Fleet cost reduction: 10 instant changes that can save you money

Rising operational costs are a pressing concern for corporate fleet managers in 2022. When looking at fleet cost reduction, there are many ways that businesses try to cut back. However, many of these can yield less than satisfying results. Our top 10 tips on how you can reduce your fuel costs, which consider both short and long-term adjustments, are:

 

1. Analyse fleet costs
2. Manage maintenance
3. Replace old vehicles
4. Optimise fleet structure
5. Track fleet data
6. Manage staff
7. Evaluate routes
8. Encourage economical driving
9. Track superficial vehicle condition
10. Use fuel cards

How can fleet costs be reduced?

1. Analyse fleet costs

 

The key to fleet cost reduction is planning and data collection. To make sure fleets are running as efficiently as possible, fleet managers need to know the full details of their fleet’s outgoings. A good method to measure this is to work out the total cost of ownership (or TCO) for each vehicle. To work out a vehicle’s TCO, fleet managers will need to calculate:

 

1. The procurement cost: The purchase price, leasing fees, and interest rates together all make up the complete procurement cost.
2. The lifetime costs: These include the money spent on fuel, tax, and insurance. Fleet managers will also need to consider the vehicle’s value depreciation.
3. The maintenance costs: This consists of routine and ad hoc charges, including MOTs and parts changes, as well as any unexpected breakdowns.
4. Area and route fees: These are charges to scrutinise if a vehicle operates in an area that accrues fees, such as congestion charge zones or if they pay regular toll fees as part of their routes.

 

Once fleet managers have calculated their fleet’s TCO, they can identify any areas or vehicles in need of further attention. After this analysis, they can work to budget effectively and reduce fleet costs using the following strategies.

2. Manage maintenance

 

Additional fleet maintenance and care may seem counterintuitive when it comes to saving money. However, caution and diligence with vehicles will lead to reduced downtime and increased fuel efficiency. Faulty parts, such as clogged fuel injectors or worn tyres, can lead to greater fuel consumption, negatively affecting your fleet cost management and increasing the likelihood of breakdowns.

 

A common issue that fleet managers are currently experiencing is the widespread MOT delays due to the large backlog after COVID-19. This has left MOT providers with limited availability. A way to avoid vehicles being off the road while they wait for an appointment is to schedule them more frequently. Vigilant fleet managers are now opting for an MOT every 8 months instead of every 12, giving them some wiggle room and preventing downtime. A complimentary approach is to schedule MOTs alongside other maintenance to be as cost-effective as possible.

 

Another example of spending to save is the use of premium fuels. Although they come at a higher price point, the occasional use of premium fuels that contain cleaning solutions, such as Shell’s V-Power or BP’s Ultimate, can increase a fleet’s longevity and fuel efficiency by cleaning out fuel injectors.

Replacing fleet vehicles

3. Replace old vehicles

 

With regular maintenance and monitoring of vehicles, it becomes apparent when they are no longer cost-effective to keep. When it is time to replace older vehicles, fleet managers should consider the depreciation figure and lifespan for the replacement models, as this will help cut down the overall TCO. They should also look at past fleet vehicles that have given a good return and use this data as an asset to reduce their procurement expenses.


As we also move closer toward carbon-neutral fleets, fleets need managing in a new way. The UK is not far away from seeing the lifespans of diesel and petrol vehicles cut short by their infrastructural phasing out. Fleet managers can transition to carbon-neutral options on a larger or longer scale to assist in fleet cost reduction. Currently, electric vehicles typically have a more expensive upfront cost but are cheaper to maintain. Although, this may change as they become the dominant vehicle type.

4. Optimise fleet structure

 

For fleet managers, it is important to continuously develop and improve a fleet’s structure. A streamlined fleet, with deliberately chosen vehicles, is much more efficient than one preserving an outdated framework.


When in the process of selecting new vehicles, there is an opportunity to look at the fleet structure and potentially choose more conservative vehicles. Namely, if it is appropriate to downsize parts of the fleet to boost fleet cost reduction. For example, if staff are now carrying less or lighter equipment, a smaller vehicle may be a valid option for them, those with lower mileage may be better suited to a petrol vehicle, or alternative arrangements, such as vehicle sharing or adopting grey fleet vehicles, may be best for those with especially low mileage.

5. Track fleet data

 

Accurate data and analytics, such as telematics, have many benefits for fleets. Advanced data collection leads to optimised routes, informed fuel purchasing decisions, and better road safety among drivers, all of which lead to fleet cost reduction. With telematics, there is the additional advantage of dashcam footage, which can save your company in costly legal fees should an accident occur.

6. Manage staff

 

Unclear leadership and low levels of staff support can lead to poor morale, diminished performance, or even high turnover rates. Within widespread fleets, it can be easy for drivers to feel isolated and like they are not part of a team.


Rather than fleet costs being spent on recruitment, it is better practice as a manager to value and prioritise your current team. By working to make staff feel motivated and connected, managers will notice an improvement in most facets of their business and fleet. Read our tips on how to best manage drivers here.


To save on spending, you can also encourage staff to make more economical decisions regarding their fleet usage. For example, office-based staff who regularly travel for meetings could replace a portion of their travel with virtual meetings.

Evaluate Routes

7. Evaluate routes

 

Along with using fuel cards, one of the most prudent ways to save on fleet costs is to stay informed on where vehicles will get the best refuelling rate, which is often a changeable detail.


When you choose fuel cards from Fuelmate, we give you access to our online portal and journey planner, which is an advantageous resource for fleet managers. With our journey planner, you can find the most cost-effective route for your drivers and save your fleet money on unnecessary detours. With our detailed invoices, you can also see where your drivers have been refuelling and what you could be saving.

8. Encourage economical driving

 

Efficient driving is one of the best ways to reduce fleet costs. As mentioned previously, uneconomical driving habits lead to increased fuel consumption and safety risks. By using telematics, fleet managers will be able to assess which drivers may need further training, and promote the following practices among drivers:


• Removing excess weight from fleet vehicles,
• Driving smoothly instead of braking or accelerating harshly,
• Avoiding unnecessary speed,
• Avoid idling,
• Where possible, such as when slowing down or on a decline, using engine speed as opposed to continued acceleration,
• Moving up gears at about 2000 rpm,
• Skipping gears where possible.

Track Vehicle Condition
9. Track superficial vehicle condition

A common complaint with communal cars, such as pool cars, is that staff members will leave them in a poor condition for other drivers. Often, we have seen fleet managers have to frequently pay to valet vehicles because of drivers leaving them in a subpar state. Another issue is that damage caused to vehicles while on the road, even superficial, can lead to end of contract charges when a lease agreement expires.


A way to reduce these expenses is to create a level of accountability for staff. This includes a clear and consistent assessment of vehicles before and after staff drive them. This can be a task that staff can complete when they are first taking the vehicle and when they return it via a form or checklist, either physical or digital. Some fleets include QR codes linked to online forms with their pool car keys, so that staff have easy access.

Using Fuel Cards

10. Use fuel cards

 

Fuel cards are a popular and effective way for fleets to save money on fuel as well as make their administration and budget tracking simple. When compared to the national average, fuel cards can offer an attractive discounted rate and, as well as refuelling, can be used for a range of fleet items, such as AdBlue.

