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Should you outsource your fleet management?

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The burgeoning trend for companies to outsource some, if not all, of their fleet management and maintenance roles to commercial vendors shows no sign of slowing in 2017.

Clive Winward, an ex-fleet manager and now director of telematics and fleet management system specialist iTracking, assesses the pros and cons.

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In a continually difficult economy, companies are renewing their focus on financial accounting and bottom lines and fleet management seems to be an afterthought that’s either absorbed into financial departments, for greater oversight on spending, or outsourced, which is often equated with cost reduction.

The growing number of fleet management companies, abetted by the advances made in communications technology and fleet management systems, has made it possible for companies to globally source services for the lowest cost.

Whilst the convergence of growing industry capabilities and greater organisational oversight offers up promising opportunities for fleet service providers, the roles of fleet managers are becoming increasingly destabilised. With company eyes on financial parameters, fleet professionals may find themselves increasingly fielding questions about the comparative benefits of keeping procedures in-house.

Fleet managers are often the ones that find themselves in the precarious position of justifying their own utility against economic pressure, especially in larger corporations where their experiential value can be underestimated due to employee saturation.

But is outsourcing your fleet management always the best option?

The benefits of outsourcing fleet management

With the potential for improved productivity and focus in both workforce and resources, in conjunction with reduced overheads and operative costs, the upsurgence in outsourcing in the fleet industry is understandable.

The rationale behind outsourcing fleet management often differs dependent on size, smaller companies may need to lighten up the load of fleet resources, whereas larger companies may choose to outsource to free up time to better strategise. Although ultimately, they all want similar things – greater efficiency and reduced overheads.

If faced with a tight budget, the experience, insight and processes that an outsourcing partner can bring can drastically accelerate growth plans when working in tandem with the business. Similarly, the potential for scalability and optimisation in terms of procedures like staff deployment, can greatly improve the efficacy of fleet operations, leading to an overall improved service and user experience.

Factors to consider before you outsource

The problem with the trending growth in outsourcing is that it can appear to be a one size fits all solution. When in reality, outsourcing your fleet management, or the level to which you do, is only beneficial within certain business structures.

How compelling a proposition outsourcing will be for your business should depend on a multitude of factors, such as the organisational culture, fleet structure and financial parameters. Factors such as the size and role of the fleet, even down to the make and model of the vehicles you use must be considered when deciding to outsource or not to outsource. Examining the structure of communication procedures between drivers and management, and analysing the existing reporting and maintenance structures are key things that are often overlooked for the sake of shaving off the top of the budget.

The capability of your fleet to be managed by an outsourced vendor must be considered above and beyond all financial imperatives.

More importantly, is considering the value of your current fleet manager. Experienced fleet managers are a rare breed, and sacrificing one for the sake of an outside vendor can mean letting go of valuable knowledge of in-house procedures and company strategy, that a management company just cannot replicate. A fleet manager that has been with your company for years is an important asset, and, has no doubt become so inherent in certain processes – such as the driver communication chain – that their input is both, in danger of being undervalued in its ubiquity, and consequently too important for the processes to properly function without them.

Outsourcing on a spectrum

Fleet management organisations exist to meet the needs of fleet users. In order to meet these needs well, such organizations must effectively manage the four key components of all fleet operations: assets, resources, shareholders, and customers. In many cases, fleet industry contractors are capable in managing some, but not all, and a crucial understanding of the wider impact of each role and responsibility in that specific organisational culture is needed from in-house personnel. Outsourcing, can, and should, exist on a spectrum of requirement.

As such, for companies that still require some degree of outsourcing, looking to an outside vendor to take care of essential, but time consuming, management responsibilities, such as administration, or telematics data analysis, will ultimately save both money and increase efficiency. Providing your fleet manager with the requisite time, and information, to focus on higher priorities and drive impactful change throughout your organisation. Similarly, outsourcing functions such as administration, or maintenance, can open a better access to newer technologies and an open dialogue of shared expertise and technical resources, which can be invaluable for smaller companies.

Ultimately, choosing whether to outsource fleet management or not should be a decision based on a careful evaluation of multiple factors. It’s about assessing what works best and where, whether it is resources, expertise or money, figuring out the advantages and disadvantages and adapting a plan of best fit. Overall, outsourcing – especially fleet management – should be approached in the manner of striking a comparative balance.

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Natalie Middleton

Natalie has worked as a fleet journalist for 16 years, previously as assistant editor on the former Company Car magazine before joining Fleet World in 2006. Prior to this, she worked on a range of B2B titles, including Insurance Age and Insurance Day. As Business Editor, Natalie ensures the group websites and newsletters are updated with the latest news.