Effective Supplier Evaluation in Fleet Procurement
Choosing the right Fleet Management Organisation (FMO) isn’t just a box-ticking exercise; it’s a key decision that can make or break your operations. A well-managed fleet is crucial for keeping customers happy and ensuring your business runs smoothly.
But when it comes to supplier selection, there’s a lot at stake—financial impacts, operational uptime, and risk management all hang in the balance.
To help you navigate this terrain, let’s break down three fundamental pillars that should guide your supplier choices:
- Program Management
- Technology
- Risk Safety Compliance
Understanding these elements could empower you to make smarter choices and get the most out of your fleet.
Generating value for the organisation. Gaining agility through digitisation and high-level analytics. Managing volatility through real-time insights into cost drivers. Building strategic resilience through risk mitigation.
A McKinsey report on the “New Currencies of Procurement” identified several strategic priorities of mature procurement functions, including:
- Generating value for the organisation.
- Gaining agility through digitisation and high-level analytics.
- Managing volatility through real-time insights into cost drivers.
- Building strategic resilience through risk mitigation.
The strategic priorities highlighted in the McKinsey report show that procurement has moved past just focusing on cost and risk. Now, there are broader considerations on generating value, embracing agility through digitisation and managing market volatility. Fleet procurement managers should keep this wider lens in mind when choosing partners, looking for those who can enhance strategic resilience and provide real-time insights.
Supplier selection: Why it matters
Why is supplier selection so important? For starters, there are potentially significant financial implications. Picking the right FMO can lead to cost savings and better service quality. A poor choice could result in costs such as fines for non-compliance or additional charges when things go wrong.
Operational continuity is another key point. Ideally, your fleet is up and running at all times, and an unreliable supplier can cause business interruptions, leading to delays and unhappy customers. Risk management is crucial, too; it is important to evaluate how suppliers handle risks related to vehicle safety and compliance with regulations.
It’s also worthwhile to weigh the long-term benefits of working with a new supplier against the immediate cost of change. True value extends beyond costs, it’s about delivering on the priorities that will have the biggest impact for your business, staff and your customers. It’s also about having a partner who understands what matters most to you.
The benefits of a fleet procurement scorecard
Naturally, a scorecard can assist with mapping your own procurement priorities and empowering your team, while also providing internal stakeholders with a roadmap for procurement success.
- Identify your needs: Clearly define what your fleet requires in terms of services and support. These become your KPIs against which suppliers will be scored.
- Research suppliers: Gather information on potential suppliers, noting their strengths and weaknesses.
- Score each supplier: Use your scorecard to score them against your requirements. Some procurement teams choose to assign different weights to KPIs to reflect their importance.
- Make your choice: Use the scores to guide your selection and discuss your findings with your team.
Use your scorecard to assess your current supplier and identify areas of risk and potential improvement. It’s also a useful tool in supplier negotiations, and for supporting your business case for change.
Take a structured approach to developing your scorecard
Where to begin? We recommend taking a moment to assess your current supplier relationships. Are you really getting the most out of your fleet? Check out the Fleet Value Checklist offered by Interleasing to help you make informed decisions that will strengthen your fleet operations.
Below, we share some elements to consider across the three pillars of Program Management, Technology, and Risk Safety Compliance.
1. Program Management
Let’s start with program management. What should you look for? A comprehensive suite of services is key—this includes everything from maintenance to fuel management and compliance support. A solid program management framework ensures all aspects of your fleet operations are optimised and working in harmony.
Consider looking for program elements including:
- Procurement: Does the organisation offer bulk discounts or increased purchasing power for customers?
- Maintenance and tyres: Helpful extras like SMS service reminders and a network of preferred partners.
- Fuel management: Access to a large network of fuel providers, with exception reporting, fuel cards, and a single monthly invoice.
- Rego, fines, roadside assist: Does the vendor’s team help ensure compliance of your fleet’s registrations and quickly manage and respond to traffic or parking infringements? Do they have a service network to make roadside assistance as seamless as possible?
- Carbon offset: Does the organisation provide fleet evaluation and advice on avoiding, reducing, and offsetting emissions?
- Telematics solutions: Solutions that can improve fleet visibility, driver-behaviour metrics, fuel and utilisation analytics.
- FBT reporting: Proactive management and comprehensive reporting of Fringe Benefits Tax-related issues.
- Driver education: Does the supplier offer programs (in-person and online) to help improve driver behaviour and reduce risk?
- Vehicle policy review: Can the supplier help mitigate risk and align with best practice from a policy point of view?
2. Technology
Innovation is everything. The AfMA 2024 report revealed that fleet managers across the board use analytics and BI applications to manage costs (68%), safety (65%) and inventory (59%).
Ideally, your chosen suppliers will be engaged with the latest tech and committed to continuous improvement. It’s also crucial to assess how well their technology integrates with your existing systems.
Data management and reporting play a huge role too. Advanced analytics can provide valuable insights that help you make informed decisions and improve fleet performance. Give consideration to critical technologies including:
- A platform to manage registrations, tyres, maintenance, tolls, fines, and more.
- Telematics.
- Accident tracking.
- Vehicle condition reporting.
- Driver details capturing.
- Driver training platform.
- Pool booking for shared vehicles.
3. Risk Safety Compliance
Finally, let’s talk about risk safety compliance. This involves:
- Regulatory compliance: Ensuring suppliers meet all industry regulations and standards. Ask to see certifications and documentation that demonstrate their adherence to relevant regulations.
- Safety track record: Reviewing the safety records of potential suppliers. Request data on previous incidents, safety audits, and any corrective actions taken to understand their commitment to safety.
- Risk management practices: Evaluating how suppliers manage risks associated with fleet operations. It’s a good idea to inquire about their risk management strategies, including training programs, safety protocols, and how they handle incidents when they occur.
- Technology: How does the suppliers’ technology stack help improve safety and compliance? Consider looking for elements including driver training, vehicle condition reporting, accident tracking, and maintenance and tyre management.
“Lower your risk by asking your network to correlate what the FMO has told you about their compliance, safety record and risk management practices”, advises Anthony Perri, General Manager, Sales & Client Relations at Interleasing. “Look for testimonials, case studies, and recommendations from peers. These assessments will provide valuable insights into a supplier's ability to maintain compliance and ensure the safety of your fleet operations”.
Choosing the right supplier is not just a short-term solution; it’s a long-term investment in the success of your fleet and your business. Contact us to speak to one of our team about how Interleasing can support your fleet requirements and procurement planning.