Outsourcing repairs, when does it make sense?

I see a lot of fleet organizations failing by trying to do everything by becoming an expert in everything. This is an impossible task in today’s world of specialization! Rather organizations should determine what they do best and stick to those core tasks.

Ask yourself, would you hire an expert electrician to sit in a cubicle waiting for an electrical breakdown to occur? The answer to this question is no. You would not waste money and time training this person, providing them with a cubicle, salary, phone, and other office accouterments in the event an electrical problem happens. You would simply outsource these repairs to a qualified and certified company that specializes in performing these services. The same applies to an outsource company who specializes in managing fleet and automotive repairs.
When do I outsource?
I have always been amazed how many non fleet experts feel they can continue to handle their vehicle repairs in-house without training or abilities to make complex decisions about vehicle repairs. The rationale for their insistence is usually very noble and stems from their insistence that the outsource company either charges too much or they will rip us off.

My question has always been this. How do you know when you don't keep up to date with the latest mechanical knowledge and expertise? Most administrators that I speak to about whether they should outsource their fleet repairs or not feel that can make these complex decisions when called upon to do so, even though they generally have no recent formal training. I have been in the fleet management business for over 30 years with experience at every level of the business starting as a journey mechanic and now an administrator. This being said, I have not had any formal mechanical trainings for many years and with all my combined experience in the automotive industry, I'm no longer certified or qualified to make any complex fleet management decisions about the repair of a vehicle. Yet, I would place my knowledge and experience up against most of the folks I see avoiding the use of outsourced repair vendors.

Why do people resist using outsourced vendors?
I think the answer to this questions stems primarily from self preservation. Most administrators faced with this question are usually the person who is involved in making the call about who repairs the vehicle. Which means, their primal instinct of whether I will still have a job or not many times plays into the decision. In addition another motivation that affects someone from outsourcing repairs is the way the organization budgets its repair dollars. For example, if the organization does not consider the total costs of the vehicle operation which a life cycle perspective in mind, it may be tempted to make myopic or shortsighted decisions when it comes to vehicle repairs. Time and time again I have watched organizations say their budget cannot afford to pay the costs for an outsourced vendor to manage their vehicles. These statements usually are unfounded when you look at the complete picture.

Ask yourself these questions:
Do I have the expertise to pit myself up against a vendor asking me complex mechanical questions and can I make the right call when asked what repair needs to be done? Most often unless you are certified technician you cannot answer this questions with any degree of certainly, which means you probably are not doing your organization any service by authorizing and approving repairs.

Do I know if the vendor is up selling or trying to rip us off?
If the answer is no, then you probably don't have any business making any repair decision on behalf of your company. Automotive vendors have made a killing over the years by over recommending unneeded repairs to consumers. Each of us has had experience with this very scenario.

Ask yourself. When I took my car into the quick lube to get my oil changed and they asked me whether I should approve them to replace the wiper blades or air filter, did I know the answer to the question or did I just tell them to do it, or not? Either answer may not have been the most cost-effective decision if you did not know the right answer. The right answer must take into consideration a historical perspective about when these components were last replaced. If you don’t know then you are gambling your company’s precious budget dollars on the vendor’s word. This is not looking out for the best interests of you company!

Not to embarrass anyone, but this is one of the simplest questions you will be asked when it comes to an auto repair.

This is why I believe these complex auto decisions need to be left up to the experts who act on your best interest as an advocate to make these decisions. This is exactly what an outsource company does! Outsource companies specialize in the science and up to date vehicle repair knowledge and ensure their technicians receive the latest training and automotive certifications. These companies are qualified to make these complex decisions and will same your organization repairs dollars.

What are the advantages of outsourcing your fleet?
First and foremost you receive the services of an industry expert working for your organization on retainer looking out for your best interests to ensure repair shops don’t take advantage of your lack of expertise. Secondly, you will receive the added benefit and peace of mind that your best interests are served by competent technicians make complex repairs decisions on your behalf.

Other benefits realized may be as follows:
1. Reduced administrative costs processing a multitude of repair invoices for vehicles. Each vehicle generally has at least 4 repair invoices a year if it is new and many more if it is aged. The cost to process a single invoice ranges from $50 to $150 dollars each from the time it is received until a check is cut and mailed to the vendor. This is synonymous to the Procurement Card (PCard) rationale that many companies turn to in order to process multiple transactions effectively. Think of your outsource vendor as a PCard processor and you have little grief justifying the costs of their services.
2. Expert trained technicians making complex decisions on your behalf using each vehicle’s repair history to ensure a vendor is not trying to make an unnecessary repair.
3. An advocate that ensures prices are negotiated at the lowest industry rates to make sure your company is not paying too much for repairs.
4. Someone who ensures if you are tax exempt (i.e. non profit or government) that you do not spend money trying to recover these costs at later date with your resources.
5. An advocate that ensures vehicle warranties are recouped and claimed during the repair process. A lot of money may be available by watching warranties on vehicles, parts and even post warranty opportunities when the general warranty is no longer in force. These third party outsource companies specialize in negotiating with vendors to ensure your company’s interests are looked after. They have a great deal of clout working with manufactures to get good will adjustments on your behalf. Ask yourself, when was the last time you had a car manufacture offer you a good will adjustment?
6. Firms that track your repair history and offers an array of online tools for your organization to better manage your fleet.
7. Reduce parts inventories, eliminate garage facilities, fleet information systems, and all costs associated with these systems.
8. Expensive tools and electronic trouble shooting devices needed to operate a shop in today's complex fleet world.
9. Training needed to keep up with government programs like EPA, OSHA, Workman's Comp etc.
10. Labor relation issues with employees in a world where technicians are becoming in short supply.
The list goes on…

What are you waiting for? It's time you outsource your repairs to those qualified to save your organization the precious budget dollars it deserves?

Finally don’t wait until you fail to accomplish everything to consider outsourcing repairs that should have happened a long time before now. If you wait until it’s too late you may find yourself completely out of a job when your entire fleet is outsourced by management because they finally get tired of the costs and lack of customer focus to core mission tasks, which brings you right back to the primary reason most fleet managers fail to embrace outsourcing in the first place, job preservation.

Tip: I found out a long time ago that when an outsource company is your partner its hard for them to be your adversary trying to get all the repair business.

Do what you do best and leave the rest to others to do what they do best. This is a winning combination.

Start using outsourcing as a tool and don’t be afraid of the control issues. Just develop tools to evaluate the outsourcing company effectively to ensure they do what you contract them to and this relationship can be a symbiotic partnership that makes everyone a hero!