The 2017 Global Fleet Conference in Miami, 7 and 8 June, focused not only on the fleet management trends of today; but also on the trends and innovations of tomorrow. Here are ten things that stood out. Oh yes, next year the Global Fleet Conference will take place on 29 and 30 May 2018 in Rome, Italy. Save the date!
1. Global Fleet Management is about balance
More precisely, about balancing globally mandated guidelines, regional policies and implementation according to local realities and preferences.
This was demonstrated by David Hayward, who manages a fleet of 12,000 vehicles in more than 60 countries for Teva Pharmaceuticals. Explaining his global fleet programme, he stressed that “one size rarely fits all. However, as our Global Guidelines and Standards are translated into strong Regional policies, that creates freedom for local practibility”.
To start your own global fleet programme, David Hayward recommends taking an inventory of what you have, if possible per region, and see what degree of harmonisation is possible for each region. That can be the basis on which to build Global Fleet Guidelines. Those are key: they are the building blocks for a regional policy in terms of vendor strategy, green and safety elements, behavioural aspects and information on mandates, roles and responsibilities.
2. Category Management is essential
Category Management is essential to control the fleet management and procurement side of global fleets, says James Jin, responsible for Merck's global fleet of more than 20,000 vehicles (8,700 in EMEA, 6,000 in North America, 3,600 in Asia and 3,400 in Latin America).
Category Management goes beyond looking at best prices or TCO. Those are the low-hanging fruit that fleet managers of multinationals have already picked – especially in more mature markets. The next step is to respond to the overall business needs of the company: by creating value for the company, by looking at the end-to-end process and by going after the hidden costs – the high-hanging fruit.
But optimal execution of Category Management requires dealing with more stakeholders than before, understanding the totality of business needs, and making decisions that will be supported by the entire company.
3. Supplier Relationship Management is a two-way street
Jonathan Kamanns of Ingersoll Rand listed a number of clear guidelines to be successful at Supplier Relationship Management (SRM).
First of all: find and develop mutually beneficial relationships with your current suppliers. Design a common project within which you both evaluate them, and yourself. “While we punish them when then fail, we also have to celebrate them when they excel”, says Jonathan Kamanns.
Secondly: regional and global suppliers need to be aligned to provide the relationship with scope and sustainability. And thirdly: it is essential to have performance-driven deliverables that are relevant and open to continuous improvement.
You also need to ensure that both parties (i.e. customer and supplier) have access to additional POCs, and that suppliers have a history of performance excellence, with alignment across your organisation and business. Last but not least: innovation is essential. Both parties have to inform and inspire each other on improving and innovating, with an eye on future objectives.
4. Tendering needs to serve your business needs
Selecting preferred suppliers is a vital link in the fleet management chain. Yet too often, that tendering is considered best which is biggest and fastest. However, as the insights shared by the OEMs show, it is a process that starts with close knowledge of your own fleet, and in which direction you want it to grow. Knowing your strategy is essential when launching a global tender - “if possible even on a medium term of three to five years”, says Steve Higgs of GM: that will allow you to respond to upcoming customer demands with the right vision and the right solutions.
Always remember that effective tenders are always framed with customer needs in mind – just going for the largest possible tender makes no sense. Also, the manufacturers agree that, for optimal results, you should allow suppliers enough time to gather the right answers to your questions: “Two weeks is not enough”, says Steve Higgs. It should at least be double that.
Finally, when tenders are concluded, it is recommended to have a follow-up, with feedback from the fleet customer to the fleet supplier. This will allow the supplier to improve their offer and do better in future: the tendering exercise is a learning curve -for both parties involved.
5. Safety first, also globally
Multinationals understand that their most valuable assets are their employees. Powered by the growing importance of CSR, Health and Safety, and Environmental concerns, safety has become a key element in international fleet strategies.
A successful safety strategy not only focuses on selecting safe vehicles, but also provides for a consistent safety programme. Such a programme would include attention for driver behaviour, accident and incident prevention and management, and transparent safety reporting.
Both Unilever and Shell have global safety programmes in place, supported by top management. Both programmes prohibit smartphone use when driving, for example – and that policy is not limited to eligible fleet drivers, but covers all employees and contractors. Unilever calls it MOMO – Motor On, Mobile Off. Shell has integrated its phone policy within a larger safety programme, which also includes defensive drive training and in-vehicle monitoring. Such policies yield tangible results: both companies report significant drops in accidents and incidents, with no detrimental impact on overall business results – quite the contrary.
6. Data can power your fleet
Fuel management is a difficult proposition in global fleet management, as there are no global fleet suppliers or solutions that cover your needs across all your fields of operation. Nevertheless, it is still possible to harmonise and centralise your fuel policy.
You can do this by basing it on your operational presence: where are your vehicles, how many do you have, and what kind of fleet is it? Passenger car fleets will require a denser network than long-haul truck fleets, for example. South African fleets may be served with a home base solution, while that may not be eco-friendly enough in Europe.