 

Here at Fuelmate, we offer a range of fuel cards that cover all of the UK’s major fuel networks to improve your fleet cost reduction and management. Our team of trained fuel experts will select the best fuel card solution for your business based on your fleet’s requirements. Our invoices supply you with advanced and itemised data that will help you to assess your fleet’s fuel usage for further savings opportunities. To find out more about how a fuel card can save you money, click here, or get in touch with our team to start your fuel card journey today.

Fleet Management Trends in 2022

So far, 2022 has been an immensely challenging year for those operating fleets. One of our top fleet management tips is to learn to adapt to the current environment and a large part of doing so is keeping up to date with the industry. In this post, we explain the biggest fleet trends and adversities that fleet managers have been discussing throughout the year. The top fleet management trends from 2022 so far have been:

• Increased operational costs
• Moving to electric vehicles
• Microchip shortages
• Cyber-attack concerns
• Grey fleet
• HGV driver shortage
• Increased interest in telematics

 

Below, we explore these topics in more detail and give advice for fleet managers moving in the third quarter.

Fleet Trends

Increased Operational Costs

Increased operational costs

 

The worrying and exponential rise in operating costs is the most popular talking point among this year’s fleet management trends. Fuel prices have risen throughout the year. In March, oil reached its highest price since the 2008 recession. This rise has seemed to temporarily plateau recently, but further increases are likely as we look ahead.


The rise in prices is due to a variety of factors. The most impactful has been the invasion of Ukraine by Russian forces. Russia was one of the world’s largest exporters of oil and supplied much of Europe before the invasion. Afterwards, countries began to introduce sanctions against Russia. This has affected the global supply of oil and raised costs, as well as put a strain on availability.


The effects of Brexit have also seen prices and time needed for importing and exporting goods increase this year. These delays have caused unwelcome strain for fleets and those in the freight and transport sectors.
As a result, the cost of most resources that fleets depend on has shot up.

David Legg, director of tyres at the i247 Group has said “We’ve seen manufacturer price increases due to cost rises across materials, logistics, labour, and fuel. These increases are then coupled with a significant change in the fleet mix where we are seeing larger rim sizes and new, more expensive tyre technology to accommodate an increasing number of SUVs and electric vehicles.”


Unfortunately, as most are aware, this is one of those issues that does not have a simple answer. A recession is looking increasingly likely as the economy struggles to right itself. On our blog, we have recommended diverse ways businesses can save money where they can. For those wanting to keep up to date with the oil market, our director, Andy Smith has a weekly update. This update, Fuel for Thought, breaks down the week’s oil market news and what it could mean for customers.

Electric Vehicles

Moving to electric vehicles

 

When it comes to fleet trends, one of the most longstanding topics has been the 2030 ban on new diesel and petrol vehicles. In 2022, this incoming ban has seen fleet managers ramping up their efforts to introduce eco-friendly options to their roster.

 

Previously on our blog, we have discussed the alternatives available on the market, such as HVO and hydrogen. HVO offers a great in-between for ICEs. Hydrogen, however, looks to be the future of heavy-duty, time-pressured, transport such as HGVs. Even so, the industry discusses these options less than their more readily available counterpart: electric vehicles.

 

Electric vehicles are the main alternative fuel source supported by the UK government. As such, we have seen infrastructural developments for EVs such as grants and nationwide charging points crop up over the past decade. This has led to electric vehicles being a pertinent talking point when looking at fleet management trends.

 

Even though there have recently been issues in vehicle supply chains, we are still seeing an increase in the number of electric vehicles purchased. In April 2022, EVs had a 10.8% market share, compared to their April 2021 figure of 6.5%.

 

Initially, the switch to EVs encountered trepidation from fleet managers. However, the transition so far has been going smoother than expected. FleetNews reported that only 20% of fleet managers operating EVs saw rises in the cost of maintenance. When comparing this to the fact that 44% of fleet managers expected increases in maintenance costs during the switch, it raises hopes for a painless changeover.

 

Even though the target for the UK to hit net zero by 2050 appears a good distance away, it would be prudent for fleet managers to look into their fleet’s options for making the switch. This will ensure a smoother transition. However, fleet managers will need to be aware of our next fleet trend.

Semiconductor Shortage

Microchip shortage

 

At the end of 2021, the global auto industry saw an output of 1.5 to 5 million vehicles shorter than planned. This has had a knock-on effect on fleets and fleet management trends everywhere, as vehicle supply has been sparse.


The main part that has been causing this issue is the semiconductor. Semiconductors are a vital part, used in lights, safety features, navigation displays and speedometers. The pandemic heavily affected the supply chain for semiconductors, which is taking longer to recover than hoped. The lack of this crucial part has seen vehicle lead times increase from 6 months to 9 months and over.


Also straining supply chains is the lower output from vehicle manufacturers, who shrank their production last year following reduced global requirements. As is the story for many manufacturers post-pandemic, they have struggled to keep up with the now vastly increased demand.


Thankfully, semiconductor production looks to be picking back up and is on track to be at a sustainable level over the next few quarters. In terms of vehicle manufacturers, there may still be a strain on fleets looking for new vehicles in the short term, but improvement in the long term is likely. Arval’s CEO Alain van Groenendael has said that their “N°1 mission in 2022 will be to help and support our clients overcoming the delays in new vehicles deliveries and in their energy transition”.


In the short term, fleet managers would be wise to extend the life cycles of their current vehicles and place orders for new vehicles earlier in anticipation of longer lead times. Using telematics to stay on track with your vehicle maintenance and reduce downtime or breakdowns is a terrific way to keep your vehicles moving while you work to update your fleet.

Cyber-Attack Concerns

Cyber-attack concerns

 

In May 2022, the fleet software firm Digital Innk warned fleets about the dangers of cyber security breaches. Various popular fleet news sources, such as FleetWorld and Business Motoring, shared this warning. This saw cyber security become a much-talked-about fleet management trend for companies across the UK.


A government survey prompted Digital Innk’s concerns. The survey, conducted between winter 2021 and early 2022, investigated the processes and approaches to cyber security for businesses to inform future policies. The key findings of the survey show that the percentage of businesses facing cyber-attacks has held steady between 2021 and 2022 at 39%.


Even though this figure is lower than 2020, which saw 46% of businesses facing cyber-attacks while employees were working from home, it is still a soberingly high number.


Endorsing strong cyber security is important for all businesses but especially in the context of fleets. As fleets use technology such as telematics and delivery planning software, protecting both your drivers’ and your customer’s data is an essential requirement.


The CEO of Digital Innk, Angela Montacute, advised businesses to update their fleet’s technology to the latest software to make sure their digital security can cope with newer dangers. “Cyber-attacks bring operational issues and the risks of reputational and financial damage,” she said. “Fleets should take action to ensure the digital platforms they use to interact with customers, suppliers and internally are secured with the latest technology.”

As well as keeping technology up-to-date, it is wise to review company procedures and implement regular training for the workforce about the dangers of phishing, suspicious downloads, and general online safety.

