31st Aug 16
CEO's Blog: The Rise of Procurement-Led Fleet Outsourcing
In this insight blog, Optimum’s Chief Executive Peter Rushton reflects on how an advanced procurement skill set can make a real difference to the fleet outcomes delivered to customers.
Optimum Fleet operates as a key service line within the Optimum Procurement Group, meaning we offer some often very different perspectives to our customers in the way we manage their fleets and ultimately deliver value to them. For near on a decade, we have seen a growing trend here at Optimum of an increasing number of fleet customers citing the importance of working with a procurement-led partner. Usually, this is because they want to ensure a fleet solution that focuses on the key deliverables of cost reduction, reducing supply side risk and improving sustainability.
We’ve never made any apologies for maintaining our independent status within the fleet sector. This allows us to capture significant savings through market driven opportunities, ensure consistently high service levels and maximise the return on investment delivered to our customers. However, the importance of delivering our fleet management solutions via a procurement services infrastructure has been a vital ingredient in our service offering and success to date.
Optimum has a proven pedigree in procurement outsourcing, having been independently ranked by leading research firm Everest Group as one of the top five service providers in the UK, as well as being in the top twenty globally. Very few fleet management providers offer genuine procurement expertise at this level, despite some claiming otherwise.
We believe and consistently show that the combination of expert procurement processes and fleet domain knowledge offers a rich source of incremental competitive advantage for our customers. In the early phases of engagement most customers want to understand more about our procurement outsourcing heritage, so we always begin by defining what’s involved:
Procurement outsourcing (PO) involves the transfer to a specialist third party provider of procurement and supply chain activities, the ongoing management responsibility for specific pre-determined categories of bought out expenditure, for example, fleet management. The focus is typically to measure spend consumption data, reduce costs and supply chain risks whilst ensuring sustainable sourcing practices. The full spectrum of support involves source to contract through to full settlement. A key point of aggregation and differentiation for third party providers versus in house teams is that they work across multiple clients leveraging deep insight into real time category activity frequently resulting in new and incremental value being captured.
With this in mind, we can now look at the key challenges our customers face and how I believe a procurement-led solution addresses them.
The majority of customers who come to us are faced with the increasingly difficult challenge of trying to manage and maintain a fleet of vehicles in-house with scarce or ill equipped resources. I find this is particularly true of many small or medium sized companies who are increasingly turning to fleet outsourcing.
Fleet is mostly a non-core category that is becoming even more complex. This complexity manifests itself in having to deal with growing legal regulation and safety issues combined with the day to day demands of driver and vehicle management. In short, the scope of responsibility can often end up being far larger than many organisations realise – many often end up concerned that they aren’t in full control of their fleet, and few are ever able to realise the potential savings effective fleet management can bring.
Furthermore, I am finding growing levels of frustration amongst potential customers regarding the value proposition and fee structures of traditional fleet models. Many find they lack a distinct balance between risk and reward. Thus, many buyers have little trust in the fleet supply chain, and as such desire an alternative to these traditional service models.
Our Procurement-Led Solutions
With these issues in mind, we have consciously designed our service offering to alleviate many of these common concerns.
Firstly, our procurement-led approach is underpinned by our leading technology platform, FleetPlus. As such, we can reassure our customers on the challenges of managing vehicle and driver compliance, control and, most crucially, costs. Put simply, our procurement-led ethos ensures we focus on creating preferred fleet supply chains that cover every facet of fleet activity from acquisition to maintenance and repair to accident management and temporary hire amongst others.
Having access to a leading technology asset management platform allows us to offer customers an end to end fleet solution that can be tailored to suit giving real time data on key KPI’s, including fleet operating efficiencies, cost control and service performance. Our service is a modular design meaning we are equipped to serve fleets of any size, from one unit to thousands. And, for convenience, we can normally load all of the fleet data within a short time, thereby mobilizing a new service solution that offers any new customer a step change in performance from the outset.
We have a strong track record of delivering significant incremental savings for customers across all elements of the fleet supply chain. Procurement is what we know and what we do, day in and day out. Alignment with your customer is crucial, so we embed our engagement model around a simple but highly effective service review board governance process, matching ourselves to the customer’s culture, thereby becoming an extension of their business. All of these traits are essential in any wider procurement outsourcing arrangement, so naturally feature in the way we approach fleet management.
A procurement-led approach means that providers like Optimum are now seen as an attractive alternative route to market for many key suppliers within the fleet supply-chain. This primarily means we can build highly effective relationships with vendors that allow us to secure enhanced savings and service improvements for our customers.
I believe the business case for utilizing a procurement-led approach to fleet management is a compelling one. It is perhaps more evolutionary than revolutionary, but it is nonetheless a growing force within the fleet industry that is rightly challenging the traditional models of fleet management.