From driver safety to improving the productivity and financial outlook of your business, a solid telematics strategy can be foundational for your fleet’s success story.
By Colin Sutherland
For fleet managers, ensuring the safety of employees as well as the public is of utmost importance, which is why telematics technology has become a mainstay for fleet operations of all sizes. Telematics data enables fleet managers to track and identify risky driving habits in their fleet such as speeding, harsh braking and seat belt usage. The ability to track these behaviors can help fleet managers identify which drivers need additional training or support. On top of that, telematics technology can help to minimize unsafe driving habits before they result in a serious accident. For instance, drivers can receive alerts when they are engaging in risky driving behavior, along with updates about weather and road conditions and they can communicate with their fleet manager in near real-time.
Beyond fleet safety boosting capabilities, telematics data can also help fleets better manage and lower their overall operating costs, which can help maintain the financial health and profitability of a company. In an industry like waste management and recycling—where time is money—and neither should be wasted—a solid telematics strategy can mean the difference between a business-breaking narrative and a company success story.
Implementing a telematics strategy can have a positive impact on your fleet’s finances, specifically when it comes to zeroing in on total cost of ownership (TCO), mitigating potential cost of ignoring (COI) and yielding a positive return on investment (ROI).
Understanding and Managing Total Cost of Ownership
Total cost of ownership (TCO) for a vehicle is a foundational business expense for any organization’s fleet. In addition to the initial cost of the vehicle or machinery, the TCO includes the return dollars when the vehicle is sold, and all the costs in between buying and selling like maintenance or fuel. Often one of the highest costs associated with fleet management, TCO can have a palpable impact on an organization’s overall profitability. TCO expenses should be accurately managed so fleet managers can identify problems and make educated decisions. These expenses include:
• Vehicle acquisition costs (dealer’s sell price, manufacturer incentives, vehicle upfitting costs, licensing, taxes, etc.)
• Fleet financing costs (leased or owned)
• Running costs (fuel or electric charging, maintenance repairs, insurance, plate renewals, tolls, etc.)
• Resale costs (optimal mileage at time of sale, etc.)
Telematics data can play a vital role in identifying, managing and, ultimately, lowering a fleet’s TCO, specifically the associated running costs. Telematics technology is capable of gathering real-world data and providing insights to help fleet operators efficiently manage their fleets, and account for related costs, such as the impact of fuel efficiency, maintenance fees, vehicle downtime for repairs and other factors. Not only can these insights help fleets to cost-effectively manage the here and now, but they can also help inform decision-making around future operational plans, such as fleet electrification. Telematics data can provide fleets with data-driven electric vehicle (EV) recommendations. Comparing daily driving distance readings against the real-world range of available EVs in the market, coupled with fuel consumption readings and fuel savings analysis can help guide fleet managers into a more carbon-neutral future—all while mitigating their organization’s overall TCO.
Paying Much-Needed Attention to the Cost of Ignoring
When a company fails to undertake a strategic business investment that would otherwise improve operational efficiency, such as data-driven insights that telematics intelligence can bring to their business, it faces a cost of ignoring (COI). This COI can be financially detrimental to a business since it often results in lost savings or higher costs. These are things that most fleet managers cannot afford, especially as the current economic climate continues to challenge businesses across all industries, waste management and recycling included.
With cost reduction strategies core to addressing COI, there are four key areas where telematics can help mitigate expenses including:
1. Increasing driver safety to help reduce the chance of costly vehicle collisions. Insurance companies have reported a 45 percent reduction in accidents and a 50 percent reduction in accident payout costs via the effective use of telematics, with an additional 5 to 25 percent reduction in comprehensive insurance cost.
2. Reducing unplanned repairs and maintenance. It is estimated that a non-scheduled maintenance interruption can result in lost profits of between $400 to $700 per day. The Organization for Economic Co-operation and Development (OECD) reports that telematics technology can help a company reduce scheduled and unscheduled maintenance and repair incidents by as much as 14 percent.
3. Managing fuel expenses by controlling runaway fuel costs. It has been reported that telematics combined with effective driver coaching initiatives can minimize aggressive driving behaviors and reduce fuel costs by as much as 14 percent.
4. Increasing productivity by increasing workforce efficiency. Market research suggests that telematics can increase workforce productivity and reduce labor costs by up to 12 percent.
By leveraging telematics data, fleet managers can discover new cost savings opportunities across their entire fleet. Pursuing these savings opportunities enables the fleet manager to reduce COI, improve fleet operating efficiency and maximize bottom-line returns. Managing a fleet without a telematics platform is likely to result in higher costs and poor visibility for improvement.
Generating a Return on Investment
While COI strategies are focused on minimizing operating costs, an ROI blueprint is focused on maximizing incremental revenue. Fortunately, with telematics there is a clear path to ROI since this data-driven technology can provide a full account of a fleet’s expenses as well as how it is helping to generate revenue. With near real-time data insights, fleet managers can identify inefficiencies and make changes to help eliminate monetary waste and improve overall productivity. As an added benefit, some telematics solutions can now integrate directly with some businesses’ existing enterprise platforms such as the integration of a telematics platform with SAP Cloud Platform technology. This type of integration allows companies to better optimize their overall operations, putting them on a direct path to ROI. By providing business managers with visibility and access to a range of features such as end-to-end digital supply chain visibility, valuable reporting on ROI, improved asset management, insights relating to vehicle health and driver safety, and more—all from within a single user interface—organizations can better visualize how vehicle data may impact other areas of the business.
From driver safety to improving the productivity and financial outlook of your business, a solid telematics strategy can be foundational for your fleet’s success story. | WA
Colin Sutherland is the Executive Vice President, Sales and Marketing for Geotab (Oakville, ON) and has been part of its leadership team since its inception in North America and directs the company’s global sales growth. Prior to joining Geotab, Colin managed the Customer Support, Dealer Technical Support and Aftermarket Parts teams for Freightliner of Canada. Helping to implement the telematics strategy for two of the top five fleets in North America, Colin routinely participates in customer and partner consulting in the use of telematics for productivity, safety, fleet, compliance and data integration. Colin has also been a speaker at many telematics and related industry conferences worldwide, where his perspective and advice to his audiences focuses on sharing knowledge and best practices for companies who are developing a telematics strategy. For more information, e-mail [email protected].
References
• www.geotab.com/fleet-management-solutions/evsa/
• www.geotab.com/blog/show-money-fleet-management-roi-vs-coi/
• www.driversalert.com/attention-fleet-manager-fleet-safety-is-important-too/
• fleetanswers.com/content/understanding-true-cost-fleet-vehicle-downtime
• www.oecd-ilibrary.org/economics/oecd-observer_15615529
• www.telematicswire.net/telematics-to-save-fuel-costs/
• www.automotive-fleet.com/156386/how-to-increase-fleet-productivity-using-telematics
• www.geotab.com/press-release/sap-partnership/