By Mark Boada, Senior Editor
When it comes to running a fleet of vehicles, what’s the best way to save a business money: spend as little as possible on the goods and services the fleets need to operate, or to run the fleet so it operates at the lowest overall cost?
If you answered “both,” Bingo! That’s the view from the top of the industry, but it’s not always the way fleets are run.
Over the past 10 to 20 years, those in charge of purchasing have gradually gained leverage over fleet management. The reason is clear: fleet has long been seen as an overhead expense, and in an increasingly competitive world, controlling costs is one of the keys to survival.
But, as many a fleet veteran will tell you, sometimes a primary emphasis on cost-cutting can be a false economy. For example, one vehicle that costs more than another to acquire may be more fuel-efficient, cheaper to maintain and repair and safer, or to simply help the fleet driver do his or her job more effectively. Or a service supplier whose fees are more than another may offer a higher level of service that saves the fleet department and its drivers time, prevents accidents, does a better job at recovering losses or is more creative in solving emerging challenges.
The fact is, however, that the shift toward procurement taking precedence over fleet is not going away. It’s the new paradigm, because it’s been proven to have visible success. In fact, part of the trend has involved the downsizing of the fleet department, in some extreme cases, to just one person whose job it is to manage suppliers who run the fleet entirely, and that someone hasn’t necessarily risen through the ranks of fleet and is steeped in it.
What’s needed, however, is for a merging of the perspectives of procurement and fleet. Fleet needs to be more sensitive to the notion of saving on fleet spend, and open to the creative ways procurement can find to accomplish that. Procurement, on the other hand, needs to gain a deep understanding of the methods by which vehicle total cost of ownership can be maximized.
In other words, fleet managers and procurement professionals need to wear their own and each other’s hats. But how can they pull this off, when they’re so busy? One suggestion here is that they start by tuning in to NAFA Fleet Management’s latest webinar series, “How Fleet Links with Procurement in the Supply Chain.” It was launched last month as two-one hour sessions, and is available through NAFA as a podcast. Topics covered are:
- The changing role and relationship of fleet and procurement specialists.
- Evolution and steps involved in Strategic Sourcing/Procurement.
- Stakeholder responsibilities (fleet, procurement, finance, user departments, environment, safety, etc.).
- Category Management and Supplier Relationship Management.
- Procurement decision factors and selector process.
- Negotiating and decision-making – the debate.
- Resources for career/knowledge development.
- Impact of “Disruptors” – sharing economy, sustainability and succession.
The fleet industry is facing the most dynamic era of technological and process change in its history. Fleets are going to be forced in the near future to make more fundamental decisions than they’ve ever been asked to make before, about transitioning away from the internal combustion engine, about advanced driver assist systems, how to monitor and change driver behavior, and how to transition from fleet management to mobility management.
To make the right decisions is going to require a much wider range of expertise and perspective than either fleet or procurement professionals have traditionally focused on. More than ever, to succeed they’ll need to be partners over the rest of the 21st century.