Government Waste - CEOs must make eliminating surplus vehicles a priority
“Australian Government departments hold more than 17,000 surplus vehicles that cost the taxpayer $12.3 million each month in avoidable waste” says Derrick Bishop, Global Managing Director of Bishop Fleet Optimization (BFO). The internationally recognised fleet expert has studied vehicle utilisation for more than 60 AU/NZ agencies making fleet size reductions worth $10’s of millions with no loss of service delivery capability.
Australian politicians and business leaders understand that the nation must learn to live within its means. But how? Fleet is a good place to start.
DELEGATION IS NOT WORKING
State Governments hold department CEOs accountable for matching vehicle numbers with service demand. “A widespread problem exists, however, when CEOs ask fleet managers, State Fleet agencies, or outsourced fleet management companies if the fleet size is optimal” says Bishop. “Optimisation requires GPS equipment and specialised know-how that few, if any, of the delegated parties have to identify surplus vehicles. The answer is all too often “yes, everything is OK” despite regular State Auditor General reports that say otherwise.”
CEOs previously had no way to validate optimal fleet size but that has now changed. CEOs are increasingly using 5-week GPS-based vehicle utilisation studies to check the numbers. “CEOs tell us the studies are a “no brainer” given the 2-month pay back and typical 20:1 ROI” says Bishop. “The best practice approach finds surplus vehicles with renewed precision and has already saved Australian taxpayers $10 of millions. Executives often find other operational bottlenecks that, once fixed, deliver additional efficiencies.”
HEALTH CEOs LEAD THE WAY
“Health CEOs are well ahead of other Australia government sectors when it comes to fleet optimisation” Bishop said. “Almost all Victorian Health entities have completed studies with great success. NSW Health is making inroads but most other States are well behind.” Melbourne Health won a prestigious award for the efficiency gains it achieved with its study.
“Studies often uncover inefficiencies outside of fleet” says Bishop. “One fleet study identified that triplicate data entry was costing 300 hours per day in lost productivity.
Other studies revealed that 60%-80% of vehicle office/depot locations are in suboptimal positions relative to where services are delivered.
To put this into context, NSW Government has 25,000 vehicles so the driver cost equates to $1 million per hour assuming a $40/hour labour cost. Imagine the productivity gains, reductions in congestion and emissions, and improved work conditions if service delivery locations were optimised” says Bishop.
“Australia and New Zealand lead the world in fleet optimisation. BFO innovation and thought leadership mean that CEOs now determine optimal fleet size with real utilisation data that is credible and easy to sell to staff” says Bishop. “CEOs are often astounded when fleet management companies say that mileage will be used to optimise fleet size. Mileage completely ignores where and when a vehicle was used” says Bishop. “CEOs trust BFO’s reputation to get the numbers right and that reliability makes all the difference.”
“Fifteen years of development means that BFO remains a generation ahead of the industry” said Bishop. “BFO is increasingly getting requests from utility and local government operations to transform their existing GPS data into actionable information to improve performance. CEOs refer other CEOs to us which reflects the confidence that executives have for our work.”
WHY 5-WEEK STUDIES WORK
It is important to note that the 5-week GPS snapshot is the key, not the vastly more expensive permanent GPS approach. The reason is simple. “Staff job description tasks typically follow the same daily, weekly, and monthly patterns. Our GPS research shows that vehicle use also logically follows those same repetitive patterns” says Bishop. It means that the operational knowledge gain from collecting a second month of GPS data is almost zero in most cases so purchasing expensive GPS with 3-5 year minimum term contracts makes no sense. Buyer remorse is high for those who make this costly mistake.”
“Some State Fleet agencies now try to optimise with electronic booking systems but we still find 20%-30% surpluses. Adding expensive permanent GPS to booking systems only tells you if a vehicle is currently onsite, not if it is available in two days time when you need it. It is important to think this through or seek independent advice before committing to a permanent GPS contract” said Bishop.
A POLITICAL WINNER
Malcolm Turnbull and the State Premiers are looking for smart ways to save money. Short-term GPS fleet studies deliver tangible cash savings every time so should be a priority. “The best practice approach ticks all the political boxes” says Bishop. Taxpayers get better service at a lower cost, CEOs improve service delivery, staff are happier due to more equitable work scheduling and fairer resource allocation. “All bets are off if across-the-board cuts are used though” says Bishop. “Such blunt instruments only serve to punish your efficient managers, demoralise staff, and degrade work conditions and service delivery.”
“CEOs like the fact that BFO takes ownership of agency problems to help solve them. Our transparent approach helps stakeholders understand why recommendations are made so resistance to change is low” says Bishop.
“Large numbers of surplus government fleet vehicles still need to be cut. The $12.3 million per month waste continues while Treasuries largely ignore expert advice and experiment with solutions that consistently underperform or fail. Responsible use of public money and working for the public good are the key principles at stake” says Bishop.
The bottom-line is that CEOs can optimise fleet size now to stop this waste. “As a CEO, I would prefer a proven no-risk option that delivers large savings every time with a 2-month payback” says Bishop. “The alternative is to endure $140 million per year losses while Treasuries struggle to find the answer.”