Fleet News

Expert urges caution over ‘simplistic outsourcing’

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Fleets are being urged to be wary of outsourcing services without considering how they can be properly managed and remain fit for purpose.

The growing trend is particularly prevalent in the public sector, which views outsourcing as a potential quick win when trying to cut cost s.

However, outsourcing expert and independent strategic adviser John Tizard (pictured) urged fleets to consider all their options before deciding on how to manage their fleet.

“Simplistic outsourcing is disastrous,” said Tizard. “If you put the emphasis on the ‘out’ – ‘it’s nothing to do with me’ – you’ve got major problems.”

Deep cuts across the public sector, with 75% of the savings announced by the chancellor in 2010 still to take effect during this spending period, is putting “enormous pressure” on public sector fleets to be more efficient.

Tizard explained that this was happening against a policy backdrop of a desire to increase competition and outsourcing in the public sector. “There is an expectation that there will be a different relationship between the public sector and private sector suppliers,” he said.

However, Tizard urged organisations considering outsourcing to be clear about their objectives. “If you’re going to move to an outsourced solution for fleet management, you’ve still got to have the client capacity to manage that,” he said. “You’ve got to be absolutely clear what you want to get from it.”

Lincolnshire Police struck a £200 million, 10-year out-sourcing deal with G4S in April and earlier this year the Surrey and West Midlands police forces jointly invited bids to take over a wide range of services, including fleet management (Fleet News, August 2).

Under guidance from the Home Office, the forces advertised contracts worth £1.5 billion to private companies to run policing services.

However, Surrey Police Authority has now agreed to suspend involvement in the business partnering programme, while the West Midlands Police Authority has deferred a decision on the selection of partners until the November election of its new police and crime commissioner.

The possibility of Bedfordshire, Cambridgeshire and Hertfordshire Police following Lincolnshire’s lead in outsourcing a range of backroom services, including fleet management, to G4S has also been put on hold until after the elections. Utilising the private sector is a major issue for all police forces as they consider, with Home Office backing, the option of outsourcing support services in a bid to collectively save millions of pounds.

The G4S contract with Lincolnshire Police, which operates a fleet of 400 vehicles, could save up to £28m.

Tizard said: “The fleet underpins the operational identity of the police or any other emergency service. It must not be seen as something that can be removed, marginalised or easily passed on to the private sector because it’s not core – it’s fundamental.”

It’s a concern that is shared by John Gorton, head of transport at Essex and Kent Police.
He said: “Some of the police and crime commissioners may have some fairly short-term objectives, whereas the infrastructure we look after tends to be longer term.”

In the first ever police elections, 41 new police and crime commissioners will be elected across England and Wales on November 15. Their responsibilities will include police strategy and the force’s budget.

Tizard said: “It’s important that you don’t just go for change for its own sake. Only go for change where it’s going to add value. Some of the things that look tempting in the short term don’t deliver.”


Outsourcing: What are the options?

  • In-house provision
  • Joint or shared arrangements
  • Fully outsourced
  • Supplier partners with in-house  support
  • Partner provision of vehicles and  support
  • Private Finance Initiative
  • Joint ventures with business –  single or multiple authorities

Outsourcing: What to consider?

  • How best to secure strategic objectives
  • Political considerations
  • Public opinions and consent
  • Staff opinions
  • Client capacity and competency
  • Market capacity
  • Reputation and record of potential partners

Click here for fleet procurement best practice and procurement insight

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Comments

  • Neil McCrossan, Chief Executive Nexus Vehicle Rental - 16/11/2012 16:42

    A very interesting article which makes a lot of valid points, however I think it is important to highlight outsourcing does have a valuable role to play in business. Of course it may not be suitable for every business function or for every business, but outsourcing within both the fleet and public sectors has been proven to help achieve business objectives through operational excellence. Outsourcing is a certified cost effective and time efficient strategic business function which can allow a business to gain a competitive advantage. While these examples in the article above demonstrate it should be approached with caution, they emphasise the importance of choosing the right outsourcing partner. The right partner will open up opportunities for a business to utilise skill sets and expertise it normally wouldn’t be able to access without large financial and HR investments, and time must be taken to source the correct collaborator. At Nexus, we provide a number of outsourcing services to our clients with proven success in boosting business efficiency through time and cost savings. Outsourcing success is all about controlling outcomes, ones you define based on what constitutes success for your business.

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