Case studies

Stakeholders Engaged: Finance, Procurement & HR

The initial assessment consisted of the Key Solutions team conducting a wide-ranging review of the baseline costs of our customer's current policy; together with a benchmark analysis against their peers. This analysis revealed the potential to optimise the Structured Product that was being deployed at the time to generate additional cost benefits. As a result Key Solutions were able to propose a revised car policy, based on Whole Life Cost, which has enabled significant cost savings for the employer, whilst offering benchmark cars with improved specification.

Key Solutions were able to further reduce fleet costs through the recommendation and subsequent implementation of a reduction in OEM choice list down to 3 main manufacturers plus one additional manufacturer aligned to their European Policy. More importantly, from a savings perspective, this change was supported by GE procurement leverage, which delivered increased financial support from the manufacturers and dealer network.

Further savings have been generated across a wider population by re-engineering the cash allowance policy to be fully aligned with new, reduced cost base. Whilst significant savings in Fuel costs have been realized by ensuring the most efficient vehicles are promoted through their new Policy.

Stakeholders Engaged: Finance, Procurement & HR

The initial assessment consisted of the Key Solutions team conducting a review of policy, resulting in a whole life cost policy being introduced. The impact of the new policy was to improve the average MPG of fleet cars by 20%, reducing fuel costs considerably.

However, whilst this change in policy was successful a greater area of concern to the customer was the provision of private fuel. All employees who had a company car had the option of receiving free private fuel benefit; with the majority taking up this benefit and paying HMRC the appropriate benefit-in-kind.

The provision of this benefit results in the customer paying for all private mileage fuel costs and Class 1A National Insurance on the employees private fuel benefit-in-kind. This resulted in total annual costs of £345,000 to the customer for providing this benefit.

The Key Solutions team introduced a more cost / tax efficient method of providing the benefit. Analysing each individual driver's levels of private mileage, we determined what level of benefit each driver received from free private fuel. For the majority of driver's their benefit-in-kind cost was higher than the cost of fuel. These drivers were asked to no longer receive the private fuel benefit, but instead would make monthly contributions to the company to cover the full cost of their private fuel.

Stakeholders Engaged: Finance

The customer operated a whole life cost based policy, which resulted in low average CO2 emissions and therefore tax efficient cars on fleet. Essential users had a limited selection of leased (via Contract Hire) cars to choose from, all of which had CO2 emissions of sub 120g/km.

The Key Solutions team considered all the tax implications (lease rental restriction, capital allowances, Class 1A National Insurance, VED etc.) for company cars, in order to recommend a solution for the customer essential user fleet. We analysed multiple vehicle types and financial products using a discounted cash flow model, to determine which would be the most viable for the customer.

The result was a new scheme for essential users where all cars were put on a Contract Purchase product and would have emissions of less than 110g/km. By implementing such a scheme the company could now claim the capital allowances on the cars (as they were using a Contract Purchase product) and claim 100% tax relief in year 1 for the cars, because the CO2 emissions were all sub 110g/km.

The accelerated tax relief under the new scheme resulted in a cost saving for the customer of £20 per month for each car. In addition, the car choice available for the employee remained good.

Stakeholders Engaged: Finance, Procurement, Fleet Manager & HR

Key Solutions reviewed the data to determine the average cost per accident and the trend of increasing costs. The team were also able to quantify the reduction in the number of accidents required to cover the costs of implementing a full Duty of Care service across the Fleet.

Key Solutions then facilitated a working project of data sharing and evaluation between both the Accident Management and Duty of Care service providers (FMG Support & RAC Risk Management) who were working with the customer. This Implementation took approximately 6 months.

The implementation of a full Duty of Care service with Driver training and Risk assessment, coupled with the sharing of Accident Management data enabled our customer to focus their attention on the ‘High Risk' population within their fleet.

Stakeholders Engaged: Procurement & HR

The initial assessment consisted of the Key Solutions team conducting a wide-ranging review of the current policy. A robust benchmarking exercise was undertaken, using internal and external data sources, to benchmark the customer's current policy against their peers.

