Telematics ROI – Beyond Fuel Savings

 In Archive
« Back to blogs

How Can Fleet Tracking and Telematics Save Me Money?  Let’s Review…

Saving fuel is the obvious way to justify the costs of using telematics in fleet. And, while fuel is a huge expense for many fleet operators and reducing fuel consumption is a great goal, there are additional benefits and savings to be had.

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 that may be more difficult to quantify, may impact several budget line items in a smaller way, or are simply qualitative measures.  But knowing this information and how it happened is what helps fleets 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 lean, competitive and profitable.

Good Maintenance for a Good Return

Fleets can improve maintenance scheduling and servicing with accurate and automated usage and also diagnostic data.  The simple act of automatically capturing odometer values to automate service scheduling can ensure that nothing slips through the cracks and is under-maintained.  It also alleviates asking employees to keep up with their own maintenance, which is imperfect and, often times, not their biggest priority.

Also, capturing diagnostic data can have a profound impact and allows fleet managers and technicians to make real time decisions to avoid catastrophic break downs.  In some scenarios fleets can share the alerts with their outside service provider, or make decisions about which service provider to use based on the nature and cost of the work. 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. (Tucker, 2014)

A Utilization Balancing Act

By capturing miles traveled, engine hours, number of trips, and measuring metrics like % of time utilized, fleet managers have the data to manage and optimize fleet utilization – i.e. extend the life of overworked assets, shift under-utilized assets to more demanding routes or regions, and manage operating costs of aging assets.

Without reliable telematics data it’s difficult to know if you’re “overfleeting”, have the right mix of assets to perform the work, or are wasting money by over-utilizing and maintaining aging equipment.

A Safe Fleet Costs Less

Many major and minor insurance providers offer commercial auto insurance incentives for fleets with Telematics. And, if an insurance company is willing to pay for telematics, it’s a safe bet that they’ve crunched the numbers and see a positive return on investment.

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.

So, why does the insurance market love telematics?  Because it provides the opportunity to measure and manage risk.  Fleets that monitor and coach drivers on speeding and aggressive driving (harsh cornering, braking and acceleration as measured by the telematics device) certainly find reduced liability expenses – insurance premiums, downtime, and repairs.  Interestingly, however, they also reduce normal vehicle wear-and-tear maintenance costs, extend the life of the asset, and improve resell value.

Exoneration is a big factor as well.  Fleets are often accused of misbehaving when they’re not at fault – that marketing emblem on the side of your vehicles can look like a bulls-eye to a litigious driver.  Telematics provides the tools to refute false claims quickly and inexpensively.  Also, when accidents do occur recreating the scene is easier with Telematics data to determine who was actually at fault.

Theft is a big deal as well to insurance companies.  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. Often fleets that allow employees to take vehicles home have no way to verify on clock vs off clock hours.  A few 20-minute nudges here and there can add up across your employees.  Further, arriving late to appointments can often be traced back to a late start in the morning, which can be coached, tracking, and improved – resulting in happier clients.

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.”  (Tucker, 2014)

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. (Tucker, 2014)

Some fleets even set up reports on how many times and how long driver spend with customers versus driving time. This helps get a better idea of the client-vendor relationship and possible improvements that could be made.  Ideally, this data is made available not just to Fleet Managers, but business users throughout the front and back offices – i.e. sales representatives, management, and Executives.
To save on headaches, fleets can also use the data when customer’s 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 has profound effects not only on fuel used, but also wear and tear and asset lifecycle costs as the vehicle’s life is being extended for every mile saved.

CRCS DKI, after having telematics for three years, increased its fleet’s 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. hotel comparison . 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. (Tucker, 2014)

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, communicate with customers about arrival times, and provide flexible services.

As a telematics program develops, it also evolves into our other aspects of the business.  Other departments such as sales / customer service, HR, accounting, and risk and safety management, will ultimately find more opportunities to utilize the data and maximize the ROI.

Using Telematics to Manage Equipment

Telematics isn’t just for passenger vehicles. If your business relies on assets like heavy equipment, 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 are the key factors that drive ROI in equipment tracking.

You may also have a heightened interest in geo-fencing to ensure costly equipment doesn’t leave designated areas and to quantify utilization within a specific work site or location.

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.

Summary

Telematics solutions can delivery triple-digit ROIs starting with Fuel savings, but extending to virtually every other aspect of the business.  As discussed above, GPS Tracking and Telematics provides tangible value through:

  • Better Maintenance
  • Improved Utilization
  • Reduced Safety / Liability Costs
  • Better Payroll Management
  • Improved Productivity
  • Better Customer Service

Certainly every business is unique and some areas will apply more or less to your specific business use case.  But, if you’re just looking at Fuel savings to justify a telematics purchase, you’re missing a big part of the ROI calculation.