Fleet managers and procurement experts must work with other stakeholders to secure the best terms for their organisations when appointing suppliers of vehicles.

The same should be applied to other related services as well, said the Fleet Industry Advisory Group (FIAG) at their fleet decision-maker workshop. The event, ‘The Role of the Supplier in Supporting the Fleet Manager’, sponsored by Enterprise Rent-A-Car was held at the company’s Training Centre in Egham, Surrey.

A strong theme at the workshop was centred on how a successful fleet and supplier partnership is run. Defining what would-be suppliers require, both commercially and operationally while at good value was what the group concluded. 

Launched by industry veteran Geoffrey Bray and a team of experienced professional fleet managers in 2014, FIAG has recruited decision-makers as well as employees working in procurement, finance and HR positions to its membership.

The workshop was based on round table discussions, focusing on the role of suppliers in three areas: choosing suppliers, managing suppliers and renewing or changing suppliers.

Bray said: “There is no single magic formula to securing the right suppliers, but relationships are key as is trust.”

Also present were 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.

On the subject of choosing the supplier, 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.

“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.

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.”

On managing the supplier, Housley exlpained that establishing service level agreements and key performance indicators at the outset of the partnership was key to a long-term successful partnership.

“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, the workshop concluded.

Meanwhile, decisions around whether or not to outsource were dependent on the level of fleet expertise within a business, the size of the fleet and whether it was core to the organisation.

Housley said: “There is no easy answer. It is very much down to the individual business.”

According to FIAG 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.”

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.

Lastly the issue of renewing or changing suppliers was also discussed. 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”, said FIAG.

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.”

FIAG also felt because drivers frequently have first-hand experience of dealing with suppliers so, their engagement in the decision-making process is vital.

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.”

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.”

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.”