FleetVision: Best Practice Fuel Management

Focus on fuel process, not just fuel rebates, says FleetVi­sion

Although fuel prices con­tin­ue to rise across Europe, best prac­tice fuel man­age­ment is less about nego­ti­at­ing the best rebates and more about man­ag­ing and mon­i­tor­ing fuel expen­di­ture more effi­cient­ly to dri­ve down costs.

So says Tobias Kern, senior con­sul­tant at Brus­sels-based glob­al fleet con­sul­tan­cy, FleetVi­sion, who has recent­ly com­plet­ed a pan Euro­pean fuel ten­der process on behalf of a glob­al PR and mar­ket­ing agency which oper­ates around 3,000 vehi­cles in 11 coun­tries across Europe.

The fleet client had a decen­tral­ized fuel pol­i­cy, with each coun­try hav­ing its own indi­vid­ual approach, but want­ed to cen­tral­ize its fuel buy­ing across Europe to help dri­ve down over­all fuel costs.

With fuel account­ing for around 20–25% of the TCO (total cost of own­er­ship), reduc­ing fuel expen­di­ture remains high on the agen­da for many fleet oper­a­tors. On this back­ground, FleetVision’s client want­ed to explore the options for har­mo­niz­ing its fuel sup­pli­ers on a pan Euro­pean lev­el.

The ten­der review process con­cen­trat­ed on nego­ti­at­ing direct con­tracts with the major pan Euro­pean fuel card sup­pli­ers, who were pre-select­ed on the basis of being capa­ble of meet­ing the ten­der require­ments.

As well as pric­ing lev­els, the FleetVi­sion ten­der process took into con­sid­er­a­tion fac­tors such as the spend­ing pat­terns of each coun­try that made up the client’s fleet, the extent of the sup­pli­ers’ Euro­pean net­work and how they over­lapped.

The ten­der also con­sid­ered the lev­el of report­ing each fuel card sup­pli­er pro­vid­ed in areas such as mileages, fuel con­sump­tion, car­bon diox­ide emis­sions, excep­tion alerts, fraud pre­ven­tion and fuel card han­dling, as well as look­ing of the lev­el of oper­a­tional sup­port pro­vid­ed through end-to-end IT sys­tems.

It is FleetVision’s opin­ion, that fuel ten­ders not tak­ing into account the improved man­age­ment of the fuel process, ignore key fac­tors which will help improve fleet oper­a­tors’ fuel man­age­ment pro­grams and reduce fuel spend. On this back­ground, FleetVision’s ten­der project under­lined the fact to focus beyond rebate lev­els.

“Fac­tors such as net­work cov­er­age, report­ing lev­els and the impact on the dri­vers are all impor­tant con­sid­er­a­tions in any fuel pro­gram review. Just focus­ing on secur­ing the best lev­el of rebate from the sup­pli­er can ignore impor­tant fac­tors which, when com­bined togeth­er, can be more valu­able than the rebates achieved.

“Fuel card prices, vol­ume rebates and fuel costs based on coun­try-spe­cif­ic prices are all impor­tant com­mer­cial con­sid­er­a­tions.  Addi­tion­al­ly, scale effects achieved by com­bin­ing fuel vol­umes inter­na­tion­al­ly also need to be added to the over­all val­ue com­par­i­son between sup­pli­ers.

“At the same time, any com­mer­cial ben­e­fits need to be bal­anced against the net­work cov­er­age in the respec­tive fleet mar­kets, which dif­fers by coun­try and by fuel card provider. The best pro­cure­ment sce­nario usu­al­ly depends on the indi­vid­ual fleet pat­terns and how they match the supplier’s foot­print.

“Care­ful con­sid­er­a­tion should be giv­en to the process impli­ca­tions for dri­vers of hav­ing to reach a fuel sta­tion of the pre­ferred fuel provider ver­sus the com­mer­cial ben­e­fits that can be nego­ti­at­ed. There is no point in nego­ti­at­ing the best pos­si­ble price if the supplier’s net­work is too remote or too inac­ces­si­ble for your dri­vers to reach,” said the con­sul­tant.

At the same time as design­ing the new fuel pro­gram, a change man­age­ment pro­gram also has to be set up with­in the fleet operator’s busi­ness to com­mu­ni­cate aware­ness of chang­ing process­es and con­trac­tu­al struc­tures.

“Before start­ing such a pro­gram, the buy-in of the var­i­ous stake­hold­ers with­in the orga­ni­za­tion is absolute­ly vital, along with a thor­ough and detailed imple­men­ta­tion process in sup­port of the poten­tial new set-up.

Among oth­er things, the ten­der project also revealed that the lead­ing Euro­pean fuel card sup­pli­ers all worked with part­ner net­works, each of which had a dif­fer­ent strat­e­gy on rebate lev­els and which had to be con­sid­ered in the over­all analy­sis.

The project also iden­ti­fied a key shift in the Euro­pean fuel mar­ket, fol­low­ing the announce­ment last year of a part­ner­ship between Total and Shell in the Ger­man fuel mar­ket. “This new rela­tion­ship clear­ly opens up new alter­na­tives both on a nation­al and even inter­na­tion­al lev­el for fleet oper­a­tors,” pro­ject­ed FleetVi­sion.

Ide­al­ly, once the final deci­sion had been made, the cho­sen fuel card supplier(s) should be an inte­gral part of an over­all fuel man­age­ment approach that looked at over­all fuel con­sump­tion across the fleet, green fleet con­sid­er­a­tions such as low car­bon emit­ting vehi­cles, the selec­tion of the right pow­er­train match­ing the indi­vid­ual dri­ving pat­terns of each employ­ee, and the pro­vi­sion of eco-dri­ver train­ing for dri­vers to encour­age them to dri­ve more eco­nom­i­cal­ly and respon­si­bly, said Tobias Kern.

“Giv­en this back­ground, an inte­grat­ed fuel man­age­ment pro­gram that con­sid­ers vol­ume con­sol­i­da­tion along­side process cost reduc­tions, and total  trans­paren­cy on cost dri­vers and cost con­trol mea­sures, will effi­cient­ly reduce fuel spend across the whole fleet. In such a sce­nario, vol­ume rebates and price reduc­tions are only one part of the fuel man­age­ment equa­tion.

It is FleetVision’s con­clu­sion, that the pre­ferred sup­pli­er should be the one that is best capa­ble of sup­port­ing the entire pro­gram and not the one offer­ing the best rebate lev­els only.

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