Fleet Optimisation through International Fleet Management
So your company has been running its own sizeable fleet of company cars for years now. Could you benefit from centralised fleet management? And if so, when’s the right time to switch?
In my experience, fleet size is not the only issue. Where international fleet management really adds value is in a fragmented fleet: one spread across multiple countries – or perhaps even across multiple companies and cultures – with misaligned fleet policies. International fleet management helps you to create order out of chaos…and reduces your costs at the same time.
A company with a growing international fleet may wonder when it’s the right moment to start a centralised fleet programme. Naturally, fleet size matters to a certain extent; I generally see companies with fleets of 400-500 cars starting to centralise and/or outsource, as the large fleet becomes too complex for an in-house solution. However, to really leverage scale and obtain significant discounts from suppliers, you need a total fleet of over 1,000 cars or local fleets of over 100 cars per market in several different countries.
More important than fleet size is a willingness to change and a central mandate. This can often be triggered by developments such as a merger or acquisition. Now that the crisis is behind us, more and more companies are pursuing a mergers & acquisitions strategy as a route to value creation and profitable growth. The fleet set-up following a merger is initially disjointed and may be no longer ‘fit for purpose’. Moreover, the size of the fleet will have changed – it may have increased to include new offices or countries or, if the merger has resulted in redundancies, there may be a surplus of vehicles. Various legacy systems, company car policies and definitions are generally in use within the merging companies, resulting in a lack of data and transparency about fleet management and performance in the new organisation.
All these factors make a merger/acquisition or another kind of strategic business change a logical moment to develop a new fleet programme as a way of creating order out of the chaos.
What are the benefits of international fleet management?
1) Cost control & reduction: Often, the ultimate objective behind strategic business changes is to maximise profit. Fleet management can contribute to that goal by improving cost control over the new fleet and by identifying cost savings. The most significant cost savings can be made by leveraging the scale of the company to downsize the number of suppliers in terms of both fleet management and vehicle choice.
2) Standardised processes: Simplified and streamlined processes often result in lower costs and less internal demand on resources. Furthermore, standardisation and centralisation of the entire fleet structure not only makes it easier to develop a strategically aligned solution, but also enables benchmarking against industry peers.
3) Harmonised vehicle offering: The formulation of an international company car policy based on unambiguous rules and driver guidelines for all countries ensures a minimum standard of mobility, safety and environmental impact in all local markets. It also helps the organisation to focus on its core business by relieving the local markets of the non-core activities associated with fleet management. The result is a vehicle offering in line with market needs, fit for purpose and providing the right level of mobility.
All centralisation projects are complex, since they are essentially change management processes. In terms of the time frame, it can typically take between nine months and two years to centralise a fleet. This not only depends on the fleet size and number of countries involved, but also – and more importantly – on the willingness of the local organisations to change and the central mandate within the company. To maximise your chance of success, it is advisable to follow the international fleet programme implementation roadmap and/or to enlist the help of experts.
I’ll go deeper into how to actually centralise an international fleet in a future blog.