One of the keys to success in fleet management is containing costs, an effort that involves continuous process improvement that leads to more efficient operations. For fleet managers, telematics provides a way to reduce fleet costs, improve fleet productivity and better manage risk.
Telematics can provide a competitive edge for fleet managers who face complex challenges every day when attempting to reduce fleet costs. Those challenges include the expense of vehicle purchases and maintenance, high fuel costs and increasing insurance rates. Global inflation drives these increases even higher.
Against this backdrop, finding fleet management solutions is key. Telematics makes the drive to reduce fleet costs much more successful.
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Calculating Fleet Costs
To launch a strategy that involves making operations more efficient and effective, fleet managers must first calculate the total cost of ownership. For example, on a vehicle it includes the purchase price and the total cost of maintenance, minus depreciation.
For operations, fleets typically divide costs into two main categories. One involves the fixed costs of operating a fleet, including licenses, fees, lease payments, and loan payments. These costs typically stay the same throughout the fiscal year.
The other category is variable costs, an area that can impact cash flow for a business in unexpected ways. Variable costs include repairs for vehicle breakdowns, the costs associated with crashes and collisions, fuel costs due to route changes, and driver behaviors (such as speeding, excessive idling and distracted driving) that can lead to higher fuel costs and increase the chance of costly accidents.
With so many variables involved, some fleet managers have adopted a financial plan that involves breaking down the cents per miles driven for fixed costs as well as subcategories for the variable costs associated with maintenance, driver behavior and fuel.
Ways Telematics Can Reduce Fleet Costs
The advanced software and connected devices used in telematics can reduce fleet costs quickly and substantially. Some of the most popular uses of telematics to reduce fleet costs include the following.
Track Fuel Efficiency
Fuel costs are top of mind for fleet managers as they continue to spiral upward. Telematics systems can help reduce fuel costs. They include the use of fuel cards that allow fleets to track and control when and where drivers purchase fuel. Other systems employ an engine control module that allows fleets to customize settings that can improve a vehicle’s fuel economy while unlocking greater torque and horsepower.
Real-Time Driver Coaching
Telematics systems can help fleets better control variable costs by providing real-time coaching to drivers in the cab. This includes alerts when they engage in behind-the-wheel behaviors that can increase the risk of crashes and also lead to higher fuel use.
Data for Budgeting
The wealth of data that telematics systems offer fleet managers can help them better forecast costs for the upcoming fiscal year. Because these systems can provide and analyze data separated into different categories – including by vehicle, driver or route – managers can develop more accurate financial forecasts and identify problem areas that need addressing.
Reduce Risk, Insurance Costs
Telematics systems can coach drivers in real-time, as well as monitor driver behavior to see what areas need addressing through further training. Systems also can alert drivers of dangers on the road, including abrupt lane changes, hazards blocking the road and trailing too closely behind other vehicles. This leads to fewer accidents, which in turn leads to lower insurance premiums.
Adhering to a maintenance schedule reduces the chances of costly breakdowns on the road. Telematics systems automate this process, ensuring that managers receive an alert when the time for routine maintenance approaches. Telematics systems also monitor engines, providing alerts when they detect an issue and allowing fleets to address those issues before they become major problems.
Telematics leverages advanced technology to make fleets safer, as well as more efficient and productive. They are key tools for fleet managers who always welcome new approaches to reducing fleet costs while improving the quality of service.