02 Sep How Company Car Fleet Operates as an Enabling Function in a New Strategic Era
Over the past decade the corporate support function has begun to play an increasingly important role in the strategic requirement of an organisation. Prior to this change in emphasis, support services would do exactly that: support the organisation in the day-to-day transactional types tasks that made the wheels turn. Finance would manage the accounting, process the invoices and ensure the business got paid. Human Resources would deal with the myriad employment issues inherent in complex organisations and manage recruitment and retention, whilst large organisations would also employ a fleet department to manage the company car fleet and keep their people mobile.
As market dynamics change, competition intensifies through the emergence of disruptor brands and technology increases consumer expectations, organisations are looking at how support functions can add more value and play a more strategic role; becoming enabling functions that add more and deeper value to the organisation.
Strategy& from Pwc looked at the reasons for this change with interesting results, suggesting, among others, the following:
- Innovative new companies are emerging which force massive changes in the competitive landscape. Organisations need to respond with greater flexibility and agility
- Companies are following the principle of the “coherence premium”: the competitive advantage of only doing a few things but delivering them exceptionally well. Everything within the business is being brought in-line with the core capabilities. The support functions are becoming critical enablers of competitive differentiation.
- Outsourcing and process improvement has resulted in routine tasks becoming slicker, freeing up resources for more strategically focused activity which makes the organisation more competitive.
As many fleet departments have been lost to outsourcing activity and the responsibility for fleet has been absorbed by HR, finance and/or procurement the enabling capabilities of company car fleet may not now be as obvious as marketing or IT. However although it may be an outsourced activity, an efficiently run car fleet can still provide robust strategic support and assist in developing much sought-after competitive advantage.
Car fleets enable a business to carry out the 3 S’s necessary to grow a business and deliver long-term growth
Many businesses could not function without boots on the ground, and although technological advances mean less time travelling and more time skyping, human contact and personal service still rules and transportation is always necessary.
At the very least the car fleet needs to offer basic reliability to the workforce. The fleet needs to be modern, maintenance free and fit for purpose. If issues occur then systems needs to be in place to ensure smooth replacements, minimising downtime and ensuring no disruption to the customer. The fleet needs to meet the demands of the job and add value to the reward package offered to prospective employees.
Car fleet is a huge contributor to an organisations duty of care toward employee wellbeing. A well organised and correctly specified car fleet provides a more controlled environment for the employee, assisting safety, comfort and productivity. As the fleet supply chain exists to manage the vehicle and support the driver it also removes the personal burden of responsibility for the upkeep of the vehicle, allowing the employee to be free from the distractions and compromises of personal car ownership.
Driving the right type or vehicle adds to the strategic value of the brand building efforts of the business. The vehicle needs to reflect the brand image and personality that the business is projecting. Sports cars may be desirable to the employee but if they contradict the understated, professional and level brand image that is being communicated then the customer may be left confused about the brand and its real values.
Recruitment & retention
Exciting car choice can act as a powerful recruitment enabler. Many mature businesses struggle to match the car reward offered by niche operators on a pound for pound basis. Niche and disruptor brands are known to offer company car reward in the 95th centile, causing issues for many businesses trying to compete in a shrinking employment market. Introducing smart car fleet policies can help companies improve their car value without increasing their investment, actively assisting the recruitment and retention efforts of the organisation.
CSR – ESOS obligation
Under ESOS regulation companies which are classed as “large undertakings” need to identify their total energy consumption and recommend their energy saving opportunities. As this includes transport, having a well managed and transparent car fleet means this obligation can be met and the subsequent CSR value is maximised.
Grey fleet challenges
Making business journeys in driver-owned vehicles can challenge all the hard fought for strategic gains made by organisations. It is estimated by Energy saving Trust that there are 4 million Grey fleet cars in the UK and in the public sector the use of grey fleet is actually the norm, not the exception. Using grey fleet invariably means older vehicles, that are less reliable, less efficient and from a hugely diverse mix of manufacturer and model. Using a managed car fleet removes all the challenges intrinsic to a grey fleet and affords far greater control over the ability to use it as an enabling function.
Company car fleet management has progressed hugely over recent years and has much to offer a progressive and ambitious organisation. When operated efficiently, the company car fleet is a valuable enabling function, providing support to business growth and adding strategic value in many areas.Back to Blogs Back to Case Studies List