One of the key aspects of a fleet manager’s job is the Supplier Relation Management (SRM) with its leasing companies. Since there is a lot of operational work and communication between the fleet manager and the lease company, especially in a multi-supplier set-up, a key decision to make is whether to source the company car fleet from one leasing company or multiple leasing companies.
Both a sole and multi-supplier set-up have some benefits and drawbacks. In this blog post, we will discuss how to fully leverage having multiple leasing companies to source from.
Sole Supplier in Leasing
When a fleet manager decides to source their entire company car fleet from one leasing company, it is called a sole supplier set-up. The main benefit of this arrangement is that it can simplify the management of the fleet. With only one supplier to deal with, the fleet manager can develop a strong relationship with them and work together to ensure the fleet runs smoothly.
However, there are also several drawbacks to a sole supplier arrangement. Firstly, the company heavily relies on the single supplier. As operational processes, such as fuel card requests, ordering processes and others, are dependent on the supplier, the fleet manager may have to go through the costly and time-consuming process when switching to a new provider.
Secondly, in a sole supplier set-up, there is benchmark available to determine wether your pricing is market-competitive. The ‘loyalty’ or ‘signing’ bonus that was received when entering the sole supply does not outweigh subsequent price increases.
Remember, leasing companies are no non-profit organisations ;). An example of the latter was recently illustrated by the research of Transport & Environment (T&E). According to their latest European Transport & Environment (T&E) study, leasing companies are overcharging customers for electric cars. The main reason is a underestimation of the residual value for EVs, leading to unjustifiable higher leasing prices for this powertrain category. Latest fiscal results from large leasing companies show huge business profits.
Multi-Supplier set-up in Leasing
Having multiple leasing companies to source from can offer several benefits to a fleet manager. Firstly, multi-supplier provides access to a wider range of products and services. Different leasing companies may offer different types of accompanying services, such as lease bikes, run-up car services and more. This allows the fleet manager to select products and services that best meet the needs of their fleet.
Secondly, having multiple suppliers can provide more competitive pricing. By sourcing from several leasing companies, the fleet manager can negotiate better pricing and better SLAs (in terms of service) from each supplier upfront. Furthermore, by multi-bidding each order, a continuation of market-competitive prices is guaranteed, as leasing companies have to compete to win the orders.
From our experience with clients, we see that a multi-supplier set-up can lead to cost savings of on average 8%. An overview of the benefits from a procurement angle are listed here.
Thirdly, having multiple suppliers reduces the risk of being reliant on one supplier. Would one supplier experiences issues to deliver timely service, the fleet manager can turn to another supplier to meet their needs. This reduces the risk of downtime for the fleet and ensures that the fleet can continue to operate smoothly.
Of course, it comes at the drawback that this might increase the administrative burden for the fleet manager. Our well-designed software solution can help you reap the benefits, without the drawbacks.
How Headlight can help you benefit from multi-supplier set-ups
At Headlight, multi-supplier set-ups are built-in by default in our ordering flow. The flow goes as follows:
- The employee configures his/her car via the built-in configurator, uploads her dealer quote, or selects a vehicle from the company car policy car list
- The employee confirms the vehicle choice
- The Headlight platform automatically requests leasing quotes from all configured leasing companies. Requirements in terms of lease service packages are included automatically
- The Headlight platform automatically processes all received leasing quotes and determines the Total Cost of Ownership of the vehicle
- The Headlight platform automatically selects the lease quote with the best offer
- When the company works with TCO budgets, the employee is notified and the quote is presented to the employee: if a personal contribution would be required, (s)he can review and confirm it
- The fleet manager is now notified that a final quote can be confirmed. See it live below ⬇️
In conclusion, while a sole supplier arrangement has some benefits, having multiple leasing companies to source from can offer multiple advantages. These include access to a wider range of products and services, more competitive pricing, reduced risk, and improved service and innovation.
By sourcing from several leasing companies, a fleet manager can ensure that their fleet has access to the latest technology, is cost-effective, and can continue to operate smoothly even if one supplier experiences issues. A suitable fleet management software is the perfect companion to avoid an increased operational workload.
For more information: reach out!
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