Enjoy the highlights of the IFMI Session on International Fleet Procurement
On October 16th 2011, Fleet Europe and its partners LeasePlan, PwC, Arval, Athlon Car Lease International, ALD Automotive International and Mercedes-Benz Cars, organized the IFMI Expert Session on International Fleet Procurement Strategies. No less than 26 fleet decision makers from companies including Accenture, Procter & Gamble, Pfizer, Coco-Cola Enterprises, Philips, Eli Lilly, Bayer attended this IFMI Expert Session.
One important company function which is now becoming more global is the purchasing department. According to Bernard Gracia, Director of the European Institute of Purchasing Management, too many corporates focus too heavily on the price and cost element and don’t pay enough attention to the value contribution from procurement. The purpose has to be to go from buying a product for a certain price to buying a complete service for a certain value. The value contribution can be measured as the customer satisfaction divided by the cost of the service or product and has to be positive.
To keep all clients happy
When creating client satisfaction, think about the external and the internal client. To create an efficient customer relationship management, for both internal and external clients, a client satisfaction survey, sent out regularly can be very useful. To internal clients it is vital to know what they want, to avoid dissatisfaction with unsatisfied needs and over-satisfaction with useless features.To external clients, you have to keep up your attractiveness as a partner.
Do’s & Don’ts of fleet procurement
But even when your relationships are well developed and strong, you still have to make fundamental decisions in terms of fleet procurement. Three international fleet managers – Lutz Hansen (Bayer), Paul Herremans (Philips) and Robert Patrick (Merck & Co) explained how they have dealt with crucial elements like ‘bundling or unbundling of services’, ‘multi or sole suppliers ‘ and ‘do’s & don’ts of fleet procurement’. Within fleet management there are different areas regarding funding and management that can be sourced on a single or a multiple source basis. A single source strategy gives the highest negotiating power and the best discount possibilities, low process complexity, high transparency but less flexibility, more supplier dependency and less internal client satisfaction than a multiple sourcing procurement strategy. A balance between negotiating power and complexity therefore has to be achieved in order to get best results.
When looking at bundled or unbundled fleet services, you first have to understand and know the breakdown of the components in the Total Cost of Ownership (TCO) of your fleet. This TCO is influenced by elements like the price of the car, the discount level, the residual value, the insurance fee, the fuel consumption of the car and the fuel cost and maintenance & repair costs. When going for outsourced bundling services you eliminate certain risks such as the residual value risk and you don’t have the burden of organizing in-house management services. On the other hand unbundling will enable you to manage and optimize individual cost components.According to the IFMI audience, when you bundle you have to do so with the necessary transparency and visibility to give you valuable insight for strategic and commercial negotiations.This means that bundling combined with managed competition looks like the best value for efforts solution.
As a conclusion we can say that there is no one size fits all approach.For each fleet type and each corporate strategy there is a right sourcing approach to balance the interests of company stakeholders. But when going through a new procurement strategy, a clear plan and strong organization, with the full support of the board is needed to achieve the required changes. Do not attempt to move too far, too fast, but understand the speed the company is willing to move. Because as fleet management is no exact science, there will be subsequent phases for future improvement.
The next IFMI Session will be organized on June 6th in Brussels. The general theme will be “Managing your fleet in crisis mode”. We will inform you about this session on http://www.fleeteurope.com/ifmi/ .
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