Can A Telematics Pilot Improve Your Fuel Costs and Safety Management?
By Steve Saltzgiver
During my career, I’ve had the opportunity to test technology and implement solutions that really bore some fruit. One of those projects happened early in my tenure as a Vice President at a beverage fleet when we designed a 12-month pilot program to test the power of telematics on 900 vehicles. I’m a huge advocate of telematics based on my early experience and believe it is something every fleet operation should consider. The following is a summary of the success we had with the pilot program that led to a major saving initiative once we implemented telematics into the entire fleet. During the year of the pilot, we were able to gain an overall savings of about $12 million, allowing the fleet team the esteemed honor of receiving “Team of the Year!”
What Is Telematics and What Should You Track?
Vehicle telematics is a term used to describe a computerized on-truck system that enables the following capabilities:
- Vehicle diagnostics will report fuel consumption, oil pressure, engine temperatures and charging voltage in real time to support proactive vehicle maintenance.
- Monitoring and improving your daily driver vehicle inspection reporting (DVIR) compliance to better maintain your fleet assets safely.
- Automated reporting of miles by state to provide accurate and complete data for IFTA Fuel Tax Surcharge calculations where required.
- Hard braking and excessive speeding information to help keep both drivers and other vehicles safe.
- Vehicle traceability for asset utilization, location, route reconciliation and accident reconstruction purposes.
- And many other fleet performance and maintenance benefits.
The pilot kicked off in January of the test year with our telematics partner installing this technology on over 900 fleet assets ranging from Direct-Store-Delivery (DSD) Semi-Tractor to Service Vans. The pilot project’s primary objectives were to place its focus on four target areas to determine if the fleet could see a return on investment (ROI).
Our pilot focus areas were as follows:
- Increase driver productivity by 2%, saving an estimated $106 per vehicle/month ($1.18M annually) in driver salaries through improved routing and reduction in the administrative time it takes a driver to leave the facility and start the route.
- Reduce vehicle engine idling from about 21% down to 8%. The focus was “Idle for safety not comfort”. The estimated fuel savings target was about $53 per vehicle/month. (Estimated $572,000 annually).
- Reduce fuel expenditures by about $18 per vehicle/month by monitoring driver behavior and targeting a reduction in miles driven by overlaying planned route with route traveled. (Estimated $195,000 annually).
- Proactively track interstate travel and reduce annual fines and penalties incurred for non‐compliance with governmental fuel tax assessment programs. (About $1M to $2M annually)
- Proactively identifying unsafe driving behaviors that can be corrected before an incident/accident takes place, creating a safer environment.
What Was Learned from Our 12-Month Pilot?
Routing Improvements
We found that most of our drivers were very supportive of the process and saw the value to optimize the routes they operate daily. Overall, the implementation process was seen as a very positive project and there was great opportunity to work closely with each driver, using their feedback along with the telematics data to improve the routes. As the project began, we discovered a great opportunity to improve the geocodes, which is the virtual stop location (i.e., longitude/latitude) of each customer stop on assigned routes. As result of the pilot team’s combined efforts, geocodes increased to a 92% accuracy rate, which was a 32% improvement.
This resulted in an improvement in overall routing efficiencies throughout the system where pilot vehicles were located, allowing dispatching the appropriate tools to realign routes. The tool developed by the pilot was called “A Planned versus Actual” report that compared the dispatch route plan with the actual route traveled, allowing changing to occur to optimize future routing. Overall, our drivers expected operations and fleet management to provide an efficient and effective route where they could reduce unnecessary miles driven and excessive wait times to evenly balance their daily workload. Telematics afforded us the opportunity to overlay the planned route with the most efficient route driven to make improvements that reduced unnecessary miles and fuel costs.
