Central reservations: Nestle's fleet management strategy

31 May 2013

In the light of Nestlé’s drive to reduce CO2 emissions across Europe, global fleet solutions manager Andrzej Sacha talks to Elliott Aykroyd about the company’s decentralised approach to fleet management.

In 2007, Nestlé set a five-year target to reduce vehicle fleet CO2 emissions to 130g/km. The plan would have been ambitious enough in favourable circumstances, and uncertain European market conditions arguably made the task even more complex. However, amid growing economic upheaval across the continent, by the end of 2012 the company came nail-bitingly close to delivering the goods.

"We were within a hair's breadth of hitting the target," says Nestlé's global fleet solutions manager Andrzej Sacha, speaking from his office in Geneva, Switzerland. "In 2007, we were at about 180g and we finished last year at 133g. Over a five-year time span, that's pretty good going."

A major contributing factor to the success of the operation was Nestlé's decentralised structure. Sacha sets strategy from a central perspective, but it is the local fleet managers who execute the plans and deliver on them at a country level.

"It's very much a question of setting the direction, getting the buy-in from the market and the senior management, then everyone follows that approach," he explains. "The local guys know their market the most and the best way to achieve the targets we want them to meet."

Sacha inherited his position at Nestlé from a legend in the field of fleet management, Werner Berger, who bequeathed him two mantras: 'You can never overcommunicate' and 'Persevere in your beliefs'. These bon mots have served Sacha well.

"Within the Nestlé environment, because I have no direct influence over markets, the key is very much to keep everyone onboard with the direction and approach that I want to take with the fleet," he explains. "So I do talk a hell of a lot with the local heads of business; I present to all of their quarterly management meetings. For example, I will go to Poland probably in June for the next marketing meeting they have there, then maybe Bulgaria, Germany and Greece, to do the same. This keeps everyone on agenda and abreast of what's going on, to make sure they don't start deviating from what we're trying to achieve. That's where the perseverance is; if you believe in it, you have to keep communicating about it. I even write a blog about this, as a very quick way of communicating."

Driving down emissions

The process by which Nestlé achieved its emissions target typifies how this communication filters down through the organisation's structure. At a central level, the aim was to rationalise the company's car pool, which meant compliance with preferred original equipment manufacturers (OEMs). Over the same five-year period as the emissions target, Nestlé aimed to work with just five OEMs, where previously it used 16 manufacturers around Europe. The company ended last year with 81% compliance with these five suppliers thanks to the efforts of local fleet managers, and the criteria for selecting the five OEMs help to define the company's emissions mission.

"One of the drivers of the RFP [request for proposals] was power-train development and, as a result of this, Mercedes-Benz fell out of our portfolio, because in 2007 they had a very poor power-train footprint, whereas Volkswagen, Ford and Renault each had a very good footprint. That gave us direction and support."

Power-train development generally is moving apace, but for Nestlé it is not the hybrid motor generation typified by the Toyota Prius that is taking centre stage. According to Sacha, hybrids have limited use.

"Everyone keeps talking about the Prius, but it only does 5-10km at a time on the electric side. We've looked at this on a number of occasions and we can't justify the TCO on hybrids at the moment. My personal opinion is that the hybrids are probably not the most appropriate vehicles yet for the Nestlé fleet because a lot of our drivers do quite a bit of mileage as salesmen. It's not so much a 'user-chooser' fleet, more of a 'this is the car you can drive in this country' situation and, in that case, a good, efficient diesel is worth much more to us than a hybrid.

"Plug-in hybrids are looking more and more attractive, and the new Volvo V60 would be a very interesting car to have, but the initial cost of that vehicle at €49,000 outweighs the long-term benefits. Though I'm sure, as time moves on, that equation will change."

Nestlé does have cause to use some electric vehicles, but only for specific tasks in particular countries, another example of the benefits of a decentralised management structure. In France, for instance, a driver might have a tour plan every day because of the autonomy limits these cars have, and they always go back to the warehouse each night to recharge. For Sacha, this is a 'horses for courses' solution but, more generally, it is the evolution of the diesel engine that is making waves.

"In 2007, our carbon emissions were at about 180g/km and we finished last year at 133g. That’s pretty good going."

"If you look at where diesel was ten or even five years ago, the development curve of power trains has been astronomical. If you take Volkswagen's development, for example, CO2 emissions dropped from 160g to 99g two years ago and have dropped to 89g today. It will be interesting to see where this goes next but I think it's starting to flatten out. Manufacturers will start looking at lighter materials and new technology; stop/start for instance knocks off 1-2g when you're sitting at traffic lights."

Developments in automotive technology are not the only factors that have aided Nestlé in the restructuring of fleet management; the focus of some governments in particular on emissions reduction has also played a part.

"Some markets have been very conscious of the CO2 footprint that we have and that has been reinforced by creating shared values within Nestlé itself to become more sustainable," explains Sacha. "We downsized vehicles across the markets, and governments helped with this in some ways. In France, for example, they introduced the CO2 taxation on cars and also personal tax on people driving cars with high emissions."

However, CO2 taxation differs greatly across Europe.

"We've already talked about the French scheme and the UK tax system is probably a little bit more advanced insofar as it is probably disadvantageous for people to use fleet cars, even though it's the second largest vehicle fleet in Europe," Sacha says. "For Nestlé, the UK fleet is much smaller proportionally because people are given the option to take remuneration instead, which the majority of people in the offices do.

"In Eastern Europe, however, these issues are not there. So in Russia, for example, there is no tax on cars and you can drive any monster you like. But my feeling is that when these things begin in the UK and France, they will filter through the rest of Europe."

The other Europe-wide factor to consider is the economic downturn, and Sacha admits that it has had an impact in one way. From a fleet perspective, it means that Nestlé is re-evaluating in certain markets its policy in terms of the models of car provided. "We are downsizing," he says. "So, in Switzerland, we have moved away from the Passats to Golf variants."

The road ahead

Taking Nestlé's decentralised fleet management structure to its logical conclusion, the progression from central strategy to local action is filtering down one more level to the drivers themselves.

"One of the big initiatives for the next few years is looking at safety, health and environment (SHE) in the car fleet, with the aim of bringing down accident rates to zero within the fleet," Sacha explains.

Driven by Nestlé CEO Paul Bulcke, the objective is to focus on the individual driver's awareness of not only the environment at large but his own immediate environment too.

"The driver has up to 20% influence on the environment just with his driving style. The heavy-footed driver has a much bigger carbon footprint than the efficient, environmentally conscious one. So I'm setting up a system of online assessments followed by a one-day training course, then a repeat of the assessment.

"Every country has a different flavour to it, like there are 27 flavours of Kit Kat around the world, but the main objective is to achieve this zero-accident, reduced-CO2 footprint output from what is an asset; let's not forget these are quite expensive assets we are using around the place. I'm putting this in place right now."

Nestle's global fleet solutions manager Andrzej Sacha.