{"id":2926,"date":"2019-06-21T16:33:56","date_gmt":"2019-06-21T14:33:56","guid":{"rendered":"http:\/\/en.advancedfleetmanagementconsulting.com\/?p=2926"},"modified":"2019-06-21T16:33:56","modified_gmt":"2019-06-21T14:33:56","slug":"2926","status":"publish","type":"post","link":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/2019\/06\/21\/2926\/","title":{"rendered":"Overcoming the Hurdles of Fleet Procurement"},"content":{"rendered":"

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Image: Getty Images<\/em><\/b><\/p>\n

Overcoming the Hurdles of Fleet Procurement<\/h3>\n

Whatever your problems are with procurement, other fleet managers have likely faced the same issues and overcome them. Here, fleet and procurement professionals discuss how they handle purchasing rules, cooperative agreements, improving vendor relationships, and long lead times for heavy or specialized equipment.<\/p>\n

Overcoming \u2018Buy Local\u2019 Obstacles<\/strong><\/h3>\n

Some fleet organizations are obligated to \u201cbuy local,\u201d with local ranging from within the city, to counties in the area, to statewide. Depending on the fleet\u2019s location, however, getting three bids may be difficult.<\/p>\n

Douglas Adams, fleet superintendent for the City of Nampa, Idaho, purchases about 30 to 40 vehicles annually and has a solution. When it comes to \u201cinformal\u201d bids \u2014 purchases costing less than $100,000 \u2014 Idaho law says he only has to solicit three bids, not receive them.<\/p>\n

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\u201cI am very clear with my vendors that if they don\u2019t respond within a few business days, I will consider them \u2018non-responsive.\u2019 I am then legally able to purchase from vendors that did provide a quote,\u201d he said. \u201cIt is important to note that I document that I had attempted to obtain three quotes and received no response.\u201d<\/p>\n

Documentation is important, Adams said. He files e-mails sent to vendors and copies of bid instructions to save them as proof.<\/p>\n

The City of Mesa, Ariz., also has a local preference policy. Out of the approximate 8% sales tax, the city gets about 1.75%. When local bids come in for vehicles, \u201cwe remove the 1.75% from the total cost, and that is their number for scoring,\u201d said Pete Scarafiotti, CAFM, CEM, CPFP, fleet director & automotive engineer for the city.<\/p>\n

The policy has increased the city\u2019s business with local companies. Scarafiotti reported: \u201c1.75% is not going to make a big difference, but on some products that were very competitive to begin with, it did. We boosted our opportunities with the local folks. We\u2019re about 60% now buying locally.\u201d<\/p>\n

He believes this local preference policy drove down prices, with vendors bidding lower because they know it\u2019s more competitive.<\/p>\n

In Monterey County, Calif., which spends up to $1.5 million a year on fleet purchases, the local preference percentage is 5% for those located in the tri-county area and have been in business for more than three years. But Michael Derr, contracts\/purchasing officer, said this rarely has been the deciding factor in which company wins a bid.<\/p>\n

\u201cOur local vendors usually come in pretty low compared to outside vendors. The majority of the time, local vendors even beat cooperative pricing,\u201d he said.<\/p>\n

Vendors outside the \u201clocal\u201d area may not be too happy with a buy-local policy, but Scarafiotti simply tells them to move their business to the city.<\/p>\n

\"As
As a transmission utility, Bonneville Power Administration has larger equipment than distribution utilities. Some of its fleet includes (clockwise from top left) a Tucker Sno-Cat, a 95-foot digger derrick, a 17,000-\u00adgallon storage tanker, and a 3,000-gallon aviation refueler. Photo courtesy of Bonneville Power Administration<\/em><\/figcaption><\/figure>\n

Cooperative Purchasing a Quick Solution<\/strong><\/h3>\n

\u201cIt\u2019s massively cumbersome [to go out to bid]. It takes a lot of manpower,\u201d Adams said. The city doesn\u2019t have a purchasing division, so it\u2019s up to Adams and division heads to get requests for proposal (RFPs) out and award a vendor.<\/p>\n

This means he avoids it when legally permitted. If Adams is purchasing a small number of vehicles, he turns to the state contract. If he\u2019s buying heavy equipment \u2014 usually not available on the state contract \u2014 he turns to a cooperative purchasing contract.<\/p>\n

The time difference is significant \u2014 at least three months to go out to bid and award a contract versus a couple of weeks by using a state or cooperative contract.<\/p>\n

But that doesn\u2019t mean it\u2019s always the best solution. \u201cIf the HGACBuy [contract] doesn\u2019t offer what we want or if we feel the price is too high even with HGACBuy, we\u2019ll use a formal RFP,\u201d Adams said.<\/p>\n

