Why Use Third-Party Fleet Consulting Services
By Marc Canton
This is the second-part in our series on Third-Party Consulting Services. Last week we discussed the types of reviews you can expect from consultants, and this week we dive into why you need consulting services.
Many fleet managers or leaders within fleet owning organizations ask themselves, “Why Use a Third Party? Why should I have an outsider come in to look at my operation? I think we can perform many of the activities escribed above ourselves and outsider may not understand my organization’s unique operating circumstances.” These hesitations are understandable, especially within the fleet management industry. One of the challenges fleet professionals face is that most consultancies are not specialized in fleet, and as such, it is certainly important to vet the resumes of the firm and project team. That said, there are in fact quite a few reasons to consider conducting a third-party review.
Three Key Truths
Fleet managers and organizational leaders considering bringing in a third-party should start by accepting these three key truths:
First and foremost, Fleet Management is very complicated. Skeptical? Just consider all of the management functions and disciplines fleet leaders need to be proficient in:
- Vehicle/Asset Allocation
- Vehicle/Asset Acquisition (Specification Development, Purchasing)
- Licensing and Titling
- Fleet Replacement Planning
- Life Cycle Management
- Fleet Finance and Funding (Debt, Lease, Reserve Fund)
- Used Vehicle/Asset Remarketing
- Maintenance and Repair
- Parts Procurement and Supply
- Parts Inventory Management
- Outsourced Repair Management
- Employee Classification and Compensation
- Mechanic Supervision
- Shop Safety and Compliance Management
- Roadside Assistance
- Accident Repair Management
- Service Level Agreements
- Customer Relationship Management
- Bulk Fuel Procurement and Supply Management
- Fuel Site Management and Maintenance
- Commercial Fuel Card Management
- Vehicle/Asset Utilization
- Personal Use Management
- Car Allowances and Mileage Reimbursement
- Motor Pool Management
- Vehicle Dispatching
- Routing & Scheduling
- Operator/Driver Training
- Driver Management
- DOT Compliance Management
- Risk Management
- Insurance Procurement and Management
- Management Information Systems
- Data Collection and Integrity Management’
- Management Analytics and Reporting
- Performance Measurement and Benchmarking
- Supplier Management
- Business Planning
- Cost Analysis and Control
- Overhead and Indirect Cost Allocation
- Internal Cost Distribution (Chargeback)
- Accounting and Financial Management
- Budgeting
- Real Estate Management
- Facility Maintenance
…. Just to name a few.
Of course the great irony of the above is that most folks who have not done fleet management think it is not all that complicated. Fleet professionals often hear comments to the effect of, “I own a car. I know what a lease is. I can change my oil.” Of course comments like that are usually followed by something like “And I got a great deal on the air brakes the service guy installed on my Toyota Camry.” Nonetheless, fleet professionals and their leaders need to accept that the majority of the professional world simply does not appreciate how challenging and complex fleet management truly is, and in most cases, it is simply a matter of not being exposed to it.
And finally, the simple fact is that resources will always be limited, and everyone in the organization will always “need” more. This is often called the Resource Crunch. When you take these three truths together, it is very likely that an objective external voice can often make the case that an internal voice struggles to convey to stakeholders and leadership, if for no other reason than because those same stakeholders and leaders listen differently. A third-party can help eliminate subjectivity and ensure the results are fair and strategic. This becomes all the more important when the challenge is less associated with deciding on additional resources, but instead requires the elimination of some resources due to recession, reduced revenue or profit margins, etc.
Time Crunch
As noted earlier, there are many third-party reviews that you can probably do internally. You know what needs to be done, but you don’t have the time to do it. And your staff is not in position to get it done either, whether it is because you are short staffed to begin with, there are current vacancies, turnover is too high, or because it is more difficult to hire additional staff than pay a vendor. And let’s be honest, a new “project” never leads to a pause in your existing day-to-day responsibilities. So how can you get the work done, when your day is already spoken for? For this reason, organizations commonly turn to a third party when they have a new initiative, such as a technology implementation or specialized bid or position search.
A Different Perspective
Consultants and other third parties do not “live” in the same singular sphere as most fleet management professionals. They see things differently because they often get to visit many similar operations both near and far, which creates an opportunity to learn trends and how others are doing things, taking the best ideas that may apply to your operation.
Moreover, sometimes the nature of the project requires a third-party by its very nature, or because it is prudent and pragmatic. For example, sometimes leadership needs an objective assessment because there is a key strategic fork in the road, or because a very influential stakeholder wants change. Third-party assessments help remove the personalities and politics from the equation, and can objectively benchmark the quality and cost effectiveness of your operation. Remember, compete or become obsolete. If costs are not competitive relative to the quality delivered, the simple fact is that a change is necessary.
Education
Many fleet professionals “fell” into fleet. Third-party reviews conducted by dedicated fleet management professionals provide an opportunity to quickly learn best practices, which key performance indicators (KPIs) to utilize, and how to leverage them. Even the most learned and experienced professionals need training and refreshers. In life and in business, if you are not moving forward you are moving backwards; when you think you have nothing left to learn, well….
The Real Reason
Let’s be honest. When most organizations engage a third party, it is because they must for compliance reasons, or because they believe there is potential to save money. The good news is most fleet engagements do lead directly or indirectly to cost savings. Fleet right-sizing/right-typing studies typically save fleet owners 2x – 10x the cost of the study. Fleet replacement studies & life-cycle analyses generate significant budget savings immediately and reduce long term operational costs, often paying for themselves more than 10 times over 20 years. Process improvements increase productivity, efficiency, and reduce downtime dramatically. Cost allocation, chargeback rate analysis and billing system implementations lead to long term savings of up to 25% of operational costs (combined) when implemented properly.