Asset Productivity Improvements
There were two primary areas of focus to proactively monitor and improve asset management of the fleet. These target areas included Asset Utilization and Engine Alert Optimization. Included in the telematics portfolio was the ability to connect the hardware directly to the asset engine computer to monitor and measure vital performance information. These metrics included engine speed and idling, acceleration, and deceleration of assets (i.e., braking and acceleration momentum) along with real-time battery voltage and engine temperature readings. The access to these metrics allowed us to vastly improve our preventive maintenance programs across North America fleet shops. The ability to monitor speed allows the opportunity to proactively help drivers with route performance optimization and fuel reduction, resulting in improved productivity, reduced product damage and safety with fewer accidents. Additionally, telematics afforded us the opportunity to gain greater compliance with our daily driver vehicle inspection reporting (DVIR) program.
Overall, the pilot proved that through effective monitoring, engaged associates and leaders could improve the total number of alerts received daily. During the pilot trial period the number of alerts were reduced by more than 40%, making the work environment much safer and more productive for our valued stakeholders, which included our customers and the public. If you’ve been following the Fleet Success initiative, you’ll certainly understand the critical importance of stakeholder satisfaction in your operation.
The ability to monitor non-productive engine idling provides the fleet with an advantage in its sustainability goals to reduce fuel and harmful carbon emissions. As a direct result of the pilot, we were able to reduce idling from 21% to 9.6%, gaining about 5% reduction in fuel gallons — or approximately $1.1 million in cost. Overall, the net results were a 57% improvement in non-productive engine idling over the course of the 12-month pilot.
A major benefit to telematics is the ability to obtain accurate mileage from the engine computer. Accurate miles and data are critical to measuring fleet performance. As our fleet tracked the daily movements (and miles) of its assets it found great opportunity to reduce the number of assets in the fleet. The initial utilization of the fleet assets was found to be about 65% utilized overall across North America, allowing the newly centralized Asset Management Team to work closely with each of the regional management teams to reduce almost 1,000 underutilized assets (which later became 10,000).
Underutilized assets allow fleets to save precious dollars in annual depreciation expense, tax and licensing, and various cost avoidance in administrative and operational expenses necessary to the management and operation of a fleet. Improving asset utilization literally saved hundreds of thousands of dollars, allowing the central Asset Management Team to increase focus on the administration of replacing assets used and critical to the operation and reduce wasted time evaluating low-use assets for replacement.
A true understanding of underutilized assets affords the Fleet Management team to set realistic goals to improve the overall operation to reduce costs and increase productivity. The central asset team was able to aid in reducing low-use assets across North America, resulting in improved asset residual values and reducing the overall spare percentage to industry levels below 15%.
Fuel Tax Administration (IFTA)
The ability to track the exact movement of each asset is critical for fleet to ensure they pay their fuel tax obligations — which if not monitored properly can result in heavy fines. In the past, fleet incurred $1- to $2 million dollars a year in governmental fines resulting from inaccurate reporting using outdated manual processes.
Using a telematics solution to track the exact interstate movement of an asset afforded our fleet with the ability to possess the data necessary to file its periodic tax obligations associated with such government programs as the International Fuel Tax Association (IFTA) and individual Highway Use Tax programs in various states, like the New York area, for example. Now, at the push of a button, the fleet had the ability to produce a detailed report of all asset interstate travel that can be used to prepare its tax administrative reports. This new tracking and reporting process using a telematics tool has removed 90% of the administrative burden, saving an estimated $145,000 annually.
Are You Considering Telematics?
I’m a huge advocate of using telematics technology to obtain efficiency gains in the fleet.
This turned out to be one of those career-making initiatives that proved to be a win-win for all the stakeholders involved, from drivers to C-Suite management. If you haven’t considered telematics in your fleet operation, it may be a good time to set up a pilot with a telematics supplier and see if your operation can gain similar results.
At RTA, we are a reseller for a well-known telematic supplier and can assist you with an opportunity to pilot this great technology to gain efficiencies in your fleet. This is especially critical now with all the supply-chain issues and economic challenges fleets are facing. Because RTA is a system that supports telematics, we also have interface capabilities to capture the telematic data seamlessly using APIs and custom designed integrations between telematics suppliers and the RTA system.
With a tight budget and worsening economic conditions, what are you waiting for to set your fleet up with success?
To learn more about the RTA system and it works with telematics solutions, reach out to our Sales team, or schedule a demo.