Why ERIKS decentralised its European fleet procurement
A decentralised strategy for a pan-European fleet procurement programme has paid dividends for a large Netherlands-based company.
ERIKS, a specialised industrial service provider, recently moved its tender from a pan-European approach to country-by-country for its new leasing and vehicle supply contracts.
“Doing so allows us to focus and better anticipate the needs and wants of our local companies, while achieving our procurement targets,” said Jan-Martijn Prins, Director Global Indirect Procurement, ERIKS (pictured below). “There are local requirements in one country that may not be relevant in others. For example, in my previous company, drivers in Germany found it particularly important to be able to select the type of steering wheels in their cars.”
Supplier service competition
With this in mind, Prins directed the procurement process for ERIKS’s 1,500-strong international fleet and commissioned Fleet Competence to assist with the process. The strategy was strengthened by appointing two suppliers in each market to maintain constant pricing competition, although ERIKS focused on a number of service level criteria before asking leasing companies to supply quotes for a basket of cars.
Thilo von Ulmenstein, Managing Partner, Fleet Competence Group, said: “We asked for leasing companies’ support tools for drivers, such as car configurators; their return process and wear and tear terms; and for a clear pricing matrix to make sure that any contract adjustments will be done in an open and transparent way. Only when we had the best compliance with these terms did we go into a second round of the RFP, looking at quotations.”
New leasing companies appointed
The approach has led to the appointment of different suppliers in different countries. In the Netherlands and Germany, for example, Alphabet and Athlon have won the business, while in Switzerland – given the low volume - ERIKS’s local team has opted for a sole supply arrangement with Arval. Lease contract awards for Belgium are pending.
“We strongly believe you can achieve cost savings if you work with two or more suppliers. Doing so enables healthy and permanent pricing competition,” said von Ulmenstein. “Financial saving from the new contracts will reach double-digit percentages in some markets, depending on the competitiveness of the former supply arrangements and the volumes of vehicles involved.”
Additionally, working with several leasing partners has given ERIKS a more holistic view on changing consumer behaviours. Prinssaid he expects about 30% of new orders will be for electric vehicles, although this percentage could rise sharply if EVs achieve parity with their petrol and diesel equivalents in their total cost of ownership, a development that would help ERIKS meet its sustainability objectives.
As for the longer term future, he sees mobility opportunities for employees who live and work close to public transport grids.
“We are already working with our leasing partners to come up with mobility alternatives,” said Prins.
IMAGES: Shutterstock, ERIKS