Mechanic David Gunderson is the lone fleet employee at the City of Saint Peter, Minn. Between managing the shop, handling repairs, and purchasing eight to 12 vehicles annually, he\u2019s trying to save as much time as possible.<\/p>\n

Still, he prefers to buy from local dealers because dealers providing vehicles on the state contract are usually located at least an hour away. But Gunderson will check the state contract price or Sourcewell and go with it if bids come back too high.<\/p>\n

Scarafiotti is cautious about using cooperative contracts. As an automotive engineer, he prefers to spec vehicles himself.<\/p>\n

\u201cYou can buy off other bids, as long as you remember that whatever mistakes that guy made [spec\u2019ing], you get them too,\u201d he said.<\/p>\n

But he does compare prices and uses the contracts occasionally. At times, he knows he won\u2019t be able to beat the cooperative contract price because \u201cthey\u2019re going off the throughput of the entire cooperative to get that price,\u201d Scarafiotti said.<\/p>\n

\"The
The City of Nampa, Idaho, purchases its vehicles via the bid process for larger purchases, but relies on state and cooperative contracts to buy smaller amounts of vehicles. Photo courtesy of City of Nampa<\/em><\/figcaption><\/figure>\n

Long Lead Times Frustrate Fleet Managers<\/strong><\/h3>\n

Fleet managers have noticed it\u2019s taking longer to get vehicles than it used to and have had to adjust their replacement and purchasing methods to reflect this.<\/p>\n

The Bonneville Power Administration, which provides energy \u2014 primarily hydropower \u2014 to the Pacific Northwest, has an average annual capital fleet budget of $7.5 million. David Tidwell, acting fleet manager, said lead times for heavy equipment can be 18-24 months, up from eight to 12 months a few years ago.<\/p>\n

\u201cAs fast as they can make it, someone is buying it,\u201d he said. \u201cIt takes time to get [through a bid process], and a lot of government fleets are in a bind because that private entity that comes in with a checkbook, they\u2019re going to get their piece of equipment first because they\u2019re spending cash right now.\u201d<\/p>\n

Tidwell has a new vehicle replacement strategy that allows him to identify replacement needs and get the procurement process started 12 months ahead of time.<\/p>\n

Scarafiotti said the order-to-\u00addelivery delay means he must keep vehicles longer than their intended lifecycles while he awaits delivery of the new units, which could result in increased costs. The city\u2019s fleet replacement module takes into consideration long lead times when procuring vehicles.<\/p>\n

Inspections Are Important<\/strong><\/h3>\n

Tidwell and Scarafiotti stressed the importance of doing inspections. Manufacturers working under the gun are more likely to deliver vehicles that aren\u2019t built to spec.<\/p>\n

\u201cWe send our equipment specialist to the manufacturer to do an inspection on the piece of equipment before it\u2019s sent to us. We\u2019re doing that with almost everything because we\u2019re finding issues,\u201d Tidwell said.<\/p>\n

But Scarafiotti said a spec inspection isn\u2019t the only one his staff performs. He\u2019s finding that vehicles need warranty repairs soon after delivery, and these repairs are often not done correctly by the vendor.<\/p>\n

\u201cThey\u2019re having problems finding technicians<\/a>, like we are,\u201d he explained. \u201cThey give it a shot and it comes back to us, and we\u2019ll do an inspection of the work and sometimes we find that it\u2019s not right, so we send it back.\u201d<\/p>\n

This process can take months, so Scarafiotti keeps the the old vehicle until the new unit is ready for full-time use.<\/p>\n

\u00a06 Tips for Improving the Purchasing Process<\/strong><\/h3>\n

Fleet and procurement managers recommend the following tips to improve the spec\u2019ing and bidding process:<\/p>\n

1. When requesting bids\u2026<\/h3>\n

Adams from the City of Nampa suggested: Don\u2019t divulge any budgetary numbers. Don\u2019t include specifics that might prevent a vendor from bidding, such as a color specification. Don\u2019t spec a brand or proprietary information. And be sure to add \u201cor equivalent\u201d to your spec.<\/p>\n

2. Buy the right vehicle for the job.<\/h3>\n

\u201cIf you\u2019ve identified the right tool for a certain agreed-upon service level, try to hold fast on that,\u201d Adams said. \u201cTry not to deviate from that, be it political pressure or budgetary pressure. Because then it\u2019s no longer a budgetary discussion. It\u2019s a level of service discussion.\u201d<\/p>\n

