Benefits & Drawbacks of Outsourcing Fleet Management

Managing and maintaining a fleet of vehicles in-house is becoming an increasingly difficult operation. From dealing with legal regulations and safety issues to driver and vehicle management, the sheer number of responsibilities can often feel overwhelming.

What’s more, there is bound to be constant pressure on reducing costs, improving productivity and maximising efficiency. Unfortunately, these objectives are sometimes impossible to achieve given the current economic climate and tight financial resources.

Therefore, several public institutions and private companies choose to outsource fleet maintenance and management. Even though the main reason for this decision is usually driven by the potential of saving money, there are additional benefits and drawbacks too.

Should you outsource fleet management?

Before taking an outsourcing leap of faith, there are a few of things to consider with fleet maintenance and management, so ask the following questions:

What is the company culture?

Certain companies will be reluctant to seek out or accept help because they prefer to manage everything in-house. This is a perfectly reasonable and understandable stance to take, as there is a danger of losing control or authority over certain operations or departments.

However, other organisations will be more willing to improve processes and management through any means possible. Regardless of fleet maintenance and management, outsourcing has been proven to deliver measured results for numerous businesses. So before bringing up the question, bear in mind that some companies will be reluctant to outsource, regardless of the advantages it can bring.

Is fleet one of the company’s core activities?

If you’re a fleet manager in charge of countless vehicles, then handing responsibility to a dedicated provider with a wealth of industry knowledge and expertise could be a game-changing decision. This move has the potential to transform or even revolutionise the way your company or organisation goes about its business and could have a knock-on effect to other departments too.

But even if fleet isn’t the most important aspect of an organisation’s operations, small and medium enterprises are recognising the advantages of outsourcing fleet management too, with this sector now the fastest-growing part of the vehicle leasing market.

What is your current financial situation?

In a downturn or recession, obtaining funds from the bank or another financial institution to grow, manage and maintain your fleet is much more difficult. On top of that, during times of hardship there is increased pressure to watch the budget carefully and reduce spending.

If the economical outlook is more positive and optimistic, it might be tempting to deal with fleet management and maintenance in-house. Complete control over every aspect of your fleet is advantageous in many ways, but also has its drawbacks. Remember that the financial climate can change quickly without much warning, as we have seen in the past.

The answers to these questions will differ greatly depending on the type of company, organisation or institution. However, understanding the role of fleet management and the economic situation at the time is of the upmost importance. From here, it is possible to weight up the pros and cons of outsourcing fleet management.

Advantages of outsourcing fleet maintenance and management

Reduced operating costs – If you deal with fleet maintenance directly, then you could be paying over the odds for parts, labour and other expenses. But by outsourcing purchasing, management and maintenance to an industry specialist, you could make a dramatic saving. Specialist organisations will deal with suppliers on a daily basis and inevitably be able to get a much better deal. There have been a few high profile examples of fleet operation cost-cutting in the past too. Outsourcing may even result in a reduced headcount, so other expenses relating to payroll, back-office functions and human resources can be eliminated completely.

Increased efficiency – The new level of efficiency you can achieve will depend on current maintenance and management systems, but outsourcing key responsibilities to a dedicated organisation has the potential to transform productivity. By not having to worry about the burden of fleet management, both you and other members of staff will have much more time to concentrate on other important areas of the business. You can rest assured that things like fleet availability and safety requirements will be taken care of by dedicated and knowledgeable professionals.

Enhanced service and satisfaction – If things like fleet scheduling, parts availability, ongoing repairs and other aspects of maintenance stretch in-house resources to unmanageable levels, then service and satisfaction will inevitably suffer. However, striking a deal to outsource fleet maintenance and management can provide assurances that both you and your clientele will receive excellent service and continued satisfaction. For example, the NHSBT needed assurances that urgency would be applied with fleet maintenance, something outsourcing could guarantee.  What’s more, the best fleet maintenance and management companies work in accordance with quality assurance processes and industry defined standards. Therefore, the quality of work will be guaranteed.

Greater accuracy – A dedicated maintenance and management company will be able to analyse fleet metrics and establish Key Performance Indicators, which can lead to greater accuracy and ensure future success. Both financial and operational objectives relating to driver training, vehicle purchasing, ongoing costs, downtime and repair turnarounds can be constantly scrutinised and compared with other companies.

Assurance over legal and ethical requirements – From vehicle maintenance to driver eligibility, the number of requirements and responsibilities that come with fleet management are somewhat endless. However, by outsourcing to a company with an absolute understanding of what is required from a legal point of view, this accountability disappears. Just be sure that the company in question is a legitimate and reputable management specialist. With the leasing industry under pressure to become more environmentally friendly, you may also become a more sustainable company too.

Disadvantages of outsourcing fleet maintenance and management

Break down of relationships – Fleet managers are bound to develop strong and dependable relationships with the outsourced maintenance specialist, but the same cannot be said for other employees, particularly drivers. If operations are kept in-house, then a driver can go to the manager directly with any questions, concerns or problems. However, adding a third-party into this relationship makes matters a little bit more complicated. In addition to this drawback, previous relationships between the in-house fleet manager and dealerships, suppliers, insurers and accountants will break down too.

Loss of insight – If fleet maintenance and management is outsourced, there is a danger that previous insights and control over operations will be lost. This is even more plausible if previous in-house responsibilities are absorbed into another department. Although budget and efficiency considerations take top priority, it is important to establish clear lines of communication with any outsourced provider in order to receive detailed feedback about operations.

Accountability issues – Ultimately, the in-house fleet manager will be responsible for every aspect of maintenance and management, even if certain tasks and functions are outsourced. But, if a regrettable or difficult incident occurs, it is easy to pass the buck and shy away from accountability. For the main aspects of fleet maintenance and management, it is advisable to have in-house members of staff in place. However, more specific tasks such as purchasing handling, legal requirements, accident reporting, and ongoing repairs can be outsourced.

In summary

The decision to outsource fleet maintenance and management is not an easy choice to make for any company. However, it should be based on factors such as company culture, in-house expertise, core activities and the economic climate. Although guidance and enlightenment can be taken from other companies that have outsourced responsibility, the final decision must directly relate to your business.

But with potential benefits including reduced operating costs and overheads, increased efficiency, improved service and satisfaction, greater accuracy, as well as assurances over legal and ethical requirements, outsourcing fleet maintenance and management can be extremely advantageous.

It is crucial to recognise the potential downsides and pitfalls, even though several of these can also be addressed and dealt with. But ultimately, it is a balancing act between maintaining some level of responsibility with a solution that benefits your company as a whole.




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