Fleet News

International fleet focus: Global domination – the fleet way

WHILE an international fleet may be part of one company or brand, operations in each country are likely to be as diverse as the cultures in which they operate.

This presents unique challenges for any firm trying to introduce a pan-European or global fleet management policy. While a UK fleet has to get to grips with the increasing complexities of legislation, taxation, budgeting and demands from drivers, this is multiplied ten-fold whenever additional countries are added.

But despite the difficulty, large companies are looking much more closely at introducing international fleet policies, encouraged by the success of other pioneering fleets (see case studies below).

Although a dedicated and expert internal fleet manager is essential to the success of a pan-European or global fleet operation, outsourcing is also at the heart of many departments, simply because of the logistics of co-ordinating so many people and organisations. In most cases, the key supplier will be a leasing or fleet management company, which is large enough to already offer international support in different countries.

This is vital when introducing something as complex as a pan-European choice list, as fleets need constant monitoring to ensure the policy is adhered to in every country.

Among companies enjoying success in international outsourcing is DaimlerChrysler Financial Services, instantly recognisable because of its global brand.

Tony Elliott, international sales manager, said although outsourcing was a key benefit, it also had to be approached with a clear understanding of the fleet’s needs.

He said: ‘The trend to outsource the management of international fleets seems unstoppable.

‘The way in which such fleet deals are negotiated, however, is not always leading to the results that the companies had originally envisioned them to be. Previously, the customer’s different country operations often acted mostly independently and dealt with fleet management providers on a local level.

‘But over recent years the structure has changed completely and purchasing teams or projects on a headquarters level have taken over negotiations with service providers – and normally with the fleet management company’s HQ or international unit.’

Fleet decision-makers in charge of any outsourcing process must therefore liaise with everyone involved in the process in each country, from managers through to drivers. This is particularly important when dealing with any choice list discussions, as countries can be particularly sensitive about automotive brands and removing one, or introducing another, could create areas for conflict.

Elliot said: ‘Fleet managers in each country have to share their responsibilities and may be reluctant to do so.

‘To avoid a difficult start with reluctant local colleagues, the HQ purchasers must ensure that they are aware of local market environments and local fleet issues.

‘If everybody involved can clearly see his or her local specifics considered in the deal plus savings being realised, the implementation of an international fleet deal shouldn’t be too difficult.’

Cost savings may come at a price . . .

COMPANIES don’t simply introduce international fleet policies because they like the sound of the name – there have to be clear benefits.

Cost savings are one of the most important and the potential to reduce budgets is vast when dealing with thousands of vehicles across a number of countries.

For each country, a different approach to funding may be needed, so an employee car ownership scheme might be chosen in the UK, while outright purchase is favoured in Poland. With the added complications of dealing with an international fleet comes added costs, so companies can only expect to receive so much product for their pound.

Elliot explained: ‘There is a trend that customers ask for sophisticated fleet management tools they may not need. They ask for everything but are not really willing to give anything in return. It could be that sophisticated web solutions are demanded without accepting any price tag on them or asking for the lowest insurance rates without giving any damage history. If fleet management companies do not set boundaries, negotiating a fleet deal will come close to a capitulation of the fleet management providers.’

Steve Simpson, director and general manager at International Fleet Services Ltd (IFSL), an international fleet management and leasing company, believes leasing companies must balance service with consistency in order to compete in the global market. He said: ‘The trick for leasing companies will be to deliver the right value for money service in each country balanced with enough consistency and co-ordination.’

To achieve this balance, the leasing companies must ensure that service, pricing and products are transparent from country to country, which means that a central fleet policy must be flexible.

Filip Van Mullem, director of Fleet Logistics, which provides fleet management on an international basis, said: ‘In Europe, leasing companies take the cost risk in a closed-end leasing arrangement. They all integrate different discounts, rebates, residual values and interest rates assumptions in their calculations. Inevitably, the final pricing always shows wide variances from one supplier to another.

‘Despite the fact that some pressure is exerted by parent leasing companies during international tendering, the final pricing is still calculated and decided locally. With the car manufacturers proposing new models each year, the subsequent lease quotes and differences between the leasing companies for each vehicle need to be benchmarked on a permanent basis in full transparency.’

Priority is to get the fundamentals sorted

ONE of the simplest questions can cause the biggest problems for companies launching an international fleet policy – what do you want?

Although many companies might dismiss this as too basic to worry about, there is evidence that it is an area that is causing problems. Elliot said: ‘One of the recent trends in the fleet industry is that international customers tend to demand everything they can possibly imagine – not knowing whether they actually need it or not.

‘However, international tenders often include markets with significant differences in terms of maturity levels, product diversity and understanding of fleet management that suits local and international fleets.’

In trying to create a ‘catch-all’ fleet policy, companies might be asking for quotes on irrelevant services, such as for personal leasing in a country where there is no benefit in providing it.

