Customer projects on benchmarking, partial outsourcing, restructuring and standardization of the fleet
Swisscom AG is the leading telecommunications and one of the leading IT companies in Switzerland. Swisscom has a fleet of several thousand vehicles, divided into passenger cars and light commercial vehicles.
Vehicle fleet in the project: passenger cars
Result: Digitalization of procurement and change management model from purchase to leasing
The joint project with Swisscom began with a benchmarking for selected frequent driver models. The results have shown at which cost elements of a TCO analysis Swisscom is “best in class” and where there is still room for optimization. “Swisscom has structured and managed its fleet very well. Nevertheless, other management models had potential for savings. In addition, some processes could be simplified and risks externalized,” says Rolf Müller, partner at procorp. Based on the results, Swisscom decided to review the current structuring and management approach through a comprehensive tender.
Priority Car Fleet
“Given the magnitude of the project, it made sense to split it up to allow for a timely implementation of the result,” says procorp CEO Patrick Ineichen.
Thanks to a clear project structure and clearly allocated resources, procorp’s support was very targeted. Thus the requirements for the vehicles and the fleet management services to be externalized could be defined in a short time. Additional information for the providers – importers and leasing companies – on Swisscom’s objectives and the expected scope of service offerings greatly simplified the proposal process.
Software from procorp enables variant tendering
The high flexibility of the procurement software from procorp convinced Swisscom. All requirements could be mapped directly. By means of the software, different management variants of different functional levels could be tendered and compared. Patrick Ineichen is convinced: “As one of the leading IT companies, we were able to win Swisscom as a customer primarily due to the digital approach of our method”. The large number of offers in the price matrices for each vehicle model led to an enormous amount of TCO values. “The software made the number of offers manageable and enabled a fair comparison. We were able to process the data quickly, efficiently and without errors and present it to the decision-making bodies in the required quality and time,” summarizes Rolf Müller.
“From our point of view, the tender for Swisscom was certainly a success. The project was also very informative for us, since new approaches can always be introduced and negotiated with such heterogeneous fleets,” says Rolf Müller.
“We were allowed to accompany Swisscom up to and including the conclusion of the contract. Negotiations of this magnitude are always something special. It was very exciting to see which solution concepts the competition offered”, Patrick Ineichen evaluates the project.
procorp’s many years of experience make it possible to accompany even a large company such as Swisscom in the change of fleet management. Gaining experience from the respective customer projects, aggregating it and passing it on to the customers is an important aspect of procorp’s service and consulting.
In 2018, procorp tendered for a large Swiss retailer’s car fleet, aggregating 10’000 TCO offers.
Vehicle fleet in the project: passenger cars
Result: Change of catering model from purchase to management only
The customer knew procorp’s TCO method from another context in the logistics environment and was interested in tendering its own car fleet using this method. The aim was to inquire about the costs of the passenger cars in the form of total costs on the market, regardless of how the vehicles are ultimately financed. It was clear that maintenance and tires including their management should be purchased on the market at a flat rate. In addition, the management of the fleet (driver and vehicle support) should be increasingly outsourced, but not completely out of the company’s own hands.
As usual in such projects, potential brands and models were first put out to tender. Subsequently, various leasing companies were invited to submit their offers at the vehicle conditions submitted. This resulted in more than 10’000 TCO offers (sum of vehicle models for selected term/mileage combinations), which had to be condensed in order to determine with which suppliers negotiations should be started. “It was only thanks to our web-based software that we were able to condense this amount of offers and make them comparable. The customer was also aware of this when he received the evaluations,” says Patrick Ineichen, CEO procorp.
procorp’s TCO method, which uses specially developed software for the tenders, was able to create the transparency in the cost structure desired by the customer. The project had an open tender and very broad market demand. The management of this project and the automated comparison of offers with rankings was only possible within the desired time frame thanks to the web-based software.
The client was the subsidiary of a German family-owned company that is the world market leader in its core business. With more than 600 employees, the vehicles are primarily used in the field.
