To own or not

to own?

Before you outsource ...

The term "Dedicated Fleet" is often taken to mean a fleet which is owned and operated by a business and deployed solely in transporting goods manufactured and/or distributed by that company, and is not engaged in providing these services beyond its own road transport requirements.

The company can manage its transport operation, or contract it out to a professional road transport company: commonly referred to as a Professional Carrier. Alternatively own the fleet and contract out the management there of.

Almost everyone who has been involved with, and/or responsible for managing a dedicated fleet has had this conversation. It goes something like this:

Finance Director: "We are not in the trucking business, so let's free up capital for our core business and leave road transport needs to a professional carrier.

Fleet Manager: "So what do we do with our current infrastructure, people and trucks?"

Customer Manager: "As long as we can hold them accountable if they don't deliver"

Operations Manager: "Aren't we going to compromise efficiencies and flexibility?"

CEO: "Go get some quotes and let's see if it is cheaper"

The conversations in "To own or not to own" – focuses attention on the importance of providing cost-effective transportation in the supply chain. Traditionally these fleets have been considered an overhead expense (a cost of doing business) with a lack of effective KPIs to assess Derived Value.

A useful formula was introduced to measure Value as a function of “what you get relative to how much it costs you (VALUE = FUNCTION/COST) and of necessity must prove to be >1,00.

Any quotient <1,00 would indicate that the supply chain is being subsidised from net profit on the sale of goods and/or services rendered.

If you are answering "Yes" to any of these questions, you should join this conversation.

  • Has your company out-grown its ability to provide effective customer service delivery relative to competitors?

  • Have escalating transportation costs negatively impacted profit margins?

  • Are you facing labour challenges and/or lack of personnel, competency and skills that are affecting the business? 

  • Is there a reluctance to further capitalise fleet replacement/capacity?

  • Are you experiencing distribution challenges - changes in demographics of the market?