices; maintenance labor; costs for specialty items such as light bars, plows, radios and the like; are for the most part, set by the market. Given all these cost factors, it doesn’t make sense for every agency to separately maintain and operate its own fleet. Instead, the State of Utah operates a centralized model that eliminates redundant costs and overhead. A centralized model also leverages skills and services across all agencies and the 4800+ state vehicles currently in service.
So how does the SUCCESS Framework strategy work for a centralized entity that acts as an Internal Service Fund (ISF)? First, there is a focus on internal processes. By focusing on “blue light” activities, the DFO team found opportunities to reduce information technology and accounting costs. Through attrition, vacated positions have been eliminated and processes have been improved to avoid the need for new hires. As a result, DFO is projecting a reduction in operating expense of roughly $600,000—not a bad improvement for an operation of approximately $2 million. This savings will translate to a request for a reduction in the fees charged to state agencies during the next rate committee hearing. While $600,000 may seem small, the amount represents a 30% cost reduction and reinforces that every organization can improve—regardless of size.
Strategies to address other key improvement goals are underway. These are just a few examples of the work DFO is engaged in to help manage costs and improve quality.
- Utilization. Using mileage to measure utilization can be misleading—a more accurate measure is time. So what would it look like if we paid for vehicles only when we needed them? This is what the Enterprise pilot project recently launched is all about. Fleet was able to eliminate 65 vehicles from the fleet and replaced them with…nothing. Enterprise is filling this gap. Fleet will monitor the pilot to determine its effectiveness and on-time availability.
- Pollution. All 2007 and earlier vehicles are the immediate target to be removed from the fleet—essentially because they use older engines. Newer engines are more efficient and less polluting. Tier 3 engines and fuel will come into play in 2017. This will reduce sulfur emissions from -30% to -10%. This compares very favorably to many of the cleaner fuel burning vehicles in use today. We will leverage hybrid and other cleaner fuel alternatives by replacing the pre-2007 vehicles wherever possible and step to Tier 3 vehicles when available.
- Maintenance. In addition to saving costs through a new in-house maintenance model, DFO is standardizing the vehicles in the state fleet. This means that in the future, if you want a mid-size passenger vehicle, there will be one choice. This allows the state to take advantage of warranties and efficiencies by make and model. Finally, vehicle depreciation is being moved from a variable rate to a fixed rate—providing clarity as to when the asset is paid off and allowing for firm strategies for unloading vehicles when necessary.
Currently, DFO has applied the tools of the SUCCESS Framework to four systems. Thanks to the ongoing work of Marilee Richins, Eric Gardner, Scott Bingham, and Amanda Ronan we anticipate ongoing improvements and enhancements to include the Enterprise pilot program that just went live and two new services that will be announced this summer.