Bishop Fleet Optimization Case Study
GPS Right-Sizing Helps District Health Provider Save $1M in Fleet Costs
INelson Marlborough District Health Board
Posted on Friday, August 26th, 2011 at 10:12 am
Forget obsolete vehicle mileage analysis. True best practice fleet optimization uses a 5-week GPS data snapshot, a change-management focus, comprehensive communications that has helped New Zealand’s Nelson Marlborough District Health Board (NMDHB) to improve fleet utilization while reducing vehicle count.
The result delivered more than $1 million in fleet cost savings and $146,000 in ongoing annual savings.
Like most government agencies, NMDHB was looking for ways to reduce its budget deficit without impacting patient health care. Part of this effort included determining whether a major cost component, the 211-vehicle fleet, was utilized at an optimum level.
Approximately 80% of total fleet cost related to just possessing the vehicles, regardless of how far each was driven each year. Depreciation and capital charges alone consumed around 70% of the budget. Given these facts, it was clear to Hospital Services Manager Sandy Russell, who was sponsoring the project, that the number-one way to reduce this fleet ownership fixed cost was to review utilization levels and dispose of surplus vehicles.
The NMDHB examined the available fleet management information and determined log book records, mileage data and fuel data were too inaccurate and, consequently, of little value in identifying surplus vehicles. The Board tried an audit using Vehicle Allocation Methodology. However, the CEO threw out the findings because he could not expect staff to make changes based on flimsy evidence that ignored when and where vehicles were used. Although a number of fleet management organizations indicated that no better tools were available, Mrs. Russell's persistence paid off ─ she discovered Bishop Fleet Optimization (BFO), an innovative fleet consulting firm that was soon to make a large impact on the industry.
BFO, which had been involved in similar health sector audits, had developed a specialized Fleet Utilization Audit system for large fleet owners that finally met the NMDHB’s needs. BFO understood that fleet managers regularly operate with constrained budgets. In response, the consulting firm totally revamped both the GPS and fleet right-sizing audit models, making it possible to affordably use short-term GPS deployment to optimize fleet size.
"BFO offers its GPS equipment free of charge so it can gather accurate, credible data for its consulting work. Our fleet staff installed the GPS devices in no time, and the resulting information after five weeks was amazing. We could now get great utilization data, an advanced online analysis capability and a comprehensive report from an internationally respected consulting firm without having to sign up for a GPS three-year minimum-term contract and all the other add-ons. The BFO business model makes sense and has made all the difference for us. The savings speak for themselves," says Mrs. Russell.
BFO GPS units uniquely acquire satellite data through buildings and operate in areas with no cell phone coverage. "This means no data gaps occur that can undermine credibility at implementation time," Mrs. Russell continues. “Additionally, the database analysis tool transforms the fleet data into meaningful, actionable information that provides evidence-based support as change is implemented.
Discussions about the data being wrong or too old stopped immediately. The evidence is clear and decisive. We are no longer subjected to the ridicule that often followed when trying to justify fleet reductions using mileage analysis."
BFO put these technologies to work at NMDHB to:
Optimize the vehicle count and composition at each site
Group vehicles into interdepartmental pools (when appropriate) to support optimal vehicle numbers while still maintaining 100% vehicle availability for staff
Develop and implement efficient transportation options between hospitals located 120km (75 miles) apart
Assess the fleet-car cost breakeven compared to taxi and hire-car options
All affected staff received a communications document prior to implementation outlining what was happening as well as why and when the audit would take place. BFO developed templates for all project activity, including collection of fleet data and communication plans to facilitate this process. Some managers and staff were initially anxious about the project; senior management overcame this by remaining clear and candid about the reasons for the audit.
In preparation for the five-week data collection period, fleet staff received a 20-minute training session. They then locked a self-install data logger into each vehicle’s 12V power socket. The loggers collected utilization data every five seconds whenever a vehicle moved. “The most difficult part of this exercise was making sure vehicles were available for the one-minute installation,” Mr. Bishop says. “Weekend and after hours installations made the process easier.”
The results of the exercise exceeded all expectations. NMDHB staff was finally able to accurately understand exactly how the vehicle fleet was being used. They could view interactive information on graphs as well as visually on Google Earth. BFO’s QueryBuilder produced a number of reports showing concurrent vehicle use by site, department, cost centre and vehicle type down to the individual vehicle level. They also could generate map overlays showing activity for individual vehicles, vehicle groups and the entire fleet for analysis. Decision-making was highly visual, making the process transparent and easy to explain to managers and their staff.
“The processed information was a powerful tool in assisting with fleet management as well as changing the behaviour of fleet users,” Mrs. Russell says. “Before the project we had ideas about how our vehicles were being used, but no clear, easy-to-see picture of what was actually happening. QueryBuilder changed all that.”
Concurrent usage graphs showed that by removing the current departmental system of vehicle ownership and creating centralized vehicle pools, 52 vehicles (25% of the 211 vehicles audited) could be safely removed from the fleet with no reduction in service quality. This simply cut waste, not services. NMDHB has removed more than 80% of the recommended vehicles so far, saving more than $1 million.
The data collected also identified numerous opportunities for improving travel efficiency.
These included recommendations to relocate particular departments closer to the clients they serviced, saving fuel and staff travel time. The QueryBuilder inter-city reporting function identified a major opportunity to improve travel between hospitals. Staff often made a three-hour return trip between the sites on a daily basis in multiple vehicles. A regular van service was introduced based on the findings.
Concurrent usage graphs also identified morning versus afternoon use patterns for departments. Staggering vehicle use across the day enabled NMDHB to improve utilization and deliver the same service with fewer vehicles.
Two other significant findings were an analysis of short trips followed by long parking durations and NMDHB vehicles’ overnight use. A BFO QueryBuilder “Short Trip – Long Park” report identified examples in which vehicles had been driven to a location (e.g., an airport) and then left for 5 to 10 hours. A taxi fare was suggested as a better option so other staff could use the fleet vehicle.
The most significant challenge of any project comes when findings require behavioural change from staff involved. The NMDHB was determined to implement the BFO findings despite misgivings from some staff. BFO first presented each finding to the executive team.
Department managers then interactively reviewed them on QueryBuilder. Department managers and staff were given time to consider the proposals and the opportunity to respond where concerns still existed. Staff suggestions were included in the final implementation plan. As a result, more than 81% of BFO’s recommendations were implemented.
The implementation also included some changes to vehicle use policy. Non-business vehicle use was of concern to the CFO, because this attracted fringe benefit tax issues. The NMDHB was able to identify examples of practices that did not meet the vehicle use policy. An increased focus on educating staff on vehicle use policy has significantly reduced such incidents.
“As a typical state health provider, we are always looking for ways to better use the limited resources we have available,” says Mrs. Russell. “Fleet costs are a significant area that we have never been able to effectively deal with through traditional utilization analysis methods.
BFO’s approach has turned all that around for us; we now have definitive results as well as a tool to tell us how many vehicles we need and where they should be positioned. We have managed to improve our utilization levels substantially while reducing our vehicle count.”
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