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Fleet Management Solution: A Powerful Management Tool with a Clear Business Case and ROI for Fleet Operators
Frost & Sullivan, April 2011, Pages: 33
As this study illustrates various internal and external challenges faced by fleet managers that require solutions to optimise cost and operations and at the same time improve customer service. Telematics is a powerful management tool that can support fleets in overcoming those challenges but in times of limited margins and economic slowdown, a significant and fast return on investment is mandatory. This research is part of a phased exercise. Objective is to measure and analyse the short-, mid- and long-term benefits of implementing Telematics. Therefore this analysis will be continued over a one year timeframe, collecting real-world data and customer specific calculations and analysis.
Research Overview
This Frost & Sullivan research service titled Fleet Management Solution: A Powerful Management Tool with a Clear Business Case and ROI for Fleet Operators provides return on investment (ROI) case studies, strategies and business model overview.
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Market Overview
Multiple Advantages Push Case for Telematics in Fleet Management
In today’s transport and logistics industry, fleet operators face both internal and external challenges to improve their services and remain competitive. The recent global recession and ever-tighter margins have compelled fleet operators to achieve better cost management. Volatile and extremely high fuel costs, combined with penalty fees and communication outlays, have made such efforts extremely challenging. In order to both maintain existing customers as well as win new customers, fleet operators need to continuously monitor operations to identify opportunities to improve customer service, while offering optimal responsiveness and flexibility. Telematics has established itself as a powerful management tool that supports fleet managers in this endeavour by addressing major challenges and requirements.
“The potential ROI that fleet logistics can expect is primarily based on the optimisation of travel distance and total trip time,” notes the analyst of this research. “Based on a recent case study conducted by Frost & Sullivan, it became clear that total travel distance could be reduced by approximately 1.15 per cent resulting in the fleet operator potentially saving up to € 1,410 in fuel cost and up to €2,580 in other vehicle cost such as lease cost and wear and tear, when a telematics fleet solution was deployed.” The research found tangible ROI, in terms of reduced wear and tear. In this context, better route planning enabled reduced damage on vehicles with savings that could add up to €9,500 per year. Increased productivity was another favourable outcome of using fleet management solutions; an increase of approximately 20 per cent in the numbers of jobs per day was observed by a public organisation, a definite increase from the previous average of 5-6 jobs per day.
Fleet Telematics to Support Multiple Operational Efficiencies and Cost Savings
Internal challenges such as duty of care, an increase in fleet size and the dearth of competent drivers in the industry remain issues that a fleet manager has to deal with on a daily basis. Legislative requirements such as restrictions on driving hours, reduction of emissions and traffic regulations have forced fleet operators to collect and archive data about their drivers and vehicles. Fuel costs, driver wages, vehicle maintenance and tyre wear and tear are the key costs that add up to nearly 62 per cent of the total operational outlay.
“Telematics can lead to a progressive ROI,” concludes the analyst. “It can help to reduce direct expenses such as fuel cost by optimising route planning, improving operational efficiencies and driving revenue generation through top quality customer service and maximum flexibility.”
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