Grey Fleet

Grey fleet

 

As operating costs continue to rise, businesses are now looking toward the benefits of grey fleets. Grey fleets, in which employees use their private vehicles for work purposes, also rose in popularity after COVID restrictions ended in 2021. Employees, who previously had used public transport before the pandemic, no longer felt comfortable doing so. Instead, staff began to drive themselves and have their fuel usage subsidised by their employer.


We are again seeing grey fleets become a fleet trend in 2022 as they can remove the expenditure from buying and maintaining vehicles such as pool cars. Grey fleets are not an option for every journey or every fleet, but for those using smaller vehicles for shorter range and less regular trips, they are a viable way to save your company money.


For those deciding to include more private vehicles in their fleets, it is important to ensure that all vehicles used are still legal and safe. Remember that employees will also be feeling the pinch and may hold off on repairs or maintenance as a result. In July, FleetNews found that 6.4% of 3,000 grey fleet vehicles assessed had illegal tyres.


It is also worth noting that using private vehicles can diminish the ability to collect accurate data from driver journeys. It is harder to track mileage without the help of telematics, which can make it harder to see where you can save money by planning your staff’s routes or choosing the most cost-effective refuelling points.


As long as well-constructed processes are in place that ensure vehicles are safe, a grey fleet is a good option for businesses that have infrequent low milage trips to save money on purchasing vehicles.

Driver Shortage
The HGV driver shortages

 

Fleet managers often discussed the HGV driver shortage at the end of 2021, a fleet trend that has persisted through 2022. Fortunately, the shortage has been showing the first signs of easing after government initiatives and media campaigns aimed at bringing fresh drivers on board.

 

In late 2021, the UK was short of over 100,000 qualified HGV drivers. This came as a result of factors including driver retirement, poor rates of driver retention, an enormous backlog of HGV driving tests caused by COVID lockdowns, and Brexit causing EU nationals who were working as HGV drivers to relocate. All of this, combined with the already present shortage of 60,000 drivers caused countless issues and delays within the transport industry.

 

In September, the government laid out thirty-three actions to try and increase the number of LGV drivers in the workforce. These included launching training schemes and boot camps, increasing the number of HGV driving tests by 90%, and introducing temporary visas for EU nationals working as HGV drivers. Some of these actions have been more successful than others, the government scrapped their temporary visa scheme in February after only attracting a proportionally small number of drivers compared to their target.

 

There has also been a media push to change the image of the HGV driving sector, encouraging more women to consider it as a career path. Recently, the BBC released its new show Queen of Trucks, showing the behind-the-scenes of women working in the sector.

 

For fleet managers operating HGVs in need of drivers, although recruitment is a factor, driver retention has much more of an impact on driver numbers. Creating a rewarding environment for your workforce should be a top priority for fleet managers wanting to avoid losing staff. Read our tips on how to be a successful manager for your drivers here.

Fleet Trends and Telematics
Increased interest in telematics

At Fuelmate, we have seen an increase in interest this year in the benefits that telematics can provide. Telematics is an invaluable tool for fleet managers.


This is especially the case in the current climate where fleets are dealing with higher fuel costs and lower vehicle availability. Telematics can help fleets reduce fuel costs by monitoring their drivers for problematic habits that burn unnecessary fuel such as harsh braking or driving in the wrong gear. It can also keep you alerted to when your vehicles are requiring maintenance, which can help stretch out vehicle lifespans in the wake of longer vehicle lead times. If you are interested in telematics, or other cost-effective and convenient fleet solutions like fuel cards, contact us today.


If you would like to stay informed about fleet trends and news, make sure to keep up to date with our blog. You can also follow us on social media, such as Facebook, LinkedIn, or Twitter for regular updates. If you are searching for advice and guidance on fleet management and different management styles, check out our comprehensive guide to fleet management today.

Will HVO fuel the future?

HVO fuel, or Hydrotreated Vegetable Oil, is one of the many alternative fuels gaining popularity in the UK’s journey to becoming carbon-neutral. The government’s upcoming ban on the sale of new petrol and diesel vehicles in 2030 has left many weighing up the advantages and disadvantages of using HVO fuel to power their fleet.


A huge advantage is that, for most diesel users, HVO fuel doesn’t require purchasing new vehicles or significantly changing a company’s infrastructure in order for fleets to use it as a fuel source. This makes it an easy-to-implement choice for reducing your fleet’s carbon footprint. But what is HVO fuel?

What is HVO fuel?

 

HVO fuel is a low-carbon alternative to diesel. Also known as green diesel or renewable diesel, the use of HVO fuels can cut a vehicle’s carbon emissions down by 90%.


HVO itself is a second-generation biofuel. The first generation of biofuels was a step towards sustainable fuels and offered options such as bioethanol or biodiesel. The second generation contains even more advanced options, such as HVO fuel.

What is HVO fuel made of?

 

HVO fuel is made of vegetable oils and animal fats and is mostly manufactured from food waste.

 

The first generation of biofuels boasted a huge reduction in the use of fossil fuels and reduced carbon emissions. Unfortunately, the fact that they were manufactured from food products created friction between the food production and fuel industries over limited supplies. The development of HVO fuels worked to solve this problem.

 

In HVO manufacture, the oils are hydrotreated for a process with lower carbon emissions and can be used for diesel engines with little to no modification. As well as helping solve the food supply issue, this will also reduce global food waste, making HVO fuel an overall attractive option for those considering the environmental impact of their business.

Can fleets use HVO fuel?

 

With the diesel vehicles currently on the market not requiring major modifications to use HVO fuel, it looks like a viable and attractive fuel option for fleets. Speedy announced in 2021 that they would be moving to use HVO fuel to power their commercial fleet going forwards.

“Our fuel usage comprises the largest part of the business’s carbon footprint, making it a priority area for us to take action. Reducing emissions in our delivery fleet helps customers to make big gains in decarbonising their supply chain, reducing the overall carbon footprint of their projects.”

Mike DeRome, head of fuel at Speedy

Speedy isn’t alone. Many large fleets, with national operations, have begun trialling or implementing HVO fuels into their fleets over the past year. These companies include Evri, Travis Perkins, and Wren Kitchens.

HVO fuel vs Electric

 

When looking to the future, electric vehicles (or EVs) are seen as the primary option for fleets. In fact, FleetNews’ 2022 poll asking readers what their next company car would be showed that 51.9% favoured pure electric vehicles, with only 16.5% opting for diesel.

 

However, BMW CEO Oliver Zipse has warned against relying entirely on EVs moving forwards. In 2022, we saw the economic consequences, throughout Europe, of sanctions imposed on Russia’s crude oil exports after their invasion of Ukraine. We also saw the knock-on effects of microchip shortages in China causing delays in vehicle manufacture and purchasing. Both of these events highlighted the dangers of becoming dependent on a limited number of countries for necessary resources.

 

This is why it’s important that those considering the future vehicles for their fleet examine the variety of alternative fuels available. HVO fuel also offers a number of benefits that electric vehicles don’t.

Benefits of HVO fuel

 

HVO fuel has many advantages that make it a viable replacement for diesel, some of which are:


● Refuelling with HVO is like refuelling with diesel: you simply need to refill the tank. When compared to electric vehicles’ much slower charging method, HVO fuel could potentially save fleets a great deal of time.


