Posts Tagged ‘Strategy’

ImageTransport & Logistics has become more complex for large enterprises, particularly for multinationals and public bodies that need to manage the mobility of their staff and goods across different regions.  In addition and to compound the situation, there is a blur when it comes to differentiation of business and personal vehicle usage hence, many fleet managers struggle to put in force company policies while making sure that all business process are running smoothly and the Total Cost of Ownership (TCO) of their fleet is kept at a minimum.

In a recent advert, the Kenyan Ministry of Finance invited players in the motor vehicle and leasing industry to apply for provision of leased vehicles and transport services, on trial basis.  The reason being, there is bound to be huge savings for the government if the purchase and management of these vehicles is to be outsourced. In making such a decision, the government will be joining the ranks of Kenya Shell, Supermarket chain Nakumatt, soft drink maker Coca-Cola, East Africa Breweries Ltd and several high ranking international NGO,s, which are currently the largest consumers of leased motor vehicles.

The government is also seeking to outsource related services such as insurance, scheduled and unscheduled maintenance, replacement of non-functional vehicles, and supply of fleet management systems. The fact that the Government, which is the largest consumer of various goods and services, plus the big enterprise ‘boys’,  are joining the bandwagon, already sets a trend and is a major indicator of the shifts within the industry.  It is for this reason that fleet management solutions will be huge business in the near future. When it comes to real-world fleet operations, triumph often hinges on how well you’re able to track and manage assets/people while taking advantage of the present opportunities in productivity and cost-per-kilometer savings.

Therefore, the Big question to CIO’s will be, “ will their  enterprises   manage their fleet from a tactical level — putting out day-to-day fires — or from a strategic angle which focuses on achieving specific long-term objectives that will work in reducing the TCO of the firm’s fleet? “

A variety of factors will inform their choice. One is Cost; it is getting increasingly expensive to operate a fleet, especially in an period of stratospheric fuel cost, the main reason for the increase in fleet management   outsourcing by the big ‘boys’ in the market. Another factor is the diminishing number of opportunities to reduce cost and enhance fleet efficiency using traditional fleet management techniques. The latter being what is creating a need for new fleet management solutions that operate outside the box.

Looking ahead, firms will continue to outsource fleet management services to Fleet Management Companies (FMCs). This will in turn create a need to integrate business processes between FMCs and their clients’ fleets. This will involve the automated collection of fleet data without human intervention providing a seamless and transparent system-to-system communication between the FMCs and a fleet’s HR, payroll, logistics and financial system.

But before this integration happens FMCs will have to acquire Fleet Management solutions that can easily be upgraded to integrate with its clients’ existing Enterprise Resource Planning (ERP) systems. This calls upon CIO’s to challenge the way fleets have been conventionally managed and run in the past, and spot exceptional opportunities to create an integrated fleet management strategy. This strategy, if supported by cautiously structured business processes and backed by appropriate open standard technology, can offer near and long term benefits of cost-savings and enhanced service.

Most Fleet management softwares come as stand – alone applications designed to meet the operation’s basic business requirements (i.e., just adequate attempt and resources to get things back to business as usual). This common scenario occurs when, during a system’s implementation, the firm focuses solely on getting the system up and running to meet core business needs, such as work orders, parts inventory management, and basic reporting without first looking into setting up an integrated fleet management strategy.

An integrated fleet management strategy should consider Fleet Management Software as an integral component of the ERP. The ‘E’ for Enterprise connotes that the core functionality consists of fleet software applications that have an organization-wide impact. The ‘R’ for Resource suggests that the applications concern the management of both financial and non-financial resources of fleet management. Finally, the ‘P’ for Planning implies that the system focuses on improving strategic (i.e., future-oriented) decision making for the enterprise as a whole with emphasis on rolling-out features such as warranty management, workshop  scheduling, GPS vehicle tracking, insurance, Route mapping  to economize on fuel consumption, motor vehicle pool scheduling, logistics and administration,  ­management ­reporting etc.

In short the current trends by government and large organizations with complex distribution networks in respect to fleet management is a wakeup call to CIO’s to rethink their proposals of acquiring or upgrading their ERP systems to include  an  open standard integrated fleet management strategy that can scale.


KAMAU TIRUS: Heads the Innovation Arm of Alliance Technologies and is responsible for driving and providing Leadership for the Research & Development (R&D) team. EMAIL: