By Janice Sutton
Partha, we know that managing the vehicle supply chain process is very complex. What is ARI’s approach to the process to insure that you meet, even exceed, your clients’ expectations?
At ARI, we provide a full suite of services encompassing every aspect of the vehicle supply chain process. It starts with evaluating a fleet’s vehicle specifications in tandem with the business’ goals and objectives. We then work with our OEM and upfit partners to process and facilitate production to ensure a road-ready vehicle is delivered on time and ready to go.
But that is not the end of the relationship for us. We continue to work with our clients, helping them to evaluate when that vehicle is no longer delivering value for them. When they decide to cycle that vehicle out of their fleet, we leverage our extensive auction network and virtual platforms so they earn the best return possible when it is remarketed. We call our approach “end-to-end” or “E2E” supply chain management. Having that end-to-end process and management of the entire supply chain management process gives ARI a significant advantage in the marketplace as compared to our competition.
It’s important for fleets to understand that the supply chain process is very complex. There is a multitude of process steps to acquire a vehicle, deliver it and ultimately to dispose of it. At ARI, we have established over many years very close and productive relationships with nearly all key vendors, from our OEM partners for the acquisition of vehicles; to our upfit partners, who help create the right vehicle for your business; and finally, when it comes time to dispose of the units, the major auction players in the remarketing industry so our clients get the best possible return on their investment.
At ARI, we don’t take sides – we have partnerships with many different providers, which give our clients an additional advantage. One simple example is the remarketing industry. There are many different independent auctions as well as several major chains, and we work with all of them in order to create a comprehensive network and productive relationships to make it possible to offer a full set of remarketing solutions for our clients. For some fleets, one vendor may make sense. But more often than not, in today’s modern marketplace sticking to one vendor may not make sense. We try to find the right vendor or set of vendors that best fit the client’s needs, depending on what their fleet is comprised of and what their most critical business needs are.
What kinds of problems has your end-to-end process solved for new customers who come on-board with ARI?
I’ve found that many of our new fleet customers have had multiple partners and people involved in the supply chain process at the same time, and have had painful problems when there are handoffs from one to another. When a fleet comes to ARI, our start-to-finish process (or E2E approach) eliminates those kinds of issues.
Another thing that works for our clients is our focus on proactive communication. When we see the possibility for problems to arise, we don’t hesitate. Instead, we get out in front of whatever may be happening and work to develop alternatives that either solve the problem or keep them from happening at all.
Does your approach help reduce your customers’ total cost of ownership?
With new customers, we have found that their prior total cost of ownership (TCO) can vary greatly. By converting to our end-to-end approach, we have seen that the TCO can drop dramatically from anywhere from as little as 5 or 10 percent to upwards of 40 or 50 percent, depending on their circumstances. Typically, where we see this is with a fleet that had been buying vehicles off a dealer’s lot. We call them stock purchases. We work with them to transition them toward factory ordering, which can save them a lot of money in their acquisition process.
We can also return greater value for fleets on the backend when it comes to the disposal of their units. Typically, if they had managed the remarketing process themselves they may have known a local resource that did the disposal for them. With our national reach and strategic partnerships with key auction partners, we can often help our clients to realize significantly better returns on their vehicles, and that in turn drives their TCO down.
A number of market observers have said there’s been an increase in the supply of used vehicles that is driving prices down. What is ARI’s forecast is for used vehicle prices over the next six to eight months?
ARI has been looking at this issue of resale values over the past couple of years because we, too, see that wave of used vehicles coming into the marketplace. It is a concern not just for us, but for our clients as well.
There are a number of different strategies that we have employed to try to minimize that risk for our clients. One has been to drive as many buyers to the marketplace as possible. We have taken some key steps to make that happen. Over the past year we have cut the number of auction partners roughly in half. The reason for doing that is to really create more of a brand presence at our remaining partners. As a result, we get more volume through fewer auctions and that drives more interest in the brand and creates stronger brand awareness with our buyers.
To supplement our presence at traditional physical auctions, we also employ 14 virtual auction platforms. Because of that, we get more eyeballs out on our inventory, more interest in the vehicles we have to sell, and typically higher resale prices
Looking forward, we do expect to see pressure on prices as a result of the increasing supply. But key strategies we have put in place should mitigate the impact of that price pressure for our clients.
What are you advising clients about hybrids and electric vehicles right now?
We take a client-centric approach. In other words, if hybrids or electric vehicles make sense for your business and fleet then use them. It really depends on what the needs of your business are and how the vehicle will be used. For example, if your organization is focused on fuel conservation and ensuring you are demonstrating your commitment through your choice of fleet vehicles, then yes, it makes sense. If you are really concerned, however, about towing capacity or other requirements, hybrids might not make sense. Companies need to decide what makes the most sense for their business requirements and make decisions that provide the best results for their fleet.
As I mentioned, at ARI the focus is really on the client and what their fleet needs are. We try to work closely with our clients to determine what those needs are so that we can help them make the best decision.