Heavy-duty long-haul fleets are now old hands at using technology to wring costs out of their operations and improve efficiency. For many of the thousands of companies operating light- and medium-duty vehicles, however, the implementation of technology-based fleet management solutions has been much slower. A March 2007 survey of service industry fleets by Aberdeen Group (www.aberdeen.com) for example, found that service industry executives have traditionally focused their resources on two of their three main cost-drivers, labor and inventory, paying little attention to the third major cost driver, fleet.

“The category that has not received much attention until recently is fleet,” notes the study. “This lack of focus has prevented service organizations from realizing significant cost savings from route optimization, operator behavior modification, fuel management and maintenance management.”

MONEY ON THE TABLE

So what's going on here? Are there really companies that don't care about reducing costs and improving productivity, or perhaps just don't appreciate the considerable benefits possible? Even though there are right-sized solutions for almost every fleet operation today and prices have plummeted (some fleet management system suppliers are actually giving away the hardware and charging only the monthly usage fees) adoption has been surprisingly slow.

There are several reasons why this has been the case. “Light- and medium-duty fleets are much more detached from compliance pressures for one thing,” observes Eric Manegold, vp-business development for Zonar Systems (www.zonarsystems.com). “Events like equipment breakdowns are also not usually as critical and costly as they are for a heavy-duty, long-haul carrier, and maintenance is sometimes not taken as seriously as a result. These factors can change the perceived value of a vehicle tracking and maintenance system.

“Another barrier to implementing fleet management systems has been the question of who at a company is going to manage the data generated and act on it. Fleet and operations are often two entirely separate functions at these organizations,” Manegold explains. “One fleet manager described it to me like this: Operations handles the drivers and Fleet fixes what they break.”

The diversity of light- and medium-duty fleet operations has also been an obstacle to implementing technology-enabled fleet management solutions. “In the Class 8 world, when you talk about an onboard diagnostic product, for instance, it is a fairly well-defined and straightforward market to address. There are the standard data buses, J1708/1939, that everyone integrates with,” notes Diego Borrego, founder and director of product engineering for Networkcar (www.networkcar.com). “On the lighter-duty side, however, there has been a proliferation of different, proprietary vehicle communication platforms. Since mixed fleets are very common, it has made finding one solution that works with all the vehicles in the motor pool more challenging. Our web-based interface has been a plus for Networkcar because fleets do not need different systems for different vehicles.”

Upfront cost has historically been another impediment. “Major long-haul, over-the-road carriers were really the early adopters of communications and tracking technologies,” observes Jon Shapiro, director of marketing for Skytel (www.skytel.com). “It was actually more of a fleet size than a vehicle class issue. Smaller fleets are often much more price-sensitive; they need lower-end solutions, which were not available until rather recently.”

According to the Aberdeen Group study, simple lack of knowledge about solution providers and the inability to make a compelling business case has also held many lighter-duty fleets back. Almost 70% of surveyed technology non-users cited lack of knowledge as a reason for not deploying a fleet management solution at their company.

As operating costs continue to rise and management solution costs continue to fall, however, more light- and medium-duty fleets are taking a fresh look at fleet management solutions and finding compelling reasons to invest — reasons that are not necessarily the same as they are at their heavy-duty fleet counterparts.

“At light- and medium-duty operations such as plumbing companies, electricians, telecoms, cable companies and so on, ROI is all about handling more jobs per day,” says John Lankes, vp-global commercial vehicle markets for @Road (www.road.com). “Interestingly enough, it is often process issues that slow people down, things like standing in line for parts or standing in line for orders, so we work to get people on the road as quickly as possible in the morning. Drivers in local and regional fleets also often pass one another on the road as they crisscross town all day, so better dispatch can be a big help in improving jobs-per-day metrics.

“There are some cross-over points between the needs of heavy-duty and lighter-duty fleets, of course,” Lankes continues. “Everyone has become much more concerned about safety in the past five to six years than ever before. If you can document change in your safety performance, insurance companies may reduce premiums.”

PEACE OF MIND

Executives at light- and medium-duty fleets want to be more efficient,” agrees Diego Borrego. “Basically, they are looking for peace of mind on a gut level,” he says. “Often the fleet manager is the company owner or president and they have a whole lot of things to worry about already, so they want a proactive warning about emerging problems, such as maintenance issues, use of vehicles in an unauthorized way, unsafe driving practices, or wasting fuel by idling.

“Vehicle tracking is often what brings a customer to our door initially, but the onboard diagnostics capability may deliver the larger benefits,” he continues. “For example, we can do geofencing with GPS, but we can also tell if the key was turned on or not during a specific period with onboard diagnostics. If you are a plumbing franchise, you may permit your drivers to take trucks home at night, but you probably do not want the vehicles used outside business hours.”

“Greater driver accountability is what we are really talking about here,” adds Eric Manegold. “It is very important to many lighter-duty fleets. For instance, the fleet manager at local construction supply company with light- and medium-duty trucks told me that the company owner found one of his drivers sleeping on the job the other day in his truck. That fleet manager wanted to implement onboard telematics primarily to change driver behavior and improve accountability.

“There are lots of other benefits to be had,” he continues. “A JIT fleet that delivers gas and welding supplies told us that what they really use our telematics system for is to document on-time delivery. So if a customer says, ‘you've been late four times this week, what do you have to say about that?’ the fleet can use the system to set up a ‘location of interest’ and prove exactly when they arrived.”

