Don’t leave money on the street: How international fleet consolidation can cut costs
Thilo von Ulmenstein, managing partner, Fleetcompetence Group, looks at the benefits of adopting a Europe- or global-wide fleet policy.
With an intelligent strategy for the management of cross-country fleets, considerable cost reductions are achievable. But this requires changeability at two levels: internal policies and the supplier portfolio.
In today’s level of globalisation, there are hardly any companies that are active in just one market. Most have vehicle fleets in many European countries, or even on other continents. However, we often see still significant fleets managed purely on a national level. This means that company vehicles are allocated based on local policies. And suppliers also come from the respective home market.
But fleet clearly is a category to be managed centrally. An international consolidation based on an overall strategy can lead to a reduction in fleet costs of up to 20%. This is the reason why I am increasingly seeing a trend towards the internationalisation of fleet management. To open up the potential for consolidating the fleet, a company has to act in two directions: car policy and supplier base.
The question of a Europe-wide or even global car policy is often denied, referring to the different company car cultures, as well as the diverging legal and fiscal circumstances. From these indisputable facts, it is then concluded that a uniform policy is not feasible. My experience shows that this is not the case. But a prerequisite for success is that the company’s management sends out a clear signal towards consolidation – and creates a culture of openness towards change. On this basis, an appropriate framework policy can be developed, which – where necessary – considers country-specific requirements.
A new international fleet strategy should be built upon different scenarios, illustrating the impact on employees and costs. Usually they range from ‘soft’ to ‘medium’ to ‘hard’. A ‘soft scenario’ does not touch the employee’s car brand or model choices, while a hard scenario does give (nearly) no choice any more. Most companies go for the middle road, but we see an increasing number of ‘hard’ policy concepts being implemented.
I often see HR and procurement departments fight for sovereignty over the policy. I strongly believe that only a joint approach will bring sustainable success. Both parties have fundamental insights in areas that build the basis of a successful international fleet strategy.
While HR plays a strong part in developing the ‘employee focus’, procurement takes over the significant part of implementing the policy. It must be translated into a new supplier strategy to achieve the projected cost reductions. Usually procurement has a less emotional view on cars, which makes them impartial when it comes to supplier selection.
Finally, the new consolidated strategy and policy has to be signed off by the management board. This is always a great opportunity for the team, responsible for the fleet category, to make their excellence and know-how visible and to bring the fleet management on the next level.
Interestingly, I’m noticing more and more that not only is it the large companies, with fleets of tens of thousands of vehicles worldwide who recognise the advantages of an international consolidation, but also medium-sized companies are increasingly recognising that an interesting potential is being raised here. Do not leave this money on the street.