Centralised solution gives Pfizer a ‘change-agile’ and efficient global fleet

Who better to turn to when planning the radical restructure of your European fleet operation as a centralised, outsourced solution than an experienced former managing director of a fleet management company?

Ivor Johnson, ex-MD of Fleet Logistics and operations director at Leasedrive Velo, joined pharmaceutical giant Pfizer in 2008 as European regional fleet lead, bringing substantial knowledge of running outsourced operations on behalf of fleets.

His brief was to establish a “high performing” fleet function which served the needs of both benefit and job-need company car drivers.

Initially, the fleet team had been responsible for the operations associated with fleet management, excluding procurement.

This subsequently changed, bringing all aspects of fleet under a single category team, responsible for policy and governance, supported by local procurement colleagues who play an important role in implementing strategy.

Global role

Johnson’s role evolved over the ensuing 14 years, as he moved into a global fleet position and then, more recently, assumed responsibility for the wider category, including market policy, governance strategy and policy execution for 75 markets and a fleet of around 14,900 vehicles.

He leads a global team of fleet professionals and is also responsible for the general management of Pfizer’s two captive leasing operations, which fund 3,500 vehicles.

The fleet typically operates on a 48- to 60-month replacement cycle with funding divided equally between leased and purchased. Included in the purchased fleet are the captive leasing figures which account for 40% of the European assets.

The latest changes to Johnson’s duties came as a result of the creation of the global centralised team which serves all markets through an optimised outsourced supply chain that manages the day-to-day fleet operations.

“The move to a fully centralised model was possible due to market changes in the way we work, allowing for more digitalisation of policies and processes,” Johnson, now global fleet services senior director, explains.

“It took a year of planning and hard work to execute. As a result, we now have a smaller, more change-agile team that is better able to meet the needs of our clients.”

The captive leasing hub was created to give Pfizer greater flexibility in meeting its evolving requirements, while leveraging its strong balance sheet.

“The hub provides us with the means to adapt the operating lease contracts with minimum penalties for changes,” Johnson says. “It also enables us to leverage the risks and rewards of an efficiently managed fleet and gives improved cost transparency.”

The global and UK fleets have been through dramatic consolidation over the past decade. Johnson joined a business with 26,000 vehicles across the world, a figure which swelled
significantly to 34,000 a year later with the acquisition of Wyeth.

Drivers opt out

Since then, changes in the business model have more than halved the fleet. In the UK, those changes in working practices, combined with a high proportion of benefit drivers deciding to opt out of the company car scheme, have resulted in an even more rapid contraction from 2,400 to 350 vehicles. Johnson says:

“Most drivers opting out of the company car scheme do little or no business mileage.” 

He is investigating salary sacrifice and may introduce a scheme in the future. For now, anyone who does drive a personal car for business purposes must meet policy mandates relating to vehicle age (less than seven years), maintenance regime and insurance.

“Drivers are sent an online annual declaration form by our global risk management company and are required to upload a copy of a valid insurance certificate for compliance purposes,” Johnson says.

“They are also required to agree to a licence check, normally via an online portal.”

Pfizer operates a global policy which provides a framework to help formulate local country policies and is co-owned with colleagues in the ‘People Experience’ team (human resources). This approach provides consistency, ensuring the business operates its fleet to common standards, and the necessary governance of the purchasing strategy and operating standards.

“Our purchasing strategy has not really changed in the past 10 years. We continue to consolidate the number of brands around the globe to enable us to leverage our size,”
Johnson says.

“The reduction in fleet size has been countered by a cut in suppliers, effectively maintaining the number of purchases per supplier.

"In Europe, we operate four brands and have total compliance, similar to our two largest fleet markets, the US and Japan.

“Elsewhere, the supply is a little more fragmented as we are required to work with additional brands to meet demand.”

Annual review

Operating standards are reviewed on an annual basis in conjunction with its fleet management company to align with recognised market practices.

Johnson’s global remit enables him to be at the forefront of market innovations and project initiatives which can be lifted and shared with other countries.

A notable example was an enhanced vehicle safety equipment pilot in the US which showed a return on investment during the vehicle lifecycle from a reduction in incidents.

Included within the test list were automatic emergency braking (AEB – forward and reverse), front crash warning, reversing sensors/camera, adaptive cruise control, blind spot monitor, lane-assist and driver attention monitor.

The policy is now being rolled out to other markets.

“In the UK, many of these features are standard specification, but, when compiling our vehicle selection lists, we take into account vehicle safety features,” Johnson says.

“Drivers are typically permitted to add approved options up to a fixed limit and many of these are safety-related.”

