Current uncertainty in the fleet market should be seen as an opportunity for procurement departments to rethink supply chain strategies and reshape their fleet policies for a sustainable future.
So says Fleet Logistics UK (FLUK), the UK and Ireland arm of Fleet Logistics International, Europe’s largest independent fleet management provider with more than 180,000 vehicles under management worldwide.
It is becoming harder to for fleets to determine sustainable, long-term strategies and anticipate events - or predict how they will unfold - due to the current lack of clarity from the UK Government on future taxation and strategy, it says.
This adds complexity to fleet and a 'one solution fits all' approach, often seen in the sector, is no longer effective. Due to the complexity involved in managing a fleet now, there is a need for regular adjustments to policies which results in fleet taking up more time than ever within a business.
However, says FLUK, fleet buyers within companies are often under internal pressure from within to ‘right-source’ their fleets – which can mean finding the cheapest, short term fix, with limited regard for sustainability in the medium to long term. Although this method may appear to generate an initial saving, this is usually the wrong approach, says FLUK.
With the vast range of categories sourced by businesses, the talent and knowledge to handle these, as well as the process complexity, can prove challenging for a business, it says. Fleet buyers cannot be experts in every spend category so, in response to this, many businesses are bringing in contractors to manage short-term projects, often at a premium that could be avoided.
“A short-term sourcing approach typically does not work in this constantly-evolving fleet market that we are currently experiencing,” said Sue Branston, country head of Fleet Logistics UK and Ireland.
“Companies need to take a longer-term view to a more sustainable future, and consider the advantages of a partner focused purely on fleet, with the knowledge and experience to guide them through both current and future challenges.”
She continued: “Fleet is transforming and having a partner with expertise in every market your business operates in is a key factor in controlling spend.
“A fleet management company can help realise untapped potential in the fleet supply chain and work with you to develop your sourcing strategy in each market.
“Selecting the best services, to meet your business’ individual list of requirements, will improve processes and reduce admin and manage your fleet suppliers and their costs. This frees up time and resource within your business.
“The right fleet management partner will also be able to proactively suggest improved services, efficiencies and technological improvements, which will result in a lower fleet Total Cost of Ownership (TCO) and help build for the future. Despite the market evolving at such pace, businesses can plan ahead with expert help.”
Branston said that corporate procurement teams had the opportunity to play a major part in shaping a cost-effective, sustainable fleet landscape in the UK. Procurement’s influence on supply chain selection could enable a sustained balance between quality service delivery and cost.
“Our methods work well with the current uncertainty in the UK and the benefits are seen in the bottom line by a business. It creates flexibility and adopts a more agile approach,” she added. “By supporting our clients to tender for the best fleet supply chain, either alongside their internal teams or on their behalf, we help them select the best providers. This can work better than employing a ‘one-stop-shop’ approach and being tied to a sole service provider for all fleet services, when not all services may continue to be cost effective or best-in-class mid-to-long term.”
For example, procurement departments need to select vehicle manufacturers based on a range of factors that have a medium to long term impact on the company fleet.
This includes factors such as technology, carbon dioxide (CO2) and nitrous oxide (NOx) outputs, impact of WLTP (including vehicle availability), the types of powertrains and their suitability as well as benefit-in-kind tax bills for drivers and the appeal of the range.
“This does not necessarily mean selecting the traditionally popular OEM’s or most popular front-end options, although these OEM’s undoubtedly still play a key role for the right fleet,” said Branston.
“Helping clients select the right vehicle in a new car market which is seeing uncertainty over residual values, new models and new OEM's appearing on the scene, makes vehicle selection a far from simple task.
“Instead, taking a longer term view means looking at whether an OEM can demonstrate the environmental impact of its vehicles and balance this against cost, particularly as the market moves increasingly towards an electric future – and one that involves a range of mobility solutions as well.”
She concluded: “Partnering with a fleet management supplier that is completely transparent and impartial in its dealing with your selected fleet suppliers, can really benefit both a business and its drivers.
“The right fleet management partner can support you in the most effective supply chain management, as well as carrying out robust cost reduction and monitoring programmes, helping your business work towards achieving its business goals.”