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The Car and Truck Fleet and Leasing Management Magazine

Telematics ROI Beyond Fuel Savings

September 2014, by Joanne Tucker - Also by this author


Photos: istockphoto.com/everythingpossible
Photos: istockphoto.com/everythingpossible

Saving fuel is the obvious way to justify the costs of using telematics in fleet. While fuel is a huge expense for many fleet operators and reducing fuel consumption is never a goal to shy away from, there are benefits in telematics beyond fuel. And as telematics matures, fleets and providers are finding more and more ways to take the data and turn it into actionable business intelligence.

Ranking fuel efficiency as the top goal in using telematics is definitely smart — fleets proactively monitoring idling and using telematics to improve routing cite immediate fuel reductions. Whether you’re a large corporation or a small business, the savings can be significant.

But compared to hard numbers like fuel data it’s easy to ignore all the other benefits since realizing the return on investment may take more time to observe or the topic difficult to address. Or, some benefits are the unexpected byproduct from another initiative. But knowing this information and how it happened is what helps fleets keep up with their telematics, maximize their ROI, and maintain management buy-in by consistently proving a solid cost-to-benefit ratio.

Telematics is simply a business tool that allows you to track, analyze and make consistent improvements on your mobile operations. All of that comes down to the final punch line: Keeping your company competitive and profitable.

Good Maintenance for a Good Return

Fleets can improve maintenance scheduling and servicing with diagnostic data, in which alerts can be sent directly to the fleet manager or technician. In some scenarios fleets can share the alerts with their outside service provider. These measures result in better warranty recovery on newer vehicles, less vehicle downtime, reduced total cost of ownership and a higher resale value since the vehicle is well-maintained and there are no unexpected or major vehicle breakdowns.

Preventing vehicle breakdowns through vehicle diagnostics has several other benefits as well. Fleets will see lower roadside assistance and towing costs and won’t have service disruptions — or angry customers because of it.

Omaha, Neb.-based HVAC and plumbing repair company ServiceOne piloted a telematics solution on five of its service vans, allowing them to identify exactly what kind of savings the company could expect. During the pilot program, ServiceOne saw notable improvements in fuel usage, idle times and repair costs. For example, a single engine diagnostic trouble code alert helped shave nearly $800 off one van’s repair bill.

“By remotely identifying the engine problem, we were able to confirm that the van could be serviced at a local shop rather than the dealership, cutting the cost nearly in half,” said Gary McCollum, operations manager for ServiceOne.

A Utilization Balancing Act

With an eye on what and how vehicles are utilized, fleets get a better picture of whether or not they’re “overfleeting” or if some vehicles are being overworked. Fleets can also use the data to better cycle high-mileage vehicles to less demanding routes before cycling out the vehicle entirely. Utilization data from telematics typically includes items like miles traveled, engine hours, number of trips and days utilized.

Increasing vehicle utilization allows a company to rightsize the fleet, which can have a direct impact on operating costs.

By having data on mileage, maintenance and other dynamics, fleets may also find that they have the wrong vehicle on a job. Maybe they have a pickup pulling the weight of a heavy-duty truck, resulting in out-of-control costs on tires and major repairs.

A Safe Fleet Costs Less

Many providers are working directly with major insurance providers to offer commercial auto insurance incentives for fleets. While not all insurance providers are currently doing this, many of them — including smaller insurance carriers — are entering pilot programs with interested fleets to figure out how it all works. It’s a newer endeavor from the insurance companies and varies depending on the carrier, but growth is expected to continue.

Some carriers give small breaks to fleets just for having telematics installed, while others also give premium reductions when a fleet can show safety improvements through telematics.

But taking a step back, a fleet would only be able to show that drivers are speeding less, for example, if they’ve been tracking that data and actively working with drivers to curb their speeding habits. Fleets that monitor and coach drivers on harsh cornering, braking and acceleration, will find safety improvements and even vehicle wear-and-tear improvements. But progress is only possible if fleets take action on the data.

Fleets can even show that they weren’t at fault in an accident if they choose a telematics service that provides accident alerts, which give details that help fleets reconstruct the event and address preventable claims faster.

Recovering a vehicle or even preventing vehicle theft is another more obvious risk that telematics mitigates. Any business that recovered a vehicle from theft could likely report an immediate payback on telematics.