Four key pillars

Safety is one of Pfizer’s four key pillars, sitting alongside sustainability, colleague satisfaction and total cost of operation (TCO).

The business has operated a global fleet safety programme for the past decade, owned and managed by stakeholders in environment, health and safety, and supported by the fleet team which provides key data including miles travelled and accident frequency/type.

“The programme provides a risk rating based on colleagues’ driving histories, tracking events as and when they occur, and including changes in licence status. Based on the risk rating and the events, colleagues are allocated virtual training,” says Johnson.

“Quarterly performance is tracked via data feeds from our fleet management companies.

"Pfizer participates in a benchmarking group to establish our performance against peer companies using accidents per million miles driven.”

Accident rates

Over the past four years, global accidents as a percentage of fleet size have been between 15% and 17%, while in the UK, they are 12-15%. The exception was 2020 when the numbers were lower (12% and 7% respectively, mainly due to reduction in mileage during Covid lockdowns).

According to Johnson, while the four pillars remain as relevant today as when he joined the company in 2008, the focus has shifted to put greater emphasis on sustainability.

Pfizer is targeting carbon neutrality by 2030 and the fleet, which represents 8% of its Scope 1 and 2 emissions based on a 2019 baseline, has an important role to play.

In 2021, Pfizer launched a pilot programme for electric vehicles in the UK as part of a wider programme to evaluate sustainable fleet solutions. Its goal is to cut emissions through optimisation of the fleet, selecting the most appropriate vehicles and technology.

It has established a glidepath which will result in a 25% reduction in Scope 1 direct emissions from the fleet by 2025, as it aims for net zero carbon by 2030.

“This will be achieved, in part, by a switch to alternative technologies, for example battery electric vehicles (BEVs),” Johnson says.

“We are in the process of running seven BEV pilots in Europe, including one in the UK, which has already launched.

"Based on the results of the pilot, we will then look to roll out BEVs across the globe during 2023, based on market readiness.”

No plug-in hybrids

Note the emphasis on full electric and not plug-in hybrid vehicles.

Johnson explains: “We made the decision not to include plug-in hybrids, preferring to move directly to full BEVs instead. We were not convinced the technology would help towards Pfizer’s sustainability goals.

“We carried out detailed modelling in two markets and had practical operating experience of running a dual fuel fleet in a third market. The results did not support plug-in hybrid electric vehicles.”

Initial findings from the pilots have persuaded Pfizer to revert to a multi-brand choice list due to the inability of its preferred suppliers to meet demand because of the global
production issues.

The company is also working with its fleet suppliers to address Scope 3 emissions, encouraging them to adopt approved and published science-based target initiatives (SBTi).

While sustainability and the green agenda have consumed a substantial amount of Johnson’s time over the past couple of years, he remains fully committed to minimising total cost of operation. Johnson says:

“The strategy for TCO has been to try to keep the fleet operating costs in line with inflation.” 

“This has been achieved by optimising our purchasing policy, regularly reviewing our policy/vehicle selector lists and adjusting operating practices to reduce cost. Examples include the lease hub (captives) and switching to pay-on-use maintenance.”

While the UK is a mature market with much to teach other countries about efficient and effective fleet management, one area where it lags is the adoption of mobility services.

Johnson, who last year was inducted into the Fleet Europe Hall of Fame, concedes that Pfizer is “very much in our infancy” when it comes to the integration of alternative mobility solutions.

However, it is conducting a pilot project in the Netherlands where employees receive a mobility allowance for a company car or an alternative form of transport.

It is also running a battery electric bicycle scheme in Belgium which has seen strong take-up by the workforce.

“This now out-numbers the company car scheme, with more than 800 battery electric bikes on the road,” Johnson says.

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Johnson on... immediate fleet challenges

Vehicle supply, as for every business, remains a major headache for the Pfizer fleet team.

“In the short- to medium-term, the biggest challenge we see is the supply chain for new cars and parts, which is presenting numerous problems around the world,” Johnson says.

“We are trying to address this by extending the operating cycle of our vehicles (where appropriate), bringing forward new car ordering to mitigate the longer lead-times and considering expanding our list of preferred vehicle manufacturers.

“Another challenge is achieving a cost-neutral and more sustainable fleet, as the switch to BEV is expensive.

“The current supply chain issues are exacerbating the situation with increased demand driving up costs and reducing competition. We expect that advances in battery technology, manufacturing and improved supply over the coming years will help in addressing this problem.

“Finally, we will likely adapt our policies to recognise new ways of working within Pfizer and greater product reliability with more simplified electric drivetrains giving scope to extend operating cycles.”