Focus on fuel process, not just fuel rebates, says FleetVision
Although fuel prices continue to rise across Europe, best practice fuel management is less about negotiating the best rebates and more about managing and monitoring fuel expenditure more efficiently to drive down costs.
So says Tobias Kern, senior consultant at Brussels-based global fleet consultancy, FleetVision, who has recently completed a pan European fuel tender process on behalf of a global PR and marketing agency which operates around 3,000 vehicles in 11 countries across Europe.
The fleet client had a decentralized fuel policy, with each country having its own individual approach, but wanted to centralize its fuel buying across Europe to help drive down overall fuel costs.
With fuel accounting for around 20–25% of the TCO (total cost of ownership), reducing fuel expenditure remains high on the agenda for many fleet operators. On this background, FleetVision’s client wanted to explore the options for harmonizing its fuel suppliers on a pan European level.
The tender review process concentrated on negotiating direct contracts with the major pan European fuel card suppliers, who were pre-selected on the basis of being capable of meeting the tender requirements.
As well as pricing levels, the FleetVision tender process took into consideration factors such as the spending patterns of each country that made up the client’s fleet, the extent of the suppliers’ European network and how they overlapped.
The tender also considered the level of reporting each fuel card supplier provided in areas such as mileages, fuel consumption, carbon dioxide emissions, exception alerts, fraud prevention and fuel card handling, as well as looking of the level of operational support provided through end-to-end IT systems.
It is FleetVision’s opinion, that fuel tenders not taking into account the improved management of the fuel process, ignore key factors which will help improve fleet operators’ fuel management programs and reduce fuel spend. On this background, FleetVision’s tender project underlined the fact to focus beyond rebate levels.
“Factors such as network coverage, reporting levels and the impact on the drivers are all important considerations in any fuel program review. Just focusing on securing the best level of rebate from the supplier can ignore important factors which, when combined together, can be more valuable than the rebates achieved.
“Fuel card prices, volume rebates and fuel costs based on country-specific prices are all important commercial considerations. Additionally, scale effects achieved by combining fuel volumes internationally also need to be added to the overall value comparison between suppliers.
“At the same time, any commercial benefits need to be balanced against the network coverage in the respective fleet markets, which differs by country and by fuel card provider. The best procurement scenario usually depends on the individual fleet patterns and how they match the supplier’s footprint.
“Careful consideration should be given to the process implications for drivers of having to reach a fuel station of the preferred fuel provider versus the commercial benefits that can be negotiated. There is no point in negotiating the best possible price if the supplier’s network is too remote or too inaccessible for your drivers to reach,” said the consultant.
At the same time as designing the new fuel program, a change management program also has to be set up within the fleet operator’s business to communicate awareness of changing processes and contractual structures.
“Before starting such a program, the buy-in of the various stakeholders within the organization is absolutely vital, along with a thorough and detailed implementation process in support of the potential new set-up.
Among other things, the tender project also revealed that the leading European fuel card suppliers all worked with partner networks, each of which had a different strategy on rebate levels and which had to be considered in the overall analysis.
The project also identified a key shift in the European fuel market, following the announcement last year of a partnership between Total and Shell in the German fuel market. “This new relationship clearly opens up new alternatives both on a national and even international level for fleet operators,” projected FleetVision.
Ideally, once the final decision had been made, the chosen fuel card supplier(s) should be an integral part of an overall fuel management approach that looked at overall fuel consumption across the fleet, green fleet considerations such as low carbon emitting vehicles, the selection of the right powertrain matching the individual driving patterns of each employee, and the provision of eco-driver training for drivers to encourage them to drive more economically and responsibly, said Tobias Kern.
“Given this background, an integrated fuel management program that considers volume consolidation alongside process cost reductions, and total transparency on cost drivers and cost control measures, will efficiently reduce fuel spend across the whole fleet. In such a scenario, volume rebates and price reductions are only one part of the fuel management equation.
It is FleetVision’s conclusion, that the preferred supplier should be the one that is best capable of supporting the entire program and not the one offering the best rebate levels only.