The Car and Truck Fleet and Leasing Management Magazine

Measure Yourself by Benchmarking

February 2005, by Ed Bobit - Also by this author

There is nobody so irritating as somebody with less intelligence and more sense than we have. -Don Herold

Do not always assume that the other fellow has intelligence equal to yours. He may have more.-Terry Thomas

The difference between intelligence and education is this: intelligence will make you a good living.-Charles F. Kellering

If everybody contemplates the infinite instead of fixing the drains, many of us will die of cholera.-John Rich

 

Most fleet managers I've met in my life were pretty intelligent. The smarter ones were always eager to learn even more.

When we conducted a serious "leasing" study late in 2004 and after collating more than 1,200 returns, I wanted to immediately start hitting up fleet managers to see what their "outsource relationship" quotient would be. Obviously, it would have been fun since I had all the answers, and that's a significant edge.

Now, you have to understand that almost every fleet manager I have ever talked to feels strongly about their strong factory ties. They not only talk about how their local factory rep looks after them (or doesn't, in some cases), but they name drop the brass' names from Detroit or wherever.

The strange thing is that an observer like me rarely hears the same kind of camaraderie between the fleet manager and the lessor. That's understandable because, as our study among all commercial fleets of 25 units or more shows, only about half of the accounts lease. (Large fleets with 300+ lease 57.2 percent of the time).

While I cannot share the entire study results with you (it is proprietary, for the most part), I can help you see where you fit in with your fellow fleet managers. This is benchmarking at its best because we actually broke out the answers by number of units operated; i.e., 25-99, 100-299, and 300+.

When asked about how often you send out an RFP for fleet management services, most fleets responded "as needed" and nearly 20 percent said "every 3 years."

On "which companies are selected to quote," the answers ranged in the half-and-half columns between the "fleet" and the "finance/purchasing" departments. As the size of fleet became larger, the selector was more heavily the fleet manager.

The larger fleets also reflected the increased influence of the "strategic sourcing group," as we might expect.

The allied question of "does your company employ a strategic group in selecting a fleet management supplier," the answers were almost predictable. In the small fleet group, less than 3 percent had such a group. In the middle group, nearly 20 percent used the group; and in the largest fleets, more than 77 percent have that kind of a setup.

Even the smaller fleets, surprisingly, use multiple lessors in 55 percent of the cases. As fleet size increases, so does the use of more than one outsource entity; large fleets scored over 63 percent.

If there was a "shocker" to me, it was the collective answers to the question, "How many years have you used your current lessor?" OK, big picture: we know how often RFPs are sent out, we know how often these accounts are hit with a personal call from their array of lessors, and we know who's in on making the selector recommendations and who's in on the actual selection.

What's your guess (answer)? Now benchmark. The smaller fleets retain their lessors for more than 10 years nearly half the time. The middle fleets only less than 28 percent for 10 years; and the big fleets keep 'em for 38 percent of the time.

Ten years is a long lime. Some fleet managers don't last that long in the position. Some lessors change their personnel pretty often as well. Is it loyalty? Is it a great local rep?

We don't know the answer, but probably, the current lessor remains competitive with every RFP, and there's a good rep, and loyalty boils down to the messy process of changing lessors - a hardship on both parties and simply a pain in your butt. But, you can call that loyalty if you like; it's all right with me.

I hope this helps you in your benchmarking efforts.

 

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