How do you see fleet management practices changing over the next 5 to 10 years?
Before answering your specific questions, I need to set up a bigger picture. I see four main trends that have an impact on fleet management.
1) Automation and digitisation:
IT technology brings massive changes to the business. 90% of the work of a fleet manager is repetitive work. This repetitive work can be automated if you have seamless processes from a connected vehicle and the driver (via an app) to the fleet manager and the suppliers. Driver communication, repair approval, invoice, and cost control are just a few examples where you can see massive increases in efficiency-driven by IT.
IT also reduces complexity: Managing multiple suppliers – quoting, monitoring performance, exchanging data with them, etc. – is much easier nowadays than in the past. The same arguments hold for suppliers’ unbundling, implementing a car policy, making decisions lease-vs-buy, etc. So, in the end, these aspects will make fleet management easier and lead to reduced costs of fleet in total.
2) New transport alternatives and service offers:
At the same time, new drivetrains gain importance: Currently, electric is en vogue, but also hydrogen and others have to be considered (besides petrol and diesel, which I do not see dead yet). Further, autonomous driving technology is improving rapidly. Also, other vehicle types like bikes or scooters gain importance. And public transport in many countries gains market share.
Also, new services models become available. Like in many industries, tech-driven companies start to disrupt the fleet industry. Fleet management software as a service (SaaS), car and mobility subscriptions, used based payment schemes and digital marketplaces are just a few trends to mention.
These solutions will make fleet management more complex and challenging. More alternatives have to be considered in decision making: What is the right mix of options for a specific corporate situation? How to calculate costs for those new alternatives? Can you gain cost or strategic advantages by adapting to new models? But also face the risks: Will a promising technology be sustainable? Will governmental regulations suddenly change and overthrow all considerations? Will, a supplier that you selected still be on the market next year?
3) Change of demand:
The demand for mobility in companies is changing as well. Two critical global trends are the increasing congestion in cities and the rising environmental awareness. They conclude that shared mobility is more efficient than individual mobility and that the most efficient way to reduce congestion and emission is to reduce travel in general.
More specific trends are: From a business perspective, the demand for flexibility and speed when delivering services or goods (fleet management to support business processes). The HR-perspective is the changing preferences of employees (less importance of car-ownership, at least for younger employees in “mature” countries; increased demand for flexible HR-benefits in general).
I should also mention the current situation regarding Covid-19 briefly: In the short term, we saw an impact on the demand side due to Covid-19: Company’s required less mobility in general. For the remaining demand, the public favoured individual transport strongly over shared or public transport.
From a general fleet management perspective, this has two implications. First, it means that as long as there is a perceived threat from Covid-19, fleet management has to adapt to the changing demand (less mobility, increased share of individual transport). Second, it adds another dimension of complexity, respectively, a new cost category of TCO in fleet management. It is unsure if and when health risk will increase or decrease; fleet management will require more flexible fleet/mobility solutions to react to this situation, even at the price of higher costs to flexibility.
Now, back to the first question: How do you see fleet management practices changing over the next 5 to 10 years? Fleet management practices will, most of all, be influenced by automation and digitisation. Simultaneously, fleet managers have to match new technologies and new service offers with their internal customers’ changing demands. Covid-19 increases and accelerates things.
Automation and digitisation: Let’s be realistic – 90% of fleet management work is repetitive work and can be automated by IT. Companies that do not adapt to this will suffer competitive disadvantages. Nevertheless, fleet management cannot 100% be automated. First of all, there will always be exceptions in operational tasks that require human attention. And especially in a fleet management setup with high automation, it will make a difference in solving 10% of cases.
Secondly, strategic tasks will remain and even increase in importance: Selecting suppliers, negotiating with them, defining and changing car policies, etc. will stay. Of importance will be decisions related to fleet management’s general setup (e.g., bundling/unbundling of services, in-house/outsourcing), the mix of mobility alternatives (dedicated company car + pool car + new mobility + public transport + X), and the internal stakeholder change management.
What do you think corporate fleet managers can do to stay relevant over this period?
First, optimise the current fleet business:
- Select and implement the right IT solutions, which will automate 90% of day-to-day work.
- Ensure superb human support for the 10% remaining operational tasks.
- Manage suppliers strategically.
And then focus on the future setup of mobility:
- Define the company’s mobility strategy – together with your colleagues from operations, travel, and HR.
- Select the right suppliers for this.
- Implement this by involving all stakeholders appropriately.
What do you think will have the most significant impact on utilisation, efficiency, and cost, and why?
In general: automation and digitisation. But even with the prevailing trends as described above being visible, this still depends on the specific company situation:
For example, it will depend on how the company best identifies its employees’ mobility-needs for a fleet with mainly benefit cars, depending on the employees’ social background, geographical area, age, and personal preferences. Then transform the fleet setup accordingly—taking into account all mobility alternatives (dedicated cars, pool cars, and new mobility alternatives). The company will optimise fleet utilisation, efficiency, and cost by installing the right mix of mobility alternatives.
