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.
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Has your company out-grown its ability to provide effective customer service delivery relative to competitors?
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Have escalating transportation costs negatively impacted profit margins?
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Are you facing labour challenges and/or lack of personnel, competency and skills that are affecting the business?
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Is there a reluctance to further capitalise fleet replacement/capacity?
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Are you experiencing distribution challenges - changes in demographics of the market?