MERCURY | Fleet Management Consulting, Simplified ™
 

Mercury Helps Transportation Company Save $1.49M per year

The Client

Mercury's client is a major transportation company operating a fleet of approximately 7,000 units in North America, which includes a variety of vehicle and equipment types deployed across multiple states. Four primary user groups operated fleet assets and total expenditures exceed $100 million in 2005.

Under the direction of Strategic Sourcing and Supply, a three-person team managed the fleet. The team managed and administered the leasing and management programs in conjunction with its fleet management company partner, which provided vehicle financing, acquisition, and disposal services; maintenance and repair management services; fuel card services; and management reporting. The lease was structured as a capital lease.

The Challenge

Prior to the expiration of its existing agreements with various vendors, the client engaged Mercury to assist with conducting a management review of its fleet operations to ensure that the size, composition, utilization, and replacement cycles of the fleet were optimized and that industry best practices were being followed. Following this review, Mercury would draft a new request for proposal for fleet services and evaluate the proposals received from fleet management companies.

The Solution

Mercury assisted the client with developing a fleet policy and procedures manual for the 7,000-unit fleet. Once this project was completed, the client expanded its contract with Mercury to include a comprehensive, multi-phase fleet management study. The study included three phases and took 10 months to complete.

Phase I: Evaluate Current Fleet Management Practices
Mercury conducted a high-level best practices assessment of the client's vehicle and equipment management activities, benchmarked fleet administration processes and costs, and reviewed the strategic direction of the fleet program.

Phase II: Reengineer Targeted Business Practices
Mercury focused on reengineering the client's management and operational functions. This process included surveying vehicle operators to determine utilization for right-sizing the fleet. Also included in the process was the development of life cycle analyses for the top 10 vehicle types in the fleet to determine optimum replacement cycles.

Phase III: Developed Request for Proposal
With a thorough understanding of the client's fleet management operations and requirements, Mercury developed a request for proposal for maintenance, fuel, and accident management services.

The client implemented Mercury's recommended changes from Phases I and II, including:

Changing the vehicle replacement parameters to include mission criticality in the equation

Including input from vehicle operators for truck specifications

Monitoring equipment overloading as a factor in truck specifications

Sharing or eliminating certain vehicles based on utilization

Shortening vehicle replacement criteria

At the end of Phase II, Mercury developed a single RFP for all fleet related services. The competitive bids the client received resulted in significant savings. As a result of the proposal process and evaluation, they decided to stay with a capital lease and finance future vehicles through a bank line of credit, and selected one supplier for all other fleet related services.

The Benefits

By implementing Mercury's recommendations, the client realized significant cost savings and increased productivity. The company estimates saving $1.49M per year on its fleet management services including maintenance, fuel, and accident management services, and through the recommended vehicle selection and upfitting process.

Examples of Recommended Savings Opportunities

  Opportunity Savings Per Year
  Replace 2-Wheel Drive with 4-Wheel Drive Trucks $700,000
  Fuel Savings $400,000 to $800,000
  Maintenance and Repair Expense Reduction Up to $28 million
Reduce Employee Downtime Millions Millions

 

About Mercury Associates

Mercury Associates, Inc. is the largest independent fleet management consulting firm in North America. Founded in 2002, Mercury consultants have provided consulting services to more than 500 private and public-sector organizations, including Fortune 500 companies such as 3M, ARAMARK, Bell Canada, BNSF Railway, Genentech, GlaxoSmithKline, Laidlaw, and Sprint; U.S. federal government agencies including NASA, the General Services Administration, and the departments of Homeland Security, Interior, and State; 33 of the 50 largest cities in the U.S., including the 10 largest, and more than half the states. Mercury Associates is a U.S. Department of Defense and U.S. Small Business Administration certified small business enterprise. Headquartered in Gaithersburg, Md., Mercury Associates has consultants located throughout the U.S.

For more information on Mercury Associates' fleet consulting services, contact us via our online form, by email at , or by phone at 301.519.0535.

 

Want to Learn More?

For more information on Mercury Associates' fleet consulting services, contact us via our online form, by email at , or by phone at 301.519.0535.

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MERCURY | Fleet Management Consulting, Simplified ™