23 Feb 23

Dealing with supply chain disruptions in procurement

The fleet industry is facing a rapid evolution amid new mobility trends, adoption of advanced technologies and rising competition among OEMs and suppliers. 

All these factors make procurement an even more critical skill for fleet operations and procurement managers need expertise to adapt. Here are the views of Adam Longenecker, who recently changed companies and roles from Strategic Sourcing Lead EMEA at Zimmer Biomet to Global Indirect Category Manager at Axalta Coating Systems, and Jeannette Töller, European Category Sourcing Manager at 3M.

"Uncertainty increases" 

Longenecker believes fleet procurement is fairly mature in Europe compared to five years ago. As the penetration of PHEV and BEV has increased in the region, Longenecker believes suppliers are selected based on TCO, while it has become more difficult to calculate and compare baseline costs. Switching from NEDC to WLTP as a standard for determining the levels of pollutants has added to the uncertainty of understanding what actual consumption might be.

“Supply chain disruptions are becoming a more pressing issue for fleets and limitations across industries have underlined the importance of supply chains. Thus, fleet procurement should be more nimble and evaluate policies quickly," Longenecker states. 

Töller, says there are many trends today in procurement due to the dynamics in the industry. "Change is the new constant. Risk monitoring, ethical and sustainable sourcing, and vendor management significantly influence procurement processes to align with constant change.” She explains.  

For Longenecker, the procurement strategy includes traditional sourcing to reinforce close collaboration with leading suppliers and OEMs internationally. Solid service level agreements (SLAs) must be defined with corresponding KPIs to ensure a clear understanding and objective verifiability of the services, says Longenecker. 

What is most disruptive? 

Both Longenecker and Töller agree that the shortages in the supply chain are a major obstacle in procurement processes. This issue forces fleet managers to reconsider whether a consolidated brand strategy will fulfil the business's needs. According to Longenecker, the policy reference vehicle list needs more flexibility, and short-term adaptations would be a good approach at a country level. 

"Tactically, it requires more communication to ensure that everyone locally is ordering well enough in advance."

Töller believes that the ongoing shortages push alternative procurement processes to achieve more flexibility in the supply chain, requiring innovative and flexible leasing partners. 

“It is primarily the new brands among OEMs that have gained acceptance with their sustainable technologies and vehicle availability. Short and mid-term leases emerge as interesting options in the supply chain. Increasing the number of EVs in fleets or preconfigured vehicles should not be ignored, as they often offer shorter delivery times.” Töller advises.  

What to expect in the future 

According to Töller, topics such as "working from home" and "mobility allowance" will significantly impact future purchasing processes. The pandemic and climate change are also an accelerator to looking for more sustainable mobility solutions. 

Longenecker believes the trend of integrating specialised third-party providers to reach a best-in-class maturity level as a procurement organisation will continue and even become more elaborate.