Return On Investment (ROI)
ROI with Fleet Management
Discovering the Hidden Savings with GPS & Telematics!
No matter what industry you are inÃÂÃÂ whether it be HVAC, Construction, Landscaping, or Law EnforcementÃÂÃÂ we all face the same challenges. How do we maximize our bottom-line to increase profit growth? The quickest and most cost-effective way to improve profitability is to reduce expenses.
Fleetistics understands that expenses make up for a large portion of any companyÃÂ¢ÃÂÃÂs budget. However, it can be tough looking for opportunities to locate cost savings. Incorporating your telematics solution into your daily tasks can assist with finding savings.
In this article, we will review a wealth of opportunities that fleet managers and fleet operators can use to help improve the company bottom-line.
What Is ROI?
To maximize ROI, you have to first understand what ROI is:
ROI measures the amount of return on an investment relative to the investmentÃÂ¢ÃÂÃÂs cost. To calculate ROI, the benefit (or return) of an investment is divided by the cost of the investment, and the result is expressed as a percentage or a ratio such as 3:1. At Fleetistics we like to express the ROI in the number of days to recover the initiial investment and then the benefit in comparison to the monthly subscription service.
Where Are the Savings?
Every fleet is unique and requires each fleet manager/operator to calculate cost differently. With our 16+ years in the telematics industry, we have concluded there are two common variables that impact operating costs: vehicle class and vehicle mileage.
If you take a heavy duty (HD) long-haul fleet compared to a light duty (LD) low mileage fleet, you will notice that these vehicles have very different rolling costs per mile. The HD fleet will have higher proportional fuel, maintenance, depreciation and labor costs per mile. There are also several other factors that we need to consider such as
fuel management, reduction in miles, reducing repairs, vehicle maintenance, and driver coaching.
These are all factors that will affect the bottom-line for any organization. How proactive you are in managing these variables will determine your potential savings.
The Fuel Flex Card is one of the simplest ways to help manage cost. Fleetistics offers a fuel card option from WEX called the Flexcard. This card has several great options and features to easily assist in reducing operating costs. Fleetistics has integrated WEX data with your Geotab GPS data for more insight into fuel purchasing and use.
You can view fuel expense data such as:
When integrated with your Geotab telematics solution, each of these features ensures that your fleet is only using the vehicle only for work purposes. You can also send an alert for unplanned or unauthorized transactions!
These features cut down on fraudulent actions. It will also provide another level of fuel savings.
Reduction in Miles = Reduction in Man Hours
Each company is different so the need for man hours and miles will vary. However, if each company can reduce the miles driven from A to B, man-hours will also decrease. By understanding the miles driven between each location, you can see the effectiveness of the routing and scheduling process. Working to reduce the average distance between stops means a lower rolling cost per mile per revenue dollar.
- You can monitor the route each driver takes to every stop. Are they taking the most efficient route? If several businesses are in one geographical area, are they completing those stops first or are they bouncing back and forth between stops across town?
- Is the driver following, or sticking to, the route plan? Holding the driver to the optimized route plan is essential. If a driver has a favorite spot they like to stop for lunch, add a geofence and view it on the GPS track data to understand the impact on the optimized route. We call this plan versus actual route analysis.
Reducing Repairs and Maintenance
Planned and unplanned vehicle maintenance is the one thing that is common among all fleets. As fleet managers know, unplanned maintenance or breakdowns caused by a lack of maintenance, vehicle misuse or aggressive driving can be a costly. This does not have to be the case.
Telematics engine diagnostics data can assist in keeping unplanned maintenance time down by as much as 14%. Interruptions can cost between $100 to $300 per hour. Using your telematics solutions engine diagnostic tool can help prevent large and costly repairs by notifying you of a small issue before it becomes a big issue. Preventing safety issue and roadside breakdowns also avoids costs maintenance related expenses.
Becoming proactive with your fleet is an integral part of your formula for success. Implementing driver training and best practices can quickly reduce fleet operating expenses and help you achieve your ROI sooner.
Not every driver is perfect. Fleets often have good drivers with bad driving habits. These are the drivers you want to target with a telematics solution. The GPS system can see what risky moves they are taking on the road and the built-in driver coaching buzzer will alert them when they are exhibiting unwanted driving behaviors. Driver coaching not only saves the company money but also supports safer driving habits. The goal is to change behavior, not to change drivers.
Here are a few programs and tools we recommend.
- DriveTRAX ÃÂ¢ÃÂÃÂ What GPS tracking cannot tell you.
- Driver Challenge ÃÂ¢ÃÂÃÂ Raise awareness by creating competition (Gamification).
- Speeding Violations – Use your reports to see has been violating company driving standards.
- GO Talk ÃÂ¢ÃÂÃÂ Verbal instructions through an in-cab speaker to relay a clear coaching message.
Each of these factors offers tangible and quantifiable savings that can be realized given careful examination. As you look to incorporate greater levels of location intelligence into your business, look beyond the obvious benefit of GPS tracking to find other ways your company can save money.