● HVO fuels can be used in most diesel engines without prior modification and without negatively affecting engine health. The fact that HVO use can be implemented across a fleet without major infrastructural changes would make the potential rollout much smoother than the rollout of electric vehicles, which would require the vehicles themselves, instead of just the fuel type, to be changed.


● HVO also features a much higher cetane rating than conventional diesel, which means that the starting power of the fuel is much greater.


● The long shelf life and easy storage of HVO fuel is also a benefit. It withstands wintry weather very well, making long-term storage easier to maintain.

What are the problems with HVO fuel?

This is not to say that HVO fuel is not without disadvantages. Fleet managers have been made wary due to:

 

● The current limited availability of HVO fuels on the market.

 

● The potentially negative environmental effects that may come into play when switching to a new fuel source, even one with a lower carbon footprint. When the first generation of biofuels rolled out, the industry realised that moving our fuel dependency from fossil fuels to fuels grown on land has a high likelihood of increasing deforestation.

 

● The higher price. Although this varies depending on the supplier and the current market, HVO fuel usually comes with a higher price point than traditional diesel or charging an electric car, although the cost of purchasing EVs also needs to be considered by fleet managers.

Is HVO fuel right for me?

 

Overall, HVO fuel is a valid and attractive choice for those looking for ways to reduce the carbon emissions of their fleet. It’s important to make sure that you are aware of the range of options available, so you can make informed decisions about your supply moving forwards. For more advice on insight into the fuel industry, make sure to keep up to date with our blog. For advice on your fleet’s fuel usage and fuel card solution, give us a call today.

Fleet Buying in a Changing World

It’s no secret that the past two years have been tough for those managing fleets. Lockdowns, fuel price surges, and driver shortages have left the industry reeling and many fleet managers asking about the future of diesel and petrol fleets. With the incoming government regulations for the UK to reach net zero by 2050 including banning the sale of new petrol and diesel cars by 2030, those in charge of fleet buying are now beginning to look to the future. 

 

While it isn’t realistic to expect a fleet to roll out electric vehicles (or EVs) en masse, when buying for your fleet, it is now a good time to be looking at filtering in EVs. Previously, electric vehicles have been both challenging to procure and difficult to facilitate for long journeys. So, should fleets switch to electric vehicles?

Should I move away from petrol and diesel when buying fleet vehicles?

 

The government policies to reduce carbon emissions are being put in place with the aim of lessening the consequences of climate change before the world reaches a “point of no return”.

 

The most widely discussed and commonly known advantage of electric vehicles is their lack of exhaust emissions. This is of vital importance to the reduction of the effects of climate change and the wellbeing of future generations. This means that, when fleet buying, it will not only be a morally influenced decision to go green, but one of legal obligation and logistical necessity.

 

In addition to this, as a result of the environmental crisis, customers are now considering companies’ green policies and actions when looking at who they’re spending with. At the same time, they are still wanting fast delivery and service. Fleetnews have stated that 80% shoppers want same day shipping, at the same time, 81% customers want companies to work towards helping the environment.

 

This means that companies need to be environmentally aware yet able to operate at their previous capacity in order to please their consumer base. With this in mind, it is best for fleet managers to consider introducing electric or hybrid vehicles into their fleets in a phased approach to minimize any disruptions to their operations.

electric-vehicles

Can an electric vehicle save me money?

 

More recently, fleet managers operating fleets using petrol and diesel vehicles will have been feeling the pinch of rising fuel prices. During the first quarter of 2022, fuel prices rose to their highest rate since 2008 due to a variety of factors. This rise in prices has made the prospect of turning away from fossil fuels even more appealing to many fleet managers.

 

Notably, electric vehicles generally benefit from lower running costs. EVs require less maintenance than traditional diesel or petrol vehicles due to the decreased number of moving parts within their engines. There is also no need for costly and time-consuming oil changes. As well as saving you money on the upfront cost of repairs, this also reduces operational downtime and keeps your fleet on the road.

 

However, the comparison between the price to refuel a diesel or petrol vehicle and the price to recharge an EV is a bit of a tempestuous subject. Which is better value for the upfront refuelling/recharging price fluctuates depending on the market prices of oil vs electricity.

 

Saying this, on average, it does usually cost less to charge an EV. Wilsons previously estimated that, for those with a 30-minute daily commute, an EV could save them up to £850 per year, but bear in mind that this may not accurately reflect the savings for fleet use. When buying, it’s best to assess this on a business-by-business basis.

Planning the move to electric

 

When moving your fleet to electric and hybrid vehicles, make sure you have time to manage a considered and careful transition.

 

The best way to approach this change would be to assess your current fleet and see if there are any vehicles that are costing you more in repairs then they are perhaps worth. If you source your vehicles through a provider or vehicle management service, get in touch with your account manager to discuss the range of more sustainable models available that would suit your fleets needs moving forwards.

 

There will be a stage of trial and error when it comes to finding out which electric or hybrid vehicles are right for you and your fleet, but you’ll find that, in the long run, the transition is worth it both financially and logistically.

 

You will also need to plan how your drivers will charge their vehicles. Previously, fleet managers have been hesitant to switch to EVs due to the lower amount of charge points compared to fuel stations. However, between 2019 and 2023, the number of EV models available has been predicted to double and the rollout of charge points is constantly increasing the ability to charge vehicles on the go. The ever-increasing amount of charge points across the country will help fleets during the transition away from petrol and diesel in the coming years.

 

If on the road, you’ll find that fuel cards are, of course, still available for electric vehicles. Our Chargemate fuel card offers access to the expanding network of charge points whilst still giving you access to the comprehensive fleet services we provide.

 

If you would like any help with your future fleet buying and options, or would like us to run our personalised analysis on your current fuel spend free of charge, get in touch today.

How to Plan Change Management in Procurement

To ensure that all stakeholders are taken into consideration, a change management transition plan needs to be well thought out and structured. If a SMART change management plan isn’t carefully considered, this could negatively impact your organisational culture and overall strategy in the long run.

 

Let’s delve into how to plan change management in procurement and the importance of a SMART change management plan.

 

What is Change Management in Procurement?

Change management is the process of moving your current strategy and departments from how you presently operate to how you wish to operate. This change must be explicitly clear, as effective procurement planning should be transparent to ensure all stakeholders and those of importance appreciate your organisation’s short-and-long-term goals. 

 

A change management transition plan is an essential component of any change management process to ensure that your colleagues and individuals across your organisational hierarchy understand the transition’s purpose. The transition plan should consider how employees will adjust to the change, such as whether the change will positively or negatively impact their performance.

 

The change management team should be as organised as possible for a successful, effective and efficient transition; without negatively impacting your current internal and external working relationships.

 

How to Implement a SMART Change Management Plan?

A SMART change management plan can result in the success or failure of your organisation’s intended transition. If your short-and long-term objectives aren’t specific, measurable, achievable, relevant and time-bound, your workplace could be missing out on being as dynamic and efficient as possible.

