Written by Marijn Overvest | Reviewed by Sjoerd Goedhart | Fact Checked by Ruud Emonds | Our editorial policy
Fleet Procurement — Everything You Should Know
What is fleet procurement?
- Fleet procurement is the acquisition of essential goods or services to run a fleet.
- The process for fleet procurement considers various factors other than vehicle acquisition.
- Fleet procurement begins with a clear plan divided into four distinct steps, to ensure procurement goals are aligned.
What is Fleet Procurement?
Fleet procurement is the acquisition of goods and services necessary for running a fleet, which typically involves vehicles. However, there are a lot of factors to consider when it comes to fleet procurement. When companies deal with the fleet procurement process, their usual mistake is considering the purchasing of vehicles as the final objective in the fleet procurement process.
The truth for fleet procurement processes is that they consider more than just the acquisition of vehicles. It includes tires, insurance, fuel, replacement parts, and components and not just the physical aspect of the asset.
A deep evaluation of the elements the fleet needs before the process starts is necessary for fleet procurement as it ensures that the company ends up with sufficient assets, resources, and services.
It should consider different possible options and the ability to predict the cost of the fleet to the company. This process is usually the most crucial for fleet managers. The decision of the fleet managers dictates the future of the fleet which affects the reputation of the company and the fleet director’s job.
The process of fleet procurement needs to be done by negotiating favorable contract terms and prices and ensuring that all functions as a product or service for the profit of the company. The top management and the fleet manager must collaborate so that the top management has an overview of how the fleet procurement works and how the sourced materials impact the fleet itself.
Effective Fleet Procurement Planning
No procurement process has started without a plan. All business initiatives must always start with a plan to know your direction. The planning process is important as it allows you to decide what, when, and where to purchase.
The following are the things you should consider to create an effective fleet procurement plan:
1. Budget
A clear outline of the budget is necessary for fleet procurement processes or operations to run successfully. Deciding the allotted budget across the whole department is the most important part of the planning process as it dictates how far the other step can go.
To do this, you will also need to map out what your fleet needs. This will include talking to your driver and assessing important factors, such as transportation, maintenance, and your current fleet size. Allowing yourself to know your fleet’s needs will also help you plan better and budget even better.
2. Products
Now that you have allotted a budget, the next thing you will need to do is to know the products that you have to buy.
Sourcing and knowing where to find the supplier for the products that you need is a different process in itself. However, you will be able to make decisions on this based on your fleet and its requirements.
So, what type of products do you need? Do you need a van, a pickup truck, or a box truck? Will these types of vehicles be able to serve your company’s purposes? Try to talk to your driver and figure out with them what works best to effectively set your fleet procurement strategies.
3. Time
It is important to have an accurate representation of time across your plan to ensure that items are secured at the current time. BY ordering at the correct time, you can ensure that all resources for your fleet are available and can be purchased at a lower rate.
For example, if your fleet is about distributing fire logs and wood, the typical season you are busy in winter due to the fact that most houses will need heating to warm themselves from the cold. Therefore, this is the time that you will need to order more fuel cards to accommodate the extra staff due to the demand for your product.
4. Resources
The new projects of a company sometimes require extra resources. You will know whether you can cope with the requirements of the plan by planning your budget, products, and time needed.
5. Other considerations
Fleet procurement involves more than just vehicles. For that, you have to consider other factors such as fuel. You will also need to consider your relationship with suppliers and how to manage them effectively, as well as your relationship with the drivers.
Skills that a Fleet Manager Must Possess
A fleet manager is responsible for the company’s group of vehicles. It includes all aspects from hiring to maintaining the efficiency of the fleet.
Fleet managers have the responsibility of managing the costs of the vehicles leased or owned by their companies. Additionally, they create policies based on the requirements of the company to manage the usage and driver behavior of the fleet.
These are some of the skills that a fleet manager must possess:
- Legal experience – They need to have a good grasp of all the legalities of the contracts to ensure that they can gain favorable contract terms and that the company cannot be susceptible to procurement fraud.
- Negotiation skills – Fleet managers must possess good negotiation skills to get the best price, terms, and conditions with their suppliers.
- Risk management – They need to know how to handle and manage risk when problems or emergencies arise in the supply chain.
Conclusion
In summary, the fleet procurement process is the purchase and acquisition of goods and services with a distinct quality and specific quantity which is also bought at a specific time from suppliers.
However, the common misconception or mistake made in this process is that it ends in the purchasing of vehicles. In fact, it does not only stop there but also touches on the acquisition of tires, replacement parts, components, and other non-physical aspects of the asset.
Moreover, a deep evaluation is needed to ensure that the buyer can get sufficient assets, resources, and services. Thus, it’s not an easy task. That’s why a fleet manager is important to oversee every fleet procurement process.
To add to this, they are responsible for managing the costs of the vehicles leased or owned by their companies, thus, they also create policies based on the requirements of the company. Furthermore, to be able to fulfill these roles, a fleet manager must possess certain skills. With that, they may be able to run a smooth fleet procurement process with little to no risks.
Frequentlyasked questions
What is fleet procurement?
Fleet procurement is the acquisition of goods and services necessary for running a fleet, which typically involves vehicles.
Why is fleet management important?
Fleet management is important as it is an effective way to know the excessive costs of the fleet and lessen the utilization of the resources of a company.
What makes a great fleet manager?
A great fleet manager has wide industry knowledge and possesses good negotiation, legal, and risk management skills.
About the author
My name is Marijn Overvest, I’m the founder of Procurement Tactics. I have a deep passion for procurement, and I’ve upskilled over 200 procurement teams from all over the world. When I’m not working, I love running and cycling.
