Overcoming challenges of centralized fleet procurement

If you work in fleet or mobility procurement for an international company, chances are that your company has implemented – or indeed is in transformation to – centralization of a number of functions, amongst which (indirect) procurement. Central procurement is an exciting role, but nonetheless a complex one; its success depends to a great extent on how the transition was done.

Your new role: challenges

The total or partial removal of local fleet procurement means a significant brain drain, to start with, as in-depth knowledge of the local markets disappears, and so do connections and contacts with local stakeholders. Your employer however will expect deliverables similar to, or even in excess of what the sum of your now-gone local colleagues has achieved.

In order to manage your fleet centrally, you’ll be sourcing for global suppliers, at least for lease, OEM and energy (fuel/electricity), only to notice that the global ambitions – or promises – of the supply chain are limited by reality. OEMs work with local importers, some of which require local contracts and not all registrations will count against your volume agreement; leasing companies work in partnership with local vendors and products, or services diverge from country to country; no fuel company will be able to offer the global coverage that you’re looking for, and you’ll end up with a patchwork of vendors.

Your new role: opportunities

Nonetheless, there are some real opportunities that you’ll be able to leverage to compensate for the challenges.

First, there’s the opportunity to redesign. If your company is centralizing, it’s very likely that indirect procurement is not the only function subject to transformation. A central model doesn’t work without consolidation and harmonization, which will be the ambition as well of your compensation & benefits (total rewards) colleagues, your finance colleagues, your reporting colleagues and your account payable colleagues, just to name some. Making a difference and leading a fleet transformation project is an interesting experience, essential for your company and a great experience for you personally.

Next, supply chain optimization is achievable. Don’t aspire to going from 100+ suppliers globally to single digit, but a realistic and limited target is within range if tendered correctly.

Finally, there’s an opportunity to modernize and innovate. In a centralized model, you will be able to obtain a mandate to automate certain tasks or involve new vendor types necessary to support the model. Connectivity, digitization in fleet management, reporting tools are just a few examples of innovation ready to be implemented.

Compromise

Against the challenges and opportunities, it is recommended to target realistically. You’re entering a process that will take several years to come to completion. The delays will become clear as you’ll start noticing that your company is not entirely ready to support you, and that your supply chain isn’t either. Therefore, think in phases and integrate levels of expectation in your plan: higher for Europe and North America, medium for Latin America, but allowing for more time in APAC and MEA.

Make sure you communicate these milestones across the organization, obtain buy-in from your (local) stakeholders and, especially, don’t let a few obstacles distract you from your target.