Detroit’s Standardized Purchasing Strategy Cuts Costs

For the City of Detroit, fleet savings were achieved by revamping its procurement strategy altogether. Recently, the city shifted from decentralized purchasing by individual agencies to a centralized strategy that includes standardized vehicle types, bulk purchasing agreements, and reduced vehicle lifecycles.

Prior to these changes, the 1,400-unit light-duty fleet alone had 95 makes/models for which the General Services Department had to keep parts and repair capacity ready. “That meant retail pricing, and a variety of specifications not always fully rationalized to our requirements,” said Janet Anderson, deputy director of the General Services Department and chair of the city’s Vehicle Steering Committee.

So the city decided to simplify. The new fleet purchasing strategy standardizes vehicle types and usage plans. It also ­reduces light-duty lifecycles from 13.5 years to five years, which translates to purchasing about 250 new vehicles per year. By purchasing larger quantities of vehicles per order, the city is able to leverage its purchasing power to establish master supplier agreements and receive better pricing.

“We had some success getting pricing discounts in our light-duty fleet because of our volumes and long-term deals,” explained Boysie Jackson, chief procurement officer. “We expect to realize further reductions in the future as light-duty manufacturers understand our commitment to the new strategy.”

By the time the entire 2,500-unit fleet is replaced under these long-term agreements, the city anticipates spending $20 million less than if there were no standardized vehicle types or usage plans in place.

Editor's Note: This story is part one of a four-part series on the true cost of procurement. Click here to read part two, about New York City's initiative to buy safer vehicles.

Related: How Detroit's Fleet Survived City Bankruptcy