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Monthly Archives: November 2018

Company Car Fleets – Single or Multi Supply? You Decide.

Company Car Fleets – Single or Multi Supply? You Decide.

When considering a company car fleet supply process, fleet stakeholders are often in conflict over the type of process with which to engage.

Some departments are often in favour of a single supply agreement so they can build relationships with one supplier, whilst other departments encourage a dual or multi-supply so they can “horse-trade” the leasing cost and “bank” a saving.

Choosing between single supply or dual/multi-supply is central to a company’s fleet model, and making the correct choice at the beginning of a supply term is essential; as the wrong choice could have a significant impact on the overall fleet cost.

But what are the relative merits of the two supply choices and which will be better for your business? Read on or download our simple infographic outlining the differences.

SINGLE SUPPLY – PRO’S

  1. Contact Leverage

The leverage generated by putting all the business with one supplier can provide the following benefits:

  • It develops a strong negotiating position which can help eliminate contract re-writes;
  • It can help remove any profiteering by the lessor on end-of-contract charges for damages, and restricts the charges to the actual costs to the lessor and no more;
  • It can help protect against high 2nd tier supplier costs with large lessor rebates;
  • The client will be able to negotiate greater transparency.
  1. Budget Accuracy

As legacy suppliers disappear, only one PO will be required per supplier. This will inevitably produce more accurate budgeting.

  1. Relationship Management

Relationships only need to be maintained with one supplier, resulting in slicker processes that reduce the administrative burden of managing multiple suppliers.

  1. Realistic Pricing

Although still needing to be competitive, the headline lease pricing of a single supplier will tend to be more realistic and more reflective of total cost than that of a dual or multi-supply arrangement.

SINGLE SUPPLY – CON’S

  1. Complex Savings Calculations

True savings gained form commercially advantageous terms are more complex to determine than those from directly competing lessors.

Very often, the final savings cannot be determined until individual contacts have matured.

  1. Detailed Contract Component Knowledge

A detailed knowledge of the contract components is required to understand the competitiveness of the supplier. This detailed knowledge is also important when managing the pricing structure and avoiding cost creep.

  1. Governance Need

Resource needs to be applied to governance processes within the client, as the single lessor cannot be expected to “sign off” their own invoices.

DUAL/MULTI SUPPLY – PRO’S

  1. Savings Transparency

Competitive bidding for each individual car can demonstrate accountable savings.

Although it should be noted that these are theoretical savings and may not reflect the whole life cost of the vehicle.

  1. Reduced Governance Burden

Some of the administrative burden of running multi-supply can be allocated to fee-charging external multi-bidder intermediaries. These are also ideally placed to conduct local governance tasks.

DUAL/MULTI SUPPLY CON’S

  1. Cost/Resource Burden

The client may need to pay fees to an intermediary company to transact the multi-bidding or resource it internally.

  1. Risk of Contract Deviation

The competitive nature of the rental is only maintained so long as the contract runs to the original deal. As contract parameters can change, the headline price can be theoretical, which means the contract may not produce the cheapest option.

  1. Supplier Selection

Suppliers must be churned regularly to exploit the opportunities of multi-bid, otherwise savings may only be theoretical as the suppliers may be the most expensive on the market.

For a simple infographic of supply options click here. This article is one in a mini-series featuring the complexities and challenges of managing fleet supply contracts. Visit www.fleetworx.com for other resources such as our ebook explaining how to Avoid Fleet Commercial Contract Trapdoors

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Lifting the Lid on Business Mobility – Car Sharing

Lifting the Lid on Business Mobility – Car Sharing

As companies are being forced to reconsider the financial and carbon cost of employee movement, a wide range of service providers are disrupting the market and providing mobility solutions that are shifting the focus from long-term leasing and ownership, to usage and mobility.

One of those services is the development of car sharing.

Many companies have taken the concept of the company carpool, enhanced it with technology, and transformed it into a car-sharing scheme. It is the development of the technology that makes the creation of a sharing scheme much more attractive and effective than even 10 years ago, with advancements such as real-time app-based booking and keyless vehicle access.

According to Fleet Europe, the car-sharing market is expected to grow at an annual rate of 26%, with 18m users by 2020. The market is driven by the rental companies who have gone through a period of product development and acquisition to offer the majority of the corporate car sharing schemes currently available. DriveNow recently divested by Sixt, and Ubeeqo by Eurpocar, appear to be leading the market with penetration across Europe.

Car sharing is quite a step-change for companies and employees alike, and the introduction of schemes will always require careful planning and consultation. The main practical requirements are managing the optimum number of vehicles so that availability is never compromised. It is stated that 1 car share vehicle can replace up to 8 standard company cars, however, a study of travel habits and a detailed understanding of travel planning is needed before the correct ratio of vehicles to employees is introduced.

As company cars are still a powerful and emotional draw for employees, some providers mitigate this by offering an integrated car share and mobility credit allowance. This means a user can relinquish their company car and downgrade to a smaller car within a car share scheme. They have credit up to the value of their allowance that they use on the car share use, however, they can also use that for evening and weekend hire.

The “sharing” of the vehicle can be handled in many ways:

  • Station based – where the cars are centrally located and must be hired and returned to the same station.
  • Free-floating – where the cars are parked within zones and are located and unlocked via a booking app, after the journey they can also be dropped anywhere within a fairly widespread zone.
  • Intra-corporate – where businesses located within industrial /business areas collaborate and share vehicles between their employees.

There are two business models for developing a car-sharing scheme:

  1. Use technology to convert part of an existing fleet. Companies such as Ubeeqo offer technology to assist in this.
  2. Enlist the services of specialist provider such as DriveNow or Car2Go and make use of their vehicle fleet and booking app.

Car sharing is one of a number of mobility solutions that are being implemented by businesses across UK and Europe. To understand more about business mobility and what it could mean for your employee movements Fleetworx have created the ultimate guide to business mobility.

Fleetworx provide client-side support in the design and delivery of cost-saving and carbon-saving company car policies and mobility solutions. To find out how Fleetworx could help you review the mobility options in your business contact Graham Rees or Tom Osborne on +44(0)1926 353 300 or visit www.fleetworx.com

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