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Using specialist procurement firms could prove ‘expensive mistake’, says FleetLocum

Businesses have been warned to be on their guard against a growing trend to turn to specialist procurement companies when acquiring fleet services – which could actually see fleets left exposed to rising costs over the duration of the contract.

Tony Donnelly, chief executive, Goodwood Corporate Mobility

According to Goodwood Corporate Mobility, parent company of interim fleet management services provider FleetLocum, using a procurement company to find fleet providers will see them choose a supplier on a ‘best price’ basis, before walking away to carry out another purchasing job “almost certainly in another business sector”.

Tony Donnelly, chief executive of Goodwood Corporate Mobility, explained: “Such an approach is far too simplistic in fleet and shows a complete lack of understanding as to what is being procured, how service will manifest itself during the in-life period and how costs, real and hidden, will potentially rise during the contract period.”

When procuring vehicles and fleet services, Donnelly said it is business-critical that, even if using a specialist procurement company or the tender process is being overseen by an in-house procurement department, fleet decision-makers should ensure that they are in the driving seat when specifying vehicles and fleet services and remain fully engaged in the procurement process.

He continued: “Specialist procurement companies are not experts in service delivery and consequently there is almost certainly no management of suppliers during the lifetime of a contract leaving a business at the mercy of the supplier with no checks or balances being undertaken because in-house knowledge and experience is lacking.”

Furthermore, Donnelly warned that specialist procurement companies may charge a one-off fee for managing the request for proposal and supplier appointment, but they could also charge the successful company an ‘introductory fee’. Consequently, that ‘introductory fee’ will be costed in to a supplier’s contract.

He concluded: “Specialist procurement companies may promise significant cost savings, added value and that they will scour the fleet market for best in breed suppliers, but the reality is somewhat different. Leaving fleet purchasing in the hands of a procurement company will almost certainly be an expensive mistake for any business.”

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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.