4 Ways to Reduce Procurement Costs

As public fleet operations face tighter budgets for the next fiscal-year, fleet managers must adjust their spending. Those anticipating reduced capital budgets are likely trying to determine how to reduce vehicle procurement costs. 

In 2019, Hillsborough County, Fla., was facing outsourcing threats and had to justify its fleet operation. Fleet management worked with user departments to reduce costs, including procurement costs. Robert Stine Jr., CAFM, CPFP, director of the Fleet Management Department, outlines some steps the fleet team took.

1. Conduct a thorough specifications audit

Always start with a base model and build up, with every line item justified in the spec.

“We define the requirement we’re trying to fulfill, and then we build it from there. So for example, if I have a requirement for an on-the-road pickup truck, and the customer wants a four-by-four with a towing hitch, but we know the mission does not require any off-road type of driving or any towing, then we just won’t support it,” Stine said. “They would have to come back and justify it.”

The fleet department did this with its fire apparatus, and while it was a lengthy and time-consuming process, it established a baseline that was used for subsequent purchases. The result was a reduction of pumper and 95-foot aerial truck purchase price by $150,000 each, or the cost avoidance of more than $1 million annually.

2. Reuse bodies on rescue ambulances

This service life extension program (SLEP) works because an ambulance chassis gets high utilization and can be replaced while reusing the ambulance body. The fleet team may do upholstery repairs and minor changes to the inside of the box. This concept saved the county $150,000 for each SLEP, and it will use the concept on a second round of the SLEPs, meaning the same boxes will be used on a third set of chassis.

Make sure to purchase high-end ambulance boxes that have a lifetime warranty, even if this bumps up the initial purchase price, Stine recommended. 

3. Buy smart

Consider total cost of ownership, always negotiate contract terms when purchasing vehicles, and consider standardizing vehicles when possible. While this might not initially reduce purchasing costs, it can simplify maintenance, repair, and parts management and reduce lifecycle costs.

4. Have good data

Have data about vehicle condition and costs so you make smart business decisions. For example, if a customer wants a new vehicle after five years, but that vehicle only has 50,000 miles on it, data can help convince the customer the vehicle may not have reached the end of its useful life, Stine explained. 

In Conclusion...

One of the biggest benefits going into a future recession is a replacement program, which Hillsborough County has had for a couple of decades for all its non-enterprise-funded departments.

“I already have money set aside for the next two years of requirements,” Stine said.

He added that a consistent review with department heads of their vehicle needs and changes, as well as costs, allows department heads to be their own internal fleet managers.