The fact that service can be a differentiator and a source of revenue for companies, especially when product competition has leveled out, shouldn't be anything new. Service is an area that can be greatly influenced and controlled via information systems. Integrated Solutions has written about hardware and software solutions for managing work orders and optimizing the workforce (refer to the article "Field Service Automation Pays Off" in this issue). We've also written about companies using technology, both back end and field-based, to manage parts in the field to control inventory costs and on-time part delivery. An additional piece of the service puzzle that companies can address, which can contribute to the bottom line, is effectively managing your fleets.
A recent study by AberdeenGroup (Service On The Move, March 2007), shows that companies using fleet management solutions realize benefits such as a 12.2% increase in service profitability, a 13% improvement in vehicle utilization, and a 14.8% decrease in travel time. Additionally, the companies experienced an average annual savings in operating costs of $1,100. Implementing fleet management is obviously a smart move — in the same study, 82% of respondents said fleet management was of importance to a company's operational and financial performance. Yet, only 25% said they were very or extremely satisfied with their company's fleet management approach. How do you avoid that low level of satisfaction? By understanding your needs and finding a solution that meets them.
Companies typically adopt fleet management solutions because they're feeling a pain. Usually, this is the costs associated with the following:
- theft — stolen vehicles or stolen goods on vehicles
- overtime — trying to get a handle on service people's overtime and how long it takes to perform deliveries, repairs, or service calls
- operational costs — the need to reduce operational costs, including the number of vehicles, miles driven, etc.
- competition — competitors who have fleet tracking applications are taking market share from those who don't by lowering costs or improving customer service.
"The executive spotlight has become focused on fleet management initiatives largely due to pressures to improve profitability, as well as executives' awareness of the potential savings fleet management can provide," says Amit Jain, research director of aftermarket service and support, AberdeenGroup. "In fact, 63% of the companies we polled in our Service On The Move study stated that management's demand for increased visibility into operator- and fleet-related metrics and mandates to reduce operating costs were the primary drivers for adoption of business processes and solutions to improve fleet management."
All of these pain points can be addressed by an effective fleet management system. But finding an appropriate solution seems to be one of the biggest challenges for companies, especially those not using any type of fleet management technology. In the AberdeenGroup study, 70% of the nonusers of technology said they did not deploy a fleet management solution due to a limited knowledge of the solution providers and the inability to make a business case for the solution. The numbers mentioned above should help you make your case; now you can look at the types of solutions available.
LOOK FOR INTELLIGENT DEVICES IN A FLEET MANAGEMENT SOLUTION
Fleet management solutions have come a long way from a white box in a truck, monitoring speed. Advances in telematics mobile technologies enable you to deploy more effective solutions. "The hardware you use is key to an effective fleet management solution," says David Leis, chief marketing officer for NovaTracker. "You must have an intelligent device, and by that I mean one that is flexible and can be customized. The intelligence is often thought to lie in the software, but it's the data collected from the vehicle — and the ability to customize in a dynamic manner what data is collected — that is vital. For example, you might have 60 trucks, and one week you want to track the routes of five, and another week manage and monitor the driving of eight new drivers. You want to enable the devices to report what you need." You should also ensure that the data is reported back in real time so fleet managers can act on any driving violations or problems. For instance, if data points show that a truck is traveling an unapproved route (e.g. traveling on a road prohibited to vehicles over a certain weight limit or carrying certain freight), a manager can contact the driver and reroute him, rather than responding to historical data, after the damage has been done.
FLEET MANAGEMENT SOLUTIONS SHOULD HAVE OPEN ARCHITECTURES
Another key component of a fleet management solution is its ability to be integrated with other systems — namely, field service automation applications, accounting, dispatch, etc. Some solutions involve a telematics device on the truck and a mobile computer for the driver where he receives his delivery route and customer information. The data collected from the truck can be linked with the data in the delivery application, so that you know how long he spent at each stop and if stops were actually made (e.g. he noted that he made a delivery, yet the truck did not stop at that time). "You should also look for a solution that offers a wide range of in-depth, detailed fleet management reports that allow individual and fleet-wide performance to be measured objectively," says Bill Ritzhaupt, marketing manager at Teletrack, Inc. "These allow owners and fleet managers to identify areas in need of improvement and then take corrective actions based on fully documented facts."
Prior to implementing a fleet management solution, you first need to have baseline metrics of your performance in industry standard categories: overtime expenses, fuel costs, excessive mileage, driving accidents, average jobs completed per month. Without this data, you won't be able to measure the improvements a fleet management solution provides, nor will you be able to maintain the level of improvement you've achieved. And that level can be significant, as the Aberdeen study shows. In a study of fleet performance over two years, best-in-class companies (which are more likely to adopt fleet management solutions) reduced vehicle downtime 58% and total operating costs 43%, reduced fuel costs per mile 42% and fuel consumption 40%, and improved vehicle utilization 75%.