The Client
A worldwide pharmaceutical company, headquartered in the US with a UK fleet size of 700 cars and 200 cash allowances.
The Background
The client operated a mixed fleet utilising ECO and traditional funding methods predominantly with one supplier. Following an internal procurement team review, it was clear that there were no supplier tracking mechanisms in place either from a quantitative (cost) or qualitative (service) perspective. In addition, there was a requirement to understand whether best value was being obtained from the fleet supplier network.
The Project
Fleetworx was engaged to undertake a high level review of the fleet and the following cost and service elements were incorporated within the brief:
- Manufacturer terms and dealer discounts
- Credit Sale Agreement pricing within ECO scheme
- Lease pricing for company car fleet element
- Management fees and charges, third party supplier rebates and additional non transparent revenue streams
- Establishing the current Total Cost of Ownership and the implementation of an ongoing supplier tracking mechanism
As part of the project, Fleetworx were retained to renegotiate supply terms in conjunction with the client’s procurement team.
The Outcome
A comprehensive Total Cost of Ownership (TCO) matrix was established and coupled with a supplier tracking system. The exercise immediately highlighted three areas of issue – fuel, mileage claims and a higher than expected lease recharge account.
All three areas were addressed without delay, with the introduced control mechanisms delivering an annual saving of £740,000. The ongoing tracking system has subsequently allowed the client to identify trends in the component areas of fleet spend and act on these at the earliest opportunity.The lease cost and Credit sale Agreement pricing benchmark identified that current pricing was not competitive within the marketplace. Rather than switch suppliers or adopt a multiple supply strategy, steps were taken to understand the price differentials and work with the supplier to redesign the schemes into a more transparent solution for the client. This resulted in an immediate windfall of £30,000 and the delivery of £120,000 per annum savings through fee reduction and a return of supplier rebates.
The ongoing supplier performance control programme has enabled the client to maintain a proactive supplier management process across all component aspects of fleet cost and service elements.
Savings Delivery Summary
- £30K windfall bonus on implementation of new scheme
- £740K per annum saving through mileage tracking and fuel spend
- £120K per annum through management and associated fee reduction plus a return of supplier rebates