Vehicle fleet in the project: passenger cars
Result: Introduction of vehicle catalog and change of leasing provider
The vehicles are primarily used in the field and are part of an incentive system. In this respect, there was a high degree of freedom in the choice of the company vehicle. This situation, as well as the fact that the vehicle fleet represents a large cost pool, was the reason for reviewing the vehicle fleet with regard to costs and possible standardization and bundling effects.
In the fall of 2014, it was determined together with those responsible for the project which downsizing objectives should be pursued and which requirements should be minimally fulfilled within the scope of the tender. When selecting vehicles, the suppliers were able to submit “best-in-class” offers based on ecological, technological and logistical specifications. It was important to optimize the previously open structure of the vehicle fleet by means of standardization efforts while maintaining at least the same level of service quality. However, the total costs played the decisive role in the evaluation.
Individual mapping of customer requirements in the evaluation tool
In order to get a feeling for possible solutions, the first phase of the project involved drawing up a requirements specification and the associated evaluation tool to meet the customer’s needs and thus obtain TCO quotations on a uniform basis.
It has been confirmed that optimization possibilities can be realized by means of a structured and holistic method as applied by procorp.
Right in the middle of the discussion about the possibilities for optimization, the National Bank decided to stop supporting the Swiss franc exchange rate. The consequences for the various market participants in the automotive industry were not inconsiderable. It was therefore decided to repeat the 1st round of the tender. “It was hard to believe, but the offers became even more attractive. It is difficult to say whether this was really only due to the adjustment of the exchange rate or whether the competition was already playing up here”, says Rolf Müller from procorp.
After evaluating the offers from the market sounding, a vehicle catalog based on various functional levels was created together with the customer.
The vehicle fleet has been standardized considerably and fuel consumption and thus CO2 emissions have been reduced. The structured and holistic approach and the use of economies of scale led to corresponding financial results for the customer. Downsizing played a decisive role here. Instead of a free choice of brands, the portfolio was now limited to a handful of brands. In addition to the requirement for motorization, the equipment was standardized as far as possible. “The customer benefited from a detailed cost-performance transparency thanks to our method and the results achieved for the customer were by far exceeded in all respects”, summarizes Patrick Ineichen of procorp.
2017 / 2018 procorp has tendered the fleet of an internationally leading service provider in the railroad sector in the DACH/NL region. The tender included passenger cars and light commercial vehicles.
Vehicle fleet in the project: passenger cars and commercial vehicles
Result: Standardization of brands / models and leasing providers across four countries
Up to the time of the tender, the various companies of the holding company had tendered their vehicle requirements independently. As a result, the fleet comprised various makes and models in the individual countries. All possible management variants were also in use, from purchasing with own fleet management to full-service leasing. The owners of the group came to the conclusion that a bundling and standardization of the fleet (within the framework of mobility and country-specific needs) was desirable from a process and economic point of view.
Definition of the needs and implementation of the tender
Together with the customer, the actual costs per country were collected. At the same time, the mobility needs of each country were determined: which functional levels are required by which vehicles, with which equipment features, which interiors, and which installations, attachments and superstructures are needed? Based on a specification sheet, the possible makes and models per country were first surveyed. The suppliers filled in their data into the procorp software.
Subsequently, various leasing companies (international as well as national per country) were asked to record their offers in the software. The results led to astonishment among customers, as such a significant improvement was not expected.
“It has been clearly shown that our software can be used in various countries in Europe. Of course, certain specifics have to be taken into account for each country (e.g. standard consumption tax, so-called NoVA, in Austria or the radio and television licence fee, so-called GEZ, in Germany). Thanks to
the modular structure of our software, such specifics can be integrated without any problems, so that ultimately a TCO offer results,” says Rolf Müller, partner at procorp.
The customer has decided to conclude a full-service leasing contract with one provider for all countries. “We accompanied the customer up to and including the preparation and negotiation of the contract to ensure that what was tendered and offered was represented in each country,” says Patrick Ineichen, CEO procorp.
Rolf Müller concludes: “The project was not easy due to the various challenges, i.e. country-specific conditions and requirements. It turned out that implementation is only possible if the project and its implementation is supported by the management”.