For a fleet with mainly tool-of-trade cars, it depends on the business needs. Here a first step will be an analysis of the purposes of mobility (mobility required for delivery/service/sales in urban/rural/extreme conditions). Afterward, the team can define a specific strategy per mobility purpose. It may be necessary to install advanced telematics systems to optimise trips and scheduling times in some cases. However, in many cases, merely monitoring the driven kilometres and identifying underutilised cars that can be replaced by pool cars may already help optimise utilisation, efficiency, and costs.
Do you see the role of fleet management companies changing over the next 5 to 10 years, and if so, how?
The trends mentioned above for fleet management are valid independent from whether a company manages its fleet in-house or outsourced. Therefore fleet management companies will need to transform precisely the same way that fleet management changes in general, which means automation and digitisation of most processes while focusing on excellent personal customer interaction of the remaining activities and strategic fleet advice. Plus, they can build a platform that can plug in and out fleet management suppliers and manage them digitally.
The last point makes clear that fleet management companies will still exist in the future. But with the critical success factor being IT integration, the established fleet management companies will need to change while some new IT-driven companies might gain market share. Further, with the described development of fleet management IT solutions, companies will be easier to manage their fleet in-house. In that respect, the differentiation between inhouse and outsourced fleet management will diminish.
What do you think the best approach can be for corporates looking to adopt new fleet management technology?
Having worked with several corporates on that question, the answer is. Start doing it.
Most of the corporates know more or less what solutions are available on the market and what they need in their specific situation. At least, this is the smallest part of fleet management consulting. The real challenge is to make a clear decision, define the strategy clearly, get all stakeholders on board, and implement it. Changing a fleet or mobility setup is a tricky thing; starting fast with a small part of the big plan is better than designing the perfect plan and taking too long.
The successful cases of corporates adapting to new fleet technology that I have seen are a strong commitment to top management, quick decision-making, and a quick start of at least a part of the big plan.
Do you have any advice for companies who want to consider connected car solutions and face challenges with GDPR?
GDPR in fleet management is indeed a challenge for many companies. However, my opinion is that GDPR is overrated or used as an excuse by management to do nothing or use it as a weapon of stakeholders against change.
However, many IT solutions on the market are GDPR compliant or can de-activate certain features that may be incompatible with GDPR.
Therefore, if you like a fleet management solution but are afraid of GDPR, have a neutral look at what features you require and define a GDPR-compliant setup. And secondly, more importantly, work on stakeholders’ involvement in the early stage of your project to convince them that there is no problem with GDPR – and even better, convince the stakeholders that drivers will benefit from the new system.
How do you see connected cars impacting fleet management?
Connected cars will have multiple advantages for fleet management, with some disadvantages like GDPR-issues (see above) and at least initially higher costs.
The main advantage of fleet management is that connected cars are integrated into operational processes much better: Cars can initiate work orders automatically – no driver must report issues anymore. The vehicle is sending the information; this is specifically important for fleets with many pool/shared cars, where drivers care less about the vehicle than dedicated cars.
Further advantages from a fleet management perspective are the ability to analyse better utilisation of cars, lock-/unlock cars, or have more data available where you need an extra telematics device. From an HR perspective, connected vehicles also have some “cool” features that may help drivers accept this technology regarding GDPR, etc.
In the end, however, connectivity should not be overrated. Benefits are mostly relevant for pool/shared cars, which are still just a fraction of most companies’ total car fleet. And benefits resulting directly from connectivity are still small concerning benefits resulting from other IT-based innovations in fleet management.
How do you see EVs impacting fleet management.
EVs are one drivetrain alternative, amongst others. EVs have advantages over other drivetrains in certain use cases of a company fleet, but they are less suited in different use cases. The general goal to replace all combustion engine-vehicles with EV is wrong, in my opinion.
For fleet management, EVs pose two challenges. One is related to EVs’ operational management: Charging infrastructure, range of EVs, maintenance; however, those topics have been solved pretty well, meanwhile by manufacturers, energy suppliers, etc. Companies who use EVs actively prove this.
The second and more important challenge of EVs for fleet management is related to the strategic vehicle selection. EVs need consideration as a substantially new alternative of drivetrains – which adds complexity to the decision-making process: What is the TCO of EVs? What is the impact on CO2? How will governmental decisions regarding taxation/ subsidies be? As said before: there is no general right or wrong – it depends on the use case. But meanwhile, EV-technology is mature enough, and sufficient data is available so that fleet managers can make educated decisions.
What do you see as a critical skill set required for the future fleet manager?
The future fleet manager will need a multi-level-skillsets. However, the required skills will shift to more strategic skills and IT-affinity.
A requirement of basic fleet management knowledge will remain: understanding fleet management practice and ultimately even being able to “get hands dirty.” As before, selecting the right people for excellent human fleet operations, selecting suppliers, and optimising existing processes are essential skills.
Increasing importance will have the fleet manager’s ability to define completely new fleet management processes and implement them. Implementing these new processes means understanding new business and IT opportunities, designing and implementing new solutions quickly and efficiently – and, last but not least, facilitating the change management process internally by aligning all relevant stakeholders in the company.