What To Consider In Your Fleet Procurement Strategy?
Summary
The article discusses the importance of fleet procurement strategy in logistics and provides steps to build an effective procurement strategy for your fleet business. It emphasizes the need to assess the needs of fleet managers and drivers, including securing deliveries, preventing theft (fuel, vehicle, etc.), improving visibility, choosing the right vehicles, and introducing a driver training program. It also recommends investing in technology like fleet management software, fuel monitoring system, and vehicle tracking systems to enhance fleet management and increase productivity.
It will become a challenging and exciting task when logistics functions meet fleet procurement strategies. Starting with procurement, what is procurement?
Procurement is an essential business process followed from acquisition to disposal of an external resource or service. What exactly do procurement activities consist of?
- Identifying the right product or service
- Selecting suitable vendors
- Negotiating payments/contracts
- Analyzing regulatory compliance
- Agreement
- Purchase
The procurement strategy in fleet business defines the entire process of fulfilling your fleet needs. Implementing the best procurement strategy brings a better lower cost of ownership.
Building a profitable procurement strategy for your business needs more research and deep analysis. But, not to worry, do not think the procurement function is too complex. So, here we are; let us make you some essential simple steps to build your fleet business procurement strategy.
Step 1: Assess THE NEEDS
People say the very first step of procurement is sourcing, but know one thing that assessing the needs of your business helps you find the source. Assessing the need for your business has different and essential categories.
Analyze Your Fleet Manager NEEDS
Ask your fleet managers for their opinion on your fleet. Then, define the problems faced by the fleet managers with the fleet and find solutions. Here are some vital factors which need to be taken under consideration for your fleet business enhancement.
Secured Delivery
Security is considered one of the important aspects of a fleet manager’s duty. When we say secured delivery, theft serves as the main obstacle for a fleet manager. The losses are very much high if we neglect theft in your business.
Theft; What is there to do with procurement? Investing in security factors helps you to avoid theft and increase productivity.
Fuel Theft
When it comes to fuel theft, the rising fuel price is considered the main cause.
Why is it important for a fleet manager to prevent fuel theft? By avoiding fuel theft,
- You can control your fuel expenses up to 20% in your organization.
- You can increase fleet efficiency.
- Companies may face huge losses if you don’t take any action on fuel theft at the first pace.
Yes! We all agree, preventing fuel theft brings profit, but a fleet manager can’t revolve around the truck anytime. So, Is there any solution for fuel theft?
Investing in the fuel monitoring system, which helps you to prevent fuel fraud. Fuel monitoring system helps you to monitor, manage and control vehicle’s mileage, fuel consumption, and idle hours. Mainly fuel monitoring system sends alert notifications via SMS or email if any fuel fill or sudden drain activity occurs.
Vehicle Theft:
Vehicle theft happens in various places. Not only inside the organization’s walls, but it also happens with any external parking spaces, highways, etc.
Investing in vehicle tracking systems brings enormous benefits to your fleet business like real-time tracking, geofence, instant notifications alerts, reports on speed monitoring, mileage tracking, driving behavior tracking, etc.
Visibility
Another important factor that every fleet manager wants. Improving visibility in the fleet business helps you cut down the idle hours and improve the fleet’s productivity; also, there is another benefit that makes your business grow is customer satisfaction. So improving visibility also increases your customer satisfaction.
To solve the visibility issue in your fleet business is by using the best fleet management software. FleetOS helps you provide better visibility over your vehicle and lets you share the trip details with whomever and whenever your want.
Fleet Management
Managing and maintaining a fleet is one of the vital tasks of a fleet manager. In fleet management, fleet managers have to choose the right vehicle according to the destination and goods.
Before choosing the right vehicle for a trip, a fleet manager should consider the below-mentioned factors.
Purpose of Vehicle – What type of goods are you going to carry?
Destination – Either snow or rain, etc.
Types of Vehicles – i.e., van, flatbed, box truck, etc.
You may think does vehicle type will affect efficiency and productivity? Without a doubt, we can say that fleet size, type, and everything has an impact on the delivery. So, inversing in the vehicles will make you profit in many ways.
Training Program
Training for drivers, is that so important? Why do you want to invest in the driver training program? There are enormous benifits by introducing the driver training program to your drivers.
- The driver training program helps to minimize accidents on roads.
- Reduce theft activities held by drivers.
- Increase the efficiency of the drivers.
- Drivers can learn many fuel-saving techniques.
- Training help drivers to tackle their problems faced on the route.
- Your drivers can learn technology, telematics and they learn to work systematically.
- Drivers can learn to improve the safety of themself and their vehicles.
- Drivers can improve their knowledge of the different types of vehicles
- Drivers can create their culture.
We can keep on say even more benefits on the driver training program. Introducing this program will help fleet manger to reduce their workload in some way. So, invest in introducing a proper suitable driver training program or create your own driver training program.
Analyze Your Fleet Driver NEEDS
Is it essential to assess the procurement needs of a driver? Although your ego may have this question, in reality, drivers are the one who works in the field and also, drivers are one who faces huge problems on road so, getting inputs from drivers helps you in many ways.
Know that your drivers are the valuable resources of information, and make use of them. Give them a chance to talk by asking some questions.
- Are you comfortable with the vehicle?
- Are there any defects?
- Do you have any ideas or suggestions on the vehicles?
- How to improve safety?
- Ask about their salary.
Consider their answers and make your procurement strategy.
Analyze Your Fleet Vehicle NEEDS
Fleet vehicle needs are not about the vehicle types; it is all about service maintenance; do you really take care of your vehicles? What exactly do your vehicles expect from you?
Preventive Maintenance
Preventive maintenance is the process of inspecting and maintaining your vehicle and its components just before it gets damaged completely.
Predictive Maintenance
Predictive maintenance is the process of constant monitoring of the vehicle and its components when the vehicle’s performance is absolutely normal.
Reactive Maintenance
Reactive maintenance is the process of providing maintenance service to your vehicle or its components after its damage.
Are these three types of maintenance important to your fleet? Yes! Maintenance typically increases the efficiency and resale value of your vehicle, also, reduces the operations downtime, which is much beneficial thing for an organization. Also, if you didn’t take care of your vehicles, today’s 100 dollars of maintenance cost will end at 100 dollars tomorrow.
Step 2: Calculate Your Total Cost Of Ownership (TCO)
Total Cost of Ownership is the process of calculating the assets purchased for the company plus the cost of operations. Fleet is not just handling a single simple vehicle; the fleet is the combination of vehicles where each vehicle has different requirements.
In procurement strategy, we need to include every expense done for the fleet like fuel costs, insurance costs, etc. Now consider and calculate the TCO of every worthy option available to you.
Step 3: Choose The Right Partner
Finally, choose your right partner; if not, the above steps will be useless at last.
Tip: Research on every suitable provider before selecting them as a partner.
Have some regulatory compliance (laws or conditions). Also, take some ideas and advice from industry people rather than just referrals. In some cases, you may find yourself in some difficult situations like you may get additional money savings with poor service, never go with them.
Tip: Always choose the best service provider for your business growth.
