1. Best Practices Consortium
Supply Chain
Best Practices Consortium
Outsourced Fleet Practices
and Performance
Executive Seminar
Track 3, Session E
September, 2006

2. Scope
This session covers strategies and trends for outsourced fleet practices and performance:
Outsourced Fleet Decision Criteria
Profile of 3PLs Utilized
3PL Performance Trends
Outsourced Fleet Contract Trends

3. Outsourced Fleet Definition
How do you define outsourced fleets?
Dedicated fleet using 3PL assets? Drivers? Systems? Management?
Dedicated fleet with a blend of company owned and 3PL resources?
Third-party management of transportation operations using carriers?
Shipper managed operations with leased assets? Drivers? Contract maintenance?
Use of 3PL technology only?
Use of carriers?

4. Outsourced Fleet Use
What percentage of consortium members employ an outsourced fleet?
% of Respondents with Core Carrier Program
Over the past 3 years, use of outsourced fleets has ranged from 29% to 44%.

5. Outsourced Fleet Decision Criteria
Ratings of criteria importance in fleet outsourcing decision
Less Important
More Important
Firms that have decided to outsource primarily do so to improve service and cost.

6. 3PLs Utilized Profile of 3PLs Utilized
From 2004 to 2006, 32 3PLs have been identified as outsourced fleet service providers.
Of those 3PLs, the Top 4 most frequently noted account for 66% of the responses.
3PLs Top 4
Swift
JB Hunt
Schneider National
Werner Enterprises

7. Outsourced Fleet Satisfaction Ratings
Selected outsourced fleet satisfaction ratings over the past 3 years:
Less Satisfied
More Satisfied
Respondents are most with on-time and driver performance. Cost satisfaction rates lowest.

8. Outsourced Fleet Contractual Relationships
Profile of outsourced fleet service agreements:
Average Duration of Contract
Compensation Variables
Contract durations appear to be getting shorter, and outsourced fleet costs based on a combination of elements and mileage is most common.

9. Your Expectations What would you like to learn from this session?
Important issues?
What’s working? What’s not working?
What’s changing?
Shared good and bad experiences?
Reasonable performance expectations?

10. Potential Discussion Points
What are the top two or three factors in achieving a successful fleet outsourcing strategy?
What is the primary role for your outsourced fleet service provider?
How often do you re-bid outsourced fleet service?
In what ways do you seek to optimize relationships with outsourced fleet service providers?
How do you measure the success of your service provider?

11. Potential Discussion Points (continued)
How responsive are your service providers to addressing performance issues?
How frequently do you meet with service providers and what are the meeting objectives?
How have rising fuel costs impacted your strategies?
What technology benefits have you gained from outsourced fleet relationships?

12. Important Takeaways
Some of the most important outsourced fleet strategy takeaways in Benchmarking & Best Practices include:
Fully investigate all service options – Outsourced fleet arrangements can be tailored to shippers’ specific needs. Most 3PLs are willing to use a blend of their own resources and customers’ resources. 3PLs are typically open to incorporating client assets, technology and personnel into operations.
Define performance expectations – Periodic meetings with outsourced fleet operators can open up opportunities to improve.
Leveraging additional services – 3PL tools, networks and expertise can be leveraged for additional services beyond fleet operations.

13. Important Takeaways (continued)
Joint Planning – Involve 3PL staff in operational and seasonal planning.
Establish performance metrics – Consider tying compensation to performance.
Expectations and Accountability – Establish a periodic meeting schedule to review performance with 3PL staff. Develop action plans and a process to follow up on improvement commitments.
Recognize Success – Establish a process to recognize excellent performance. A balanced approach of accountability and recognition will enhance 3PL relationships.

14. Questions?

15. Benchmarking & Best Practices References
Information on outsourced fleet practices and performance strategies can be found in the following references: