5 steps you must follow in fleet procurement
Now you are ready to purchase a fleet of vehicles, but with the need to cut costs, forecast fuel prices and labor rates, procuring and managing a fleet of vehicles can be intimidating, and it isn’t easy – here are 5 steps you must follow in fleet procurement.
Fleet management requires a certain set of skills
A fleet manager’s skills are varied. Some of these skills include understanding vehicle systems, communication and finance and accounting.
Procurement officers have different skills and experience. A fleet manager can use these to help achieve a successful fleet. Some of these are:
- Negotiation skills. The procurement officer can help negotiate the best price and terms and conditions with a supplier.
- Legal experience. The fleet manager needs to use the procurement officer to assist with the legal aspects of a contract. This results in a final contract that serves the company’s best interests.
- Risk management. A procurement officer should know how to handle and manage risk within a supply chain environment.
This isn’t to say a fleet manager doesn’t have these skills or experience. It means that the fleet manager has access to someone with these skills to ensure the project is a success. The procurement officer and fleet manager should work together and leverage off each other’s skills and experience.
With this in mind, you can begin your fleet procurement process. And you start by consulting all the relevant stakeholders.
5 steps to follow in the fleet procurement process
- Speak to everyone involved
This should include anyone that is involved with the fleet in some way. These representatives can include sales and service, risk management, legal, and fleet. Getting input from all these stakeholders ensures that the company’s best practices are followed.
- Perform an asset management inventory
Ensure that you have completed an asset management inventory. Before you begin the procurement process, you should assess the condition of your fleet. You must also have a fleet plan in place before you start. You should also assess past fleet procurement mistakes and apply those lessons learnt to this procurement.
- Use a balanced approach
You should plan your fleet using a balanced and deliberate approach. This means considering all options when financing your fleet including lease, purchase and hire.
Whole-life costing should be calculated to ensure you understand the true total cost of a vehicle throughout its operational life. These costs include things like maintenance, fuel and tyres which can vary between different types of vehicles. Upfront discounts from suppliers may look attractive but they do not provide an indication of future vehicle costs.
- Define a technical specification
Consider everything when developing a technical specification, including total cost of ownership and fleet continuity.
An important part in the final stages of the procurement process is checking your vehicles’ against certain performance-meeting criteria. Doing this will ensure that they meet your company’s best practices.
A well-written specification will define your operating environment and your required performance characteristics.
- Choose the right partner
Evaluate the potential fleet suppliers objectively. Be thorough and objective when selecting your fleet vehicle provider. Once the provider has been selected, develop a partnership with them. Find ways to minimize risk and maximize value during the procurement process.
If your replacement volume is large enough, you may want to consider contacting an OEM to get contract pricing for your most often purchased/leased vehicles.
This will standardize your fleet and allow you to push some cost control on to your dealers, as well as allow your team to better prepare for future vehicle acquisitions. Standardizing your fleet can help lower maintenance costs by limiting the variety of parts you will need to up-fit, repair, and maintain your fleet.
For over two decades, RMA Automotive has provided fleet solutions to governments and NGOs, important Aid & Development missions and security forces around the world.
Ford Global Fleet Sales (FGFS), a wholly owned subsidiary of RMA Group, is the Aid & Development distributor for Ford Motor Company. FGFS maintains an inventory of stock vehicles ready for immediate shipment and has fast-deployment mobile service systems, ready to support client projects in remote areas or regions where local services are not available. Fleet productivity is the result of careful long-term planning of the vehicle’s life cycle. A FGFS Fleet Solutions Program is a comprehensive fleet asset management system covering all aspects of creating and maintaining vehicles for successful operations.
As a major supplier to both commercial and non-commercial organizations, RMAA has delivered over 100,000 vehicles to customers in almost 100 countries. These special vehicles include ambulances and emergency response vehicles, armored vehicles, mine site vehicles and various others.
Procurement should be a team effort. With a well-developed fleet plan, and all the stakeholders involved, the procurement of a fleet will reach a successful outcome.
Choose the supplier
Once all the potential suppliers’ bids have been evaluated, the fleet manager will decide which supplier to use.
The contract will be finalized, and then it is time to put in place the new fleet program.
This includes, amongst other things, adapting to the processes of the chosen supplier. There will be an adjustment to the communications with the new supplier, the paperwork required and the training on any new technologies used by the supplier.
A final step in the fleet procurement process
Before actually procuring anything, you should carry out an evaluation of the items you intend to procure to ensure you end up with the appropriate vehicles, parts and services. This evaluation is an ideal opportunity to involve users whose knowledge and views will contribute to more effective procurement.
It is critical to consider all options. You need to know exactly what the fleet will cost your organisation throughout the vehicle’s life. And by involving all the relevant stakeholders, you can ensure the procurement of a successful fleet for your company.
Have your say
This is a simplified overview of what can be a very complex operation. Please feel free to let us know what else you would add to the mix. Submit your comments in the field below.