So, a global fuel strategy should not be equated with single, simple solutions. It is counter-productive to chase one-size-fits-all solutions, especially considering the fact that fuel suppliers often have partnerships with each other. Consider your needs, find out what is practicable, and don't forget those cross-acceptance partnerships between fuel suppliers in certain regions: these might prove very helpful in efficiently managing your fuel requirements. Data and technology are vital supports for your fuel management, as data will provide insight in spending, and indicate which steps to take next.
7. Global excellence comes from regional knowledge
A global approach is fine, but your policies and solutions need to work on a regional level. It cannot be said often enough: one size does not fit all.
Remains a benefit-car-driven market. The SUV and crossover segments will continue to boom and become more prominent in large, multinational fleets. Outsourcing of risk via full-service leasing will also continue, as customers like the predictability provided by leasing. Alternative powertrains, currently at 4% of corporate fleets, are expected to increase rapidly. The trend towards wider mobility management for all employees will also amplify. As for new mobility solutions, that international trend is very local in implementation, due to local variance of infrastructure, regulation and acceptance. Another rising trend: the pressure on diesel, with over 200 low-emission zones in 14 countries already.
→ Latin America
Most Latin American countries will experience economic growth. This will result in growth of fleet services outsourcing and fleet sales. However, some countries, not in the least Brazil and Argentina, remain economically and/or politically volatile.
Another challenge: the sheer size and diversity of the Latin American region, with large distances and infrastructural challenges throughout. But, as more fleet suppliers improve their coverage of the region, it will become easier for multinationals throughout the region to outsource fleet operations and mitigate risk.
It should be noted that the U.S., open-end model of fleet management is popular in Mexico – via the NAFTA free trade agreement – while the European, close-end model is preferred in South America. Green issues are not high on the agenda yet, even though megacities like Mexico City and Sao Paulo have imposed some restrictions on pollution. This could spark a wave of eco measures to rival those in Europe and elsewhere. A similar story on mobility: Latin America is not an early adopter, but may choose to jump in soon, and do so swiftly.
Australia and New Zealand are large, mature and low-density markets. While in the U.S. about 17.5 million vehicles are sold annually, the figure for Australia is 1.1 million. Fleet managers often run relatively small fleets, and struggle to find the time to innovate – as they have other roles to perform outside fleet management. Safety is strictly enforced, but environmental regulation is not high on the agenda. Australia's big cities are ideal for mobility concepts like ride-sharing, with a younger generation eager to embrace new mobility solutions.
8. Mobility and disruption are transformative
The automotive and fleet industries may not be as innovative an industry as IT or telecommunication, but new mobility and other disruptive trends will transform them beyond recognition over the next few years. Those new services are expected to grow the automotive revenue pool to a $1.5 trillion market by 2030.
In a future where cars will be increasingly electric, connected and autonomous, the fleet industry will experience the increasingly rapid introduction of new services and solutions by new suppliers.
Fleet managers are ready, willing and able to embrace this brave new world, and welcome disruption as a pathway to greater efficiency. Even if that means that fleet managers will transform into mobility managers, who must analyse the growing range of offers on the mobility market and select the right solutions for their employees. This process will involve more stakeholders, and even stricter alignment between the local, regional and global levels than today.
The future is not necessarily convergent: discrepancies between Europe and the U.S. on low- and zero-emission zones will grow, for instance.
9. On balance, in balance
On 1 January 2019, the new lease accounting standards will come into effect. Mandating that lease assets appear on the balance sheet of the lessee – for leases longer than 12 months - they will have an impact on the vehicle fleet business.
The new standards will not lead to a substantial decrease in the popularity of operating leasing (for which leased assets currently are off-balance sheet as far as the lessee is concerned). But they will have an effect on the complexity of accounting, financial reporting and process management.
On top of that, the new standards will lead to an increase of new product types such as private lease, car-sharing and flexible leases in general. Also, the portfolio management approach is very much in keeping with the new standards.
10. As the global economy grows, so wlll global fleet sales
Mustafa Mohatarem, chief economist at GM, says the global economic forecast is stable and positive. By the end of the year, he expects to see even more economic growth. The good news is that growth is happening right across the globe – Brazil is the exception: a large, emerging economy that is struggling to find its feet again – and that large fluctuations, both up and down, seem to have been eliminated.
This provides calm and stability, as does the fact that the economic nationalism that threatened to engulf both the U.S. and Europe has not materialised. Also, oil has remained relatively cheap, with a benefical effect on fleet TCO. Mustafa Mohatarrem predicts the oil price will remain stable at between $50 and $60 a barrel for the next few years, with no signs of an exponential increase in demand.
Long-term demand for cars will remain solid, with recent record sales figures across major markets in Europe, North America and Asia likely to be broken, as populations grow, become more affluent in emerging markets and tend to drive longer distances than ever before.
Image: public domain
The 6th edition of the Global Fleet Conference will take place next year in Rome. We look forward to welcoming you all in the Eternal City on 29 and 30 May 2018, for two days of high-octane learning, s