Even larger growth ex­pected

Why the trans­port func­tion should be given to spe­cial­ists

Finweek English Edition - - Focus on fleet management and financing -

RE­SEARCH ON FLEET man­age­ment stan­dards con­ducted by KA Smart for Au­tonews at year-end 2006 in­di­cated that fleet man­age­ment within com­pa­nies is of­ten done very in­ef­fi­ciently.

It was shown that in the pre­vi­ous 12 months the staff of more than 40% of fleet own­ers had re­ceived no rel­e­vant train­ing. Of the man­agers re­spon­si­ble for fleet man­age­ment – most of whom had “in­her­ited” that func­tion – con­sid­er­ably more (73,3%) hadn’t re­ceived any train­ing re­lated to fleet man­age­ment over the pre­vi­ous year.

What makes those fig­ures dis­turb­ing is that many fleet man­agers, in both private and pub­lic com­pa­nies, are work­ing with a di­vi­sion that usu­ally in­volves the sec­ond-largest ex­pen­di­ture af­ter staff re­mu­ner­a­tion.

Sarel Vis­agie, head of the Fleet Man­age­ment School at Lyceum Col­lege, says it’s been shown that busi­nesses can cut their trans­port-re­lated costs by as much as 12% by sim­ply out­sourc­ing their fleet man­age­ment func­tion to com­pe­tent fleet man­age­ment spe­cial­ists.

Says Vis­agie: “Fleet man­age­ment in any or­gan­i­sa­tion de­mands a pro­fes­sional approach and that in­cludes the staff and the de­ci­sion-mak­ers in­volved. Un­for­tu­nately, many peo­ple still re­gard fleet man­age­ment as an ad­min­is­tra­tive func­tion and only re­alise their mis­take when fleet ex­penses get out of hand. Then they turn to fleet man­age­ment spe­cial­ists.”

The SA fleet man­age­ment in­dus­try is a young, dy­namic in­dus­try that has es­tab­lished it­self firmly in SA’s trans­port econ­omy over the past 20 years. Af­ter ex­pe­ri­enc­ing a good deal of re­struc­tur­ing over the past two or so years the in­dus­try is geared to share in the gen­eral re­vival, es­pe­cially over the next few years in the run-up to the 2010 Soc­cer World Cup and at the same time to help other role play­ers so that they don’t earn a av­er­age growth for re­tail­ers also means more goods have to be trans­ported and de­liv­ered, re­sult­ing in a greater de­mand for ve­hi­cles. And the more ve­hi­cles there are on the roads, the more im­por­tant their man­age­ment and con­trol be­comes. In or­der to get ev­ery­thing ready for 2010, smaller share of the profit as a re­sult of poor trans­port man­age­ment.

Though fleet man­age­ment means dif­fer­ent things to the dif­fer­ent role play­ers it’s fairly widely de­fined to­day as the cost-ef­fec­tive run­ning and ad­min­is­tra­tion of all the func­tions re­lated to trans­port. Buy­ing and fi­nanc­ing, fuel and main­te­nance, track­ing and even train­ing so as to en­sure as many ac­ci­dent-free kilo­me­tres as pos­si­ble are all part of that cost-sav­ing func­tion.

Var­i­ous fac­tors make the fur­ther growth of the in­dus­try in­evitable. • The grow­ing trend of out­sourc­ing while com­pa­nies con­cen­trate on their core busi­ness suits the fleet man­age­ment in­dus­try per­fectly. Fig­ures from FleetAfrica, one of SA’s largest fleet man­age­ment spe­cial­ists, in­di­cate cost sav­ings of 15% to 20% for com­pa­nies that have signed con­tracts with fleet man­agers. De­ci­sion-mak­ers are aware of that and are there­fore in­creas­ingly pre­pared to leave the run­ning of their ve­hi­cle fleet to spe­cial­ists. The trans­port in­dus­try is one that ben­e­fits most from SA’s cur­rent eco­nomic boom, as the dou­ble-digit growth in car, truck and bus sales shows. Above

Fleet man­age­ment in any or­gan­i­sa­tion de­mands a pro­fes­sional approach and that in­cludes the staff and

the de­ci­sion-mak­ers in­volved.

