Managing the Financial Side of Commercial Fleets

How to Get Optimum Performance from Fleet Suppliers

Whether dealing with one fleet supplier or several, a fleet manager's actions are directly impacted by supplier performance. Here are some tips on how to get the best in products and service.

July 2009, by Staff

As company resources grow more and more precious, outsourcing various functions has become a critical element in many fleet operations. The convenience, resources, and expertise fleet suppliers bring to the table is substantial, and if used properly, can contribute to a fleet manager's success.

However, outsourcing merely for the sake of outsourcing does not take full advantage of these resources and expertise. If suppliers aren't performing optimally, their effect on fleet operations is muted, and money is wasted.

Define Expectations & Establish Measurement Criteria

The process of optimizing the performance of fleet suppliers is a team effort; it isn't simply the customer demanding and the supplier producing. Both parties must first define expectations, establish measurement criteria, and schedule performance reviews. If these tasks are done carefully, both fleet and supplier enjoy a mutually beneficial relationship.

We can begin by identifying fleet activities most commonly outsourced:

  • Vehicle acquisition, via leasing or a purchase/disposal program.
  • Maintenance/repair/tires.
  • Accident repair, reporting, subrogation.
  • Miscellaneous administrative processes, including license/registration renewal, title, parking ticket payment.
  • Fleet administration, a so-called "fleet desk," including toll-free driver access, vehicle order processing, and policy communications.

Suppliers provide other functions; however, those listed are the most common, either as separate programs ("unbundled") or in a bundled fleet product.

What, then, defines peak performance in these programs? Any fleet program can be judged in two ways: operationally and financially. Operational performance covers issues such as error rates, telephone performance (dropped calls, speed of answer), and both day-to-day and field customer service. Financial performance includes any and all cost containment and savings data.

Leasing Programs Cover Several Fleet Functions

Fleet leasing programs aren't simply financial instruments. They encompass a number of important fleet functions, including order placement, order status tracking, delivery, billing, and used-vehicle remarketing.

The operational aspects of leasing supplier performance include, but are not limited to:

  • Order placement: error rates and turnaround (how long between order placement and scheduled build).
  • Order status: the ability to track the production process.
  • Delivery process: prep and drop- ship fees.
  • Used-vehicle turn-in: condition reports and pickup.
  • Vehicle resale: days from pickup to sale, proceeds versus market.

Most importantly, all these aspects of a lease program are measurable, and all are important indications of optimal performance.

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The term used in some European countries, e.g., Spain, for closed end leases, which ordinarily include the lessor assuming responsibility for maintenance and tire costs in addition to residual value risk.

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