Uncertainty is what characterises business life in the New Normal, but cost-cutting is bound to be the main priority of fleets. What is also certain, is that the lockdown has changed the way people work and communicate, but opinions diverge as to the long-lasting effects.
In such uncharted territories, scenario planning can be a useful business tool. It models and assesses every possible outcome over a long period of time. It’s not a crystal ball, but it creates a series of alternative ‘what if’ scenarios, often extreme, against which the impact of future plans can be measured. Its aim is to spot weaknesses and prepare the ground for policies that are more resilient.
To help fleet decision makers stress-test future strategies, you could assess them against the following three what-if scenarios.
SCENARIO 1 – The Green Scenario
Companies emerge from coronavirus lockdown with a renewed commitment to environmental goals and find that access to financial support from the EU, national and local governments is closely linked to reducing carbon emissions.
- Businesses start to ask how many professional business miles they really need.
- Businesses downsize their fleet sizes, operating fewer vehicles and restricting them to essential journeys.
- A massive Europe-wide expansion in renewable energy makes electricity a cheaper power source than petrol or diesel.
- Employees have become used to cycling and walking to work during the lockdown, prompting authorities to prioritise road space for active travel.
- More employees work from home, reducing the need for company cars.
- Mobility as a Service becomes a key feature of employment contracts.
SCENARIO 2 – The Digital Scenario
Online society, online economy – the coronavirus lockdown prompts a fundamental shift in the way businesses and private individuals buy products and organise their corporate and personal life. Digital communication is all around. Shopping shifts online and delivery becomes central to the retail experience.
- COVID-19 has forced fleet managers into a more pragmatic and decentralised fleet management with digital tools helping them to execute their role.
- Retail space and location become less important than warehouse space and location.
- Businesses need freight consolidation centres to gather packages prior to last mile delivery.
- Logistics and delivery firms start to share warehouse and hub facilities.
- On-demand mobility will grow as the need for professional miles will become more punctual rather than constant.
- Punctual delivery times become a vital USP – customers expect to track deliveries minute-by-minute in real time.
SCENARIO 3 – The Cost Scenario
Cost cutting chaos – the economic impact of the coronavirus pandemic forces companies to adopt drastic cost-cutting measures.
- Fleet renewal is suspended. Vehicle holding periods extend, contract mileages rise, service and maintenance challenges increase.
- Perk company cars disappear from employment contracts.
- Price becomes the most important factor in sourcing new vehicles, leading to a possible resurgence of diesel sales as oil prices remain low.
- Fleets look to leverage their buying power through a single supplier – only a small number of OEMs have ranges capable of satisfying all fleet operational needs.
- Long-term, fixed cost supply agreements become essential as fleets operate under strict budget controls during the corporate recovery.
- After the recovery fleet managers will question if non-flexible, long-term solutions are the right choice.
Source: Fleet Europe – fleeteurope.com