Over the duration of four days, Las Vegas hosts the largest annual exhibition of high-tech innovations known as the Consumer Electronics Show (CES) 2015. This year the show presented technologies such as virtual reality, drones, IoT and intelligent cars. Innovation is everywhere and businesses will have a central role in the adoption of these technologies. Fleet management as a whole must adapt and innovate to offer new solutions.
In this context, we wanted to interview Patrick Beyer, Director of Indirect Purchasing for 12 years with KONE France to understand his vision of fleet management and its future evolution. In addition to his directorship, Patrick Beyer also holds the position of Senior Sourcing Advisor at KONE International for the last 6 years.
Hi Patrick, thank you for sharing your wealth of experience with us today. Can you introduce us briefly to the KONE business?
KONE is a world-renowned Finnish company manufacturing and maintaining elevators and escalators. With a turnover of 7 billion euros in 2013, KONE stands as the second largest operator installer of new lifts. To support and develop its business, KONE employs 43,000 people worldwide and applies a visionary strategy focused on innovation.
The company was ranked 37th out of 50 as one of the most innovative company in the world in 2013 by the US business magazine Forbes. We were the first company to receive a “Label A” eco-efficiency certification for our elevators that has become the benchmark in Europe (“Energy efficiency certification VDI 4707). With more than 3,000 patents, KONE is positioned as the “engine of innovation” in the sector where our elevators consume 70% less energy compared to competitors.
What is your role as Senior Sourcing Advisor?
I am in charge of all back-office functions procurement, ranging from property management to the management of mobile telephony, through to fleet management. My role is to manage international expenses and optimise fixed costs both variable direct and indirect.
To give you a scale, the total fleet alone accounts for 14,000 vehicles (including assets in France) where we have saved more than a third of the company’s operating costs in 2013.
How has the business benefited from your time and experience at KONE?
When I took the responsibility of the fleet for KONE France, fleet management was limited to financial monitoring of vehicles and the overall expense of the fleet. I set about asking the right questions and establishing an A to Z management approach, such as “What size fleet do we require?” and “What is the most appropriate vehicle for each type of job?” and “What are the unnecessary costs associated with the fleet and how to avoid them.”I think I now have a good vision of all fleet costs thanks to the Key performance indicators (KPI) analysis I am able to do. There is still scope for finding new solutions and reducing associated costs.
What do you expect from a fleet management software?
A good fleet management tool should be able to offer a 360° view of the direct and indirect costs to both managers and employees. This is why fleet management software must now be primarily a communicating collaborative tool. I also think the ability to track the costs per employee for their daily acivities and not just costs associated with the use of their vehicle is essential.
What importance do Business Intelligence (BI) and KPIs play in your management? With this in mind, what would you recommend to other managers?
KPIs are the key to good management. Knowledge of numbers and their comparisons have become major tools and should be part of decision making. However, we must go further than simply generic top-level KPIs to also take into account the hidden costs. I myself have set up a system of KPI’s with a 3-level “Top-Down” analysis : firstly annual cost of the vehicle, then the different associated costs (fuel, rent, insurance, etc.) and finally a breakdown of costs by individual (the driver). So I have enough visibility to see which levels have hidden costs and therefore act more precisely and efficiently.
My experience has also taught me that it is necessary to push the TCO analysis further. “How to develop the TCO with driver behaviour?” and “What could be the hidden costs and non-predictive costs of my fleet?” It is in the pursuit of aiming even further, that we come to ask the right questions.
How important is innovation in your business as Senior Sourcing Advisor?
Innovation, leadership and “thinking out of the box” are core values in my profession. Always try to see things differently when the impact may be important, it is even truer in difficult economic times. Today, I consider that the buyers business has significantly improved in terms of professionalism where negotiations with suppliers have reached a level of “Win-Win” maturity and it is increasingly becoming difficult to improve in this area. We are finding that additional savings are hidden internally and not just with suppliers.
With the advancement in technology continuing to grow, how do you think this affects fleet management?
It’s all happening now! Technology drives solutions involving all users (from employees to managers). With IoT (Internet of Things), it also saves time and allows greater accuracy in data integration. But above all, the greatest contribution of technology without hesitation is the automation of low-value tasks (typically administrative ones).
That’s what pushed me to work with the WinFlotte team around its brand new software coming soon and which will exploit these new technologies to offer a solution suited to track and optimise all business supporting functions costs.
What is the impact on the role of fleet manager?
The technology will improve the proficiency of the fleet manager giving it a much more tactical and strategic function going beyond its usual administrative function. Human intervention in strictly operational tasks will decrease while the manager will be responsible for analysing the fleet with a more global perspective implementing and monitoring targeted action plans to maximise efficiency.
What is your vision in the future of fleet management software?
I guess tomorrow’s fleet management solutions will be tools offering complete 360° visibility including predictive and non-predictive costs, which will not be limited to vehicle fleet management. I expect them to manage more than fleet of vehicles but also other type of fixed and variable charges that every manager must be able to improve on.
As improvements in operational efficiencies of tomorrow will be leveraging mobile solutions enabling access to real-time information, the future fleet management tools should capture all costs related to mobility, such as mobile workers and technicians (not just cars, vehicles). Indeed, whilst mobile workers are increasingly using telecommunications solutions to perform their daily jobs, these are becoming costly. So there is a growing requirement to capture and manage these costs.
To illustrate this, today a KONE technician on-the-road uses 4 mobile devices with 4 plans. The traditional TCO of a fleet is not the only indicator in managing the fleet, it is already replaced by the TCM (Total Cost of Mobility), which will take into account all the costs associated with mobility within the company. For example, if no attention is paid to the monthly mobile telecommunication costs these can very easily spiral out of control resulting in equal or even exceed costs compared to vehicle.