The Car and Truck Fleet and Leasing Management Magazine

There's Always Somebody Who's Smarter... Isn't There?

August 2004, by Ed Bobit - Also by this author

Intelligence is characterized by a natural inability to understand life.-Henri Bergson

Intelligence is quickness in seeing things as they are.-George Santayana

A great many people think that polysyllables are a sign of intelligence.-Barbara Walters

 

After having just completed the '05 Fleet Previews for GM, Ford, DaimlerChrysler, and Toyota, there are always a couple of things that you come away with. There's the obvious one, "It's great to be a guest." The others are more germane.

More than ever before, I have fleet managers privately sharing the travails they face today. No, they aren't complaining about the operating costs (their companies are beginning to accept the higher gas prices) or their lack of time to do a better job.

They are bitching about intervention by non-fleet-oriented managers within the company who are insisting on changing what used to be called professional fleet management.

Coming under this heading include regular questioning about adopting the "reimbursement rather than ownership" conundrum, and the stronger influences of the sales staff, procurement director, and HR person on acceptable company fleet policies.

There's also the pressure to use a "reverse auction" process for single sourcing for a period of time. It's crazy out there.

Fortunately, when our editor, Mike Antich, created a special report on reimbursement and its inherent weaknesses some three years ago and the NAFA Foundation produced a similar follow-up study, it was the ammo that fleet managers needed to solidify their ownership positions. Even NAFA has material in this area.

The other threats are more formidable. For instance, ask any fleet manager who boasted about his/her single source, three-year, exclusive agreement how he/she feels about it today. With retail/consumer incentives reaching galactic heights, the CAP monies contracted for three years ago now appear inadequate.

In 2001 the CFO was shouting for downsizing and reduced budgets. The procurement manager said, "We'll buy cars and trucks the way we buy computers." The HR director and the sales vice president said they now value their jobs so much in this tight economy, they won't complain about a four-cylinder compact.

Simply stated, it was wrong then, and it's still wrong today.

The reverse auctions are being characterized like the plague. The same thing happens with the consortium groups that promise largely and fizzle out quickly. Those individuals on the "buying committee" who believe their vehicle buying commitment is like a commodity need an education on the values of "service" outside of the purchase agreement.

There are myriad stories about the reverse auctions. One fleet manager went through the process and awarded it to the second-best bidder in the end. (That will cost him and his company the next time around). Another had the final bids in hand at the appointed closing minute only to elect to extend the bidding five more times. What kind of list is he on now?

Some manufacturers are now shunning opportunities to bid at all if it's the reverse auction process. When the purchasing agent said, "But you have to bid," the maker didn't budge. Gutty.

One of the major fleet management companies lost three or four important accounts over a relatively short period. Now, keep in mind that it isn't an easy process to change lessors. In every case cited here, each fleet manager told me that the change was because they were not getting the service they expected.

Is it any wonder why some companies don't get deserved service when they cut the rate to the bone or beyond? Does the procurement director know you can get a faulty transmission replaced even though it's just out of warranty if the factory feels you are a good account? Does the HR director know that you might be able to get the optional driver seat lumbar support for pennies if you're a good account? Does the VP of sales realize that single sourcing might limit your selector list as no one factory has product in every niche?

Buying committees are fine if the fleet manager (you) keep them abreast of the reasons why some things don't work. Of course, you are on the "company team" to buy at the very best price. Just remember, there's always someone smarter than you are.

 

 

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