How To Source Tires For Your Fleet

 

If you have a fleet, you have a need for tires. With a limited life and a key component to driver safety, procuring tires wisely can make a big difference in the Total Cost of Ownership (TCO) of your fleet. Tire pricing is typically based on volume and negotiating discounts is difficult at best. So how do you control costs if you do not have a massive fleet? There are a few simple avenues that can help your company save time and money procuring tires.

As a fleet manager, or a procurement professional purchasing tires for your organization, there are a few upfront decisions to make. First, you must decide what tier of tires you are searching for. This is a loosely defined rating on quality, engineering, price point, and markup. Although slightly arbitrary, typically, a tier 1 tire has the backing of a large organization. They have built up a lot of trust to get to that level, so their product can be trusted. Tier 2 tires will typically be lower in quality, price, or markup, and so on for Tiers 3 and 4. Finally, will you want to buy direct or through a distributor? Both have their pros and cons. Distributors will mark up the price but may have better service options. OEM tires often are cheaper, but the manufacturer may not have locations to install the tires you purchase. Be sure to consider what is most important to you.

Now, on to how to procure them!

1.      GPO’s (Group Purchasing Organizations)

Perhaps the simplest way to get high quality tires for your fleet at a fair price is through a GPO. A Group Purchasing Organization leverages the buying power of many organizations by combining the spend of multiple fleets to negotiate better pricing. This can especially benefit small and mid-size fleets. With a lower volume, negotiating pricing is very difficult as the scales are tipped against you. With a GPO, many small and mid-size fleets are combined to tip the scale back to your side. The best part is the work is already complete. Simply signing up with the GPO warrants you all the benefits with none of the work. It is the easiest way to receive a quick win and can save your company a surprisingly large amount.

To put this in perspective, Corcentric has over 160 group purchasing programs. With an 800,000-unit fleet under management, the pricing within these GPO’s is much better than a small or mid-size fleet can obtain. Tires are just one of the programs that we offer. Many different maintenance parts and fleet related products, including fuel, can be purchased using this buying power. We also offer multiple tire brands. You can choose form Goodyear, Michelin, Continental, Bridgestone, and more! Whomever you choose, GPO’s are the quickest way to get immediate savings on your tire purchasing.

2.      Back-End Rebates

Another simple and effective way to save on tires is to negotiate back end rebates. A simple explanation is you spend so much with the supplier, you get a specified percentage back. The lower the spend figure and the higher the percentage rebate, the better the savings. Rebates may be difficult if you do not have a large enough fleet. However, if you do not have a large enough fleet, you should be purchasing through a GPO like we spoke about earlier.

3.      Maintenance Mindset

Do not let your tires bald before replacing. It may sound counter-intuitive but replacing on a specified schedule is important. In the long run it will save your business money. The costlier repairs for damage that can occur if your tires tread or blow are not worth the risk. Replace them before they cause the larger issue. Also, the consistency of spend can help with negotiations and spend commitments to supplier partners. Finally, you will change fuel consumption and put your drivers in potential danger. As a side note, maintenance parts of all kinds can also be purchased through a GPO!

4.      Outsource

If the analysis, contracting, negotiation, and many other tasks that come with wise fleet procurement are more than you care to take on, outsource the work. Corcentric, for example, can manage your whole fleet. We not only source the suppliers, but we also take care of the maintenance, lifecycle management, and even remarketing. This may be the simplest way to avoid the vast amount of work that comes from fleet management. The best part is you can afford it! You will actually end up saving money in most cases.

Hopefully, this will help in purchasing tires for your fleet. These suggestions also apply to other maintenance related parts. Fleet management is one of Corcentric’s bread and butter. We have been working in this space from the very beginning of our company. With many subject matter experts, we can give you the advice and service your fleet requires!