This analysis revealed the potential to optimise the policy in a number of differing areas. As a result Key Solutions were able to propose a revised car policy, based on Whole Life Cost, which has enabled significant cost savings for the employer, whilst offering benchmark cars with improved specification.

Key Solutions were able to further reduce fleet costs through the recommendation and subsequent implementation of a reduction in OEM choice list down to 3 main manufacturers from 10. More importantly, from a savings perspective, this change was supported by GE procurement leverage, which delivered increased financial support from the manufacturers and dealer network.

Further savings have been generated by switching 12 and 24 month contracts to 36 and 48 months, also adding a full maintenance package to these new contracts. Existing contracts were rewritten to 36 and 48 months with maintenance.

Stakeholders Engaged: HR, Procurement & Finance

The initial assessment consisted of the Key Solutions team conducting a wide-ranging review of the baseline costs of the customer's current policy. This analysis revealed 40 potential areas of cost saving ranging from optimisation of the Structured Product that was being deployed at the time to global pricing. Key Solutions used Six Sigma methodologies to prioritise the list of opportunities, which was modified by the customer and deployed to other suppliers as best practice. Key Solutions together with the customer created mini project teams to work on the top six areas identified, and set up bi-weekly conference calls to drive the pace and progress.

Key Solutions were able to further reduce fleet costs through the recommendation and subsequent implementation of a reduction in OEM choice list. More importantly, from a savings perspective, this change was supported by GE procurement leverage, which delivered increased financial support from the manufacturers and dealer network.

Further savings have been generated across a wider population by re-engineering the car and cash allowance policy to be fully aligned with the reduced cost base, with new allowances taking effect from 1 July 2009. The whole life cost policy has been tailored to reflect the true cost to the customer of each company car and includes a budget for end of life damage.

Stakeholders Engaged: Finance, Procurement, Fleet Manager & HR

In supporting the customer's internal fiscal savings objective the GE Key Solutions team successfully identified a range of cost-saving areas that were then validated as realistic and timely objectives by the customer's team.

Firstly, the Key Solutions team conducted a holistic review of how fuel is provided to employees. By understanding the stakeholders objectives we were able to design an innovative methodology to reduce the cost of business mileage reimbursement. Key Solutions also proposed a direct marketing campaign with individual employees to reduce the number receiving fully expensed fuel. This was achieved without reducing the value of the car benefit to any employee. In facilitating this understanding with the key stakeholders of the customer's we were able to successfully structure the resulting policy delivering savings of £512,000, thus meeting the customer's objective.

Further, Key Solutions looked carefully at vehicle selection and, by adopting a Whole Life Cost methodology, were able to introduce a series of enhancements to the policy incorporating improved sourcing leverage, a more strategic approach to vehicle replacements, and a self-funding incentive program to further encourage the take up of low CO2 emitting cars.

Finally, Key Solutions extended their analysis to the population of cash takers. Cash Allowances were realigned and delivered in such a way to significantly improve the Tax and NI position for the company.

Stakeholders Engaged: Finance, Procurement & HR

The initial assessment consisted of the Key Solutions team conducting a wide-ranging review of the baseline costs of our customer's current policy; together with a benchmark analysis against their peers. This analysis revealed the potential to optimise the Structured Product that was being deployed at the time to generate additional cost benefits. As a result Key Solutions were able to propose a revised car policy, based on Whole Life Cost, which has enabled significant cost savings for the employer, whilst offering benchmark cars with improved specification.

Key Solutions were able to further reduce fleet costs through the recommendation and subsequent implementation of a reduction in OEM choice list down to 3 main manufacturers plus one additional manufacturer aligned to their European Policy. More importantly, from a savings perspective, this change was supported by GE procurement leverage, which delivered increased financial support from the manufacturers and dealer network.

Further savings have been generated across a wider population by re-engineering the cash allowance policy to be fully aligned with new, reduced cost base. Whilst significant savings in Fuel costs have been realized by ensuring the most efficient vehicles are promoted through their new Policy.