THE CAR AND TRUCK FLEET AND LEASING MANAGEMENT MAGAZINE
One challenge for fleet managers interacting with procurement professionals is understanding the nuances of procurement terminology. Many fleet managers believe the term “procurement” is synonymous with the term “sourcing,” but there are important distinctions between the two functions.
Management must develop remuneration policies and incentive plans encouraging procurement to cooperatively work with in-house fleet leadership to support attainment of larger strategic goals allowing fleet to cost-effectively fulfill its corporate mission.
To be successful on a sourcing team, you need to be open-minded about exploring all available service channels and partners. However, open-minded doesn’t mean being open-headed. You must listen and entertain new ideas, but also temper such a practice and attitude with pragmatism and knowledge.
The strategic procurement process typically involves a multifunctional sourcing team. This cross-functional team often designates a “gatekeeper” responsible for controlling the flow of information to the group. When selecting a fleet supplier, I strongly believe the fleet manager needs to be the gatekeeper. Here are the arguments supporting this assertion.
Many interdepartmental and operational conflicts that intersect at fleet are typically driven by the challenge of balancing HR/driver requirements versus finance/procurement requirements, which are often at odds, with the gains in one area negatively impacting the other. And, the hard reality is not all department or operational managers are team players and, as a result, there are the inevitable interdepartmental (and personal) conflicts.
Until the emergence of strategic sourcing in the 1990s, procurement did not hold the same prominence within corporations as it does today. Nowadays, procurement plays a pivotal strategic role. Procurement is now the new engine of change in fleet management, which has resulted in dramatic changes in the fleet purchasing and supplier selection process.
This article from a recent issue of Fleet Financials covers what fleet managers need to know when working with procurement professionals.
When you examine the seminal events of fleet management over the past 30 years, most were driven by changes in tax law, the introduction of governmental mandates,and adoption of new technologies. Looking to the future, we should probably expect more of the same.
It goes by any number of different names: shared services, strategic sourcing, or simply leverage. Whatever you call it, taking full advantage of the volume your company can bring to bear on the fleet marketplace is good business.
Corporate procurement departments are becoming the engines of change in fleet management at Fortune 500 companies. The emergence of strategic sourcing in the 1990s is rapidly altering corporate purchasing and increasingly forcing change in fleet purchasing and the supplier selection process.