CORPORATE EXPERIENCE 2
Procurement potential in favor of digitsation of fleet management and optimization of utilization rates
Our TCO per car is roughly 10K per year. We have about 2000 vehicles in 15 countries, so that’s roughly 20 million of OPEX spent. We have to liaise with over 50 vendors, process 150+ invoices per month, manage multi-leasing providers plus an outsourced fleet management company plus, all by 4 FTEs who complete all the operations whilst trying to manage the spend. In my procurement role, I’ve maximized the discounts with all providers over the last few years but it’s not enough, so have to look at fleet from a new angle to reach our objectives. The first thing I’ve done is to look at the quality of our providers in function of the operational workload. I couldn’t understand why it’s so labor intensive to manage a fleet. I was surprised to see how low-tech our fleet was managed. People were working on spreadsheets that were transferred via email from the providers to ourselves that needed to be reworked, in order to fit the requirements of the accounting and finance departments. Digging deeper, I also noticed that our providers made many “mistakes” in their invoicing, or charged for extras that were included in the contracts – for a total of 17% of our TCO!!! So I made the decision to remove the outsourcing solution, by renegotiating contracts with the key vendors and implementing technology to manage our fleet: professional data consolidation, automated invoice control, connectivity between employee and cars and a mobile phone application for the employees instead of having them call our ops people constantly. I’ve360K on OPS efficiencies and avoided another 340K on the sundry costs that we’ve been paying without checking the invoice. I then started looking at the utilization rate of our vehicles. I couldn’t believe my eyes: the average utilization rate was 20.5%. This means I can replace a couple of under-utilized cars with one efficient car. In collab with HR and functional leaders, we’ve reduced the fleet size to 1700 cars in the first year and to 1400 cars in year 2. We’re aiming for 900 cars in 2 years’ time. That’s 6 million in 2 years, 11 million in 4 years. In addition, we’ve transformed all tool of trade cars into shared cars. From a procurement perspective, this is great because I can now do batch ordering. Answering to the ask of our leaders and Works Councils, we’re now ordering electric cars that are charged at the office. Additional cost of about 3K per car, but there’s enough budget left to work with. HR is now asking for budget to create additional benefits for the employees and we’re able to do it We have enough budget to provide fully paid commuting for all employees, plus extra budget that can be used as an incentive for the voluntary return of their company car. All in all, we’re landing on +30% savings. #CMaaS #fleetmanagement #reducecost