Managing the Financial Side of Commercial Fleets

The Pros & Cons of Centralized or Decentralized Fleet Operations

Some companies determine that the best way to manage their fleets is by decentralizing fleet management; others believe centralized fleet management is the most efficient and cost-effective.

July 2012, by Staff

As with any number of departmental functions, senior management must determine whether fleet management should be a staff or line-management function. The decision is one of allocating precious company resources (money, people, and time) to their most productive uses.

Some companies determine that the best way to manage their fleets is by decentralizing fleet management, delegating fleet responsibilities among various regional or internal operations.

No matter how a fleet decides to run its internal operations, one thing is a must: a clear, well-written fleet policy.

Defining The Fleet’s Mission
The first step in determining whether to centralize or decentralize fleet functions is to ensure there is a thorough understanding of the fleet’s mission.

Utility and delivery companies cannot operate without the cargo capacity required for their jobs. The mission is part and parcel of each company’s existence. For a consumer product company or insurance provider, it can be less clear cut. True, employees are provided vehicles due to the high mileage they accumulate; however, there is the reasonable possibility that employees can use their own vehicles and be reimbursed. This is not an option for a utility. Expecting a potential hire to have a bucket truck is a stretch.

Centralizing Operations
The more integral a company vehicle is to the overall mission, the more it lends itself to centralized management. It is perhaps simplest, or at least the most obvious, to put the responsibility for fleet management in the corporate office.

The primary benefit is that the overall administration requirements are limited, and, thus, a higher level of concentrated expertise can be achieved.

The recruitment and hiring of professional fleet management staff is focused in a single department, as is the building of staff functions. But, personnel advantages are only one of a number of advantages of centralizing fleet management.

Vehicle Selection: Some companies have homogenous fleets — the fleet mission is consistent throughout the field. Others have multiple missions with diverse requirements. Either way, centralized vehicle selection provides both high consistency and expertise that may not be available at the divisional or branch level.

Fleet Management Services: This includes primarily fuel, maintenance/repair, and collision management/subrogation recovery. The question of centralization of the provision of services is a little more complicated. The purchase of fuel, maintenance/repairs, tires, and collision repairs involves regular, ongoing activity at a local level. The economies of scale that can be achieved via centralization aren’t always evident here. A local branch, for example, may be able to contract with local suppliers that, in return for the regular flow of business and prompt payment, can provide substantial discounts, including vehicle delivery and pick-up.

The primary advantage of centralization is truly the collection, storage, and dissemination of the cost data that services generate. A single, centralized service offers a single data source, with the ability to run and schedule reports in one place at one time.

Fleet Administration: Many of the day-to-day activities required to run a
fleet can be handled at the corporate level. Interaction with vendors, establishment of policy/procedures, driver communication, record maintenance, etc., are functions that field operations are generally not equipped to handle — either from a personnel or resources standpoint. Keeping a smooth flow of communication and information is often best handled from a single source.

In most cases, the centralization decision is one of availability and allocation of resources. Frequently, the corporate office is better equipped to handle many departmental functions, including fleet. Arguments can be made, however, for decentralizing at least some fleet functions.

Twitter Facebook Google+

Comments

Please note that comments may be moderated. 
Leave this field empty:
 
 

Fleet Incentives

Determine the actual cost of owning and running a vehicle in your fleet. Compare vehicles by class and model.

Blog

Market Trends

Mike Antich
10 Ways Fleet Managers Can Avoid Being Under-Rated by Senior Management

By Mike Antich
There is an ongoing perception by senior management that fleet management is not a complicated and sophisticated profession. As a result, one of the biggest challenges facing fleet managers is getting management to recognize and acknowledge their contribution to the company. Here are 10 ways to ensure management recognizes your contribution to the company’s bottom line.

Finding the Right Balance: Over-Spec’ing vs. Under-Spec’ing Trucks

By Mike Antich

View All

Driving Notes

Mike Antich
First-Ever Mazda Ice Academy Showcases i-ACTIV AWD System

By Mike Antich
The Mazda Ice Academy was designed to demonstrate Madza’s i-ACTIV all-wheel drive (AWD) on a dedicated ice course in Crested Butte, Colo. It was a very convincing demonstration of reactive vs. predictive on-demand AWD.

2016 BMW 340i xDrive

By Paul Clinton

View All

Nobody Asked Me, But...

Sherb Brown
Preparing Your Fleet to Meet Rising Market Trends

By Sherb Brown
Plan ahead for the future and have discussions with your senior management about costs and what the future has in store for your fleet. While it looks like the cost of a gallon of gasoline may be going down, the cost of everything else is going to go up.

Analyzing the Future of Fleet

By Sherb Brown

View All

In Memoriam: Coach's Insights

Ed Bobit
Thinking of the Newbies of the Future

By Ed Bobit
A lot has changed in the past 10-15 years, so we can only imagine this momentum will continue into the next decade-plus. How will this change impact the fleet manager of tomorrow?

Managing a Car vs. Work Truck Fleet

By Ed Bobit

View All

STORE

Fleet Financials Magazine - January/February 2016
$12.95

Featured Articles Include: * 30 Years of Fleet Financials History * Milestones in the Vehicle Leasing Industry * Celebrating 14 Years of Fleet Executive Recognition

Up Next

More From The World's Largest Fleet Publisher