For a long time, fleet managers depended upon their innate judgement in choosing suppliers. They knew that the lowest pricing did not necessarily result in the lowest cost, and that there were important intangibles that must be considered in making the decision.
Gradually, however, companies began to involve purchasing, procurement, and “strategic sourcing” departments in decisions that would, in the long term, impact fleet. Such involvement began as an equal partner in the decision but have in many cases evolved into managing the process, issuing of RFPs which focused on pricing for the various products and services fleet managers need. The most recent of these functions to impact the fleet procurement process is strategic sourcing.
Strategic sourcing is a relatively simple idea: look for corporate spend and leverage diverse volume wherever possible into discounts from suppliers. Fleet spend — maintenance, fuel, etc. — is often combined with corporate card spend, such as travel and expense and straight purchasing (office supplies, etc.) spend. It’s a good process, and can save a company thousands, if not millions of dollars.
The problem with sourcing fleet products and services; however, is that there are a fair number of qualitative aspects to the choice of a supplier or suppliers; pure pricing is not often the final determinant. So then, what can fleet managers do when faced with a procurement process that is managed by a function that is not a fleet function? Here are some ways that the qualitative can be quantified.
The First Step
If a fleet manager hasn’t yet faced having to cede the vendor selection process to one of the purchasing/procurement/strategic sourcing triumvirate, it’s a good idea to take an important first step: take the initiative to meet and get to know staff in those areas. Introduce them to fleet, what you do, what your vendors do, and what is most important in a fleet supplier, other than price.
Explain that fleet cost is not simply a series of dollar purchases. The operation of a fleet of vehicles “throws off” a tremendous amount of data, data that is critical in managing these costs. It is not like, for example, hotel, air, or rental vehicle spend. That fleet suppliers are in touch daily with the fleet department, with drivers, with managers, and that a number of qualitative benefits are as critical to the decision as is pricing.
That said, a fleet manager may well learn new “tricks of the trade” that purchasing or sourcing professionals use to negotiate the best deals. It may never happen, but if the company determines that the selection process should move from fleet to sourcing this kind of relationship can be important in, at the very least, establishing the fleet manager as a subject-matter expert (SME).
One of the most important qualitative benefits of a good fleet supplier is response; how good are they, and what processes do they use, to respond to the needs of the customer, whether it’s an immediate need or a recurring one.
Even in this day of smartphones, text messaging, email, and various other communication methods, talking on the phone — smart or land line — remains the primary day to day form of communication, particularly for emergencies (vehicle accidents, breakdowns, etc.). Response time isn’t in the pricing of any of the products or services a fleet company provides, but it is nearly always part of the “pitch.” How do you quantify response time?
Most companies with call centers, like all fleet suppliers, have sophisticated call management systems, which track a plethora of call data. Answer times (number of rings), dropped calls, call duration, data that can easily be used to compare one supplier to another.
Merely returning a phone call or responding to an email doesn’t complete the response measure. The quality of the response — how promptly after the response the supplier provides resolution — is every bit as important, even more so. Fleet managers and their supplier(s) can develop a system for tracking response and resolution. Tracking initial contact, defining the purpose of the communication, and ongoing activity toward ultimate resolution is a simple and effective way of quantifying the quality of response:
- How quickly was the initial communication accepted (call answered, email acknowledged)?
- Define the issue; who initiated the communication, why, and what is expected.
- Step-by-step timeline of any ongoing activity.
- Pinpoint the date and time of the formal resolution of the initial issue or problem. If potential suppliers don’t have such a formal process in place, sourcing/fleet can require that one be presented with an RFP or RFI response.
Importance of Relationships
All fleet suppliers have some formal customer service and client relations staff and processes; the former is usually for day-to-day service via telephone and email, the latter is more strategic in nature and involves face-to-face visits.
That’s all well and good, but the mere existence of these services isn’t, or shouldn’t be, enough. Developing good, solid working relationships with service staff is important in the overall success of such programs. But how can a relationship between supplier and customer be quantified? How do you quantify “like,” or “we work well together?” Not simple, but it can be done.
Start by getting key service personnel information:
- Longevity: how long have service staff been with the company? There are usually reasons why suppliers who regularly turn over staffers do so, just as there are good reasons why such staff remain with the company. Ask suppliers what their average tenure is both with the company and in current positions for customer service and field client relations staff.
- Require that suppliers be specific as to who will be handling the account. Are calls to a customer service call center always routed to the next open line, or will the account be handled (whenever possible, keeping in mind that assigned staff may be busy, and waiting for them to return calls will impact the aforementioned response times) by an assigned rep. The same goes for field client relations staff.
