Prolonging product lifespan as far as possible

The Michelin Fleet Solutions offer is designed for large fleets of at least 200 trucks or buses, which are willing to transfer to Michelin the management of their tires. This service is based on an original business model: in most cases, instead of buying tires, our customers purchase travel mileage.

The concept originated in France and the United Kingdom in the 1920s. Motor vehicle fleets were used in France for testing new tires. Michelin’s technicians dismounted and remounted tires on a regular basis to monitor the wear of tires and provide useful technical feedback to our Research Center. To ensure that these frequent interventions interfered as little as possible with the customer’s business, Michelin remained the owner of the tires, which technicians would replace if need be, and only usage would be invoiced. In the United Kingdom, in a context of rubber shortage, Michelin also offered bus companies to invoice its tires on the basis of mileage traveled. Today, Michelin has transformed this concept into a full service offer and taken the model to the rest of Europe and North America.

An all-inclusive service

In concrete terms, once the contract has been signed, Michelin looks after everything: from tire selection and supply, stock management, organization of maintenance, replacement and management of end-of-life tires, to administration, reporting, and coordinating between the customer’s different bases.

Invoicing is straightforward: based on a rate agreed for each type of vehicle, Michelin invoices the number of miles traveled. A contract is entered into by the parties for a period of 3 to 6 years. As such, each party is committed on a long-term basis.

Customers optimize their resources

The Michelin Fleet Solutions service offers customers numerous advantages, which translates into real savings:

- Vehicle mobility is optimized by maintenance tasks being scheduled so as to limit the vehicle’s downtime; constant monitoring of tires significantly decreases the number of breakdowns and increases transport safety;

- As tire usage adheres closely to operating parameters specified by its designers, the tire actually reaches its optimum fuel-saving potential;

- Since fuel consumption related to tires can represent up to 35% of the vehicle’s total fuel consumption, the importance of the right choice of tire and a good maintenance service is clear: certain customers make a fuel saving of 2% to 6%, roughly equivalent to their tire purchase budget!

- Invoicing per mileage means that tire-related expenses become variable costs dependent on activity and thus allow better budget control;

- Finally, by delegating their tire management to Michelin, customers can focus on their core business, while being sure that they are optimizing tire-related costs.

A proven drop in CO₂ emissions

At the “Grenelle de l’Environnement” round table organized by the French government in June 2008, Michelin demonstrated that for a given fleet of buses, this service allowed a saving of 126 liters of fuel and enabled 330 kg of CO₂ emissions to be avoided per year per bus, thanks to retreading, in particular. A survey by Ernst & Young confirmed this environmental benefit.

Replacing products with services

Almost a century after its creation, the Michelin Fleet Solutions offer now corresponds to a model called “functional based economy”. Here, the interests of all parties converge toward increased product lifespan. This common interest prompts us to come out of a quantitative logic and to go toward the sale of know-how and a service rather than goods. To achieve this result, a highly efficient organization must be implemented, one that enables us to manage the tires of over 300,000 vehicles, and coordinate the 800-strong Michelin staff dedicated to this activity and the 3,500 partners.

An exemplary model for sustainable economy

The Michelin Fleet Solutions model pushes for product lifespan to be prolonged as far as possible. It reduces fuel-related expenses as well as emissions of conventional pollutants and greenhouse gases; it guarantees the recovery of end-of-life tires and contributes to greater safety and improved availability of vehicles: it really is a model for sustainable economy! Building on our experience in Europe and North America, Michelin is now working towards extending the offer to new continents and other market segments, and several experiments are currently underway.

Categories: Sustainable mobility - Vehicles

Keywords: Tires - Transportation