Fleet buying explained

I have spent more than 50 years in the fleet industry and during the last decade or more have become increasingly concerned at the decision of many organisations to axe the post of fleet manager. The traditional fleet manager is now rare and with their passing, employers have lost the knowledge and skill necessary to deliver a cost effective fleet operation. Consequently, there is a real need to reintroduce into the fleet management process individuals with a clear understanding and the necessary skill and knowledge to deliver a professional approach.  
   
I accept that the fleet industry, just like any business sector, must continue to evolve and change.

However, for those employees now taking on fleet management responsibility it is important that all aspects of running the operation are properly understood and standards maintained. The goal for every professional fleet manager should be to implement a sustainable performance programme in all areas of managing the driver, vehicle and journey.
   
The costs involved with running fleets are enormous, second only to staffing costs in most organisations. However, understanding the intricacies of fleet management is a discipline which, sadly, very few organisations properly grasp. That became increasingly apparent when I was running Fleet Support Group. Discussing the issue with colleagues who are all highly experienced, full-time professional fleet managers it became apparent that they were also concerned at the demise of the role across all business sectors.
   
The outcome is the launch of the Fleet Industry Advisory Group (FIAG), which is aimed at developing and sharing best practice among fleet decision-makers while simultaneously raising money for Hope for Tomorrow, a national charity dedicated to bringing cancer treatment closer to patients’ homes by providing a mobile chemotherapy unit to every oncology unit within the UK.

Careful decision-making
There is no single formula to tackling a fleet issue, but through networking, communication and a hugely knowledgeable base of founder members our intention is to ensure best practice is shared and adopted more widely.
   
One area of concern in terms of fleet decision-makers getting it right is the purchasing of vehicles, fleet services and related products. That is why FIAG’s first workshop, held in Spring, focused on procurement best practice. Too often the purchasing process conducted via a tendering exercise can be totally inappropriate, ineffective and almost a charade.

However, when undertaken carefully and involving all key stakeholders in the tendering process it then becomes the cornerstone of the subsequent contract that will define the long‑term efficiency and effectiveness of the fleet operation. Indeed, partnering efficiently with a range of fleet suppliers is the secret to keeping operating costs in check, while continuing to drive through efficiencies that will make the business as a whole function more effectively.

Business relationship
Making sure that the customer-supplier relationship that develops following a tender process works well throughout the duration of the contract is not just about getting right the words and numbers in the agreement. It is also about developing a strong working relationship and genuine rapport with each and every supplier necessary to achieve strategic corporate objectives.

The key to a successful fleet purchasing process is to define what is required, commercially and functionally, from potential suppliers while ensuring that very best value for money is obtained. However, do not confuse value for money with price. When making procurement decisions too many people focus on price when greater consideration should be given to intangibles such as value added service delivery, account management and product innovation if a successful long‑term business relationship is to be formed. A tender process undertaken properly will guard against incumbent supplier complacency and provide all stakeholders of the company going out to the market with firm reassurance that the process is taking their particular interests into account.
 
Tender documents
Typically tender documents when issued to potential suppliers fall into four categories: documents that are concise, to the point and generally first class; those that are vague having probably been written by people with little or no fleet knowledge; those that are written by external consultants engaged for the specific exercise, which are so often unnecessarily complicated; and those that are simplistic generic documents that are used for general purchasing that are totally inadequate for the job in hand. Therefore, it is vital that fleet decision-makers clearly identify their requirements and establish the criteria.
   
However, in ensuring compliance and value is achieved, it is critical to involve other key internal stakeholders in the procurement process. Depending on the size of the organisation this could include input from departments such as: procurement, finance, HR, legal, health and safety and environment.
   
Such an approach ensures the procurement process is both well-run and has a clearly defined and auditable tendering objective. But too often, particularly, if the fleet decision-maker is inexperienced or fleet is not their full-time job role, the purchasing decision‑making is unduly influenced by colleagues from other departments. This can result in a lack of clarity in terms of what is required from suppliers because those making the purchasing decisions do not necessarily understand the complexities of fleet.
   
Clarity
Specification clarity within the tender document is therefore essential, but too often, challenges have to be made by suppliers. Ultimately this can mean that the specification has to be rewritten so that those on the supply side can deliver what it is that companies actually want – once that has been determined.

In short, if bidders come back with numerous questions it clearly highlights poor tender drafting and a failure to understand the needs of potential suppliers. However, where fleet expertise and knowledge is thin on the ground, businesses should beware of simply setting out the status quo in service specification terms and asking tenderers to price against it. Using the ‘it’s always been done that way’ approach can be very costly in today’s fast moving world. 
   
A better tactic in such situations would be to fully explain the existing fleet arrangements and the desired outcomes of the exercise and to request detailed proposals from tenderers for delivering an effective solution or range of solutions. This will test the listening skills of tenderers and their ability to bring targeted added value to the business in terms of service and/or cost.
   
All too often tender documents contain a little bit about the fleet and the fleet policy and a lot about a company’s purchasing strategy, which appears to be the same whether those making the decisions are sourcing for fleet or any other corporate requirement such as office stationery.
   
However, it is vital that a company’s procurement department provides technical support and ensure that the purchasing process from start to finish is managed against corporate compliance procedures. To ensure that ultimately the right purchasing decision is made and the right supplier appointed it is important that: the organisation issuing the tender has a high level of market place knowledge so the right suppliers are asked to tender; potential suppliers tendering for fleet business have knowledge of the organisation; an understanding of the fleet set-up and the objectives of the exercise; and that there is a cultural fit between the parties.

This soft aspect is so often overlooked, but it is so important that a good fit exists from day one of what will often be a long term relationship.

Value
Too frequently, price is the dominating issue in tenders when the real focus should be on how a potential supplier can add value to a fleet through service delivery and innovation against a continually evolving transport and travel operation managed in a constantly changing tax and legislative environment. It is also clear that tenders are not a defined area and can result in a long drawn out and convoluted process involving too many people – and sometimes the wrong people leading the way and making the critical decisions.
   
In reality fleet managers should write the purchasing specification/operational requirement; procurement should then focus on ensuring value and compliance with the specification/requirement; and finally fleet managers should implement and be responsible once the decision is made.
   
While the product or service must be right for the fleet and the business, people ultimately buy from people because there is trust between them. If a relationship cannot be built on trust in the first instance then this could result in a recipe for operational disaster.

FURTHER INFORMATION
www.fiag.co.uk