In House vs Outsourced Fleet Management

For many companies, fleet management brings up one of those enduring business conundrums: whether or not to outsource. Should you hire an on-site fleet manager or use a company? There are good arguments on both sides, but no one solution fits all companies.

For many companies, fleet management brings up one of those enduring business conundrums: whether or not to outsource. Should you hire an on-site fleet manager or use a company? There are good arguments on both sides, but no one solution fits all companies. Ultimately, you will need to analyze your own situation and decide for yourself what course of action will best fit your company’s needs.

Let’s start by looking at what outsourcing can offer:

4 reasons to outsource your fleet management company

Increased core business efficiency. The most obvious advantage of outsourcing is that it allows you to focus more completely on your core business.  Fleet management staff can be reduced or redirected toward your core competency. Reduced time and resources spent on fleet management can result in significantly increased productivity and profitability from your company’s core activities.

Efficiencies of scale. Because fleet management is their core business, fleet management providers can meet many of your fleet’s needs more cost-effectively than individual companies. They usually qualify for lower rates and higher discounts with vehicle dealers, parts suppliers and other vendors, and they are well equipped to hire and train high-quality personnel. From vehicle acquisition to maintenance to disposal and/or remarketing of used vehicles, fleet management companies can do it cost-effectively enough that using them is often less costly than maintaining an in-house fleet.

Best practice benefits. Again, because they are experts in the field, fleet management companies tend to be more aware of best practices in the industry. They can bring this knowledge to bear for the benefit of your company. Because they manage many fleets at once, they are better able to benchmark your fleet’s performance against others in the industry. This allows them to identify and address potential problems and inefficiencies sooner, or avoid them altogether. They are also able to advise their client companies as to the most proven cost-effective and value-producing policies and procedures, allowing you to bypass the trial-and-error approach that isolated companies often take.

Risk reduction. By outsourcing to a fleet management company, you wash your hands of responsibility for OSHA, DOT, and other fleet compliance and regulation requirements. They (and their associated paperwork) become the responsibility of the fleet management company, not your business. For many companies, this in itself is reason enough to seriously consider outsourcing.

On the other hand, managing your fleet in-house also has its advantages…

3 benefits of hiring or maintaining an internal fleet manager

Stay in control. With your own fleet manager, no outside interests will influence your fleet management. You will maintain complete control over every aspect of your fleet.

Take advantage of familiarity. An in-house fleet manager is intimately familiar with your organization, including your company culture, policy and overall philosophy. This is important, because implementing optimal vehicle maintenance procedures very often requires the cooperation of multiple company departments. Your own fleet manager will be better able than an outsider to identify and overcome barriers to change, and to facilitate implementation of best practices within your company. 

An internal manager typically is also better able to maintain a harmonious working relationship with employee drivers. For example, he can more accurately judge the validity of employee requests, such as asking for an upgraded vehicle. Because he is part of the established chain of command, the manager can more easily enforce company policy with drivers. Having access to in-house communication systems and policies also better enables him to maintain direct communication with drivers and their managers.

Protect your relationship with your customers. For the same reason, your internal manager is in the best position to observe how your fleet policy affects your relationship with your customers, and to intervene if necessary. For example, a cost-saving measure that looks good on paper may result in inconveniences to your customers — and potentially lose you business. Your own employee on the front line looking out for your bottom line is better able than an outsider to understand and protect that critical relationship.

How to decide whether to outsource your vehicle fleet management

Here are some questions to ask yourself when deciding whether to manage your fleet internally or hire a fleet management firm:

What are the numbers? If you can, run the numbers on your vehicle fleet. Take all expenses into account: vehicle acquisition, maintenance, payroll, training, cost of compliance, etc. If your costs seem inordinately high, you may benefit from professional management.

How stressed is your staff? Are fleet management tasks consistently keeping your employees from contributing to your core business? Then it might be time to outsource.

How will outsourcing affect communication with employees and customers? If you can’t imagine releasing some control over this to an outside company, think twice about outsourcing

Best of both worlds

Sometimes, the best solution is to choose not one option, but both. Maintaining an internal fleet manager as a liaison between your company and your fleet management service can allow you to benefit from outsourcing, while ensuring seamless communication with employees and customers.  

Whichever option you choose, don’t just “set and forget.” Your fleet’s performance directly impacts your business, so don’t neglect to review it often, and re-evaluate your options as the need arises.

 

Robert Hall is the President of Track Your Truck. Since 1998, Track Your Truck has been the leading provider of GPS vehicle tracking systems to help businesses and fleet managers better manage their fleet of vehicles.

More in Home