For far too long, various departments in businesses have not seen the need to share their information with other areas of the business. The focus has been on maximizing the individual outcome rather than the holistic outcome.
Based on what I saw in 2020, when it comes to asset purchase decisions there are four basic silos in most organizations:
- Procurement/purchasing
- Operations
- Finance and treasury
- Legal
In order for a business to successfully achieve its goals, these four areas need to talk openly about goals and objectives around the procurement of fleet assets. The process starts with fleet operations sharing its business plan with finance and treasury so they understand the financing needs of fleet operations and can allocate the proper amount of capital.
The next step is for finance and treasury to approve the capital expenditure based on the business plan. Then it is time to get procurement involved so they can understand exactly which assets operations wants to purchase. They need to understand which vehicles are needed and what the vehicles specs are. Procurement then begins the RFP process and looks at the best options for financing the assets. Legal needs to be brought in once the contract process begins.
The success of the process rests with a strong operations person who can articulate clear objectives and goals. If someone – other than operations – is driving the bus, so to speak, you are not going to have a good outcome. It is fleet operation’s job to make a business case for the assets it needs with finance and treasury validating that there is a need for the assets and that there will be a return on the company’s investment in the assets.
A fleet management company can help a fleet get all the players together and speaking the same language if they cannot get it done on their own. All parties need to share information and make sure they understand each other’s perspectives and objectives.
It is absolutely critical that everyone involved in the purchasing decision clearly understand what the ultimate objective is and how to get from point A to point B. The best way to do that is to have business planning sessions where everyone shares information freely to collectively reach a decision that is best for the company overall.