It is the role of fleet management companies answering the tender to meet with customers and produce a final document that will meet the needs of the company on a country-by-country basis.

During the decision-making process and the implementation stage, regular meetings with executives in each country should ensure potential problems are uncovered.

Elliott said: ‘Quite often it seems that customers and fleet management providers would benefit more if they’d focus on getting the fundamentals right first. And the differences between Western and Eastern Europe are not only determined by different market maturity levels, but also by the fact that Eastern European fleets are usually much smaller and comprise different makes and models.

‘Therefore, asking for everything for all countries’ fleets may seem the appropriate thing to do from an HQ point of view – but is not reasonable or feasible if you look at the reality or regional differences.’

Van Mullem believes fleets need to fully research their markets before formalising policies.

He said: ‘Companies often get lost in the identification of the right products, the set up of a correct global processes, the selection of the appropriate players, the writing of an efficient policy, the optimal management of prices and an appropriate procurement strategy.

‘A company wishing to put together a global fleet arrangement needs first to gain a broad understanding of what is available and developing in the fleet market and per region.’

It is impossible to organise an international fleet without relying on technology, including the extensive use of computer systems to collate, monitor and control costs. But access to resources and particular technology differs depending on the region and country in which a fleet operates.

In addition, service providers and vehicle manufacturers use differing specifications and technologies depending on the country they are based.

Therefore, the choice of suppliers and manufacturers will inevitably vary from country to country.

Van Mullem explained: ‘In North America, there are only three main car manufacturers and a direct relation built between manufacturers and fleet operators, based on annual deals, Europe presents 30 plus car manufacturers with a very nationalistic touch.

‘Country lessors typically handle the local negotiations with dealers and importers/distributors. Direct European rebate arrangements on top of local negotiations are increasingly made between fleet operators and manufacturers themselves.’

Nine-steps to a successful international fleet policy

  • A clear mandate of support from senior management
  • Regular internal and external communications
  • A commitment to effective resourcing of the project for the time that is needed
  • Access to data to create a clear baseline of existing costs
  • A process for agreeing standardisation of specifications
  • A Request For Proposal (RFP) covering the key issues in a format that suppliers can work with
  • A clearly defined negotiation strategy
  • An approval process at the highest level
  • Resourcing for successful implementation
    Source: DHL

    Case study 1 – NextiraOne

    DOUBLE Fleet News Award winner Diane Miller brought together 15 countries with differing fleet policies.

    The European fleet manager of NextiraOne stressed the art of communication as a key tool towards implementing a successful multi-country fleet policy.

    Her employer, a business communications specialist, has nearly 10,000 people throughout the world and operates about 3,000 cars in 15 countries.

    Until the overhaul, which has lasted several years and is still ongoing, each country operated its own fleet policy.

    Miller was charged with the task of creating a centralised fleet operation. The aim of her initiative was to reduce costs as the company set up a centralised fleet operation based in Paris to oversee all its vehicles Europe-wide.

    The company moved to two leasing providers, Brussels-based Fleet Synergy International and ASL Auto Service Leasing, based in Germany. In Eastern Europe, it uses the services of LeasePlan and Arval.

    It also started by cutting its vehicle suppliers to three, General Motors, Volkswagen Audi Group and Renault.

    Country preferences for brands were considered and the agreement with VAG Group, for example, allowed for a Volkswagen to be offered to German employees and a similar level SEAT to their Spanish counterparts.

    Miller said: ‘The best way of successfully introducing a pan-European policy is by communicating what you are doing along the way to all the countries involved.’

    Case study – DHL

    FLEETS wanting to introduce a European fleet policy should follow a nine-point action plan designed to ensure such a mammoth task succeeds.

    Peter O’Brien, senior vice-president at logistic and transport giant Deutsche Post World Net (DPWN)/DHL, has outlined the key factors for a successful policy.

    A solid communication network within fleets is vital for policies to be implemented and maintained, according to O’Brien.

    He said: ‘Fleets need to have the right level of involvement from the whole business including support from senior management. Regular internal and external communications are also needed.’

    Fleets need to ensure they provide a ‘commitment to effective resourcing of the project for the time that is needed’ and this includes having full access to data which is able to create a baseline of existing costs, according to O’Brien.

    Additional factors, which must be incorporated into the policy, include standardisation of specifications and a clearly defined negotiation strategy, he added. DPWN has implemented a successful pan-European fleet policy across its total fleet of 102,010 vehicles, which includes 17,000 vehicles within DHL and a 23,000-strong fleet at Deutsche Post.

    O’Brien believes that success depends on consistency achieved by the fleet operator. He said: ‘It is important to be transparent.

    ‘Our own customers want consistency with just one interface to work with and fleet operators should expect the same from their suppliers.’

    However, for the fleet market to thrive in a pan-European environment, O’Brien believes competition among suppliers is needed. He said: ‘It is vital that competition remains in the market. Competition is key and quality is key.’

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