PMTC Report: Interest of Company Should Come First, Says Logistics Expert
August 1, 2003
How do private fleet operators convince their parent companies of their value in the face of budget cutbacks and increased operating costs?This important question was the subject of a lunchtime speech...
How do private fleet operators convince their parent companies of their value in the face of budget cutbacks and increased operating costs?
This important question was the subject of a lunchtime speech given by Tom Carpenter, director of logistics for Sonoco Products Ltd., to delegates at the Private Motor Truck Council conference held June 19 and 20 in Niagara-on-the Lake.
“There are two ways of dealing with difficult circumstances,” said Carpenter to those in attendance. “You alter the circumstances, or you alter yourself.”
Carpenter blamed at least some of the corporate ignorance of private fleets on fleet managers themselves.
“Too often corporate efforts to understand fleet costs are met with defensiveness on the part of fleet managers,” Carpenter said. “Their inability or unwillingness to communicate has made the ability of corporate overseers to compare the private fleet with alternatives difficult if not completely impossible.”
The resulting danger is that private fleets could be completely abolished due to faulty analysis, pointed out Carpenter.
But the objective of private fleet managers shouldn’t be the survival of the fleet, Carpenter said. They should instead share the primary goal of the parent company itself.
“Private fleet management is just one tool among many that can be applied appropriately or inappropriately. If you’re a fleet manager and you’re not aware of the options (outsourcing for example) how can you make an argument for your fleet being the best of them? And how can you accurately communicate that to management?”
The key is to have an accurate picture of your parent company’s goals and the impact of the fleet’s costs on it, said Carpenter.
“If you don’t know that you won’t be able to provide an accurate assessment of the value you’re providing to your company.”
Carpenter outlined a plan for developing better and more cost-effective relations between the parent company and its private fleet:
1) Make costs clear and visible to management (“Dumb it down to communicate up,” was Carpenter’s advice);
2) Use flexible assets and staffing solutions to minimize costs (analyze seasonal trends, use for-hire carriers or driver services when needed, supplement equipment ownership with lease arrangements);
3) Track supply and demand and develop plans to mitigate impact of fuel costs etc.;
4) Constantly re-evaluate the overall value of the fleet to the company and propose alternatives (outsourcing etc.) if necessary.
In conclusion, Carpenter pointed out that fleet management doesn’t usually get to the overall company management table.
“We’re like the local Sherpas, when someone wants to scale Mt. Everest,” Carpenter said. “But we shouldn’t be. Too many companies separate fleet management from their overall transportation and logistics function.”
The key is to leverage the strengths of the fleet with its outsourcing capabilities, Carpenter said.
“It’s important to take the risk of looking outside the fleet sometimes to see where the best solutions are.”
A good fleet manager needs exposure to logistics and supply chain management principles, he said.
“It’s essential to a fleet manager’s development. And ultimately it’s essential to fleets striving to be world-class.”