A new report estimates a small business operating five trucks could save almost $75,000 per year with fleet management software.
A study of five years of fleet management data by a telematics provider shows companies can be more efficient and serve customers better while also saving money through better management of their vehicles. According to Fleetmatics’ FleetBeat Report, the use of telematics reduces fuel consumption, shortens the workday, allows for more service calls, and helps the environment by reducing emissions.
“It’s a technology that is gaining in adoption at a very fast rate,” says Dale Willis, director of product marketing, business intelligence for Fleetmatics, a fleet management and mobile workforce solutions provider. “But it’s also something that has a relatively small penetration, especially in the small- to medium-size business segment.”
Spend and save
Among the overall benefits of using fleet management systems across all large fleets included in the report:
- One additional stop per day (up 13 percent)
- 20 percent reduction in hours on the clock per day, per vehicle (from 10.6 hours to 8.5)
- $76.73 total daily savings per vehicle for heavy contractors due to reduced payroll hours: ($18,537/year)
While landscaping companies led the way in increased stops with 25 percent more, trucking companies also saw a 21 percent increase and heavy contractors experienced an increase of 20 percent.
“A small business operating just five trucks could save $74,810 per year through optimization,” the report says. “A larger fleet of 150 trucks could save more than $2.2 million using the technology.”
A telematics system starts with a GPS receiver installed on each vehicle. “It’s a dedicated box we install that transmits data to us every 90 seconds or so,” explains Willis. It sends information such as vehicle location, speed, and whether it is idling, along with information about when it was started and shut off.
The GPS receiver also sends accelerometer data that can indicate several things, such as hard braking and acceleration or harsh cornering that will alert the fleet owner that a driver might be doing something dangerous. It can also track fuel purchases and help owners and managers stay in front of maintenance needs like oil changes and tire rotations.
Catch the trends
The dispatching benefits are obvious. “If you get a customer call you just pull up the map, see who is closest and send them a message,” Willis says. “There is also some ‘wow’ factor there by being able to flex your business to meet the customer’s needs. You can gain an extra piece of revenue without a whole lot of extra effort.”
Other information provided by a fleet management system provides broader benefits. “If you can do the same or more work in fewer hours, that is a direct savings to the company,” Willis says. “As we hear in business, things that are measured are often where you see improvement. The same goes with monitoring a fleet; you often see different behavior by drivers of optimized vehicles.”
Willis says such information helps fleet managers see things such as idling trends, fleet utilization and fleet efficiency:
- Increased productivity through improved dispatching and automated time sheets.
- Improved customer service with GPS tracking for dispatching, more accurate delivery estimates and more efficient service calls.
- Reduced fuel costs through reduced speed, less idling time, improved routing and dispatching and proper maintenance.
- Reduced labor costs by eliminating prolonged stop times, more accurate overtime and time sheet information, and identifying excess overtime hours.
- Improved fleet safety and security by monitoring driving behavior.
- Minimized operating expenses by reducing vehicle breakdowns, reducing unauthorized vehicle use, and cutting costs of fuel and labor.
The cost of such a system varies greatly depending on fleet size and various options, but Willis says the payback is fairly quick. “It’s not just about being more efficient and having higher customer satisfaction,” he says. “A typical customer is saving $45 a month per vehicle just in fuel savings by less idling and mileage. Some companies have realized as much as six or seven times the monthly investment.”
He adds that the potential for savings depends a lot on the type of work involved. “If your business is really based on the vehicle, like trucking and delivery companies, clearly you’re going to have more opportunity for reduce mileage and idling,” Willis says. “If the vehicle is just getting you to a job site, there are vehicle savings opportunities, but often you will see more opportunity for payroll reduction.
“Different industries have different savings opportunities just because the nature of their business is different.”
For a list of fleet management and routing software options, visit www.pumper.com/editorial/2013/10/office_technology_and_software1.