PROCUREMENT EXPERTS AND OTHER STAKEHOLDERS HAVE KEY ROLE TO PLAY IN FLEET SUPPLIER APPOINTMENTS, FINDS FIAG WORKSHOP
Fleet managers and procurement experts must join forces with other stakeholders in their businesses to secure the best terms for their organisations when appointing suppliers of vehicles and related services.
The key to a successful fleet and supplier long-term business partnership is to define what is required from potential suppliers, commercially and operationally, while always ensuring that very best value is obtained. That was the over-riding message from the Fleet Industry Advisory Group’s Spring Workshop – its third fleet decision-maker workshop since the organisation was launched last year.
Since launch the Fleet Industry Advisory Group (FIAG) has not only recruited fleet decision-makers to its membership, but employees with fleet responsibility working in procurement, finance and HR positions.
Entitled ‘The Role of the Supplier in Supporting the Fleet Manager’, the workshop was sponsored by Enterprise Rent-A-Car and held at the company’s Training Centre in Egham, Surrey.
FIAG was launched by industry veteran Geoffrey Bray and a team of highly experienced professional fleet managers who collectively have around 200 years’ experience in running vehicle operations.
Utilising the wealth of knowledge and experience of its founding members – as well as other fleet decision-makers when they join FIAG – the organisation provides fleet advice, consultancy and support through the mentoring of newcomers to the role of fleet manager and less experienced employees with car, van and HGV responsibility.
The Workshop was based on round table discussions with delegates discussing the role of suppliers in three key areas: choosing suppliers, managing suppliers and renewing or changing suppliers. FIAG founding chairman Geoffrey Bray said: “There is no single magic formula to securing the right suppliers, but relationships are key as is trust.”
Below are highlighted the key points in each of the three areas of discussion as highlighted by round table ‘champions’ and FIAG founding members Peter Weston, formerly in charge of the Home Retail Group fleet, and Ian Housley, health, safety, environment and quality director at The Clancy Group.
Choosing the Supplier
Preparation is key to securing the ‘right’ supplier for the ‘right’ service and that means clearly defining the requirement during the tender process.
As a result, it is critical for procurement specialists within organisations to be involved in the decision-making process alongside other stakeholders, including consulting with drivers who are the end-users.
Mr Weston said: “Co-operation between the subject matter expert – the fleet manager – and the procurement expert working together with other stakeholders, HR, finance and drivers, is key to ensuring what is supplied is in the interests of the business.
“Many businesses frequently do not know what they want and there is often a conflict between saving money and not wanting to upset employees with changes. The cheapest supplier is almost certainly the one an organisation does not want.
“If businesses are not clear during the tender process then suppliers will also be unclear on what is required and may build in potential costs. As a result, those suppliers maybe discounted at the first hurdle of the decision-making process because they were too expensive when, in reality, they could have provided a good service.”
He continued: “Procurement is having a greater role in the fleet supplier decision-making process, but many fleet managers feel that they should not be involved. The fleet industry as a whole has a greater role to play in helping organisations work with procurement experts.”
Mr Housley added: “Business cultures are critical when selecting suppliers and expecting it to be the start of a long-term business partnership. Fleets and their suppliers must have a cultural fit and be able to have open and honest discussions. Communication between the two parties is critical.
“Value is always better than a cut-price deal, but fleets must work to define exactly what they want within the tender criteria.”
Managing the Supplier
Establishing service level agreements and key performance indicators at the outset of the partnership was key to a long-term successful partnership, said Mr Housley.
“Measurements should be established at the outset of the selection process and not half-way through,” he said. “But service level agreements and key performance indicators need to be specific to the supplier/fleet relationship.”
Delivery times, customer satisfaction, number of complaints, the amount of ‘noise’ from drivers and how long it takes a supplier to correct a mistake were all critical in helping fleet managers ensure suppliers were being efficiently and effectively managed.
Meanwhile, decisions around whether or not to outsource were dependent on the level of fleet expertise within the business, the size of the fleet and whether it was core to the organisation.
Mr Housley said: “There is no easy answer. It is very much down to the individual business.”
Many suppliers want to promote their willingness to innovate to fleet decision-makers, but according to Mr Weston, that should be secondary to “getting the basics of supply right”.
“As fleet managers we want to see innovation from suppliers and there needs to be a willingness from fleets to accept innovation and change. But suppliers must get the basics right and then prove themselves with innovation later. Companies do not want to take a risk,” he said.
“Fleet manager resistance to change is an issue, but they also need to be ahead of the game and work in partnership with suppliers to implement solutions that will save money and improve operating efficiencies.
“Therefore, fleet managers must have an open mind as to how a fleet can be managed better by encouraging suppliers to improve service and reduce driver risk to cut costs year on year.”
Mr Weston added that supplier billing transparency was key, highlighting fleet manager “mistrust” of end of lease charges and a growing industry trend towards the ‘unbundling’ of the range of services from vehicle leasing and fleet management companies.
“Transparency is improved with unbundling because fleet managers can then see how much each component costs,” he said.
Renewing or Changing Suppliers
The quality of solutions being delivered to a fleet, suppliers providing what a fleet requires and the price paid were the three key issues when it came to deciding if providers were “getting it right”.
Mr Weston said: “If suppliers fail in any of those three areas then fleet managers need to look at what is happening and if things cannot be rectified then a change of supplier is required.”
However, he added: “I would always try and get issues rectified before considering a supplier change.”
He continued: “It is good practice to evaluate a supplier relationship on a regular basis even if no change is the result. Fleet managers are selecting the right suppliers if they are receiving the right solution and the right service at the right price.
“If considering supplier change then the starting point is service levels, which should be based on key performance indicators, and cost comparison. Unless fleets have a framework for managing the effectiveness of a relationship it is going to be impossible for suppliers to renew or fleets to measure suppliers’ ability and then make a decision to change or not. Benchmarking of current suppliers should be the minimum standard for change.”
If a review is carried out and whether or not a decision is made to stay with the incumbent supplier or to switch, fleets must be clear about the reasons.
Drivers frequently have first-hand experience of dealing with suppliers so, say experts, their engagement in the decision-making process is vital.
Mr Weston concluded: “Quality and value, but particularly openness and trust will make partnerships work. Ultimately the cost to change can outweigh everything, which is why it is important to measure and rectify throughout a partnership.”
Mr Housley said the key word in a fleet/supplier relationship was “trust” alongside an understanding from both parties of what the measureables were and where added value was being delivered.
It was also vital, he said, for clarity to exist around any exit strategy highlighting: “If there is no exist strategy it can cost a lot of money.”
Mr Housley added: “When entering a new relationship it is important to look long term – 10-15 years – and for that relationship to develop into a true partnership. Fleet/supplier partnerships are all about learning from when something goes wrong and understanding that both parties must work together for the collective good.”
The Fleet Industry Advisory Group (FIAG) is a not-for-profit organisation created to develop and share best practice in the fleet industry. Through the considerable knowledge of its founding members, FIAG will provide fleet advice, consultancy, mentoring and support. FIAG will also assist with benchmarking and analysis of industry developments through the publication of white papers and the organisation of workshops.
FIAG is also dedicated to supporting Hope for Tomorrow, a national charity which raises funds to support the introduction of mobile chemotherapy units nationwide. Further information on FIAG is available at www.fiag.co.uk and on Hope for Tomorrow at www.hopefortomorrow.org.uk