We look at the benefits and drawbacks of each approach so you can determine which is the best option for your business.
Outsourcing the management of fleet operations appears to steadily be on the increase. But choosing this approach really depends on the type of business, the number of vehicles and assets within the fleet, and crucially, the skills and workforce available within the business. Then there’s the cost of having those to hand internally.
So it’s essential to work out what you have, and what you need to bring in that would fill gaps or could be done better. Here’s where to start.
Ask yourself: can you tick every box?
There are a lot of boxes to tick, we know. When you think of the activities needed to be carried out by a fleet manager, the number of responsibilities can seem overwhelming.
They can include:
- Vehicle sourcing and purchasing
- Driver requirements such as license checking
- Purchasing and disposal
- Vehicle funding
- Procurement management
- Fleet administration
- Parking and fines administration
- Driver support and training
- Health and safety compliance
- Vehicle tracking and communications
- Vehicle breakdown and recovery
Ask yourself if you can tick every box in each of these areas, all day, every day. Because although managing this workload doesn’t tend to be a problem for larger fleets with tasks carried out across a team, for smaller fleets this could mean some, if not all, of these tasks can’t be done. And that may indicate a need for outsourcing help.
So we’ve put together two articles looking at some of the advantages and disadvantages of in-house vs. outsourced fleet management styles.
Benefits of in-house fleet management
Managing and monitoring costs:
You and your team know your business better than any external agency – no matter how good the supplier is. Familiarity with the vehicles, drivers and resources can help identify areas of concern before they manifest into bigger problems. That can lead to smarter ways of working with the rest of the business that could save money or improve operational efficiency.
You can build individual relationships with suppliers and other specialists to deliver on service level agreements and negotiated rates to save on both fleet costs and additional unplanned vehicle downtime costs – just as an outsourced supplier would. Except in this case, you’re confident that any deal being done is entirely for your benefit.
The big picture:
Outsourcing can be great for really nailing down specific improvements. Especially in certain, specialist areas. But does it have the big picture in mind? Fully understanding your business’s wider plans and goals is key too, and an in-house operation will get this. Sometimes, there might be an improvement that could be made to the fleet operation, which has an impact elsewhere on the business. Only an in-house team might be able to see that.
That’s because an external service provider will never have full access to your sensitive business information, such as investment and growth plans.
So while you might be prepared to negotiate for additional budget by demonstrating the longer-term cost-benefit analysis, an agency will tend to favor achieving only the targets and objectives as pre-agreed for length of the contract.
Benefits of outsourcing fleet management
Access to new ideas:
Bringing an outsourcer in could be the breath of fresh air your business needs. These specialists spend time working with many different companies’ fleet departments, and as a result bring with them a host of new best practice concepts and ideas for new ways of working. New ideas might prove invaluable in improving and streamlining your fleet processes in ways you could never have dreamed of.
Ability to focus:
Is your business focusing on the wrong thing? Outsourcing fleet management could allow you to concentrate on the things that really drive the business forward. The fleet may be simply for the purpose of enabling employees to carry out their tasks, or even as part of a benefits package, and having a dedicated fleet department to manage this might be a distraction, cost and resource you simply don’t need.
So it might be easier to outsource the management of vehicles to a specialist organization to remove management processes and manage associated fleet risk.
Do you find managing compliance and industry standards a nightmare? There’s ever-changing legislation to keep up with too, and while this may be less of a problem for larger fleet departments, for smaller ones, the risks can be just too great.
Outsourcing can help alleviate some of this worry: processes and procedures will already be in place to minimize failure to comply, with tools such as fleet management systems creating auditable trails to manage this.
It’s worth noting though, that despite outsourcing, if things go wrong the overall accountability will still rest with you.
Access to resource and knowledge:
Outsourcing often means access to a plethora of specialist systems, tools and knowledge that had previously been unavailable.
The systems and tools will in turn allow you access to market intelligence, giving you the ability to benchmark your performance to determine any shortfalls and areas of improvement.
Disadvantages of in-house fleet management
Running a fleet in-house comes with a capital cost. You’ll need to spend on providing the suitable facilities and equipment and that can be a challenge for larger fleets, let alone smaller ones.
As an example, maintenance tasks carried out in-house will require workshops, equipment and trained staff to carry out the work, and that can be expensive. These costs need to be compared to outsourced work to determine the best fit for the business.
Sourcing high caliber, trained staff to carry out specific tasks can prove troublesome in running an efficient operation. Are you sure you can find enough of the right people to run your operation?
Access to specialist technology:
Ask yourself: have you got the tools and systems in place to manage the department efficiently, and to improve your operation? There are fleets out there that rely on dated practices such as managing and reporting through spreadsheets and systems with limited integrations, because of budget constraints. They may never find issues that are costing the business time and money, which is a false economy.
Disadvantages of outsourcing fleet management
Once costs have been drawn up as per the contract, then your potential to find future spending savings could be limited. That’s because these costs tend to be tied into the contract for the agreed period before they can be reviewed and amended, and there are often penalty clauses in place for any such amends being made before the end of the contract.
So during times of trading difficulty when businesses tend to see where they can make any cutbacks, you might find a reduction to fleet operations may not be a possibility due to contractual obligations.
There’s nothing worse than needing to let go of the workforce and their vehicles through redundancy but still paying for a contracted service that is no longer required or only required in part.
Similarly, fleets lose the bargaining power in areas such as purchasing vehicle parts. Suppliers used are those set out in the contract and are bound to pre-agreed set prices which could prove costly in the longer run.
Slower to move:
Discussions with your fleet management organization will need to go through the proper channels which can reduce efficiency itself. That’s because the correct policies and procedures need to be taken to instigate any changes or areas of concern which can delay operations. This might make you less agile than if you could implement changes yourself.
How do you decide between in-house or outsourcing fleet management?
This will very much depend on multiple factors such as budgets and resources available, the size of the fleet, priorities for the business and the talent pool available to support the operation.
If you’re a smaller fleet who wants to retain in-house management, there are options available to help, such as fleet management software.
You may decide to outsource part rather than all of an operation. This is where we can help. No matter the size of your operation, all-in-one platforms such as FleetWave can help you take control of any aspect of your fleet, efficiently managing it in smarter, more agile ways.
The return on investment created means that whatever you outsource, and however much of it you do, we can help your business.