January/February 2002: The Canon Group expects savings of up to €2 million after a pan-European fleet deal with leasing firm GE Capital Fleet Services. Mike Roberts talks to executives from both companies.
The major pan-European fleet deal between GE Capital Fleet Services and Canon Group is expected to be implemented well beyond the launch markets of Germany, the UK and the Netherlands.
The two companies are assessing how to extend the leasing deal to Belgium, Finland, Sweden and Switzerland.
Involving a total of 5,600 cars throughout Europe, GE Capital and photographic specialist Canon began the process of studying fleet costs and highlighting potential savings about 12 months ago.
Canon is expected to cut almost €2 million from its fleet operation costs over the next two to three years.
The decision by Canon to consolidate its European fleet was part of a much wider purchasing consolidation programme, of which fleet accounts for about 5%
Previously, Canon's consumer operations throughout Europe were run autonomously but executives decided, as part of a major programme to improve quality of service and cut group overhead costs, that these country-specific centres each with their own managing directors would better serve the company as sales centres, consisting mainly of a local manager with salespeople and service engineers.
The Canon consumer business is, as of January 1, run by Canon's European Consumer Imaging Business Unit based in Amsterdam.
The fleet consolidation programme, which is overseen by Henk Scheffer, general manager for shared services at Canon Europa, and based in Amstelveen, the Netherlands, also allows Canon's purchasing executives the opportunity to access total European fleet data for the first time.
Scheffer admits that Canon's purchasing team did meet some resistance to the group's fleet consolidation proposals from some country executives but added that 'conceptually, it was not a difficult sell'.
Highlighting potential cost-savings was enough to convince individual country management of such a move, he said.
The agreement, in which GECFS will supply full service leasing, finance lease, fleet management, accident management and full driver contact for the fleet, replaces Canon's current arrangement involving a number of smaller suppliers.
Canon has appointed UK-based John Saunders as a central European fleet manager to oversee the whole project.
'We wanted to outsource, but we also wanted to have control ourselves,' Scheffer explained.
The next process of the agreement will be for GECFS to negotiate a pan-European supply deal with manufacturers and report its findings back to Canon.
Canon's biggest fleet is in the UK where it operates 1,700 vehicles, it has 650 in Germany, 300 in the Netherlands, 300 in Switzerland and about 600 in France.
GECFS director of international corporate accounts, Paul Walters, said: 'We will highlight further savings on an ongoing basis, such as ones with manufacturers. But that is a more emotional issue, for example, with certain countries favouring home-based manufacturers, so it has to be done carefully. Currently, Canon's cars are supplied by many different manufacturers.'
Scheffer also has the responsibility of consolidating Canon Europa's general travel requirements, which includes car rental. 'Travel is more difficult to outsource but it is an area we are now starting to look at,' he said.
Team determines type of buyer before proceeding GE Capital Fleet Services' international fleet team comprises six people based in strategic centres around Europe.
It is headed by director of international corporate accounts Paul Walters, who previously worked for Avis Leasing and Fleet Management, which GE Capital acquired in 1992.
The company, called Avis Fleet Services in some countries, has a fleet of 420,000 vehicles across Europe and 1.3 million vehicles worldwide.
Walters points out that GECFS must first determine 'what kind of buyers' potential customers are before they decide how to proceed.
A 'transactional buyer' simply wants the lowest leasing rental cost possible while the 'added-value' buyer wants a total review of their fleet to highlight wider and larger cost savings.
GECFS offers what it describes as a consultancy service, called Fleet Strategic Consulting, where it analyses every aspect of a customer's fleet and highlights where cost savings are achievable.
Customers pay for this service but the money is refunded if GE is unable to highlight any saving potentials or if the company signs a pan-European leasing deal with the company.
'Our strategic consulting method of winning fleet business is proving highly effective. By using this technique we were able to produce a compelling cost take-out programme for Canon over the next three years. This contract provides the benchmark for all future European fleet agreements,' Walters said.
The consultative methods rely on six sigma quality standards that GE has already used itself throughout all of its global businesses, saving about $2 billion.
Walters said that potential customers seeking a pan-European arrangement must ask themselves two questions: Do they have a mandate from above at European level and do individual countries know what they are attempting and the reasons behind it?
He added that many consolidation programmes can fail if there is no 'local buy-in'.
GECFS will also turn potential customers away if it believes the company is not ready to implement such a deal or if it cannot offer the right products for that company.
'There's nothing wrong with admitting the time is not right to do business,' Walters said. 'It saves a lot of time, resource and cost on both sides and we are finding more and more companies are coming back to us because they have found the transactional approach has not worked.
'A good acid test is if the customer has achieved successful consolidation in other areas, such as travel or IT,' Walters said.
'We show potential customers the pitfalls,' Walters added, 'and then we try and help them overcome those pitfalls.'
Walters said that many customers approaching GE Capital Fleet Services 'don't realise how GE can help across a number of other areas besides fleet'. The company is part of GECFS which offers a range of finance and insurance services.
'There are also the GE Industrial businesses, so overall we can offer a synergy of supply to large Pan-European companies which is truly unmatched by anyone else,' Walters added.