The average fleet purchasing timeline has been hyperinflated over the past three years, with microchip shortages and lack of materials doubling or even tripling the average lead time. This has become a costly problem for chief procurement officers (CPO) and fleet managers, particularly those within government organizations.
The traditional approach to fleet purchasing is no longer holding its own. However, certain procurement services can expedite the fleet purchasing process by a factor of months.
Let's explore why traditional fleet purchasing strategies may be slowing down your order-to-delivery and de-optimizing your pipeline.
Why traditional fleet purchasing strategies slow down the pipeline
Every fleet purchasing strategy looks somewhat different, depending on the organization. That said, a few norms of the fleet purchasing process may contribute to slower and less-efficient vehicle procurement. These include:
- Bloated lead times: In 2021, lead times for fleet vehicle maintenance and repair went from forty-two days to forty-five days. Furthermore, lead times for electronic components rose from sixteen weeks to over fifty-two weeks. The time that it takes to acquire mission-critical vehicle componentry could throw a wrench into even the best-laid plans.
- Rising acquisition costs: Simply acquiring a brand-new vehicle could put an enormous financial strain on your public institution. Today, the average cost of a fleet vehicle ranges anywhere between $34,000 and $39,000. This does not include vehicle repair and maintenance, which costs 17¢ for every mile driven.
- Falling employment numbers: It's no secret that the fleet procurement industry is facing a labor shortage unlike anything seen before. Trucker turnover hit 91% in 2019 and became increasingly unstable throughout 2020 during the COVID-19 pandemic. More than 78,000 driver jobs were left unfulfilled at the end of 2022, meaning the labor crisis has yet to run its course.
It's not possible to completely avoid the problems and pitfalls of traditional fleet purchasing. However, strategic procurement services are available to public institutions that simplify and expedite the process.
Three key procurement services that every organization needs
There are three types of procurement services that can expedite fleet purchasing processes.
1. Electronic fleet management services
Also referred to as e-procurement solutions, electronic fleet management services enable CPOs to manage their fleets online. Managers can access a single source without digging through papers or physical files. Depending on the service in question, you can also enable advanced inventory tracking and notifications and alerts that track the lifecycle of a vehicle.
Electronic fleet management services have an enormous potential to streamline the procurement process for fleets, cutting down on lead times and eliminating human error. Nearly half of US fleet managers saw a positive ROI from using e-procurement platforms in eleven months or less. It's no wonder that these services have become increasingly popular among public agencies and nonprofit institutions.
2. Fleet-tracking components
Traditional fleets may operate “off the grid” with few, if any, telematics. However, experts have found enormous potential in tracking components like GPS. You can see real-time information about your vehicles and easily assess their efficiency without sacrificing additional time.
The potential savings may be the most practical benefit of fleet tracking software. Proper use of GPS can save up to $187.01 per month per vehicle, which amounts to nearly $2,000 for a fleet of ten or eleven. Keep in mind, of course, that your mileage may vary.
3. Cooperative contracts
Cooperative contracts are increasingly popular alternatives to the traditional procedure of RFPs. These solutions enable non-profits to leverage the buying power of large organizations and are generally compliant with local and state laws. Cooperative contracts include true cooperatives, piggybacking, and third-party aggregators, which streamline the acquisition process and reduce overhead.
The benefits of a cooperative contract speak for themselves. Rather than spending months or years searching for the right fleet procurement strategy, cooperative contracts can be signed and executed in just a few months. This gives your team time to focus on other things and empowers everyone to navigate the buying process faster, which can help you expedite fleet purchasing in multiple ways.
How to get started with cooperative contracts for fleet procurement
Involving your organization with cooperative contracts is a relatively straightforward task. If you are located anywhere within the United States, Sourcewell can provide a simplistic cooperative contracting service to you within minutes.
Here’s how you can get started:
- Check your eligibility online to see if you qualify for the free program.
- Explore suppliers and associated contracts to find the right match for your fleet procurement process.
- Connect with an industry expert for guidance if you are unsure of how to proceed.
Accessing cooperative contracts through Sourcewell is always 100% free.
Here at Sourcewell, we help public agency buyers procure fleet vehicles faster by fulfilling the time-consuming bid process for them. Through cooperative contracts, we expedite the fleet vehicle procurement process so you can better serve your teams.
Want a faster procurement process? Contact one of our specialists today to buy the fleet solutions you need!