Profit Is Hiding In Dark Places
Most fleets are operating on thin margins and that is not likely to change anytime soon.
Yet many of them are missing an opportunity to add to their bottom line because they don’t have complete control over their procurement process. If managed efficiently, the procurement process — what is purchased, how it is purchased, who makes the purchasing decisions — impacts profitability.
Purchasing sounds pretty straightforward, but in reality, for many fleets it is surrounded by a great deal of confusion.
In a recent survey conducted by AmeriQuest Business Services, 2,000 respondents who were responsible for managing or influencing their company’s procurement process shed light on why this process so often falls short of its potential:
20.4 percent of the companies had no procurement process in place;
13.3 percent had no idea if their company did, or did not have, a procurement process in place;
Less than a quarter of the survey respondents indicated that procurement was viewed as a strategic business partner;
Another 25 percent noted that procurement is simply seen as a function of accounts receivables/account payables;
Fifteen percent of the survey respondents didn’t know which department managed their company’s procurement, even though they were directly involved in the process.
Dr. Reggie Peterson, Director of Indirect Programs at AmeriQuest Business Services, has dubbed this phenomena “dark purchasing.” Basically, that refers to a fleet’s inability to track where its expenditures are going. According to the survey, employees often do not know the best way to make a purchase especially when it comes to items that are categorized as indirect spend — categories of goods and services that are necessary to support a fleet’s operation. In other words, everyday items like MRO supplies, office supplies, cleaning products, etc.
Yet it is often the little things that when added together end up costing more than imagined or anticipated. As Peterson says, …Read the rest of this story
