Fleet News

Cutting costs tops fleet priorities when going international

COST reduction is the dominant motivation for companies moving their fleet on to an international basis, according to independent market research commissioned by Lease Plan.

Management consultancy Bain & Co found that multinational fleets prioritised cost reduction significantly ahead of superior service levels, enhanced control and management information, and greater consistency in their car policies.

In reality, however, companies cannot maximise their buying power until they have detailed knowledge of their fleet and spending patterns in every country where they operate.

For this reason, Francois Boulard, managing director of Lease Plan International, advised fleets not to over-estimate the returns they expect from globalising their operation, or to be over-optimistic in their target timescales.

'When you move to an international basis, make sure you want to move internationally,' he said. 'It can take from one to four years to accomplish.'

Boulard believes 'quick wins' are available by leveraging buying power with car manufacturers, tyre firms, fuel suppliers and finance and fleet management companies.

But he cautioned fleets to prepare for local resistance - Bain & Co discovered that companies moving to an international contract identified their most difficult internal barrier as the need to gain support from local organisations protective of their own fleet policy.

'It's amazing how creative people can be when trying not to do something that headquarters has told them to do,' said Boulard.

He also highlighted the need for fleets to drive their costs down after implementing an international arrangement by taking advantage of the greater accuracy of their management information.

The direct costs of running an international fleet are not evenly distributed, and focusing on one area alone, such as fuel expenditure, can achieve significant savings, said Boulard.

Behind the direct costs of running a fleet, however, lie the hidden internal management costs that can also be driven down through the rationalisation of internal administration.

This reinforces the need for fleets to select the right supplier, an issue identified by Bain & Co's research as the 'most difficult external barrier to overcome when moving to an international contract,' on a par with the difficulty of determining the right product and service, and significantly more difficult than determining the right balance between areas that should remain local and those that can be internationalised. (April 2000)

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