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.

Compare

Blog

Driving Notes

Paul Clinton
2015 Lexus NX 200t F Sport

By Paul Clinton
The NX enters a ever-more crowded field of compact SUV offerings, especially among luxury brands, but should find its niche with its sportier driving feel and aggressive styling.

2015 Ford Edge

By Mike Antich

View All

Nobody Asked Me, But...

Sherb Brown
Fleet Management: Part Art, Part Science

By Sherb Brown
Fleet management is part art, part science. Recent developments in the industry have made it more science and less art for sure. There are a lot of very complex decisions to go into the daily operation of a fleet.

The More Things Change, The More They Actually Change

By Sherb Brown

View All

Market Trends

Mike Antich
Fleet Is on the Verge of a Productivity Revolution

By Mike Antich
The fleet industry is on the verge of a productivity revolution through the introduction of faster, better, and more sophisticated analytical tools.Developing in parallel with this trend are increasingly sophisticated vehicle connectivity tools that will turn predictive analytics into a true science. The first manifestation of this will be the transition of fleet maintenance from reactive to proactive practices using remote diagnostic tools.

Implementing a Driver Communication Strategy

By Mike Antich

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 - May/June 2015
$12.95

Featured Articles Include: * CBRE Finds Unity in Decentralization * Executive Fleets: Fostering Accountability * 10 Ways to Optimize Depreciation Management

Up Next

More From The World's Largest Fleet Publisher