Web Exclusive! How to Evaluate a Potential Fleet Management Vendor

June 1, 2005
Seven criteria to determine if a fleet management service supplier offers the lowest overall operating cost.

The material handling needs of manufacturers and warehouse distributors have dramatically changed over the past 10 years. Now, ISO certification, just-in-time delivery and even 24/7 drive business. The name of the game today is saving money by moving material at the least total cost. Distribution executives must look at the whole cost situation—hard costs: equipment, maintenance, fuel; and soft costs: space for maintenance, training, purchase orders, payables. What can your fleet management services supplier do to give you the lowest overall operating cost? Leading-edge material handling operations are looking for lift truck suppliers who can keep up.

Today, highly successful fleet management services suppliers have gone beyond just building a service and parts profit center—they help reduce total warehousing cost through partnering and share ideas, successes and pain with their customers. A warehouse is total cost. Distribution provides no “value added” to the product other than getting it there on time. The dealer’s job is to help reduce the total warehousing cost.

If you are buying a lift truck on price, what are you sacrificing—can you really have lowest overall distribution cost and lowest initial lift truck purchase price? Unlikely. The low-price provider won’t have the resources to help you with overall actions required to achieve lowest cost operation and most likely not the insight and software support essential for competent fleet management service support.

Have you taken the time to study and make sure that your dealer is really trying to help or just trying to sell? Here are seven criteria to determine if a fleet management service supplier offers the lowest overall operating cost.

Seven Supplier Performance Evaluation Criteria

Based on my 30-years experience working with machinery dealers and providers of fleet management services, here are seven evaluation criteria that will help you find a high performer that’s good for you.

1. How does the Supplier help customers understand and manage cost in their operation?

  • Are they proactive with meaningful fleet reporting tools? l
  • Do they meet regularly with customers to review cost drivers and offer suggestions to control costs?
  • Do they do the necessary work to understand their customers’ businesses sufficiently to be able to make cost-saving recommendations?
  • Do both the sales rep and product support rep have the experience and ability to provide solutions without making you feel inferior?
  • Do they embrace technology that can improve communications, cut costs and make it easy to do business with?

Verification: Ask for actual reports, not samples. The dealer should be able to provide examples of cost-management situations where significant positive changes occurred. They should be able to provide references for verification of performance.

2. What is their process for consistently delivering customer satisfaction?

  • Do they have an internal/external audit process that works?
  • Do they have a business structure that enables them to give excellent service?
  • Is there a sense of urgency, evidence of responsiveness, returning phone calls, follow-up on promises?
  • Does their OEM partner support and complement their quality processes?
  • Do they measure and maintain a customer satisfaction index?
  • Do they have a respectable customer management system that allows interdepartmental personnel to see the big picture on each customer?

Verification: Ask for results of customer surveys, examine their organizational chart, and use customer references to confirm their level of customer satisfaction performance.

3. What is their strategy with hiring, training, and retaining talented associates?

  • What is their hiring process? l Are they aggressive in looking for talented A-players?
  • What is their training investment in their people? How do they spend it?
  • What is their voluntary turnover trend?
  • Levels of certification?
  • Use of computer diagnostics?

Verification: Meet their managers and staff associates and verify training commitments made by the company. “Interview” the company’s employees to determine how their hiring and training process works.

4. What are their Quality Processes that guarantee performance?

  • What do they measure for product support performance?
  • How do they measure and track equipment uptime?
  • Service response rate?
  • On time, 1st call completion rate?
  • Mean time to field repair?
  • Off-shelf parts availability and fill rate?
  • Rental availability and responsiveness?
  • After-hours support?
  • OEM factory support to the dealer?
  • Installation process?

Verification: Ask for at least five customer references that have been customers for more than five years each and interview them. Ask to see internal fleet management performance reports.

5. Are they a leading-edge supplier?

  • Does the supplier have a strong vision statement that the leadership lives and breathes?
  • Is their equipment reliable?
  • Does their OEM recognize them as a top dealer in their network?
  • Do they participate in industry associations such as MHEDA?
  • Do they invest in technology and people to improve efficiencies and gain financial results?
  • Does the supplier have the finance packages you need?
  • Are they well recognized and respected by their competitors and peers?

Verification: Investigate their reputation, discuss the supplier with allied and competitive companies in their industry, check their OEM website for dealer information. What are the experiences of the leadership in your trade organization?

6. Does the supplier understand your business?

  • What statements did the supplier make during the first contact, which indicated the supplier has researched your business prior to your first meeting?
  • Does the supplier work hard to find equipment to “fit the need.”
  • What questions did the supplier ask which indicated a sincere interest in your business?
  • Did the supplier determine the level of product support essential for your business, e.g., resident technician, consignment parts, capable dealer network for all of your locations?
  • Did the supplier immediately suggest products or services without indicating an understanding of the needs of your business (show up and throw up!)?

Verification: Ask the supplier to provide a list of three current customers with whom the supplier has done business for five or more years, which have businesses similar to yours.

7. Does the dealership and manufacturer have strength and stability?

  • What do D&B Reports, Annual Reports and the Internet indicate?
  • What is their level of investment in parts inventory, service vehicles?
  • What is their market share growth?
  • What questions did the supplier ask which indicated a sincere interest in your business?

Verification: The key here is to assure the dealership, manufacturer, and their relationship will be intact to effectively support your operation in the future. Additionally, the quality and longevity of the local leadership will determine local stability and strength of support. If a supplier comes to see you and asks five or six good, thoughtful questions, you should have at least some clues that the dealer is at least willing (if not able) to keep up with your demands. These should be good, insightful questions about your business. The next key issue, then, is which internal performance characteristics does this potential supplier measure? Then, you should verify and validate and prove to yourself they are qualified.

The key issue is which internal performance characteristics does this potential supplier measure?

Believe it or not, there are still a few dealers out there who do not even measure off-shelf parts fill rate—the most fundamental of product support metrics. Unfortunately, these businesses are rapidly becoming dinosaurs in their market area. And, selecting one of them for your fleet management service support could be very risky indeed.

Use these tools to evaluate and choose a dealer that can respond to your specific needs. You have a right to expect your fleet management services supplier to be sharp and able to keep up with your requirements in a friendly, professional, proficient and responsive manner.

Walter J. McDonald is president of The McDonald Group, Inc., a long-time industry consultant located in Sister Bay, WI. Since 1975 he has conducted more than 2,650 dealer development workshops and seminars for equipment dealers in Europe, the Far East, Indonesia, Australia and North America. As an industry consultant, he specializes in profit improvement programs based on better utilization of resources, expansion of product support and more insightful machinery marketing to higher margin accounts through better deal visibility. You can reach him at 800-217-8509 or [email protected].

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