Consulting Case Study - 1
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
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