Appointing a specialist procurement company to oversee fleet purchasing could be an expensive mistake

Friday, January 18, 2019 - 08:54
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Businesses have been warned to be on their guard against a growing trend to turn to specialist procurement companies when acquiring fleet services only to find those organisations then walk away and sub-contract to typically industry suppliers.

“Procurement companies will claim to be experts in fleet – or in any field in which they are purchasing – but all they are good at is running a request for proposal on behalf of a business interested in procuring vehicles or a service to potential suppliers to submit their proposals,” said Tony Donnelly, chief executive of Goodwood Corporate Mobility, parent company of FleetLocum.

“They then hold a ‘beauty parade’ of potential suppliers and a contract is awarded to an individual supplier usually based on price. Once that task is completed the procurement company walks away leaving their customer and the chosen supplier to get on with the job.”

FleetLocum is now expanding in the UK having typically provided organisations on the continent with experienced fleet and mobility decision-makers on a temporary or interim basis. The company has a bank of fleet managers to provide clear advice and leadership to SMEs and major corporate, public and voluntary sector fleets.

Mr Donnelly said: “Fleet procurement is hugely complex. Price is a factor in every procurement process, but it is far from the only one in fleet and should not dominate at the expenses of other vital quality and service issues that are critical if vehicle operating excellence is to be achieved over the life-time of a contract.

“Too often specialist procurement companies view fleet as yet another commodity that they are purchasing. As a result, their focus is on securing the best price. Having achieved what in their eyes is ‘the best price’, they then walk away to start work on the next purchasing job almost certainly in another business sector.

“Such an approach is far too simplistic in fleet and shows a complete lack of understanding as to what is being procured, how service will manifest itself during the in-life period and how costs, real and hidden, will potentially rise during the contract period.”

When procuring vehicles and fleet services, Mr Donnelly says it is business-critical that, even if using a specialist procurement company or the tender process is being overseen by an in-house procurement department, fleet decision-makers should take a step back and clearly identify their requirements and establish the criteria before being involved in the whole decision-making process.

“If a business has previously outsourced the fleet function or it is managed in-house by in-experienced decision-makers it is vital that a business engages with a specialist fleet organisation, such as FleetLocum, to manage and control the procurement process,” said Mr Donnelly.

“FleetLocum’s experts hold the hand of the business they are working for and oversee the procurement process through its entirety and that business relationship can continue throughout the life of the contract. Businesses must ensure that they are absolutely in the driving seat when specifying vehicles and fleet services and thereby fully engaged in the procurement process.

“Specialist procurement companies are not experts in service delivery and consequently there is almost certainly no management of suppliers during the lifetime of a contract leaving a business at the mercy of the supplier with no checks or balances being undertaken because in-house knowledge and experience is lacking.”

appointment, but they could also charge the successful company an ‘introductory fee’. Consequently, that ‘introductory fee’ will be costed in to a supplier’s contract.

He concluded: “Specialist procurement companies may promise significant cost savings, added value and that they will scour the fleet market for best in breed suppliers, but the reality is somewhat different. Leaving fleet purchasing in the hands of a procurement company will almost certainly be an expense mistake for any business.”

 

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