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 Case
Study - 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. The fleet
is operated by four primary user groups.
Total fleet expenditures exceeded $100
million in 2005.
The fleet was managed by a three person team
under the direction of Strategic Sourcing
and Supply. 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 Associates 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 Associates 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.
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Phase I: Evaluate Current Fleet
Management Practices |
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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. |
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Phase II: Reengineer Targeted
Business Practices |
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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. |
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Phase III: Developed Request for
Proposal |
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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:
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.
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Opportunity |
Savings Per Year |
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Replace 2-Wheel Drive with
4-Wheel Drive Trucks |
$700,000 |
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Fuel
Management |
$400,000 - $800,000 |
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Maintenance and Repair Cost
Reduction |
Up
to $28 Million |
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Reduce Employee Downtime |
Millions |
Contact us for a free initial
consultation
For more information on how Mercury
Associates can help you analyze your
contracts, develop RFPs, rightsize your
fleet and implement fleet management
information systems.
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