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 be steadily on the increase. But choosing this approach really depends on four important considerations:
- The type of business
- The number of fleet vehicles and associated assets
- The skills and workforce available within the business
- The cost of each
So it’s essential to work out what you have, what you need and what 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 licence checking
- Purchasing and disposal
- Vehicle funding
- Procurement management
- Fleet administration
- Parking and fines administration
- PSV and HGV operator licence management
- Driver support and training
- Health and safety and duty of care compliance
- Grey fleet management
- 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. Managing this workload doesn’t tend to be a problem for larger fleets, however, for smaller fleets it could mean some – if not all – of these tasks can’t be completed. And that may indicate a need to outsource.
So here are some of the advantages and disadvantages of in-house and 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 of the vehicles, drivers and resources can help identify areas of concern before they manifest into bigger problems. You can see 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 unplanned vehicle downtime costs. Just as an outsourced supplier would. Except in this case, you can be 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 specialist areas. But what about the bigger picture? Fully understanding your business’s wider plans and key goals is important too, and an in-house operation will understand that. An external service provider won’t have access to sensitive business data such as investment and growth plans.
So while you might be prepared to negotiate for additional budget by demonstrating the longer term cost-benefit, an agency will tend to favour achieving only the targets and objectives as pre-agreed for length of the contract.
Benefits of outsourcing fleet management.
Access to new ideas:
Outsourcing your fleet management could be the breath of fresh air your business needs. New ideas might prove invaluable in improving and streamlining your 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. Your fleet may simply enable your employees to carry out their tasks, or be part of a benefit package. Having a dedicated fleet department to manage this might be a distraction, cost and resource you just don’t need.
So it might be easier outsource the management of vehicles to a specialist organisation to remove management processes and any associated risk.
Do you lose sleep over managing complex compliance requirements and industry standards? And there’s ever changing legislation to keep up with, too. While this may be less of a problem for larger fleet departments, the risks can be too high for smaller operations.
Outsourcing can help alleviate this risk and worry: processes and procedures will already be in place to minimise any failure to comply using fleet management tools to create auditable paper trails. It’s worth noting though, that if you choose to outsource and something does go wrong, 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 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.
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? Some fleets still rely solely on spreadsheet management and reporting practices and may never find issues that are costing the business time and money.
Disadvantages of outsourcing fleet management
Once costs have been drawn up, then your potential to find future savings could be limited. That’s because costs tend to be tied into the contract for an agreed period of time before they can be reviewed and amended. And there are often penalty clauses in place for any amends requested within the fixed time period.
So if your business was to hit hard times, it might not be possible to make any cutbacks due to contractual obligations.
You relinquish bargaining power in other areas too, such as purchasing vehicle parts. Suppliers used are those set-out in the contract and are bound to pre-agreed prices which could prove costlier in the longer run.
How do you decide between in-house or outsourcing fleet management?
This will depend on multiple factors:
- Your budget
- Available resources
- The size of your fleet
- Business priorities
You may decide to outsource a small part of your fleet management responsibilities, rather than your entire 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 a smarter, more agile way.
The return on investment realised means that whatever you outsource – and however much of it you do – we can help to keep your business moving.