For example, the city\u2019s police vehicles have a 10-year frontline life. He makes sure to spec body-on-frame pursuit vehicles because in his experience, these vehicles last the full lifecycle.<\/p>\n

3. Standardize vehicle specs.<\/h3>\n

Purchasing is much easier, especially for large organizations, if there are standards in place for specific vehicle types. At the Bonneville Power Administration, each \u201ccraft\u201d owns its vehicle standard and is responsible as a group for updating it, according to Tidwell. For example, electricians may agree on a 60-foot bucket truck, making it easier for fleet staff when the time comes to spec vehicles.<\/p>\n

4. Group vehicle purchases together.<\/h3>\n

When going out to bid, a larger purchase will allow an organization to get a volume purchasing price discount, said Derr from Monterey County.<\/p>\n

5. Be the solution.<\/h3>\n

When vendors complained that they didn\u2019t know who to talk to when they had questions, Scarafiotti said they could contact him directly. At first, he got inundated with calls, but as vendors understood the new purchasing policy better, the number of calls dropped, and vendor relationships have improved.<\/p>\n

6. Know how to motivate people.<\/h3>\n

Scarafiotti wanted to address another vendor complaint: how long it took to get paid. He explained to the Finance Department that, especially during the recession, small vendors would go out of business if they weren\u2019t paid on time.<\/p>\n

He told them: \u201cIf these guys aren\u2019t satisfied, they\u2019re not going to be able to call you because they don\u2019t know who you are. They\u2019re going to go directly to a city councilperson. That call you get isn\u2019t going to be from me helping you. It\u2019s going to be from them looking for you.\u201d<\/p>\n

The warning worked. Payment time went from about 60 days down to 30-45 days.<\/p>\n

Follow the Laws<\/strong><\/h3>\n

Procurement laws make vehicle purchasing more cumbersome and complicated but breaking them can land fleet and procurement managers on the front page of the local paper \u2014 or worse.<\/p>\n

Adams, from the City of Nampa, takes this seriously, keeping in contact with state procurement officers to ensure he\u2019s up to date on any rule changes.<\/p>\n

\u201cThe state purchasing laws are my overall guidance. My general thought is if I violate city policy I could lose my job, but if I violate state law, I could lose my freedom,\u201d he said.<\/p>\n

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Big Trends in Cooperative Procurement<\/strong><\/h3>\n

As more public agencies turn to cooperative procurement to buy their fleet vehicles, two trends have emerged, according to Tammy Rimes, executive director of the National Cooperative Procurement Partners.<\/p>\n

1. Fleet purchases are less prescriptive in specifications. For example, instead of replacing an old mower or tractor with a new one, \u201cthe emerging trend is to purchase replacement equipment that is more versatile, with value-added components,\u201d she explained. \u201cAttachments to spread fertilizer, load sand, haul a pallet of sod, aerate, top dress, remove snow and ice, blow leaves, prune roots, spread seed, tow a trailer, sweep a path, and chip wood may broaden the potential uses for a new piece of equipment and provide a greater return on investment. \u201c<\/p>\n

2. Turning to cooperative contracts for surplus auction needs. \u201cWhile there are many companies that provide this service, the tendency is to stay with one vendor over a long period of time,\u201d Rimes said. \u201cThe newest trend is to search for these services through a cooperative contract \u2014 with lower negotiated fees \u2014 resulting in more money back to the agency. Or bring in a second vendor and split the inventory between them, for a bit of competition.\u201d<\/p>\n<\/div>\n

by Thi Dao<\/a><\/p>\n

Source: https:\/\/www.government-fleet.com<\/a><\/p>\n

\"JMF\"I\u00b4m\u00a0a Fleet Management expert, and the manager of\u00a0Advanced Fleet Management Consulting<\/a><\/strong>, that provides Fleet Management Consultancy Services.<\/p>\n

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\"\"<\/p>\n<\/article>\n","protected":false},"excerpt":{"rendered":"

Image: Getty Images Overcoming the Hurdles of Fleet Procurement Whatever your problems are with procurement, other fleet managers have likely faced the same issues and overcome them. Here, fleet and procurement professionals discuss how they handle purchasing rules, cooperative agreements, improving vendor relationships, and long lead times for heavy or specialized equipment. Overcoming \u2018Buy Local\u2019…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[18],"tags":[137],"_links":{"self":[{"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/posts\/2926"}],"collection":[{"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/comments?post=2926"}],"version-history":[{"count":0,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/posts\/2926\/revisions"}],"wp:attachment":[{"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/media?parent=2926"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/categories?post=2926"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/tags?post=2926"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}