- How many accounts are both functions assigned? How often can you expect your field client relations rep to visit?
- How large are assigned accounts? If your fleet has, say, a few hundred vehicles, does the field rep who will be visiting have other accounts with many hundreds or thousands of vehicles? No matter what a supplier says, being a smaller fish in a large pond can sometimes lead to a lack of service, as a field rep focuses on larger fleets.
- How large is a field rep’s territory? Do they even have a geographic territory, or are they assigned accounts without regard for geography?
- Ask for references. Once you know specifically who will be assigned to your account, get references from other accounts he or she handles.
Using the above information, a fleet manager, along with sourcing staff, can establish a profile of the service process, even develop a scorecard. For example:
- Average client service call center staff tenure is 3.5 years. If an assigned rep, he or she has 5 years tenure with the company.
- Your assigned client relations rep is John Smith, who has been with the company for 8 years, covering an existing territory (or specific accounts) for 6 years.
- If assigned, customer service reps handle 25 accounts. Client relations rep handles 10 accounts, average fleet size of 375 units, or, covers five states with 20 accounts averaging 400 units. The largest five accounts average 1,050 units, the smallest five average 225 units.
- Your client relations field rep is required to visit at least once per quarter, more often if required, including an annual formal account review.
- On a scale of 1 to 5 (5 being the highest/best), references contacted score their assigned client relations rep 4.5, and their satisfaction with customer service a 4.
You get the idea. All of the aforementioned can help to quantify, to score, the intangible of will the fleet manager be able to develop a close working relationship with key service personnel. one may go so far as to determine the likelihood of “liking” reps, developing the kind of close, even personal relationship that can dramatically enhance the overall supplier/customer bond.
Factoring in Technology
Technology isn’t quite an intangible, but since all fleet suppliers provide various levels of technology to their customers, user friendliness and flexibility can be difficult to quantify.
What kinds of technology does the supplier offer? There is usually a “dashboard”-type feature, a central portal for the fleet manager, from which specific functions can be accessed. Those functions include key elements of fleet management:
- Inventory control
- Vehicle ordering/specification
- Standard reporting
- Exception/custom reporting
- Data analytics
Then there is technology that is accessible to drivers:
- Accessing selectors, vehicle ordering
- Obtaining pricing for vehicles to be replaced
- Reporting lost or stolen service cards, changing PINs
- Scheduling maintenance/repairs
- Accessing company fleet policy documents
The fleet manager will usually access technology via a desktop computer, drivers via an iPad-type devices, even smart phones.
But what is intangible about technology? Fleet managers know what they want, and what they want drivers to have access to. How, though, does one quantify “user friendliness,” something that is less quantifiable than the specifics of what is required by the fleet manager.
It can be done, even though it is nearly entirely a subjective process.
- Reporting: How does the reporting function work? Are most, or all reports pre-formatted by the supplier, where specific fields of data are chosen to produce them? Or is there a custom reporting function where the fleet manager can format his or her own reports, using whatever fields of data are available?
- How long does it take to create a report? Is it a clear, “point and click” process, or does it require training?
- How often is the system “down,” if at all? Survey references provided.
- Much of drivers’ use of technology involves “inquire/response” action. How long does it take for a driver to obtain, for example, a replacement for a lost, stolen, or damaged fuel card?
- Is data secure? What steps does a supplier take to secure key fleet data?
- Who owns that data? Can a fleet manager download masses of data for internal use? Will the supplier, if a change is implemented, cooperate in providing data to a new vendor?
Much of these items are simply yes or no questions, but the ease of use, so called “user friendliness,” is subjective in nature, and the yes or no answers help quantify that subjectivity. For example, key reporting functions might require relatively extensive training to use, as opposed to one which is intuitive and simple. Fleet managers can apply subjective needs that will help quantify the use of technology, as opposed to simply learning what it provides.
It Can Be Done
Sourcing or procurement staff’s primary goal is to negotiate the best pricing, ordering, shipping and delivery processes, by combining spend. Fleet managers are indeed concerned with pricing, but have day-to-day relationships, technology, and usage concerns that aren’t always clearly quantifiable.
Collecting the right information, as described, can help fleet managers quantify intangible usage information that can help set one supplier or another above the rest, assuming of course that pricing is competitive (and not necessarily the low-cost alternative).
Develop that important relationship with sourcing/procurement staff first, whether they’re involved or not. Use those relationships to relay the importance of scoring quality, of quantifying it. More and more companies are tasking sourcing functions to involve all areas of company spend. Be ready, if it already hasn’t happened, and the decisions they make will be much more acceptable.
Originally posted on Automotive Fleet