Benchmarking with fleet telematics

Benchmarking with fleet telematics

Efficient fleets boost the bottom line. But as telematics devices make the vehicle data available to operators more robust, the need to interpret and utilize that data to maximize fleet efficiency has risen.

“I think fleets in general have become more aware that there are true cost savings out there,” says Jeff Pursell, vice president of telematics and strategic development for Donlen, a fleet leasing and management solutions company. “Now we can take [the data] and put it into numbers of what potential cost reductions there are.”

Fleet managers who want to stay competitive should be familiar with the parameters used to measure efficiency and should develop solutions that minimize unnecessary costs, such as those associated with premature vehicle repair and inefficient fuel use. But to meet efficiency goals, fleet operators must consider the range of variables, a task that has become possible with powerful new analytics and increasingly granular data. (For more on fleets, see Fleet telematics: Where the growth is, part I and Fleet telematics: Where the growth is, part II.)

Benchmarks to improve performance

The most well known parameters of efficiency are fuel consumption and vehicle repair and maintenance costs, areas where many fleets believe they can do better. Cross-industry analysis may help operators create benchmarks to improve their performance in both areas. Guided by these benchmarks, operators have traditionally tried to tweak obvious sets of variables.

“If you look across the marketplace,” says Kevin Moore, vice president of OEM sales at Telogis, a fleet solutions company, “managers are mostly going to look at fuel first. They’re going to look at idle time as a way to reduce fuel.” Which makes sense, as vehicles at idle are effectively getting zero MPG.

But there are other variables operators should be considering. “When you peel the onion a layer deeper,” says Moore, “then you get into routing and scheduling and optimization.”

He uses the example of the Direct Store Delivery (DSD) sector, where drivers might deliver things like soda and potato chips directly to convenience stores. These routes are static because the stores’ locations are fixed. As a result, DSD fleet operators have traditionally ignored routes as areas of potential optimization when benchmarking for fuel consumption.

“What they’re seeing,” says Moore, “with the right set of tools, is that having the routes optimized, taking into consideration hours delivered, location ingress, how to get in and out the most efficient way, is paying dividends.”

Appreciate the data

A fuller appreciation of the data has also led to more efficient vehicle repair and maintenance schedules. Moore offers the example of manufacturer oil life indications. While most truck manufacturers provide customers with oil indications based on simple mileage calculations that reset with every oil change, Ford Motor Company takes vehicle operating characteristics, such as airflow and driving behavior, into consideration.

The indicated oil life on a truck that uses a system like this is more accurate. Operators are able to monitor oil changes and avoid unnecessary engine stress more efficiently, which helps the bottom line. With dashboards and telematics devices becoming common, operators have more access than ever to this kind of granular vehicle data. And systems once considered fixed, like oil life and DSD routes, are now fair game for optimization. (For more on fleet telematics tech, see New telematics tech for fleet and asset management.)

At Donlen, Pursell is working with driver scoring and driver safety metrics, which pull driver-specific vehicle data on everything from acceleration to braking events to help operators identify potential savings and develop driver safety programs. “We’ve seen customers reduce accidents by as much as 25-30%,” Pursell says.

Expanding the data set to include driver behavior, then, equates to huge cost savings in the realm of vehicle repair, which underscores the benefits that operators can unearth when they start dipping deeper into the well of information available to them.

Using data to cut costs

The big companies have become experts at using data to cut costs. Companies like Asplundh Tree and Coca-Cola and highway fleets like Schneider and J.B. Hunt have all increased their margins by leveraging fleet data to shave inefficiencies from their processes.

“You can do the analysis yourself,” says Moore. “When you look at a company that has $1B in annual revenue, and they make  $10M in profit, that tells you how constrained they are in terms of operating costs. So these companies, the companies like the FedEx’s, the UPS’s, the Swifts, the Hunts, they’ve had to be frugal to survive.”

Of course, these companies have massive resources to develop their benchmarking and analytics. For resource-limited businesses with smaller fleets, this may not be an option. Which explains the growing importance of enterprise solutions companies to the sector.

Popular enterprise solutions providers include Telogis, Donlen, XATA, and Qualcomm Enterprise Services. Whatever benchmarking and optimization solutions businesses ultimately choose, Moore does have one word of caution: “Customers can’t get locked into proprietary static models. The traditional model was, ‘Here’s my software. We’ll customize it for you.’ But that is no longer sustainable. In today’s market, you need flexibility.”

Greg Nichols is a regular contributor to TU.

For more on fleets, see Special report: Fleet telematics.

For the latest on fleets, visit Telematics for Fleet Management USA 2012 in November in Atlanta.

For all the latest telematics trends, check out Telematics Japan 2012 in October in Tokyo, Telematics Munich 2012 on October 29-30, and Content and Apps for Automotive USA 2012 on Dec. 4-5 in San Diego.

For exclusive telematics business analysis and insight, check out TU’s reports: In-Vehicle Smartphone Integration Report, Human Machine Interface Technologies and Smart Vehicle Technology: The Future of Insurance Telematics.

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