 

To ensure your SMART change management plan is thorough, remember to consider:

  • Your current organisational strategy and core values

Your organisational core values are what drives the success of your business. It’s vital that these core values are taken into consideration when deciding how you will move from your current organisational strategy to your intended strategy. If as an organisation, you have decided that these core values are outdated, it’s important to communicate your new values with all stakeholders and suppliers to ensure your organisational goals are understood.

  • Your short-and-long-term objectives for the change

Your overall long-term objectives will most commonly be made up of multiple short-term objectives. Short-term objectives can have a deadline to be achieved within the next week or the upcoming months. Transparency is key when communicating these short-term objectives to your department and people of importance to reiterate the transition plan’s purpose.

 

Your long-term objectives can be divided into two categories. The first being your objectives to be achieved by the deadline for change. The second should be your long-term objectives following the change, as change management in procurement is an on-going process.

  • All available resources to reduce costs

To ensure that all areas affecting the procurement department are considered, you need to evaluate your available resources strategically. This should include how much time you have available and what budget you are working towards.

  • How the change will impact your organisational culture and structure

Whilst creating your SMART change management plan, your organisational culture should be reviewed. Is there any way that this change could have a positive impact on the culture? For instance, could it help to drive innovation, create shared values, and develop key skills?

 

Also, consider how the change will impact your organisation’s structure. Could two or more departments work more collaboratively? Perhaps a team building activity day will help to align your structure more thoroughly.

  • Delegation of tasks to employees

For any change to be successful, it needs to be a collective task. To ensure your change management plan is successful, you should consider which other departments play a key role in meeting your long-term objectives.

 

Whilst dividing tasks between the procurement department, you could set up project led teams. Each team could focus on a short-term goal with the long-term objectives in mind. Naturally, some colleagues will have a better skill set to meet the desired task. However, those with more experience could then use this change management transition as a training exercise to help develop the skills of others within the procurement department.

  • If your stakeholders agree with the change

When it comes to long-term working relationships, your stakeholders are key. Internal stakeholders such as the board of directors, investors and your colleagues should see this change as a positive opportunity for the organisation to grow moving forward.

 

Your customers and suppliers are two of the most important external stakeholders to consider. If your customers don’t agree with the change, or if the change isn’t communicated correctly, this could impact the customer satisfaction of your brand. On the other hand, if you require a quicker delivery time from your suppliers and they don’t agree with this objective, it could lead to working relationship issues.

  • How the effectiveness of the change will be measured

No SMART change management plan is complete without being able to measure your success. Decide which performance indicators are the most important for your department. For example, this could be whether you managed to achieve your short-and-long-term objectives under your budget, if the change occurred by the deadline set, how challenges were overcome or how stakeholders reacted to the change.

  • How often you review the success of the change

The procurement department needs to decide how often to review the success of the change management plan. You could have an initial review after two weeks, followed by monthly reviews within the first year. Or there could be a review every quarter or annually. Be sure to bring these reviews forward if clear issues have arisen since implementing the change management plan.

 

Remember, your change management transition plan needs to be flexible to react to any macro and micro changes that may arise from external factors outside your organisation’s control. For instance, your suppliers’ delivery time may be impacted by Brexit regulations between the UK and the European Union. Or, your change management transition plan may need re-evaluating if the Covid-19 travel restrictions has impacted your drivers.

Creating a Change Management Transition Plan

How to Plan Change Management in Procurement

In agreement with the Chartered Institute of Procurement and Supply, the following five areas need to be carefully considered for procurement change management to be successful:

 

1. Identify

In the first stage, you are identifying the need for change. You should clearly outline your strategic sourcing process to ensure your purchasing and organisational strategy are aligned. Here, you should brainstorm and develop your SMART objectives by considering your current procurement strategy, your overall business goals and the budget the procurement department has to work with.

 

2. Evaluate

In the second stage, you need to evaluate if this change needs to occur in the short or long term.  For example, you may decide on a SMART goal to tighten your procurement budget within the next quarter by evaluating and seeking resources to help in reducing costs; such as with fuel cards.

 

The management features included with fuel cards allow businesses to monitor the fuel card activity. Cost-saving solutions like these can help measure the effectiveness of your change management transition plan as well as offering companies savings on fuel. 

 

3. Manage

Next, you are deciding which people are in charge of the successful change management transition. Consider what you wish to achieve at the end of the transition. For example, if you wish to change your current supplier, consider which colleagues have a good supplier relationship to lead the change. Or, could they negotiate a reduced price and quicker delivery service to stop this working relationship from diminishing?

Creating and SMART Change Management Plant

4. Create

The creation stage involves how you will action the change. To ensure your change management transition plan is effective, always remember to keep your employees view at the forefront. For effective management, the manager and employee relationship must stay transparent to ensure the short-and-long-term objectives and new processes are understood by all.

 

5. Implement

The most vital stage in your change management plan is actioning your desired change. If you are actioning fuel cards into your fleet, have you communicated this change and ensured all drivers and administrators understand this new process?

 

Remember, change management in procurement should always be worked towards with a level of elasticity in mind. External factors could impact your plans at any moment. Be sure to take into consideration the key questions of Who? What? When? Where? Why? How? For example, the current pandemic could mean your fleets drivers may have to change schedules to reflect medical abscesses. How will the procurement department go about handling this?

 

Following the change, you should invite your colleagues and stakeholders to voice their feedback on the change management transition plan and any areas they feel could be improved.

 

Successful Change Management Transition Plans

Achieving successful fleet procurement means internal changes and development are needed. However, the results are worth the time and effort put into this strategic thinking and planning in the long term.

 

If you’d like to learn more about what the best fuel cards are for your business to help it run more efficiently, then please don’t hesitate to get in touch. Or, for further procurement and fleet management advice, please explore our blogs.

The Best Lead Time Reduction Methods in Procurement

Lead time reduction is vital for every procurement department to ensure their business is cost and time-effective; contributing to fleet efficiency. Here, we explore what lead time is, lead time reduction benefits and five lead time reduction methods for a smoother supply chain, including improving internal and supplier relations and fuel card investment.

 

What is Lead Time?

Lead time refers to the time taken between when an order is placed and when the product is received by the customer. For any procurement department, paying attention to lead time reduction methods is significant for reduced costs, time-efficiency, increased communication and productivity.

 

Lead Time Reduction Benefits

One of the key benefits of reduced lead times is increased customer satisfaction and reliability of suppliers. As a buyer of goods and services, levels of customer satisfaction are influenced by how reliable the supplier is to deliver goods in an efficient and timely manner. An effective and smooth supply chain is dependent on your products being delivered to you on time, ensuring you don’t leave your customers waiting in return. Hence, reduced lead time from your supplier can result in better rapport and a healthier and long term working relationship.

 

5 Lead Time Reduction Methods

1. Analyse your suppliers

For an efficient and reduced lead time, your business needs sufficient stock levels to respond and ship out orders in a timely fashion. This means analysing your current suppliers against the potential supplier market and selecting a reliable domestic supplier. You can also put in place a lead time contract with your supplier to guarantee you receive the goods on time.

 

2. Positive internal working relationships

To reduce lead time, different departments in your business need to communicate openly and comfortably with one another. For instance, if you have a large order being delivered today that’s ahead of schedule, emailing or picking up the phone and discussing this delivery with the relevant internal department is essential, so the supply chain isn’t disrupted. This can only be achieved by building relationships with your colleagues.