build­ing and con­struc­tion is cur­rently lively and trans­port is re­spon­si­ble for a large per­cent­age of that in­dus­try’s costs. Fleet man­age­ment spe­cial­ists can keep those costs down and are in­creas­ingly be­ing called on. The grow­ing in­ci­dence of crime in SA – in­clud­ing ve­hi­cle theft and hi­jack­ing – is mak­ing the role of ve­hi­cle track­ing in­creas­ingly im­por­tant. And track­ing is an im­por­tant el­e­ment of fleet man­age­ment. Huge growth po­ten­tial. Ac­cord­ing to in­dus­try fig­ures, less than 20% of SA’s fi­nanced ve­hi­cle mar­ket is cur­rently part of some or other fleet man­age­ment func­tion, which is sig­nif­i­cantly less than in de­vel­oped mar­kets where the con­cept has been es­tab­lished for much longer. Paul Pauwen, new pres­i­dent of the South­ern African Ve­hi­cle Rental & Leas­ing As­so­ci­a­tion (Savrala), shares that op­ti­mism con­cern­ing the in­dus­try. “With 2010 just around the cor­ner – and the im­por­tant role played by the sec­tors that Savrala serves, which in­cludes pre­sent­ing a pos­i­tive im­age of SA – we must make sure that we ful­fil our

role to the max­i­mum.”

Savrala was formed in the Sev­en­ties to pro­vide guid­ance for the fleet man­age­ment in­dus­try, to pro­mote its in­ter­ests, es­tab­lish in­dus­try stan­dards and en­sure that it had a pos­i­tive im­age. With around 90% of SA’s lead­ing fleet man­age­ment groups be­ing Savrala mem­bers, and with im­por­tant as­so­ci­ate mem­bers (such as mo­tor ve­hi­cle man­u­fac­tur­ers), it plays a vi­tal role in the in­dus­try.

Train­ing in or­der to trans­fer new skills to the in­dus­try and im­prove its ser­vice lev­els is one of the as­pects that’s con­sid­ered very im­por­tant by Savrala. Pauwen says he and the as­so­ci­a­tion plan to con­cen­trate even more on good train­ing and re­spon­si­ble driv­ing this year, as re­pair costs are in­creas­ing and al­ready the high­est sin­gle ex­pen­di­ture item for the in­dus­try.

Savrala is work­ing closely with Lyceum’s Fleet Man­age­ment School to im­prove the level of train­ing for its mem­bers. It also has a good re­la­tion­ship with univer­si­ties that of­fer fleet man­age­ment as a train­ing di­rec­tion for cer­tifi­cates, diplo­mas and de­grees.

“The as­so­ci­a­tion also in­tends to ex­tend its al­ready good re­la­tions with Busi­ness Against Crime to lower the risk of fraud and theft,” Pauwen says.

At a re­cent meet­ing of SA’s In­sti­tute for Road Trans­port En­gi­neers (IRTE) in Jo­han­nes­burg, se­ri­ous con­cerns were ex­pressed about SA’s road safety against the back­ground of the grow­ing num­ber of ve­hi­cles on the roads and in­creas­ing ac­ci­dent fig­ures. The dis­turbingly high fig­ures of 70% to 80% of ac­ci­dents caused be­cause of neg­li­gence by driv­ers and 15% be­cause of un­road­wor­thy ve­hi­cles were men­tioned.

It’s im­por­tant for SA’s fleet man­agers to keep costs down, fleet man­age­ment ex­pert Hugh Suther­land wrote in a re­cent re­port in Truck & Bus. “This re­quires com­pe­tent driv­ers (re­sult­ing in less dam­age) and other cost sav­ings, such as lower fuel con­sump­tion.”

Suther­land said an ef­fi­cient fleet man­ager will have a whole file of in­for­ma­tion to de­ter­mine the per­for­mance of any of his fleet ve­hi­cles (and its driv­ers) in a few min­utes. It’s a chal­lenge to a busi­ness to be the best in its field, which in­cludes the man­age­ment of its fleet.

Out­sourc­ing its fleet man­age­ment func­tion to a spe­cial­ist in that field is there­fore in­creas­ingly be­ing cho­sen.

Just re­mem­ber that in the fleet man­age­ment in­dus­try there’s tough com­pe­ti­tion and mar­gins are low. Con­se­quently, only the best sur­vive. Se­lect yours care­fully.

Op­ti­mistic about in­dus­try. Paul Pauwen

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