– By Rob Wilson –
The topic of outsourcing often comes up in fleet management – especially if you operate your own workshop. Fleet managers need to be able to provide quality advice on the best approach and be able to support that advice with robust evidence.
Well outsource or not? The answer is it depends. One way to think through the conundrum is to consider the service triangle of quality, time and cost.
Are you comfortable the service provider (internal or external) can meet the required standards? There needs to be evidence of the necessary skills, equipment and systems to provide the service required and meet operational (technical) and corporate (e.g. WHS, finance and environmental) needs. There may be highly specialised tasks that you can’t source externally or conversely there may be tasks you aren’t equipped for internally.
Don’t overlook the need for contractors that are easy to deal with and provide you with the necessary administrative and technical data required to keep your management systems up to date. It’s a good idea to have a structured approval process for contractors to make sure they tick all the boxes.
Contractors effectively provide additional capacity – if you don’t have the time then contracting tasks may be beneficial. Managing the time aspect of external delivery needs to be addressed up front. What priority and turnaround time will the contractor guarantee for your fleet.
Time can also relate to availability of service. If you operate shifts or don’t run typical business hours will the service provider be available when required. Out-of-hours service arrangements may need to be negotiated.
The cost question is perhaps the simplest – as long as you have the necessary data. When comparing external and internal charges you need to make sure you are comparing apples with apples. The external charge will include all of the contractor’s costs including overheads and profit. Make sure you understand your internal costs including fully absorbed hourly rates that take into account not only your wages costs but all overheads.
In summary the outsourcing decision doesn’t have to be all or nothing – you need to understand whether internal or external service provision has a competitive advantage. This horses for courses approach will provide a basis for robust decision making and ensure the best outcome for the business.