Keeping Timecards Honest

Companies that rely on employee-submitted timecards are able to compare tracking data to claimed time. A few 20-minute nudges here and there can add up across your employees.

With a fleet size of about 30, CRCS DKI, a restoration services and disaster clean up company based in Oshawa, Canada, immediately started comparing claimed start and stop times to tracking data. When first using telematics, the company was catching nearly 40 misreported hours per month across its drivers. “That’s a lot,” said Kyle Douglas, manager of corporate services. “If you’re in the service industry, you have to monitor that and make sure that doesn’t happen. When you don’t have a lot of personal interaction because they’re going right to the jobsite and going home from there, then you need to be able to see what they’re doing. And it’s not that we have bad employees, our employees are outstanding, but a half hour here then turns into another half hour there and another.”

A Time Saver

Numerous benefits of telematics shave time off daily tasks:

  • Dispatchers spend less time figuring out which driver is the best to send to a last-minute job. Besides, drivers aren’t always the most accurate if it means they’re cutting it close to missing a job.
  • Back-office personnel spend less time entering info from the field and can quickly bill the hours.
  • Drivers spend less time on the road and more time on the job, which could mean getting in more service trips per day.

Taken together telematics reduces a fleet’s overhead, allowing them to take on more jobs.

Dan Eggleton, owner of Temecula, Calif.-based Eggleton Trucking, a bulk hauler with eight trucks, is able to better monitor when trucks are leaving the yard and when they arrive to pick up a load. “We have a four-hour span of time when the trucks are all leaving the yard. If you have to sit there for four hours in the morning just to watch the trucks, then half the day is shot.” Remote visibility alleviates Eggleton or his son from having to supervise. A few remote checks and they’re able to get other tasks done.

Through improved routing, Eggleton cites that the biggest benefit he has seen for his fleet is an increase in productivity. “We’re getting more loads in per week because I know where everyone is at,” he said, adding that going from three to four loads per week yields an incremental $1,600 in revenue — a 27 to 1 return on investment for his telematics system.

Some fleets even set up reports on a driver’s time with the customer versus driving time. This helps get a better idea of the client-vendor relationship and possible improvements that could be made.
To save on headaches, fleets can also use the data when customers claim that time spent was less than their bill. Management can provide the tracking information to the customer showing how long workers were at the site.

And Then There’s Fuel

Fleets have a wide range of fuel cost reductions, but typically fleets see reductions well beyond 20 percent. This also has to do with major reductions in idle time — again with fleets typically citing signification reductions depending on the fleet type. A delivery fleet for example, could see idle reductions of 50 percent or more.

Other fuel savings comes from improved routing, which results in a drop in daily mileage. A drop in daily mileage can extend the overall life of the vehicle by reducing wear and tear as well as improve lifecycle costs.

CRCS DKI, after having telematics for three years, increased its fleets average miles per gallon from 11.2 to 13.4. And in idling, Douglas said that you never know when it’s just one driver who could be increasing your fuel costs. CRCS DKI found that one employee was costing the company $144 in fuel costs per month just in idling, making it easier to effectively address the habit with the driver.

Less fuel burned also means fewer emissions. Whether sustainability goals are set or companies are looking to use it within marketing, the information can be promoted to stakeholders and the public. Government fleets in some cases are even required to do so.

Competitiveness & Customer Satisfaction

With companies like Google Shopping Express, Amazon and Uber disrupting traditional industries with on-demand services through the use of technology, the rest of the world is being expected to do the same. This means companies have more pressure than ever to keep customers satisfied and provide flexible services.

More on-time deliveries and services are good examples. A beverage distributor can more tightly predict customer time windows for when the driver will arrive. Or, if a driver is behind or ahead of schedule, office personnel can contact the customer and give them an updated time of arrival. Some telematics providers even offer the feature of automatically notifying the customer through a text or email when a delivery is on its way. These features result in reduced service costs per customer because you’re spending less time routing and scheduling with the added benefit of ensuring customer satisfaction.

It could also mean the difference between a one-time versus a long-time customer.

Before Eggleton Trucking installed telematics, unexpected delays created major problems. “We’d plan to get the last load at 2 p.m. at a place that only loads until 3:30,” Eggleton said. “All of a sudden, my driver tells me he’s not going to make it in time to get the load. If I had known that in advance, I could have re-routed another truck.” Instead, it was missed revenue opportunity.

