By Bruce Horan, Director, PHH Onboard®
New research shows that 20 percent of the North American fleet market has implemented telematics. While that number may seem low for a technology that’s been in the market for over 10 years, I believe it will double to 40 percent, reaching critical mass, relatively soon. Today, customers are empowered when they see telematics as a viable tool to gain deeper insight and visibility into fleet operations and to make strategic business decisions that go well beyond GPS tracking and vehicle routing. It enables companies to enhance their fleets’ performance and value. In fact, telematics is becoming increasingly tied to logistics throughout the supply chain.
Telematics can assist your company, regardless of your industry or type of fleet. It can show you what you’ve been missing by providing better insight into your fleet. A successful telematics program means you won’t have to dedicate hours reading through figures and making connections yourself. It can help you execute on scalable improvement plans, change driver behavior – which is key for ROI – and measure results.
So why aren’t more companies taking advantage of telematics? The truth is the technology had a bit of a rocky start. Expensive hardware and program costs made a positive ROI challenging; would-be early adopters were scared away as several telematics companies folded and other’s long-term financial stability was in question. Lastly, certain technology issues plagued the industry. But fast forward to today, hardware costs are down as much as 300%, installations have never been easier, technology issues are rare, and service and delivery excellence have never been higher.
I equate the telematics adoption timeline and the impact of the technology to other life-changing technologies, like the PC, Internet and mobile phone. All of those took much longer than 10 years to gain traction and reach critical mass. However, in 2014, most of us couldn’t imagine conducting business without them. Do you remember the time and effort it took to simply send a document for review and redline before email was mainstream? The same will be true with telematics and fleet management in a few years. You’ll try to imagine how you were able to manage expenses and meet customer expectations with little to no insight into what was actually happening out in the field and it’ll be hard to picture.
The benefits of telematics are abundant, including increased fuel savings, more efficient vehicle tracking and routing, and the ability to set a virtual perimeter for a real-world geographic area. For example, one of the biggest contributors to poor fuel efficiency is idling, followed by hard acceleration and speeding. Telematics can track these factors and provide fleets the quickest payback, with almost immediate results and cost reductions. The technology can track risky behind-the-wheel driving behaviors (e.g., failure to use seatbelts, speeding, harsh braking and cornering), which delivers a longer-term provable payback in reduced accident rates and associated costs. Many telematics programs are evolving to cover driver safety, increased employee productivity and efficiency, route compliance, and improved customer service. Telematics can also assist with compliance issues that include both government-mandated and individualized corporate policies.
In an era of analytics, telematics can take data and make it useful. For example, we worked with a national service provider to help implement telematics to reduce the risk to their drivers and improve fuel performance. The immediate payback was a reduction in the company’s fuel expense by almost $3 million in calendar year 2013 and a reduction in their accident rate of 8 percent. What other technology can provide that level of return in such a short period of time? Now that the groundwork has been laid to gain insight into utilization and operations, the company is focused on reducing its fleet size by 2 percent and its mileage by 6 percent – impacting the bottom line by an estimated $2.8 million annually.
Implementing telematics will help increase your fleet’s productivity, improve your corporate risk profile and reduce your fleet’s operating costs. Telematics isn’t just a matter of installing technology in a vehicle, it’s understanding the resulting information and putting it into action to better serve your company.