Transport and logistics expert Walter Scremin tackles one of the most important questions facing all small business owners, and one they too often overlook - should you invest in your own fleet or outsource?
All businesses have “headache” areas which can be a huge drain on finances and resources. Transport and logistics is one and can develop into a severe migraine before you know it.
Transport has become a huge issue for SMEs whether they are in the food industry, medical supplies, retail, IT, automotive, pharmaceutical, manufacturing, building materials, hospitality and many others. Many SMEs invest heavily in transportation and their business often relies upon it.
Yet for all of the hassle and expense many SMEs never get around to asking the number one most important logistical question: do I invest in my own fleet or outsource it?
The reason this question gets overlooked is that many SMEs become fleet managers by stealth. They don’t see it coming. Most businesses grow gradually, so maybe they start out with a couple of vans or light trucks and over time keep adding and adding to their vehicle fleet. Before you know it they are running a full-blown fleet and often doing so incredibly inefficiently – because managing a fleet is not the core business.
Consider the cost of running just two or three light trucks with drivers – the cost of vehicle purchase or lease, registration, insurance, wages and we haven’t even filled up the petrol tank yet. Business can easily rack up big dollars before a single delivery has taken place.
Then there are the other headaches around transport management, which are often underestimated and riddled with hidden costs – things like fluctuations in customer demand, managing driver absenteeism and turnover, wasted management time and so on. If that core question was asked at the outset, then all of these headaches could actually be managed by specialists with the resources to cover inevitable problems such as vehicle breakdowns and absenteeism.
Before making any vehicle purchases business should ask if they really have the skills and resources to make it work, or if outsourcing is a better move. For the latter to work there needs to be a combination of cost saving and greater control over core business activities.
Greater control is an underestimated benefit of outsourcing. Business operators must keep this in mind when choosing providers – ask how they are going to respond to your specific problems; ensure there is flexibility for your business at all times; and see if you can take advantage of technology which may not otherwise be available to you such as state-of-the-art vehicle tracking and management systems. Because more control over these troublesome areas means more focus on the actual business – and fewer headaches.
Walter Scremin is General Manager of national transport & logistics company OnTime Group www.ontimegroup.com.au