Tom, tell us about Donlen’s ‘Growth Pyramid’ and how your focus on its precepts have played out over this past year.
At the foundation of our Growth Pyramid are Employer of Choice, Controllership and Compliance.
Because we are now a part of a public company we have to have more of the controllership and the compliance. That is a good thing; I think our customers and suppliers and prospects are happy about that and we have passed with flying colors. We have always been a culture that tries to do the right thing.
As far as employer of choice, we have done a lot of things to attract and keep the best talent. We have a state-of-the-art fitness center and various wellness activities. We have ramped up our training across the board, whether it is technical or just basic training for everyday life. Hertz has helped us there. We realize that we must invest in our employees — our greatest asset that we have as a company. I think everyone knows this is a very complex business. It requires deep domain knowledge and our employees’ education is critical.
Now making the journey up the pyramid, we go to Simplification and Scalability
What I mean by simplification is that we want to continue to be a company that is easy to do business with. There are a lot of ways to do that and we are working very hard to meet that goal. Scalability means that as we grow we want to do it profitably and that means an investment in people, processes and systems.
We have worked very hard at improving our IT capacity. This particular business, fleet management, requires a lot of technology investment and so we continue to focus there. We have invested in hiring more IT talent and are fortunate that in Chicago we can draw on great institutions like Northwestern and The University of Chicago. We are bringing on technical architects and software developers and are also talking with Silicon Valley.
At the end of the day, it is all about how we can get the data from the vehicle and from our various products and services, and how we can report on that data in a meaningful way to our customers. More and more the fleet managers need to report up to their leadership that may or may not know anything about fleet, but they need a concise report on where they are going. A lot of what we are doing is preparing to do a better job at predictive analytics for our clients.
And then, finally, at the top of the pyramid is Growth.
If we do all of the things below in the pyramid, that means that we will grow. We will grow through our customer base who continues to expand, and we are fortunate there. We provide services to industries that are growing; oil and gas, for example, and some others that have had very good success.
We are also investing in our trucking initiative. We brought on a very, very bright truck engineering professional who has a degree in mechanical engineering from Stanford. So, we know we have got to hire great talent to get great results.
We just recently rolled out our services platform in Canada, and Canada is booming, especially western Canada. That is going to give Donlen a larger North American geographical presence. We have partners in Mexico and in Europe and Australia, so they focus on giving our customers the best service in those locations.
Speaking of Donlen’s global reach, how has that expanded under the Hertz umbrella?
Hertz operates in about one hundred and fifty seven countries. They have rental and leasing services in various developing countries as well, and that is an opportunity for us. We have capabilities with our partners as we have expanded in Europe and Australasia, but where they have provided a big opportunity is in those developing areas.
One big area that they have provided a great entrée for us is China. Hertz owns 20 percent of China Auto Rental, the largest rental and leasing company in China. We are in negotiations right now to come up with a partnership agreement with them. It is both a referral agreement as well as a technology sharing agreement. China is the next great frontier. I think when they finally decide on what to do they are going to move fast. They are still trying to figure out the whole thing. China Auto Rental is going to be out for an IPO and once that is done I think you are going to see an acceleration of the partnership between Donlen and China Auto Rental.
In your experience, what do the best-managed fleets have in common?
The best fleets have to define a goal, first of all. They don’t just set it and forget it. Donlen has regular, quarterly updates around where they are going in relation to their goals. They have specific cost saving targets; they have certain miles per gallon targets. So it starts with clear KPIs and defining the goals that they should work for.
I also think the other thing is that fleet and whoever is representing fleet must have a seat at the table. The most successful fleets that I have seen have respect across the organization. It is not just some sort of commodity tucked away in the corner, it is taken very seriously. And then the third thing I have found in successful fleets is always pushing the needle.
We are seeing many more fleets report up Procurement. How does this affect the negotiation process for fleet management companies?
Rather than go off of third party information I contacted a sourcing executive that I knew and I just asked that executive a variety of questions. What is it about procurement that we should we be on the outlook for? And it was fascinating to hear the responses. He said, first of all, Donlen, you need to know what procurement wants to accomplish. For example, we may want new payment terms so we may want Donlen to go from 45 to 60 days. You have to know what we want.
Second of all, they know that if they grind the supplier too hard they are putting them in a harder financial situation to do the right job. And then everybody loses, including them. No sourcing person wants to get in front of their boss and say they drove prices down so low that now service delivery is terrible and we just bankrupted the supplier. There are examples across the auto industry of that. Procurement committees understand the need for a healthy supply network.
Lastly, the other thing with sourcing — like anything else — is that you have to provide the right data. Back to my other conversation about providing analytics – if you can arm the fleet manager with enough predictive analytics, you will give them new ideas. Companies will never be at a loss with why they chose you as their supplier.
Don’t be in a situation where your customer asks, “What have you done for me lately?” FMCs need to have the answers right away; you don’t have to be prompted. This tells the sourcing person that you are still working for them. You want to be thought of as the supplier that is still coming with the best and the greatest ideas. Do not become complacent. If you keep on coming up with new ideas, and if you keep coming up with different ways to save customers money and stay engaged, you are going to go a long way.
What are the special challenges for fleet management companies now?
I think there are always regulatory issues that may come up. We are not a large industry, but we still have over 3 million vehicles on the road so we are an important industry. Sometimes politicians in their haste to do the right thing forget about us and unintentionally they can do some harm. Fortunately, we have a good lobby organization and their job to make sure that that doesn’t happen.
The other challenge, as I mentioned, is to provide predictive analytics to our customers. Not just data but real information. And then the other challenge for fleet management companies is to always stay relevant and at the forefront of what is going on. It is a very, very, complex business and I think that if you are in it you have to be in it in a big way and continue to invest. That always is a challenge with everybody having to hit their P & Ls.
This is a very exciting time to be in the industry. We can save lives, we can save money and we are a big piece of these company’s assets and I think we are doing a good job as an industry overall.