True sourcing is based on a dynamic process and cost is only one part of a hierarchy of needs with the other parts being: assurance of supply, service, quality, innovation and sometimes regulatory, none of which can be sacrificed for cost. The team collaborates to determine the minimum needs as the basis for the sourcing process. Photo courtesy of Deep Blue 4 You via Getty Images.
Finding Diplomacy Between Fleet and Procurement
There is a difference between procurement and sourcing, with the former being more tactical and shortsighted and the latter being more strategic and change-management oriented, and the dynamics between these groups and fleet can sometimes be contentious.
True sourcing is based on a dynamic process and cost is only one part of a hierarchy of needs with the other parts being: assurance of supply, service, quality, innovation and sometimes regulatory, none of which can be sacrificed for cost. The team collaborates to determine the minimum needs as the basis for the sourcing process.
It’s a process that sets the stage for long-term strategic relationships, transparency, and the true value beyond cost. Essentially, reaching a point were both parties benefit from an engaged relationship that goes well beyond those initial cost reductions. The onset, however, usually begins with cost reduction as a significant attribute that results when the requirements of supply, service, and quality are understood and met, as often they are exceeded, unreliable, unstructured, or unmet in some fashion. There are many operational examples that support this.
It’s unfortunate that procurement generalists have run roughshod over some organizations, in the name of savings or even personal gain, while eroding supplier relations for the rest, said one anonymous fleet sourcing manager. He said he was fortunate enough to be category specific; but couldn’t help but think if the divide in fleet versus an embrace of sourcing isn’t perpetuating the generalist phenomena between fleet and business leaders seeking out category specific sourcing partners for their organizations.
“I hear the scuttlebutt from colleagues about the woes and friction between the two groups and I have a variety of perspectives there as well,” said the anonymous manager. “It’s really a shame on the dynamic, and I foresee the pendulum possibly swinging toward safety HSE organizations and I’ve seen that friction between fleet, procurement, and safety now as well.”
The other challenge is that negotiation and supplier management is a typical procurement function. Operations teams, not just within fleet, tend to feel this usurps their power in some way. Companies often don’t have well-defined or bought into RACI documents to help create clarity on who does what. Typically the crux revolves around decision rights. An RACI chart is a matrix of all the activities or decision-making authorities undertaken in an organization set against all roles.
Mostly far and away, this is a corporate issue within companies and not an external market issue. However, sometimes the suppliers can play the groups off one another or have a loyalty to one group or another which exasperates the situation.
Editor’s note: This guest editorial was written by an industry professional who wished to remain anonymous.
Source: Fleet Financials
I´m a Fleet Management expert, and the manager of Advanced Fleet Management Consulting, that provides Fleet Management Consultancy Services.