 

3. Investing in fuel cards

Analysing each element of the supply chain will help to improve lead time. For example, the delivery of goods can be delayed depending on the size of the suppliers fleet and how often drivers have to fill up with fuel. To overcome these factors that can slow the supply chain, look for a supplier who utilises fuel cards to speed up transportation and administration time.

 

Fuel cards are a cost-effective solution as they are pre-paid cards that drivers can use at specific stations depending on their companies operational requirements. There is a range of fuel cards available to meet the needs of your fleet, whether you operate locally, regionally, nationally or across Europe. Fuelmate offers a variety of fleet management fuel cards with connections to major fuel brands such as BP, ESSO, Keyfuels, Shell, Texaco, UK Fuels and supermarkets. Fuel cards offer management features which contribute to the smooth running of a fleet, whether large or small. Fleet fuel card activity can be measured to ensure a time-efficient delivery and a procurement department can oversee how their fleet is working towards their budget.

Fuel Cards Can Provide Great Lead Time Reduction Benefits

4. Automated stock management

Automated stock management allows for an order to be placed when your businesses current stock levels are low, calculating the correct quantity of goods to have at one time; this reduces the chance of human error such as an over-order of goods. Orders of smaller but more frequent quantities can mean a quicker delivery time and often helps you save money too.

 

5. Open communication with suppliers

Building relationships is a key factor for successful fleet procurement. As a buyer, you should communicate with suppliers regarding any stock issues or increased stock needs. Once you’ve built a strong relationship with suppliers, an effective way to reduce lead time is to communicate openly about any predicted seasons of high demand to receive your orders in time. Effective communication can not only benefit your business when it needs a quicker lead time, but it helps to develop the relationship between you and the supplier.  

 

We hope that you now understand these five ways to reduce lead time and how a reduced lead time can improve department efficiency for successful fleet procurement. For further procurement and fleet management advice, please explore our blog.

Challenges and Benefits of Buyer Supplier Relationships

 

Collaborative buyer seller relationships are an important element when it comes to successful fleet procurement.  For the procurement process to run smoothly and harmoniously, you need to build and manage relationships within your department, with colleagues and with your buyers and suppliers. Here we explore what collaborative buyer seller relationships are, four key challenges and benefits of the buyer supplier relationship.

 

What is the buyer and supplier relationship?

 

The buyer and supplier relationship is important for collaborative and effective supply chain, ensuring that your department runs successfully. A positive buyer and supplier relationship is extremely important to build a long term working relationship that’s friendly, trustworthy and gets stronger through effective communication. When the buyer and the supplier are both transparent about short and long term goals, each party, in turn, can help each other to achieve these goals through a mutually beneficial relationship. Getting to know your buyers and suppliers on a personal level, outside of work, will help you to build trust and grow a long term collaborative buyer seller relationship. However, these relationships can take time to build and won’t happen overnight.

Working in a Collaborative Buyer Seller Relationship

What are the benefits of buyer supplier relationship?

 

1. Effective communication and trust

For a mutually beneficial buyer and supplier relationship, communication is important for the procurement department to run smoothly. Open, honest, two-way communication not only helps each party to understand the other businesses needs but helps to build trust. Trust leads to a healthy and collaborative buyer seller relationship, which can be beneficial for each party, such as sharing industry knowledge or discussing seasonal peaks and troughs in demand.

 

2. Reduced costs

A positive relationship can lead to reducing procurement costs, as once the relationship has been built, the supplier may favour your business and offer you incentives to ensure that you stay as a customer. For example, a supplier may offer your business a discounted rate on stock or a reduced delivery cost, helping the procurement department to work closer to their budget.

 

3. Increased efficiency

A key benefit of collaborative buyer seller relationships is the opportunity for increased efficiency, as both parties come to understand the other businesses needs and how they work. This means both parties may be able to help each other through reduced lead times, reduce waste or come up with a solution to improve business operations.

 

Having built a strong buyer and supplier relationship, your supplier may look for advice by discussing their concerns with you; such as rising fuel and transportation costs. In response, your department can suggest fuel cards for their fleet, to reduce travel costs, monitor their fleet’s fuel usage and as fuel cards are a cashless option for their drivers, this reduces time spent on administration.  As you’ve helped the supplier, in turn, they should help you out.

 

4. Streamlined supply chain

For a more efficient buyer and supplier relationship, both parties want to get to the position where you’re comfortable enough with each other to be open and honest if there’s an opportunity that each of you could help each other with. In turn, this streamlines the supply chain; for instance, there may be an opportunity to outsource tasks to suppliers such as taking inventory levels.

Successful Buyer and Seller Relationship

What are the challenges facing buyer supplier relationship?

 

1. Preferred methods of communication

For a strong buyer and supplier relationship, communication is key. However, collaborative buyer seller relationships aren’t always easy to create. Between the procurement department and the buyers and suppliers, you will all need to find common ground for the best methods of communication. Your department may find multiple emails a day easy to deal with. In contrast, your buyers and suppliers may prefer communication once a week via email, telephone or video call software such as Zoom or Google Hangout. A situation of over-communication can deteriorate working relationships, so it’s important to find the right balance.

 

2. Lack of transparency

If the buyer and supplier relationship isn’t open and transparent, this can lead to a misunderstanding of business needs. If the correct information isn’t shared between each party, this can mean that vital business opportunities could be missed.

 

3. Supply chain disruptions

External factors outside of your control can lead to problems in the supply chain. Whether that’s a late delivery or a dip in the quality of the good or service; these are disruptions that the procurement department haven’t prepared for. These may be rare occurrences; however, they can put a strain on the buyer and supplier relationship and lead to conflict between the procurement department and your buyers and suppliers.

 

4. Mismatching business culture

A business’ culture is at the heart of business operations. Hence, for collaborative buyer seller relationships, both organisations need to have cultures which align and not conflict with one another. No matter how hard either party tries to make a relationship work, sometimes buyers and sellers don’t align, and it’s best to explore the market for an alternative buyer or supplier.

 

Managing relationships is one of the key areas for successful fleet procurement. For further effective fleet procurement tips, please check out the rest of our blog or to find the right fuel card solution for your business, discover our range of fuel cards.

Techniques that Leaders can use to Motivate Teams

Within your business, motivating your team should always be a top priority. Each individual within your team represents your company values, and they need to be inspired to work efficiently. Whether your team seeks motivation in team building, or through constructive feedback, there are many techniques that leaders can use to motivate teams.

 

When it comes to successful fleet procurement, your team isn’t just those within the procurement department; you need to consider your team as every individual who helps to achieve your end goals. Motivating your team at work includes anyone from the fleet administrator and drivers and fuel card users, to the fleet managers and owners. In procurement, every individual in your organisational hierarchy contributes to the overall mission and values. Therefore building relationships with colleagues is of high importance with many benefits.

 

Techniques for motivating your team:

Here, we take a look at ten techniques that leaders can use to motivate teams. After all, how can your team be expected to meet your companies goals when they don’t feel inspired?

