Cost Savings

The Challenge: Finding New Cost Savings

Today’s fleet managers are continuously looking for ways to manage their fleet’s total cost of ownership (TCO), minimize their operating expenses, and increase profitability. However, identifying new opportunities for savings can be difficult. The Fleet Savings Summary Report estimates a fleet’s existing and potential cost savings in the areas of safety, fuel, maintenance, and productivity based on rich telematics data. This white paper shows how fleets can use this new tool to identify strategic savings opportunities and grow their bottom line.

For many fleets, fuel is one of the largest expenses.7 Managing fuel costs can be a complicated endeavor involving a number of variables, including fluctuating gas prices and inconsistent driver behavior. In fact, the U.S. Department of Energy reports that rapid acceleration and heavy braking can reduce fuel economy by up to 33% for highway driving and 5% on city roads.8 Idling and speeding can also have drastic impacts on MPG.

Market research has shown that the effective use of telematics can reduce fuel costs by as much as 14%.9 Once again, driver coaching is instrumental in achieving these cost reductions. For example, for every 5 mph over 50 mph, a driver can reduce their MPG by approximately 7-14%.10 Therefore, getting drivers to slow down and observe the speed limit translates into saved money. Furthermore, real-time driver idling alerts can be used to drastically cut down on vehicle idling costs and wasted fuel.

Similar to the safety-scoring methodology described above, the Fleet Savings Summary Report uses a proprietary fuelscoring algorithm to determine a fleet’s existing and potential fuel-related savings. In doing so, driver speeding incidents and idle time were found to be the largest contributor to fuel waste, which resulted in fuel-related savings as summarized in Section 2 of the Fleet Savings Summary Report.

Preventive maintenance is a regular part of vehicle ownership, but additional repairs due to aggressive driving and vehicle misuse are an unnecessary cost to a fleet. Market research suggests that excessive maintenance-related costs are primarily driven by aggressive driving behaviors. In particular, hard accelerations, harsh cornering, and harsh braking cause harmful wear and tear on critical vehicle components, drastically increasing a vehicle’s variable CpM.

These effects materialize as reduced tire life, reduced brake life, more frequent scheduled maintenance, and most significantly, more frequent non-scheduled maintenance and repair. These non-scheduled events often result in large losses to a company that relies on its fleet assets for day-to-day operations. In fact, a non-scheduled maintenance interruption can result in lost profits of between $400 to $700 per day, in addition to the cost of repairs.

Today’s fleet managers are under extreme pressure to manage their fleet costs despite deteriorating economic conditions. These costs include the procurement and disposal of the vehicles, fixed and variable operating costs, labor costs, as well as collision and insurance claims.

Using telematics data, fleet managers can discover new cost savings opportunities across their entire fleet. By pursuing these savings opportunities, a fleet manager can reduce their COI, improve their fleet’s operating efficiency, and grow their bottom line. Conversely, managing a fleet without a telematics platform is likely to result in higher costs and poor visibility for improvement.

This paper demonstrates that telematics is a valuable tool that fleet managers should use to better understand and proactively manage their vehicles and drivers, and ultimately run a more profitable fleet.