The strategic procurement process typically involves a multifunctional sourcing team that brings the fleet manager together with representatives from other departments, such as procurement, sales administration, operations, HR, finance, and risk management. This cross-functional team often designates a “gatekeeper,” who is responsible for controlling the flow of information to the group. When selecting a fleet supplier, I strongly believe the fleet manager needs to be the gatekeeper based on category expertise to drive the best sourcing decision.
Since procurement groups often work on multiple projects during the course of a year, it limits the amount of time they can devote to understanding the complexities of fleet management. This is why a fleet manager is invaluable to a sourcing team. As a gatekeeper, the fleet manager shares information with others on the procurement team helping to educate them about the fleet process to facilitate appropriate analysis to make the best decision.
Benefits of a Multifunctional Team
Advocates believe using a multifunctional team is the most efficient way of making a corporate sourcing decisions. These proponents argue a cross-functional team — because of its wider range of interests and perspectives – can provide a more thorough examination of the fleet purchasing and supplier selection process.
Although these cross-functional teams may bring a fresh perspective to fleet management, they also tend to lack real-world expertise of fleet requirements, sometimes leading to a less optimal decision unless there is active participation on the part of the fleet manager. Although less so now than in the past, one ongoing challenge with some strategic sourcing groups is that they are single-focused on cost cutting.
A multifunctional team, comprised of a diverse group of stakeholders, needs a leader, ideally, someone who has the fleet expertise to drive the outcome of the process. The team leader should be someone who is facts-oriented, with a balanced perspective towards both cost and service. Similar to the gatekeeper function, the best candidate to be the fleet sourcing team leader is the fleet manager by virtue of subject-matter expertise.
To be a successful team leader, the fleet manager must embrace the procurement process and avoid being defensive when past fleet decisions are critiqued. The quickest way to lose credibility with a procurement team is by too aggressively defending the incumbent supplier and not being open-minded to considering change. The fleet manager must also avoid being perceived by other members of the procurement team as being too “emotionally attached” and not engaging in fact-based deliberations. Ultimately, a team leader needs to bring everyone to a consensus decision that coalesces on the most appropriate sourcing strategy for the corporation.
Need for Fleet Expertise
During the RFP analysis, the fleet manager needs to articulate a pro and con, fact-based discussion when analyzing sourcing options. The fleet manager must present the “fleet” perspective to strategic sourcing, since he or she is the most qualified person in the organization to understand the consequences of ill-advised decisions. While sourcing groups increasingly recognize the importance of service, they still have difficulty quantifying it and often view it as an intangible.
A procurement group is very good at buying, but often doesn’t understand the subtleties involved in the service relationships between the corporate fleet department and its partner fleet suppliers. A fleet manager needs to persuasively articulate the nuances of a service relationship to others on the team. This requires a broad perspective of how procurement and supplier selection decisions impact the corporation as a whole since fleet is a key tool to implementing and fulfilling the corporate mission.
A common communication problem between fleet and procurement is that they do not speak the same “language.” To address this, a fleet manager should translate fleet needs into procurement’s language (cost). It is a steep learning curve for the cross-functional team to fully understand the intricacies of fleet during the relatively short duration of the RFP process. When dealing with intangibles, such as service, quality, and innovation that a supplier can provide, a fleet manager should attempt to quantify these costs/savings and express them in cents per mile, dollars per month, or lifecycle expense.
Making a Balanced Decision
The ultimate fleet sourcing decision needs to be one that balances an economic solution with required service levels, while maintaining driver satisfaction, along with fulfilling the needs of other stakeholders. If the decision is to switch suppliers, it is important to quantify the cost to switch. This is the language that procurement understands.
Let me know what you think.
Originally posted on Automotive Fleet