Avis Budget Group Generated $65 Million in Savings from ‘Performance Excellence’ Initiative

Avis Budget Group announced in a Jan. 20 press release details of the ways that its “Performance Excellence” process-improvement initiative contributed to the company's financial results in 2011, including its record levels of adjusted EBITDA in the first nine months of the year.

Working closely with all facets of the organization, the Performance Excellence, or "PEx," team applied tools such as Lean and Six Sigma on more than 500 different project deployments in 2011. These projects focused primarily on enhancing operational efficiency, driving incremental revenue, reducing fleet depreciation and fleet maintenance costs, and improving the Avis and Budget customer experience. In total, the PEx initiative helped generate more than $65 million of cost reductions and revenue enhancements in 2011 compared to prior-year results.

"We are delighted not just with the stellar results achieved by our PEx initiative, but also with the way our entire organization has embraced Performance Excellence as a powerful means to improve operational efficiency throughout the company," said David B. Wyshner, senior executive VP and CFO. "We are confident that our process-improvement efforts will continue to help us identify ways that we can serve our customers better and at lower cost in 2012 and beyond."

The company has begun to apply process-improvement tools and proven best practices to its newly acquired operations in Europe. On a global basis, Avis Budget Group expects that PEx will help generate incremental benefits of more than $45 million in 2012 compared with 2011, primarily through replication projects that represent the greatest opportunities for cost savings.

Key Performance Excellence projects in 2011 included:

Fuel Accountability: This project successfully identified a number of areas where the company's more than $150 million of annual gasoline costs could be reduced and also implemented tools to reconcile gallons charged on rental agreements versus gallons pumped, allowing managers to better control gasoline costs. To date, this project has been replicated at dozens of airport locations.

Yield Management: This project has helped the company's regional operations, yield and pricing departments take greater advantage of proven yield-management methods and revenue opportunities to increase profitability.

Local Market Ancillary Sales: This project sought to close the gap in sales of the company's ancillary revenue products and services that existed between airport locations and local market locations. The project looked at training programs, tracking and sustaining procedures, differences in sales processes, policy and procedure differences, and dedicated manpower to arrive at a plan that ultimately proved successful, and will be replicated system-wide beginning in 2012.
 
Shuttling Efficiency: The PEx team drove significant cost savings by enhancing operational efficiency in the movement of fleet vehicles between rental locations and maintenance facilities by establishing standardized routes, developing analytics for each location to minimize 'over-shuttling' and implementing a GPS-based tracking system for all shuttle crews.

Preventive Vehicle Maintenance: By determining the optimal preventive maintenance plan for each fleet vehicle make and model, PEx achieved cost savings in a number of areas including increased warranty recovery, reduced oil change and tire expense, and lower de-fleeting costs, while at the same time bringing about a reduction in maintenance-related customer complaints.

"Our pipeline of opportunities remains full, and we anticipate launching approximately 500 or more new or replication projects globally in 2012," Wyshner said. "We have taken steps to solicit more process-improvement ideas from rank-and-file employees in addition to those submitted by management, as we continue to see that people who are closest to aspects of our business in need of improvement are well-suited to bring these opportunities to the attention of the PEx team."

Avis Budget Group launched its Performance Excellence initiative in late 2007. Employees began referring to successful process-improvement efforts as "PEx-ing" in 2008, and the overwhelming success of the initiative was later recognized by the Global Six Sigma Improvement Awards, when Avis Budget Group won Best Organizational Achievement in Lean Enterprise Improvement. Since its launch, Avis Budget Group's Performance Excellence initiative has generated more than $250 million in annual benefits.

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