The size of the fleet isn’t the single factor to determining the need for outsourcing fleetmanagement. Fundamentally, outsourcing makes sense for companies of all sizes. While the fleet may bean integral part of the business, it’s likely a necessary consequence or a means of operating the business.
That being said, not all fleet management resources are created equal. The ability to have essentially hands-on fleet management provided by a local client strategy manager adds an extra level of service to outsourced fleet management, particularly for small companies that maynot have a dedicated fleet professional on staff. Just as companies may hire outside professionals to prepare taxes, or consult on a complex project, outsourcing fleet management allows an organization to maintain control of its fleet, while leveraging the expertise of a professional fleet management company with expertise in overseeing every aspect of vehicle operations from acquisition to disposal.
When a company has a handful of vehicles, fleet management is relatively easy and can be handled part-time by one or two employees with additional operational or administrative responsibilities. In some cases a vehicle may be the treated as the employee’s personal vehicle, with the responsibility of its up keep —registration, maintenance, etc. — left to that employee.
But with success comes growth and complexity of operations. The fleet will likely grow and become morecomplex to keep pace with the company, reflected in the growing number of functions that now have to be handled, including:
- Vehicle Specification
- Acquisition — including the process of choosing the vehicle, negotiating and pricing, correctly timing thepurchase, and identifying the most appropriate funding
- Licensing and titling
- Maintenance and repairs
- Subrogation (in the case of an accident)
When fleet management transitions from a part-time function to a full-time job, it is less efficient for the company to properly manage the fleet without outside expertise. Without expert guidance, decisions are often made on the basis of expediency and not according to best practices or based on managing total cost of ownership (TCO). For example, an expensive repair may be made to keep a vehicle on the road instead of saving money overall by replacing it with a newer, more cost-effective replacement.
Outsourcing fleet management will help take away some of these complex functions and decisions by:
- Obtaining the best vehicle acquisition price
- Staying ahead of the curve on preventive maintenance
- Acquiring vehicles that have low maintenance costs
- Providing flexibility to make changes to the fleet to meet the company’s needs
- Having access to reporting and tracking
Without an expert fleet administrator — as with anyspecialized fleet expertise — companies often don’t have a full understanding of the costs associated to the fleet or how they can better manage vehicle’s resources to maximize operational dollars.
Oftentimes, as a small company grows, it makes few changes to its fleet operations to match its growth. For example, it’s easy to buy from the same dealer and/or use the same vehicle model that it purchased from the onset of the fleet. This results in increased acquisition costs and other inefficiencies by not using the best vehicle for the job — something that an outsourced expert can help a company adjust, identify, and control.
Companies often replace their vehicles at an inopportune time or when the company runs its vehicles until the“wheels fall off” — which significantly increases fleet operational costs and virtually eliminates the ability to capture any return on the asset.
Outsourcing allows companies to immediately put thefleet in order — getting the various fleet functions under control, making tasks such as licensing and titling and maintenance management more efficient and cost effective. It will also remove time-consuming tasks fromthe company’s employees who likely don’t have the background to handle fleet-related functions.
Outsourcing also gives a company full insight into each vehicle with comprehensive and real-time reporting that translates directly to the bottom line. Companies that outsource have a clear understanding of vehicle TCO down to the penny.
HANDS-ON ACCOUNT MANAGEMENT
Outsourcing isn’t new; fleet management companies have existed for more than seventy years to help organizations professionally manage vehicles of all sizes. What is less common, but more effective — particularly for companies with small- or medium-sized fleets without a professional fleet manager on staff — is hands-on account management, which provides much more support thana centrally-located fleet management company, or fleet management software solution can offer.Because they are local, these outsourced accountmanagers:
- Can leverage their personal relationships andknowledge of the market to the benefit of the fleet and,by extension, the company as a whole
- Can get to know the fleet operations — becomingfamiliar with the company’s particular key performanceindicators (KPIs), its business, and other aspects of theoperation
- Can be proactive in anticipating and solving potentialproblems. A centrally located fleet management providerthat isn’t local — can only be reactive
- See your specific fleet in use — understanding nuancesof your application of the vehicles
In many ways, a local client strategy manager, because heor she has a personal relationship with the company, is almost a de facto employee. This means the local client strategy manager will often have more of a personal connection and stake than an client strategy manager who is in a centrally located office. Having a personal relationship helps to build mutual trust and respect.
Because of the hands-on client strategy manager's expertise he or she not only can direct all of the important fleet functions, but can act in a consultative role, offering the kind of strategic analysis and insight necessary to keep a fleet program not only operating efficiently, but up-to-date.
HANDS-ON OUTSOURCING — THE SHORTAND THE LONG (BENEFITS) OF IT
Companies often overlook outsourcing as a solution because of the perception that they don’t have the scale to benefit from it.
In fact, companies with smaller fleets can stand to benefit significantly from outsourcing especially when it’s coupled with a hands-on client strategy manager. Professional,outsourced fleet management with a personal touchdelivers all of the advantages of a traditional fleetmanagement company (FMC), along with other benefits that can’t be found by using a centrally located FMC.
Perhaps the most important benefit is that hands-on fleet management is completely customized to the needs of the company, and the program can be designed to meet the specific short- and long-term goals set by the organization.
In the short term, the company may set goals that improve operations, save money, or improve cash flow. While the goals are highly individualized, there are a number of immediate improvements that every company will likely experience.
Companies will immediately receive reporting functionality, gaining insight into the fleet operation that will result in improvements in acquisition, maintenance, and disposition/reselling of vehicles. Getting a handle on these functions may net improvements beyond the short-term implementation goals. For example, just properly managing fuel — the second largest fleet expense — will likely result in a 10% cost reduction in this expense in the short-term.
However, fleet management should not be approached solely as a short-term solution — it’s a long-term commitment. There are numerous long-term benefits the company will see by having customized, localized outsourced fleet management, including accountability, transparency of data, sustained operational efficiency, and ongoing financial discipline.
Because of this, the financial leaders and other senior members of the company will know exactly how much the fleet costs, including cost per mile, maintenance costs, fuel spend, how many stops per day, etc.
A well-run fleet enhances the company’s brand. Well-maintained vehicles that are operated safely present a good image that translates into a public reputation that can help drive and maintain business.
If a company’s primary reason for existence is not to operate a fleet of vehicles, then it should consider outsourcing — no matter its size. And if that company doesn’t have a professional fleet manager on staff then it should consider finding a program that provides a local, hands-on client strategy manager with fleet experience.
Fleet management is far too complex for a company to go it alone — outsourcing with a company that can provide local account management will deliver the kind of depth of knowledge and infrastructure necessary to have a successful fleet operation that helps to drive growth for the entire enterprise.