 

1. Keep your team in the know

A motivated team is one that feels confident and comfortable with any changes or developments within the business. As a leader, it’s your responsibility to make sure that your team understands your organisations most recent priorities, goals, key statistics and any changes that can impact or improve the business performance. Keeping your team updated is easily achievable through a weekly, bi-weekly or monthly email sent to all team members. For instance, once you have a procurement strategy developed, your team should be informed of key updated strategy details to ensure that they understand the most accurate objectives they are working towards.

 

2. Define clear goals

Motivating your team at work by taking the time to ensure each member clearly understands your organisation’s goals and objectives, is key. Don’t do this by putting individuals on the spot during team meetings or calls. Define your clear goals and expectations by repeating the message often, whether this is written at the beginning of a team email, on social media, or mentioned in a team meeting. The trick is to be consistent. Don’t just stop there; when your team is close to or has achieved a goal, it’s important to let them know! By doing so, each team member can be proud of their contribution to achieving this goal.

Motivate in Team Building

3. Open Communication

One of the most obvious techniques that leaders can use to motivate teams is to encourage communication! Your team needs to feel comfortable to talk, discuss and deliberate daily. Whether this is in person or virtually, ensuring that your team feels that they are free to express their ideas and opinions will make each of them feel valued and motivated. Moreover, a business can feel halted by its hierarchal structure, hence encouraging communication between different departments will result in a more blended organisation. Depending on the size of your immediate team, it might not always be possible for you to interact with all these team conversations. Although, it’s possible to ask your team to give you key feedback and positive points from their discussions if they wish.

 

4. Offer praise and constructive feedback

To be motivated to work hard, your team needs to feel appreciated. To show your appreciation, offering praise on an individual and team level will show to your team or department that you are aware of their contribution to your organisations goals and objectives. Offering positive feedback and constructive criticism will not only aid in motivating your team but will also be a learning point for them to implement.

 

5. Listen to your team’s needs

Communication is a two-way street. An actively listened to team, is a motivated team. Whether that’s listening to group feedback or an individual’s suggestion, listening to your team and implementing ideas and solutions to make your teams working life easier will result in positive outcomes.

 

6. Find time-saving solutions

No employee enjoys completing a task that they know could be more efficient. Finding time-saving solutions for your fleet is important to boost morale.

 

For example, if your company has a fleet, fleet fuel cards aid in making fleet operations run more efficiently and allow you to budget your fuel costs more effectively. They also make the driver’s job easier when it comes to paying for fuel with the pre-loaded fuel card, meaning that there’s no need to store receipts and spend time sending them to the fleet administrator. Therefore, keeping your fleet drivers and those who help with the operations happy, without sacrificing budgets to do so!

strategic sourcing best practices

7. Consider work-life balance

As a leader, you need to recognise when your team is feeling burnt out. It’s no secret that low employee morale doesn’t produce the best quality of work. Take time to talk to your team about how they are finding their work-life balance. If individuals are struggling, offer the option of flexible working hours or the opportunity to work from home if they are mostly office-based or vice versa to increase motivation and morale.

 

8. Build good working relationships

Your team will feel more motivated and inspired to work harder when they know that they have a team leader who cares. By taking time to have a conversation to get to know your team members personally, it shows that you appreciate them as more than just a way to reach your organisational goals.  By building good working relationships, it makes for a more comfortable working environment for everyone.

 

9. Get your team involved

With a fleet, your team may be based in different geographical locations, so it can be hard for them to feel connected.  Team building activities are a great way to reward your team for their hard work, increase motivation, morale and build relationships. Motivation in team-building aids in successful fleet procurement and can come from many different activities for all to enjoy, from escape rooms and professional driving courses! 

 

10. Positive working environment

A positive working environment is one that is also the most productive. Certainly, it depends on whereabouts your team members are based. In light of COVID-19, working from home is more common, and this can be a situation where individuals feel isolated and lack motivation. For some of your team, they’ve only ever worked in the office surrounded by their colleagues. Hence, as a leader, it would be best to offer positive advice on creating the ideal home office space and encourage virtual communication through video calls on Google Hangouts, Microsoft Teams or Zoom.

 

Of course, this is not possible with your drivers. However, you can build rapport with fleet drivers and check-in to make sure that they are comfortable or have any questions about their routes, drop-offs and ensuring that drivers can talk to one another.

 

We hope that these ten techniques that leaders can use to motivate teams will be useful for you. Motivating your team at work and managing relationships is a key area for achieving successful fleet procurement. If you’re interested in finding out about fuel cards that are tailored to your drivers, routes and locations, please don’t hesitate to get in touch with the Fuelmate team today!

An Effective 7 Step Strategic Sourcing Process for Procurement

For successful fleet procurement, a strategic sourcing plan should be based on a 7 step strategic sourcing process. This process allows for the procurement department to evaluate the suppliers used for acquiring goods and services, as well the cost incurred, and the quantities required. Not only is strategic sourcing a way to select the most efficient suppliers before any purchasing, but you can align your purchasing strategy with your organisations short and long term goals, whether that be for goods, services or other solutions like fuel cards.

 

7 Step Strategic Sourcing Process:  

 

Here, we take you through some strategic sourcing best practices to help you achieve an efficient procurement budget.

 

Step 1. Understand your internal requirements

The first step within strategic sourcing includes understanding your organisation’s current needs and strategy and then comparing this to how your procurement process is currently operating. Be sure to consider areas within your current budget where you believe costs can be reduced. This stage is great for improving your procurement departments efficiency but also allows for reflection on areas within your budget where you can reduce or cut costs completely.

 

Step 2. Analyse the supplier market

Within the strategic sourcing plan, you want to know with confidence that you are getting the best value for money when it comes to the price of goods and services, raw materials, drivers, transport and fuel costs. Conducting an analysis of the potential supplier market will ensure that you are working towards an effective budget, ensuring the procurement department is running as efficiently as possible.

 

For example, one method for reducing procurement expenses is to consider how to streamline costs within the procurement budget. Fuel costs can often mount up and are a cost that can’t be ignored when you have a fleet. Fuel cards are a great solution to reduce fuel costs, save time and work with your budget.

strategic sourcing plan

Step 3. Gather potential supplier details

Following your supplier analysis, the next step is to create a supplier portfolio of the most viable suppliers. Due to the inevitable risks within the macro-environment, it’s best to gather information on more suppliers than necessary to reduce any possible future supply chain risks. If the chosen supplier ends up not fulfilling your needs, you can come back to this step to evaluate other available options.

 

Within the supplier portfolio, be sure to note as much information regarding the suppliers, which can include:

  • The competitiveness of the supplier market
  • The reputation of the supplier
  • The business performance of the supplier
  • Time turnaround from the supplier
  • References for the supplier

 

Step 4. Create a strategic sourcing strategy

Now you can decide on the type of sourcing or outsourcing strategy that will work best for your organisation. When doing so, consider the aims and objectives of your organisation and which sourcing strategy has a past history of being successful within your market. From developing the sourcing strategy, you will get the full picture of the specifications of the goods and services, a breakdown of all involved costs between you and the supplier, as well as the expected delivery time.

