In the fleet world, when you hear the word allocation, what do you think of? To me, it is almost solely used to refer to obtaining vehicles from a manufacturer. The Oxford-English Dictionary defines allocation as, "An amount of a resource assigned to a particular recipient."
Unfortunately, in fleet, resources (aka vehicles) aren't assigned to a "particular recipient" like the dictionary definition suggests. That's the problem that I want to explore and explain here. Unless you place your vehicle orders early enough, there are no guarantees.
How does manufacturer allocation work?
In the manufacturing world, there are many resources being allocated and used by many different companies who shape and create their own allocated resources into products (such as vehicles). These products are used to produce another manufactured good, thus the new product itself becomes a limited resource.
For example, several vehicle manufacturers are likely to use the same company to source their tires, radio systems, all kinds of internal components, latches and even the metal itself. The list goes on.
After a long string of these product resources are allocated, a vehicle is produced. This produced vehicle then becomes a resource needed by both companies with fleet vehicles and retail dealerships.
Now, let's translate that into an example that everyone can relate to: cell phones. The story goes: You're so excited that the next iteration of your cell phone is scheduled to go on sale. So, you arrive at the store to get in line well before the sale starts. You are not the earliest in line, but there are many more people behind you, too. You count the number of people in line and are sure you will be able to purchase it. You get to the front and are informed they are sold out.
This scenario is all too common in the consumer world. It's common in the manufacturing one as well, just a lot less visible to the average person. Once allocation is gone, it's gone. You may get put on a wait list, or be offered an alternative product, but it's still a frustrating situation that you have little control over.
The challenge: resources are finite
The challenge for us, as a fleet management company (FMC), is setting our clients up for success and setting the right expectations when it comes to vehicle ordering. To do this, we strive to understand your fleet's vehicle needs and work with you to obtain the allocation of specific vehicles.
However, there are obstacles to getting the allocation of these vehicles:
- Competition is taking up resources, including: Strong retail demand for a specific vehicle; Upfitters; another fleet is ordering those vehicles; cut-off dates are changing and sometimes with little notice
- Delays impact resources, such as:
o Reduced availability of railcars and carrier shortages
o Weather – hurricanes, tornadoes, heavy rain, snow, etc.
o Supply change of upstream resources
All along the way, there is competition for these resources. Each of the manufacturers have planned for the allocation of resources to buy and sell as a new resource. And just as all the companies have forecast their allocation needs for resources to produce a vehicle, you should be estimating your own vehicle needs.
The key: order early
It is human nature to procrastinate. But until a need for action is visualized or becomes urgent, we tend to push it aside as unimportant. Compound this with a reservation to spend money. Whether it stems from fear of missing a better deal, the constant improvements in technology or changes in the economy, it seems to be harder and harder for companies to create and stick to a plan for cycling out their fleet vehicles.
The fact is, deals will come and go, technology will continue to improve rapidly, and the economy will change over time regardless of how much time you wait. Often, the time spent waiting on one of these factors before ordering a new vehicle ends up costing you more money in other areas such as repairs, productivity, morale, accidents, etc. Thus, your fleet is set up for failure.
The solution: work with your FMC
To set yourself up for success, work with your FMC to secure the allocation of specific vehicles with the manufacturer to make certain your vehicle needs are met well before it becomes urgent. And start the process way before the order cut-off dates.
The bottom line: just because you place the order does not mean you are actually going to get that vehicle. When the resources run out, they run out. And you're left without a vehicle – or an entire fleet of vehicles.
About the Author
Heath Singer serves as a vehicle application & specification consultant at LeasePlan USA. He has worked in the automotive industry for 20 years and has been at LeasePlan for eight. He provides consultation for our clients and client-facing teams to make the best combinations of vehicles & equipment available to meet the clients' needs. He also works directly with manufacturers, operational business partners, vendors and IT to ensure accuracy of vehicle information.