A recent article on Business Travel News Online discusses the new levels of creativity that Chauffeured Services organizations are now forced to take in order to keep costs down and profitability up in the world of $140+ barrel oil.

In reality, most of the concepts that are being employed to keep fleet costs down are nothing special. Companies are now focusing on making sure that vehicles are not idling, and that tires are properly inflated (with Nitrogen in some cases). But these are not really creative ideas, a quick search for “ways to increase your mpg” in any major search engine and you will find hundreds of results telling you to do the same things.

One thing that is creative and is now becoming more common in the transportation industry is to employ trainers to teach their drivers effective driving and ways to consume less fuel. While the ideas, if implemented properly will almost certainly gain a small measurable savings in the fuel costs for chauffeured services organizations, I doubt the intention is to actually pass along the savings to the customer (as the article indicates), but rather to protect profitability.

Dav El's CEO, Scott Solombrino, says "You're seeing a lot more strategic sourcing and procurement departments than I've seen in my 31 years in the industry," Solombrino added. "It's helped consolidate the business because procurement seems to be able to get policies enforced."

I agree with Mr. Solombrino, we are seeing a lot more “Strategic Sourcing Managers” in just about every industry we go into, especially in the last 18 months. And we also agree that it seems, in some measure, that procurement departments are now doing a better job of getting policies enforced, however we also see unreasonable expectations set on a lot of these procurement managers, so I suspect they are just working harder to ensure the policies are enforced that they ever have been before.

The BTNOnline article continues to talk about more and more organizations are now going through formal RFP processes for contracting with Chauffeured Services organizations, and that there are a lot more questions today than there ever has been.

It is good that strategic sourcing managers are starting to understand the cost components of this type of spend, but I wonder how many of these organization still believe that Strategic Sourcing is the processes of writing a RFP and getting three vendors to bid... I would suspect that it is still the most common practice in most organizations and that many organizations are missing out in developing truly creative collaborative solutions with their suppliers because they simply throw out a RFP document for a bid.

If your organization wants to go beyond the “Three Bid RFP” process, contact Source One for assistance.
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William Dorn

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