“In lighter duty fleets the vehicle driver is often a sales person or a technician of some sort, as well,” adds Kelly Frey, executive vp of Turnpike Global Technologies (www.turnpikeglobal.com). “ In those cases the company needs someone who is both a safe driver and a good salesperson, but how do you measure those two things, which may even be in conflict sometimes?

“For instance, we talked to a home food delivery fleet that wanted to build route density, so they asked their drivers to make cold calls between the stops along their routes and offered incentives for doing so,” Frey recalls. “Drivers reported that they were making the calls, but our onboard data recorder showed that some drivers had made no additional stops. We've had other customers use their EOBRs to verify seatbelt usage, or to check to make sure that drivers were turning their vehicles off during deliveries to conserve fuel, reduce noise and emissions and reduce risk.”

THE BOTTOM LINE

In the working world of light- and medium-duty trucks, the applications for fleet management solutions seem to mirror the diversity of the operations themselves, and fleet managers are demonstrating a positive gift for application innovation. “The more you use the system, the more things you can use it for,” observes City of Napa fleet manager Chris Burgeson, of his new Networkfleet system (see sidebar page 84).

The Aberdeen Group study also offers some hard numbers to support the enthusiastic reports of fleet management system users like Burgeson. Their survey found that “a majority of leading companies are using fleet management solutions to realize benefits such as a 12.2% increase in service profitability, 13% improvement in vehicle utilization; 14.8% reduction in average travel time per job; 9.9% decrease in overtime pay and 27.9% increase in operator compliance.” Not bad.

“Technology-enabled fleet management solutions are going to be ubiquitous,” observes @Road's John Lankes. “Fleets will use them to know where their assets are, manage them better and help their drivers perform better, too. That will just be the norm.”

Municipal fleet tallying technology benefits

Chris Burgeson is the fleet manager for the City of Napa in California's fabled wine country. The city's 390-vehicle fleet includes everything from huge off-road equipment to grounds maintenance vehicles, fire and rescue vehicles, cars, scooters and everything in between. About two years ago, Burgeson began deploying a wireless vehicle tracking and diagnostics solution, in this case Networkfleet from Networkcar (www.networkcar.com). While he is enthusiastic about the benefits so far, Burgeson says that there are lots more just waiting to be realized.

“We began implementing Networkfleet about two years ago,” he notes. “Right now, we have it in about 60 vehicles; we are doing all the installation ourselves. We're already seeing benefits, though. From my perspective, one of the most significant benefits has been the advance notification we receive concerning equipment problems.

“I get an e-mail if something is wrong with a vehicle, even if it is in the field. It might be a sensor malfunctioning or an engine misfiring, but the important thing is that the advance notice enables us to make appropriate and timely decisions, whether that means asking the driver to bring it in immediately or ordering parts ahead to fix the problem the next time the vehicle is in the shop.

“Another key benefit is our ability to exempt out from California's Bureau of Automotive Repair Smog Checks,” Burgeson adds. “Because of our constant vehicle monitoring, we don't have to run separate smog checks on vehicles equipped with Networkfleet, which we would normally do ourselves at a labor cost of about $60 to $70.

“The more you use the system, the more things you discover you can use it for,” he continues. “The other day, we had a vehicle due for an inspection, but we couldn't find it. It turns out it was parked in a far corner of our yard. The AVL [Automatic Vehicle Location] told us right where it was.

“We've also begun to use it to it to restrict which vehicles are taken home at night,” he says. “Now we can absolutely track where a vehicle has been and when it was last turned off. We can see where it is going at night, and if it is to a town nearby, for instance, that is not acceptable. We are talking about taxpayers' dollars here, and those funds are not for giving city workers a free ride home.”

“The potential benefits from telematics systems like ours reach a lot farther than the fleet function, though,” he adds. “For instance, I have been talking to our operations people about the benefits, largely untapped, of the AVL capability for operations. Maintenance and operations are separate groups here, as they are in many organizations. This is one tool that can really be shared though, so even if we are paying for it in Fleet, it makes good sense to promote it to other groups within the company.”

Seven steps for better productivity & lower costs

This spring, the Aberdeen Group (www.aberdeen.com) released the results of a quantitative survey designed to evaluate and report the impact of fleet management systems on a service company's financial and operational metrics. 317 qualified responses were received from executives and managers in 26 different service industries, including construction, utilities, consumer and the public sector.

In addition to numerous other benefits, the survey found that companies that had invested in a fleet management solution saw an average annual savings in operating costs alone of $1,100 per vehicle. If you are interested in pursuing these benefits for your own operation, Aberdeen Group also offered seven recommendations for action:

  1. Do not underestimate the financial impact of operator behavior on profitability.

  2. Leverage technology to synchronize the three cost drivers of service [labor, inventory and fleet].

  3. Base preventive maintenance program on fleet utilization, not time elapsed.

  4. Align fleet management initiatives with company goals and needs before technology adoption.

  5. Involve stakeholders early and often throughout the vehicle lifecycle.

  6. Prioritize data integration with other departments to maximize ROI.

  7. Realize significant cost savings by exploring the issue of warranty recovery.