Over the years, I’ve heard some fleet managers say they get no respect from management. Similar comments were once heard from purchasing managers, but no more. Over the past several decades, the purchasing managers of yesteryear reinvented themselves into procurement professionals whose function is now viewed as a strategic asset that provides a competitive advantage to a corporation.
Can fleet management, likewise, elevate its perceived value to a corporation, especially in the eyes of its senior management? I say yes, and the timing is right to do so.
The Road from Order Placer to Strategic Asset
As recently as the 1980s, purchasing departments (as procurement was then known) were viewed as “order placers” who simply issued purchase orders with little involvement in proactively implementing corporate strategic goals.
While researching the history of procurement, I found that the first glimpses of its potential appeared when the U.S. transitioned from a peacetime to a wartime economy during World War II. With the hyperactivity of producing war materials at breakneck speed, purchasing departments began making an impact on their companies. Demand for purchasing specialists skyrocketed and universities across the U.S. increasingly offered academic courses in purchasing.
For instance, in 1933, only nine universities had purchasing programs. By 1945, 49 universities offered educational programs in purchasing. Although the value of competitive bid pricing became more prominent in the mid-1960s, many in management continued to view purchasing as a dead-end job. At the time, only 37% of companies had the purchasing department organizationally report direct to senior management.
The Origin of Strategic Sourcing in Fleet
In the early days of fleet management, most fleets reported up to purchasing since many fleets were owned and it was the purchasing department that bought and sold company cars and trucks. As fleet funding evolved and more vehicles were leased, it became more common for fleets to report to the finance department since it negotiated the lease contracts. Eventually, the majority of fleets reported to finance, but approximately 25% of fleets nationwide still continued to report to the purchasing department.
In other instances, especially with sales or service fleets, it was the sales or service departments themselves that had management responsibility for the fleet. While finance and purchasing still had the final say, the user departments wielded considerable input on vehicle acquisition decisions, supplier selection, and day-to-day fleet management practices.
In the 1990s, larger companies began to develop highly sophisticated procurement departments, frequently under the aegis of corporate finance. These procurement departments began initiating in-depth sourcing reviews and developed comprehensive agreements with suppliers and service providers who were identified as having the greatest impact on the company’s operation.
This type of procurement became known as “strategic sourcing,” which was considerably different from traditional purchasing practices. One difference between the two was that strategic sourcing looked at all cost elements of a company’s operation that involved outside vendors. Over the years, strategic sourcing became an institutional procurement process that sought to continuously improve and re-evaluate corporate purchasing activities in all “spend” categories, including fleet management.
The migration of large corporations to strategic sourcing was a powerful change agent at large fleets, forcing change in fleet contract negotiations, vehicle sourcing, supplier selection, the development of service level agreements (SLAs), and fleet reviews. In the past five or so years, procurement has continued to evolve the operational dimension of its responsibilities with procurement teams involved in operational oversight of enforcing SLAs.
A New Vision of Fleet Is Emerging
If the procurement profession successfully reinvented itself, why not fleet? However, we may have no choice but to reinvent ourselves. Fleet management is fast approaching a proverbial crossroads. There are powerful forces at work that will sweep through the global economy, which will have a direct bearing on the traditional fleet management model, such as the race to autonomous vehicles, the acceptance of mobility management, and the introduction of a broad array of new connectivity tools into our daily business lives.
In the next decade, several major megatrends, such as autonomous vehicles and mobility management, will begin to disrupt the fleet industry. One thing is certain; the term fleet management will soon become inadequate to fully define the scope of our industry and it will be viewed as an anachronistic label.
In addition, there is a third concurrent megatrend driven by embedded and aftermarket vehicle technologies, which will be the catalyst of an expanded fleet business model focused on managing a connected vehicle ecosystem. This fleet ecosystem will encompass not only the vehicle, but also the occupants of the vehicle – the mobile workers – and, more importantly, the work and activities they performed.
Shifting Away from a Vehicle-Centric Model
Technology trends will ultimately steer the fleet management industry to build solutions targeted to the mobile worker. For its first 50 years, the fleet industry has focused on asset management, but technology now allows us to expand our reach to the mobile worker and, ultimately, to managing the work application itself.
