Fleet procurement is an important part of fleet management, yet is one which many fleet managers struggle with. There are probably five main facets of fleet procurement:
- Negotiating skills – after choosing a product that’s fit-for-purpose, it’s essential that managers negotiate “best and final” pricing, terms, and conditions for the ensuing relationship.
- Understanding contracts. Managers must have an understanding of the legal aspects of the contract they are negotiating.
- Managing risk – because fleet procurement is often part of a supply chain, it is important that managers know how to manage the inherent risks to the rest of the company.
- Quick reactions. Procurement must be handled in such a way that it absorbs the basics of whatever specific function it is dealing with, quickly and thoroughly.
- Communication. A critical function, and one managers should particularly work on to ensure that all stakeholders are kept in the loop.
Vern McLaren is director of customer services at FleetPartners, and we asked him for his comments on these five facets.
“Depending upon the size of the organisation, FleetPartners sees many different organisation and role structures in this area,” he said.
“There is the dedicated procurement professional, the manager who is responsible for this activity as a part of a broader range of activities, or the purchasing team.
“The professional procurement executive is most likely to be involved in major contract negotiations driven by an organisation imperative to improving efficiency and reducing costs in a formal structured way.
“To achieve these objectives they will often have strong negotiating ability and legal competence to interpret contracts. Large organisations will have access to specialists for advice. Typically the supply of motor vehicles is stable, therefore, in smaller organisations purchasing teams periodically negotiate better prices informally.
He said outsourcing versus vertical integration of the purchasing function then becomes the decision.
“Historically the vertical integration view was that to gain control of costs and quality (delivery) ‘if you want it done right do it yourself’. In more recent years this has changed to ‘stick to your knitting’ and outsource everything else.
“One danger of outsourcing to a procurement contractor, which will achieve the objective, is that these companies often do not value supplier relationships and intangibles such as access to stock during periods of shortage.
“In New Zealand, where there is limited competition in some industries, this presents an unacceptable risk. In general the old fear of losing control through outsourcing has diminished as the fleet market has matured.
“In the fleet market FleetPartners , which has been organically growing in all respects for more than35 years, is able to offer a highly skilled outsourced supplier partnership, as the name FleetPartners implies.
“Not only does FleetPartners have in-house risk and compliance, and legal counsel, but many of our corporate customers do too, taking finalisation of legal agreements out of the procurement function.
“ Over the last five years the prevalence of RFIs and RFPs has increased markedly, often a prescriptive format supplied from a global parent organisation’s procurement team, and these have changed the landscape.
“They have brought some standardisation, covering format, content, legal and communication.
“FleetPartners has the team and skills to structure a compelling response, recommending and negotiating third party supply of a diverse group of products from motor vehicle, fuel and GPS to achieve a competitive advantage with goal congruence and most importantly a supplier partnership.
“By outsourcing to FleetPartners our customers obtain direct access to up to date specialist fleet and fleet management knowledge that resides in the business and is delivered by experienced relationship managers”.
