17 Jun Why You Need Total Fleet Category Management by Graham Rees, Director, Fleetworx
In the 21st century the pressure on businesses to focus on their core activities is immense. Shareholders want to see double-digit returns in an ever more competitive global marketplace, and executives charged with delivering this need to become more and more focused on building the top line, whilst reducing the operating costs. Something has to give and it is usually the ‘non-core competencies’ that do so.
One of those non-core competencies is vehicle fleet. Now I wouldn’t say that, from a global perspective, many businesses manage fleet particularly effectively, as they might, for example, manage a streamlined and centralised function such as procurement. However, at some point, many companies would have had competent local personnel with a reasonable local fleet market knowledge operating in regional territories. This team would have overseen the local policy development and supply chain, balancing the commercial and human aspects with the greater business interest.
Unfortunately, these functions are fast disappearing, leaving behind a vacuum into which chaotic policies and practices flood. And if you add self-serving outsourced lease providers into the mix, we can see that this quickly becomes a vast pool of unchecked and uncontrolled spend.
Creating a solution to this problem becomes a challenge for organisations with a keen focus on reducing headcount. Especially those where core functions have been centralised for efficiency, and operate in silos with their own very different priorities. Nevertheless, this is a necessary step if the interdependent aspects of fleet are to be properly structured and controlled: we call this Total Fleet Category Management.
What is the ‘Fleet Category’. Well, put simply, it is any of the following aspects that influences or is influenced by your vehicle fleet:
- Supply chain
So, from ‘company car eligibility’ through to the cost of a car wash and everything in between. Everything has an impact. And every cost has a human impact, whilst every human impact has a cost: everything is interdependent. This is why it is so vitally important to manage this category holistically – hence ‘Total Fleet Category Management’.
Quality information is the bedrock of holistic category management. It stands to reason that you need to understand the status quo before you can quantify the value or cost of making changes; whether that is policy or supply chain, the principle remains the same. In order to create quality information, you need to apply knowledge and intelligence to good data. The knowledge and intelligence can be a challenge for many businesses who have long since outsourced their fleet competencies to the lease suppliers. Whereas comprehensive data may well be available from the suppliers, or from internal stakeholders within your business if you ask the right questions, the resources to collect this and the repository to hold it all together will likely create additional challenges.
More likely the route to Total Fleet Category Management will lie externally, with specialist suppliers; these suppliers providing the necessary expertise, systems and resources. More than this, an external supplier can help you operate more effectively in a siloed organisation; providing the coordinating function between country and competency components of your business – effectively ‘project managing’ all of the necessary fleet evolution and change functions, without the need for specialist resource in your business.
Quite simply, as an international business with a vehicle fleet across several markets, if you fail to manage your car fleet holistically, you will likely haemorrhage cash and end up with a policy free-for-all.
Alternatively, if you adopt the ‘Total Fleet Category Management’ principle, you can achieve a coherent, harmonised and disciplined policy, contain costs and have the best chance of making the right informed decisions on policy and supply chain alike.Back to Blogs Back to Case Studies List