The evolution of a connected commercial vehicle ecosystem will parallel the concurrent evolution of a consumer connected vehicle ecosystem. The trend will be to manage beyond the vehicle itself and transition into the domain of the mobile workforce.
When vehicles are connected between themselves and the surrounding infrastructure, it will create a multifaceted conduit to provide new solutions to the vehicle occupants — both the driver and the passenger(s) — and the opportunity to digitize many of the offline analog work functions that exist in today’s mobile work environment. The work vehicle will evolve beyond a transportation and cargo-carrying tool into a mobile connectivity work platform.
The trend will stimulate the development of new vertical software solutions designed to streamline workflows for mobile workers. In this new environment, the term fleet management will only capture one facet of a broader mobile worker strategy. These expanded capabilities will prompt some fleet service companies to reposition and redefine their value propositions.
Redefining the Mobile Workplace
In the coming years, the world of the mobile worker will dramatically change with the convergence of a multitude of technologies, such as mobility, augmented reality, cloud-based computing, the Internet of Things, Big Data, etc. Increasingly, corporations are looking for solutions that will increase field workplace productivity and efficiency to drive a much stronger growth curve in their businesses. As a result, fleet service companies have the opportunity to expand beyond the vehicle to also encompass the mobile worker and their work application.
Historically, fleet has had a vehicle-centric mindset, but this emerging megatrend offers the potential to evolve into an employee-centric mobile strategy that manages the tools at a mobile worker’s disposal, including the vehicle. According to International Data Corporation (IDC), the U.S. mobile worker population is growing and is expected to grow from 96.2 million to 105.4 million in 2020.
In the future, it is not inconceivable to foresee formidable software providers entering the mobile worker space who today are not present. As they develop the domain expertise in the fleet space, third-party software providers will build solutions and products for corporate customers and their mobile workers. As this new business model emerges, it will change the competitive landscape and attract new players into the fleet space.
In the late 1990s, the fleet management industry made a rapid and breathtaking transformation from mainframes to Web-enabled fleet management systems. With a potential proliferation of third-party apps developed for mobile workers by non-traditional software providers, today’s fleet management systems have the potential to morph into software-as-a-service (SaaS) platforms.
There will be many synergistic opportunities for fleet service companies and vertical software providers to partner to complement each other in terms of products, skillsets, and strategies.
Wearable Tech to Link Us to the Mobile Worker
One important component of the newly emerging connected fleet vehicle ecosystem will be wearable technologies. For those unfamiliar with wearable technologies, it is a wide range of miniature electronic devices worn for extended periods by a user on either his or her body or clothing. These devices will have numerous consumer applications, such as healthcare (continuous physiological monitoring, for example, blood pressure or glucose levels), physical fitness accessories (heart rate monitoring or calories burned), or augmented reality devices.
In terms of a work environment, wearables give employees Web-enabled access to the information they need to perform their tasks and continuously updates management on their progress without interrupting their workflow or interaction with a customer. Proponents are already talking about in-vehicle integration with wearable technologies worn by a driver.
For instance, physical fitness monitors in the future will help vehicles determine climate control settings and measure the driver’s stress and fatigue levels, or even monitor a driver’s alcohol or blood sugar levels. Wearables offer many interesting and unorthodox fleet-related opportunities. For instance, could an employee wellness monitoring program for mobile workers be a future service offered by fleet management companies?
Traditional Boundaries are Blurring
The fleet world is fundamentally changing at the macro level where even the definition of what is a fleet is starting to blur. For instance, does Uber have a fleet? As the Ubers and Lyfts of the world transition to autonomous vehicles there will be new fleet management opportunities to ensure the vehicles remain clean, tires are regularly inspected, and vehicles are safely marshaled during non-working hours.
In an increasingly complex mobile work domain, there most likely will arise a corporate desire to outsource the management of this technology-enabled work anywhere-anytime job environment. Could this need be met by tomorrow’s fleet service providers offering a comprehensive field management solution?
What is exciting is that this discussion only scratches the surface of what is possible. The ancient Chinese curse dictates “May you live in interesting times.” In hindsight, history will view us as not living in interesting times, but rather revolutionary times.