Vehicle procurement is often a complex process, involving numerous stakeholders and supplier partners. This is particularly the case for companies that predominately utilize service vehicles, as there are frequently additional upfit requirements.
Balancing costs, vehicle availability, resale timing, driver expectations, and operational needs can make the vehicle procurement process among one of the most difficult parts of a fleet manager’s job.
Vehicle acquisition is all about timing — not only placing the order at the right time but looking ahead to the expected future cycling and resale date. These decisions lead to other considerations, such as vehicle availability, upfit configurations, ship-thru accessibility and ultimately order-to-delivery-date timing.
When put all together, the procurement process can appear daunting at the outset, but you can easily manage the process by defining your end goals.
Setting the Stage
There are four fundamental questions fleet managers and stakeholders need to address when starting the procurement process. The first question impacts the end of the process. When is the vehicle needed? Every other decision is informed by this answer.
Other questions include:
- What is the vehicle order to deliver time?
- Is upfitting required, if so, how long will it take the upfitters to finish the unit?
- How will the estimated ship time of each mode of transport impact the delivery time of the vehicle?
As these questions indicate, planning as early as possible is crucial. Advanced planning allows fleets to take advantage of optimal resale opportunities and factory ordering, which ensures vehicle consistency and allows you to take advantage of OEM discounts, as opposed to purchasing from dealer stock.
Certainly, there are extenuating circumstances that may result in missing the scheduled cut-off dates or the ideal factory-ordering window but that doesn’t necessarily mean you’ll have to purchase from dealer stock. Ordering from an OEM bailment pool is another cost-effective alternative.
Unforeseen circumstances, such as a rapid fulfillment or vehicle replacement needs, may require out-of-stock purchases. Note, those units will cost about $3,000 more than a traditional factory order. Yet the turnaround time is greatly reduced due to the avoidance of any manufacture delays and other potential supply chain setbacks.
Factory ordering allows the fleet office to negotiate incentive discounts directly with the OEM. The more units you purchase, the greater cash back incentives for which you qualify.
Having the order completed early minimizes order-to-delivery delays especially on units that require upfitting. Such advanced planning prevents operational bottlenecks and helps prevents impacts to your organization’s bottom line.
To Single Source or Not to Single Source
Being able to offer an OEM a bulk order will strengthen your negotiating power and simplify the ordering and manufacturing process. And while single sourcing from one OEM is an attractive option from a pricing and order-to-delivery perspective, there could be downstream effects such as recalls, if parts become unavailable and transportation constraints occur. Splitting the order among manufacturers and having some flexibility to your sourcing plan can help avoid these issues.
Another tactic to improve the planning and order-to-delivery process is to standardize the vehicle and upfit configurations where possible. Having uniform specs across the fleet will improve quality, delivery times and the customer experience.
Wheels: Bringing Value to the Table
How does your fleet management partner help drive performance and value in your procurement process?
While there are several FMCs to choose from, Wheels serves as an extremely knowledgeable extension of your procurement team with its more than 80 years of experience serving clients. Delivering services on time and at the highest quality is the goal of every fleet operation, and a strong partner has the relationships and guidance to accomplish this goal.
Wheels procurement team has the expertise, knowledge, and industry relationships to help with your strategic sourcing initiatives. Our vast supplier network enables us to advise on the ideal acquisition process, ensuring a reliable supply for your fleet.
Operating under the strategy that we take responsibility for every event, supplier and driver experience, Wheels approach to supplier management drives the highest value for your fleet including:
- Assessing and managing vendors to deliver a reliable supply chain at competitive prices.
- Providing contractual protections in order to mitigate risk.
- Promoting supplier partner diversity to support both clients’ and Wheels’ diversity goals.
- Leading vehicle and upfit RFPs on behalf of our clients.
- Performing qualitative, end-to-end performance management of suppliers through scorecards and regular audits.
- Our goal is to procure the highest quality upfitted vehicle, delivered on time and at the right price. We’d love to help you source the ideal vehicles to create a best-in-class fleet.
To learn more about how Wheels can become an extension of your procurement team, contact us at firstname.lastname@example.org.