 

Step 5. Negotiation with suppliers

You now have all the relevant information to compare which suppliers align the most with your organisation’s requirements, from step 1. Take time to deliberate the final shortlist between the procurement department through an open team discussion on the potential suppliers. All opinions of the opportunities and concerns of each supplier can be understood and taken into consideration.

 

Although this could be a timely process, you need to consider the available supplier options very carefully to align with your budget. Once you have narrowed down the options to a final shortlist, you can negotiate with each supplier with the aim of getting the best contract for the costs involved. Following the negotiations, the final supplier can be selected and be sent off for approval from the relevant departments in your organisation.   

 

Strategic sourcing isn’t only about cost-saving; it’s also about building a trustworthy and long term relationship between you and the supplier. One benefit of a good supplier relationship is that the supplier may be able to complete minor outsourcing tasks, such as taking inventory levels. Not only does this mean that your team saves valuable time, but this also means an area of outsourcing within your strategic sourcing strategy is covered.

strategic sourcing best practices

Step 6. Implement the strategic sourcing plan

Having informed the successful supplier or suppliers that they have gained a contract, it’s time to implement the strategic sourcing plan. You’re now turning the strategy previously developed in step 4 into actions. This step involves starting the process of changing from the current supplier to the newly selected supplier, transferring information over and ensuring that there is an ongoing and transparent communication between the procurement department and the chosen supplier.

 

Step 7. Measure the supplier’s performance

The last area to consider within the 7 step strategic sourcing process is to measure the supplier’s performance once the supply chain is up and running. Alongside measuring the key performance indicators and how the supplier is aligning with your requirements, it’s important to communicate with other departments in your organisation to see how they are finding the supplier as a source. If there are any areas for improvement, there should be open communication between the procurement team and the supplier to resolve these issues.

 

One strategic sourcing best practice is to consider the strategic sourcing process as a cycle. By repeating this process, you will be able to see if the market of available suppliers has changed and if there’s a supplier who can fulfil your needs at a better and lower cost.

 

The strategic sourcing process can be a timely process; however, taking your time to consider all potential sources will benefit your business in the long run as it reduces any potential risks. You are now on your way to successful fleet procurement. For more effective fleet procurement tips, please check out the rest of our blog. 

Five Ways to Reduce Procurement Expenses

Procurement expenses can soon pile up over the year, from petrol costs to client lunches, so it’s important to look at your purchasing expenses and reduce them where needed, to remain within your budget. However, some procurement team expenses are essential for supplier relationship management and for ensuring an employee’s job can be executed correctly. We’ve put together five ways you can look at your current procurement expenses to help reduce costs, including tips for using fuel cards and company vehicles, which won’t get in the way of your team doing their jobs to a high standard.

 

What is the difference between purchases and expenses?

Many costs can occur within procurement, and differentiating between them can sometimes be tricky. Purchase cost refers to the price of the goods or services you are procuring. Expenses are the additional costs that contribute to earning revenue for the company, not including the cost of the physical items or services procured. Purchasing expenses examples include client entertaining, IT equipment and company vehicles.

Five ways to reduce procurement expenses

1. Equipment

Most companies need to provide IT equipment for their procurement team, with a laptop/computer and a mobile phone being the most commonly provided. However, does this equipment need to be brand new or state of the art?


Doing some research into what software you will require can assist you in creating an ‘Ecosystem’ enabling your team to utilise synergies with certain brands. For example, if your team have android phones, perhaps a cheaper, leaner option such as a chrome book might be an option. For those who are using powerful editing or creation software, perhaps an Apple Mac and an iPhone would be the best fit. Another great way to get the best out of teams would be to use a project management tool, such as Monday, Microsoft Teams, or Jira. These products enable teams to assign tasks and mark them as complete, allowing everyone complete visibility of tasks, their progress and their completion dates.

 

Tip: Be sure to speak to an IT specialist or any consultants/representatives of the software brands you use. They may be able to recommend compatible IT equipment or brands that you would have never thought of for your IT equipment needs.

 

2. Fuel cards

A great way to reduce your fuel costs, and also the administration involved when submitting these to HMRC, is to use business fuel cards. Fuel cards are an alternative payment method for fuel; they can save you money and help you keep track of mileage. Although many meetings are now taking place via web conferencing services, many companies still need to travel as journeys to building sites, for example, are still imperative. Using a fuel card can provide significant cost savings, due to potentially discounted fuel prices, and reduced administration time.

 

Tip: Fuelmate offers a range of different fuel cards based on a variety of company’s needs. We recommend you contact us in the first instance, as we offer tailored recommendations on the cards that will most benefit your business.

 

3. Company vehicles

Running and maintenance costs of vehicles, particularly if your company has a fleet, can stack up very quickly. If you have a fleet, the chances are you will need every vehicle the company has. However, if you also have company cars used to go to and from meetings, does the business really need as many as you have?

 

Conducting a full analysis of your fleet can highlight any areas in which you can make efficiencies. Tools such as a fuel card analysis from an expert and vehicle telematics can provide you with valuable information on your fleet, such as mpg analysis and transaction reports. This will ensure your vehicles are being driven economically, and in turn, potentially reduce fuel costs. Vehicle telematics can also highlight drivers that are misusing company vehicles, which may also assist in reducing fuel costs.

 

By planning and scheduling meetings more efficiently and as in advance as possible, it could be possible that fewer cars are needed for these purposes.

 

Tip: Do you use the same vehicle insurer for all your vehicles? If not, this could be a great way to get a reduction by adding more vehicles to a policy. Also, when was the last time you changed insurers? New customers tend to get better deals, so switching things up by shopping around could help reduce your purchasing expenses in this area.

 

4. Client entertainment

Having to reduce team expenses on client entertainment can be hard, especially if you are trying to win over suppliers or clients initially. However, not all business meetings need to involve an expensive lunch or dinner. Try to review your spend on this from last year and, if you haven’t already, invest in software that allows you to easily keep track of any expenses in the team that relate to client entertainment.

 

Tip: If there are some meetings or instances where you feel you need to provide food or entertainment for the client, why not speak to a local caterer or deli and get a lunch or dinner delivered to the office? If you agree to use them often, you may be able to agree on a reduced price.

 

5. Team bonding days

Team bonding and activity days are important for morale, so they can’t be cut out completely, but you can make them as cost-effective as possible by doing some research and getting organised. Often, you can get discounts for advance and also group bookings at activity centres and entertainment venues. All it takes is a little time to research and plan these.

 

Tip: Many adventure parks or activity venues are often owned by one company. Some of these offer deals depending on how many visits you make across multiple venues throughout the year. You could always ask other departments whether they would be interested in going to one for their team bonding day. That way, the business can reach the number of visitors required to get a larger discount. If you’re looking for some inspiration on what to do for team building activities, then take a look at our blog post on the topic for a few new ideas.

 

Remember, when it comes to reducing procurement expenses, you need to be reviewing costs from the previous year and making cuts according to that. That way, you can create a new realistic reduced budget for expenses, based on the changes you make across all expense types. For more information on how to reduce procurements costs overall, then please read our previous blog post on the topic. Alternatively, if you work in fleet procurement and are interested in learning about how to achieve successful fleet procurement, check out our step by step guide.

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