But now, “The drivers are done sooner, the trucks get in earlier, and it’s been a good deal for everyone,” Eggleton said. “I thought I had a good handle on things before, but now I don’t know how I would do without this.”

As a telematics program develops, companies that collaborate among other departments, such as HR, accounting, and risk and safety management, will ultimately find more opportunities to maximize the ROI. While a telematics provider should work with customers beyond implementation to further the benefits, it’s also on the fleet to take up interest and make the commitment. 

Keep Your CSA Score Customer Friendly

For heavy-duty fleets governed under the Federal Motor Carrier Safety Administration (FMCSA), telematics can help them take charge of bettering their Compliance, Safety, Accountability (CSA) score. Increasingly, a fleet’s CSA score is available online — and viewable by anyone. This could seriously hurt a company’s ability to attract new customers, new drivers and could result in a Department of Transportation audit — not to mention a less than favorable insurance cost. Telematics can help:

  • Gain accurate visibility for vehicle inspections and Hours of Service (HOS) driver log records
  • Keeping accurate data on your drivers could mean proving compliance and preventing fines for violating HOS regulations
  • According to an FMCSA study, trucks equipped with electronic logging devices — essentially a telematics device made for heavy-duty truck applications that includes HOS tracking — showed an 11.7 percent reduced crash rate and a 5.1 percent lower preventable crash rate
  • Electronic logging devices will eventually be a requirement, so it wouldn’t hurt fleets to get ahead of the game anyway

Using Telematics to Manage Equipment

Telematics isn’t just for passenger vehicles. If your business relies on assets like trailers, sheds, generators and the like, a telematics solution can offer valuable information for equipment tracking and more. However, implementing a telematics program for equipment works a little differently.

For starters, you’ll be monitoring different metrics. Instead of seatbelt usage and hard braking, you’re likely to be more interested in engine data like run time meters, fuel burn and trouble codes. Utilization and equipment health monitoring drive the ROI in equipment tracking.

You may also have a heightened interest in geofencing to ensure costly equipment doesn’t leave designated areas. This can be key to preventing theft and recovering stolen equipment.

If you have or are seeking a telematics solution for passenger vehicles as well as equipment, you’ll want to look for a provider that can track both vehicles and equipment on a single dashboard. Doing so will save supervisors and managers time, since there’s a single website login, making dispatch and workforce management simpler.

Telematics Misconceptions

The misconception: All telematics technologies are alike. 

The reality: There are vast differences between providers. Do a little research and you’ll see you have many choices when it comes to hardware, software, available features, dashboards, alerts, reports and more.

The misconception: All telematics solutions are scalable, adapting to your growing business over time.

The reality: Not every solution is scalable. Some providers have very limited functionality that some fleets will eventually grow out of. This is an important question to ask when comparing providers.

The misconception: The cheapest solution is the best solution.

The reality: Finding a solution that fits your unique goals and business needs will yield greater ROI. The better products can be more expensive for good reason: you’re getting software reliability, functionality, excellent customer service, and a long term business partner — not just basic hardware and software. In other words, price shouldn’t drive your decision.

The misconception: A telematics program is too expensive.

The reality: It’s true that the initial investment can be significant, but telematics can help a fleet save far more than its initial cost. If you plan to spend $30,000 to purchase it, you need to know how you’ll save more than that. Have providers show you how they can save you $60,000, for example. It’s only costly if you don’t find the ROI.

The misconception: Using telematics will anger drivers and kill their morale.

The reality: Some drivers may complain that “big brother” is watching, but this is typically the minority. The majority of drivers want to do a good job, so the right telematics tool actually helps them achieve that goal.

This article originally appeared in the 2014 Connected Fleet Guide supplement. View the full digital edition here.

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Comments

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  1. 1. Michael Powers [ November 05, 2014 @ 03:37PM ]

    "If the ROI is that good, why don't the vendors guarantee the bloody savings" http://www.azuga.com/blog/if-you-think-the-promises-of-great-roi-from-traditional-gps-fleet-tracking-is-too-good-to-be-true-you-re-right

  2. 2. AJ [ April 01, 2016 @ 05:58AM ]

    can someone call me thanks 07773303059

 

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