Independent ‘deep dives’ by experts into fleet purchasing costs and terms is critical if businesses are to obtain value for money, according to intervention management specialist FleetLocum.
Many of today’s largest contract hire and leasing companies promise a consultancy-based approach when advising customers, but from a client perspective that is akin to asking a rabid Brexiteer to vote remain, according to Tony Donnelly, chief executive of Goodwood Corporate Mobility, parent company of FleetLocum.
Fleets are going through unprecedented levels of changes, due to a variety of issues including Brexit, company car benefit-in-kind tax uncertainty and the growth in the range of vehicle funding solutions available, but many organisations have in past years made the professional fleet manager job redundant.
They had instead, said Mr Donnelly, outsourced operations to vehicle leasing and fleet management companies, while placing responsibility for managing fleet operations with personnel in HR, finance, procurement or travel management roles.
Consequently, he said, those organisations relied on their chosen vehicle providers for expert advice because they lacked the in depth, in-house knowledge and experience to focus on strategy and cost management around issues such as fleet funding, vehicle choice lists, operating policies and corporate risk in a changing world.
Yet, said Mr Donnelly: “Those business partners will not provide independent advice. They may review, for example current company car provision and talk about mobility solutions, but it is purely a paper exercise. Ultimately fleet solutions will still be provided by the same partners, perhaps simply in a slightly different wrapper.
“Truly independent advice will not be forthcoming because that could mean a client switches to another provider or costs reduce. It’s like asking a rabid Brexiteer to vote remain, it just won’t happen.”
When undertaking a root and branch fleet review it was, said Mr Donnelly “super critical” to engage with independent experts who did not have a vested interest in the outcome.
He said: “FleetLocum will work tirelessly to expose all the individual components that go to arrive at a lease rate – manufacturer support, maintenance provision, and management fees, the real cost of vehicle rental – as opposed to the headline rate – accident repairs, mileage reporting, contract realignment and all the associated costs that takes considerable time and effort to find.
“Even if the time is available, managers then need to spend even more of their time to put in place and police the actions needed to ensure the good work is acted upon.”
FleetLocum, which provides businesses with experienced fleet and mobility decision-makers on a temporary or interim basis, counts among its past successes:
• Securing a £350,000 rebate from a major vehicle leasing company after undertaking an in depth review of contract terms and the service promised for a client.
• A review of a company’s vehicle rental spend that uncovered an opportunity to save £230,000 per annum.
Mr Donnelly said: “Those cost savings, as well as many others, that FleetLocum has uncovered highlight that clients were being taken advantage of on a huge scale. The businesses concerned had been long-time customers of both the leasing provider and the rental company, but had failed to undertake regular contract reviews. As a result, they were viewed by the providers as a cash cow.
“That situation only changed when, following new appointments those people engaged with FleetLocum to investigate and review all current fleet contracts and practices. Armed with reams of evidence we approached the providers and renegotiated contracts.”
Procurement professional Catharine Hague has used FleetLocum to provide “help and guidance” and “deliver transparency to the complexity of the fleet tendering and purchasing process”.
Ms Hague said: “In procurement it is very important to have a holistic overall understanding, but to truly understand the nuances of purchasing in some areas, such as fleet, it is very important to have professional guidance.
“I do not have in depth knowledge of the fleet market so when tendering I engaged Tony whose advice was invaluable. He had the knowledge and experience to conduct ‘deep dives’ into what was driving the process and the costs being quoted by providers and that was how significant savings were uncovered.
“Before working with FleetLocum I approached other independent experts, but Tony was very personable and there was a build-up of trust between us. He took me and the procurement team through the intricacies of the tender responses from short-listed companies and significant savings were made for my then employer due to his deep understanding of fleet. His work was of great benefit to me and the business.”