In an era where the number of dedicated fleet managers is declining, outsourcing can be viewed with suspicion.
“There can be a feeling of ‘oh my god, if my employer is outsourcing, my job is going to go’, but that is not the case at all,” says Ross Jackson, CEO of fleet management company Fleet Operations.
“The reality is that someone who looks at outsourcing properly will realise that what is really being outsourced is the administration and the stuff that stops fleet managers from doing what their job should be.
“It gives a fleet manager a lot more time, a lot more information and therefore a lot more ability to actually drive change through their organisation, so I don’t see it as a threat to their job at all.
“Outsourcing is not ‘my job has gone’; outsourcing is ‘I can now do my job better because I’ve got a greater focus, I’ve got more control, and I’ve got somebody working with me to actually support me in making the change happen in my business’.”
As well as reducing administration, outsourcing activities can result in cost savings and access to new technologies as well as the expertise and technical resources of other organisations.
One fleet that has benefited from the reduced admin brought about through outsourcing is Celesio, which has seen Arval take on some of its fleet administration as part of the leasing company’s service offering to the business.
This means the management of the fleet is shared across Celesio’s in-house team and a team at Arval.
“We put the fleet out to tender and that’s how we ended up switching a lot of the fleet to Arval,” says Martine Smith, distribution manager at Celesio.
The leasing company has taken on vehicle ordering, scheduling, servicing, licence checking and downtime management and Smith is expecting Arval’s involvement in the fleet management side to increase in the future.
“Having Arval handle a lot of the administrative elements leaves us to concentrate on strategic fleet objectives, such as risk management programmes, review and development of the car policy, and exploring any initiatives that can help us in running the fleet more cost-effectively,” she says.
As well as the activities outsourced by Celesio, others which are commonly contracted out to third-party suppliers include vehicle fleet management, funding management, fuel management, accident management and vehicle disposal.
However, what and how many activities a fleet should outsource differs for each individual company.
“If you have a fleet manager who is very competent and experienced, they will probably be limited in the amount they want to outsource,” says Geoffrey Bray, chairman of the Fleet Industry Advisory Group.
“Where you have somebody who has, let’s say, been parachuted into a role with fleet responsibility but they have little fleet experience, then more tends to be outsourced.
“Before you can decide what to outsource, you have to understand your company’s structure and what the capability is within that business.
“You also need to consider the role of the fleet, its size and whether there is a mix of vehicles.
“If you’ve got a complex fleet consisting of cars, vans, trucks and so on, then the process is completely different to if you have a small car fleet.”
Jackson adds: “The decision on what to outsource will largely be dependent upon the levels and cost of in-house fleet resources and expertise.
“The reality is that it is about working out what sits best where – whether that’s resources or where the expertise is – and saying ‘look, it costs us a million pounds to do it this way. Is it going to cost us more or less if we do it that way, and what’s the upside of that?’”
Bray says outsourcing certain activities such as maintenance and accident management makes “considerable sense”.
“Maintenance is a fairly obvious one to outsource,” he adds. “Why would I want to manage my maintenance in-house when I can select an outsourcer that can give me all the cover I need? I can control the supplier by setting parameters and can have it refer back to me if I need to, but at the end of the day I’m covering the area competently and the same applies to accident management.”
A further advantage of outsourcing is the expert knowledge a supplier has.
“With a specialist provider, [that activity] is its total and absolute focus,” says Chris Mitchinson, director of in-life services at fleet management specialist CLM.
“This means any changes in the marketplace, legislation, new developments or innovative ideas can be used to gain an advantage and increase the benefits to the business.”
However, the outsourced activities should be properly managed and monitored internally to ensure there is a match in terms of the personalities involved, that they have ease-of-use systems that are easy to interrogate and can provide meaningful management information.
“It should be seen as a replacement of a function rather than a replacement for internal staff,” adds Mitchinson.
Despite outsourcing having a number of benefits for businesses, Bray warns that companies should not get swept away by its advantages.
“Outsourcing for outsourcing’s sake is a danger because if you outsource everything and take the worst case scenario of removing the fleet manager’s role, you lose that in-house knowledge and skill and that places you at the mercy of the company that you’ve outsourced to, because you’ve got no one to challenge it,” he says.
“It’s a question of striking the right balance. If you get outsourcing right and create a partnership that is fully transparent and open, then it will work.
“However, if the balance is wrong and all your company has done is outsource everything and the board says ‘we don’t need a transport department, we don’t need a fleet manager, we’re going to outsource everything’, then I believe that is incredibly dangerous.
“You need somebody inside the company that understands what the fleet is all about, and that way you get a balance.”
Jackson adds: “We work well with companies without fleet managers and we work equally as well with fleet managers, and quite frankly I prefer to work with fleet managers because they know what we are talking about.”
Businesses should take time to think through what they need, set the terms and identify the right service provider.
Things to consider:
- What are your core strengths and which are secondary? Which processes are you thinking of outsourcing and why?
- Have you calculated the total costs of doing it in-house, including hidden costs such as office space and staff on-costs?
- Check the return on investment (ROI): ask the potential service provider for help, such as an ROI calculator.
- What are the costs of not outsourcing? Will your business suffer because it cannot afford to invest in the expertise, technology or the facilities that an outsourcing partner might provide?
- Have you fully checked out that any potential supplier is capable of limiting your costs and is not interested solely in gaining your business and then massaging up your costs over time?
- Weigh up the risks of outsourcing against those of keeping the processes in-house.