I102
Sample Case Study Write-Up
PHH Vehicle Services, Stair (5th edition) page 3
The Case
PHH Vehicle Management Services:
Using the Internet to Improve Customer Service
When was the last time your car was serviced? Can you remember what work was done?
How much did it cost? Do you know how much you've paid for service since you first got the car? Now imagine being the fleet manager of a large company with responsibility for hundreds of trucks and cars - how would you obtain and track that information?
PHH Vehicle Management Services, one of the world's largest providers of fleet leasing solutions for corporate, government, and utility fleets, stores all that information and more about each of the 750,000 cars and trucks it leases to more than 5,000 clients. PHH enables customers to access data on-line through PHH Inter/Active, an Internet-based information system, currently used by PHH clients throughout North America. The result is a powerful tool for understanding, controlling, and reducing the cost of operating a fleet of vehicles.
To build this information source, PHH accumulates data during the lifetimes of its vehicles, including data on vehicle orders and resales, billing, fuel purchases, maintenance, accidents, and even driver safety. Much of the data on client cars is captured from charge card use. Constant updates during the day keep the data current. For emergency repairs or accidents, PHH provides a toll-free number to the driver to report the problem. Call center personnel record the information for future use.
PHH uses this information internally to analyze market trends and supplier quality issues and to use its purchasing volume to secure lower pricing for its clients. But the data is also valuable to the fleet managers of PHH's customers because leasing is one of the largest expenses for firms that depend on their vehicles to conduct business. PHH's goal is to provide improved customer service by enhancing its capability to advise its clients and adding value by helping them manage their vehicle leasing costs.
Clients can access the data via the Internet, call up detailed information on their bills, and analyze data from the past several years. By making information available to customers from their desktops, PHH enables them to analyze their fleets in ways they never could before. Customers are more satisfied, and PHH doesn't have to spend time doing the research and returning customer calls. The gain in productivity has enabled PHH to grow its business without increasing its call center or consulting staff. Frequently, having the data helps trigger other actions. For example, if a vehicle is in the shop for one type of repair, a client might decide to do preventive maintenance at the same time. Or a fleet manager reviewing accident data might discover that one driver has had several accidents, triggering additional safety training for that driver.
The advantages provided by the Inter/Active system have set PHH apart from its competition. When PHH shows customers transactions that are only minutes old and can also produce a report on the cost of operation for each vehicle going back several years, it is quite impressive. Not only has this innovation dramatically boosted productivity and enhanced the role of the fleet manager, but it has also made it possible for PHH to expand its business geographically and enter new markets.
As you read this chapter, consider the following:
1 If you were a fleet manager for a midsized company that leased 200 trucks
and cars, what information would you want to be able to obtain for
each vehicle? What information do you need to know about your
entire fleet?
2 Is it possible that errors could creep into the data? How
might this happen? How serious of an impact might
erroneous data have on the management of a
large fleet of vehicles?
The Response
The Organization:
PHH helps companies manage fleets of cars and trucks. They can assist with purchasing, repairs, buying fuel, tracking accidents, and selling used vehicles. They provide value added by making extensive fleet management information available online.
They are the second largest commercial fleet management service in North America, serving customers with fewer than 100 vehicles to those with over 50,000. (source: http://www.phharval.com/aboutPHHArval/index.html)
The Problem/Opportunity:
PHH handles many of the details of owing automobiles so that businesses can concentrate on their core business (the business of business is business.) PHH helps improve efficiency by providing up to date information that managers can use to control costs.
1) What information would a manager want?
Managers might want to be able to set cost performance standards and see which vehicles were above or below standards. Based on this they could decide when to sell a vehicle or which drivers needed training. They could also decide on frequency of service, and the book says they could do a number of service things at once to save money and not have the car in the shop too often. Besides costs, managers might look at dependability. A truck that is in the shop all the time is not helping you make money.
They could look at the data averaged by type of vehicle. They could decide on which brand or model to buy or avoid. They might want to look at the region where the vehicle is used. A vehicle that is economical for New York City might not be the right one for Montana. Overall they would want to track the total costs of operating the fleet over time. They would want to look at different parts of the costs. For example as gas prices go up it might be better to buy more fuel efficient cars even if they cost more in other ways (for example needed more repairs.)
2) What issues are presented by errors?
It is very important that each transaction be charged to the correct vehicle, you need to decide on a standard way of identifying each vehicle. This also means that you need to know which employee is responsible for which vehicle -- this is especially important where records show that the vehicle was in an accident. If you use credit cards for things like fuel and repairs you may want a separate card for each vehicle. If the records are not dependable you would not be able to weed out high cost vehicles, and if you didn't know who the drivers were you might not give safety training to the people who need it most. If you didn't have an accurate record of your costs you wouldn't be able to charge those costs to the right part of the business. This might mean that your prices for some products or services were too low (and so you don't get enough profit) or too high (and so you are not as competitive.) The worst case is that managers might stop trying to use the data because they didn't believe it.