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GPS and fleet management systems continue to gain traction across all fleet-dependent industries based on the many benefits the technology can afford organizations and their vehicles. From helping to improve customer service, to increasing driver productivity and enabling better routing, fleet management software can play an integral role in streamlining operations and enhancing connectivity. It can also significantly contribute to measurable ROI, both in terms of the technology investment itself, and in relation to impacting cost savings across a number of critical business areas.
But to recognize true ROI, it’s important to first define what it means in relation to the utilization of a GPS management system, and then identify the key areas to measure within the organization.
Fleet management ROI: What it means
In our 2018 Verizon Connect Fleet Tracking Trends Report, based on a survey sent to those in the Automotive Fleet, Work Truck, Government Fleet, Fleet Financials, Business
Fleet, LCT (Luxury Coach and Transportation) and HDT (Heavy Duty Trucking) magazine and online subscriber databases, we found that nearly all (97%) organizations (of 807 responses) using a fleet management solution found it beneficial, and an impressive 38% of those who had rolled out the technology were able to realize a return on their investment in less than one year.
When breaking that down by fleet size or industry, the numbers get even better. 39% of small fleets and 30% of medium-sized fleets were able to see ROI within six months or less. Likewise, many organizations across specific industries were able to benefit from a positive ROI within six months:
- Commercial Work Truck (36%)
- Government (25%)
- Ground Transportation (58%)
- Trucking (33%)
While these figures underscore the value of investing in fleet management technology, there’s more to the telematics-driven ROI story. When it comes to a business’ bottom line, especially in the wake of labor shortages, compliance pressures and increasing competition, it’s imperative to understand how using GPS tracking can really help companies save money and the specific cost centers where it has the most impact.
Digging deeper into the data showed that GPS fleet management systems help to decrease overall operating costs as well: the bottom line is that 12% of small-sized fleets, 12% of medium-sized fleets and 17% of enterprise fleets cut operating costs post-implementation. And when it came to the biggest areas contributing to operating costs – fuel, accidents and labor – organizations experienced a cost decrease in all three.
By using a fleet tracking system, companies saw a 13% average decrease in fuel costs. This was slightly higher or lower when broken out by industry: Commercial – Work Truck (11%), Government (20%), Ground Transportation/Limo/Shuttle (17%) and Trucking/Transportation (7%).
With telematics, organizations reported a 25% average decrease in accident costs. By industry, the decreases achieved were as follows: Commercial – Work Truck (29%), Government (16%), Ground Transportation/Limo/Shuttle (30%) and Trucking/Transportation (16%).
Post-GPS technology implementation, companies reported experiencing an average decrease of 17% related to labor costs. Similar percentages were seen when broken down by industry: Commercial – Work Truck (17%), Government (13%), Ground Transportation/Limo/Shuttle (25%) and Trucking/Transportation (9%).
Assembling a fleet management ROI checklist
Your organization can realize many of the same benefits we’ve outlined, simply by adopting or upgrading the right GPS tracking technology. And while determining the ROI of a new software purchase like a fleet management solution can involve many factors, the formula for calculating ROI itself is fairly straight-forward: ROI = (Gain of Investment) – (Cost of Investment) / (Cost of Investment)1
The key is recognizing what factors apply to your company for both gain of investment and cost of investment. Here’s a checklist we’ve created to help you determine what to consider in your ROI calculation.
Potential Gain of Investment
- Improvements to customer service
- Improved fleet productivity (can include rightsized vehicle utilization and increase in stops)
- Enhanced routing
- Greater ELD compliance/reduction in fines
- Improved vehicle maintenance/decrease in maintenance costs
- Decrease in fuel consumption
- Decrease in labor costs
- Decrease in accident costs
- Decrease in other operational costs and cost contributors (reduction in instances of idling, harsh driving and speeding)
- Streamlined administrative functions
- Decreased instances of lost or stolen vehicles or related assets
Cost of Investment
- Cost of the fleet management system itself
- Technology installation, maintenance and support
- Downtime resulting from staff education and training
In terms of potential gain of investment, we tracked many of these factors in our Fleet Tracking report, and here’s how other fleet-dependent organizations netted out in terms of achieving these benefits post-solution implementation:
- Improved Customer Service (52%)
- Improved Productivity (49%)
- Improved Routing (48%)
- Improved Vehicle Maintenance (40%)
- ELD/Regulatory Compliance (38%)
- Decrease in Fuel Consumption (34%)
- Decrease in Accidents (22%)
- Decrease in Labor Costs (12%)
Make this year all about your fleet
According to ACT Research, fleet growth is predicted to outpace freight growth in 2019.2 And for the commercial fleet segment in general, 2019 looks to be a strong asset acquisition year, especially in the energy and construction sectors.3
This means, depending on what industry you’re in, using the latest fleet management technology to help gain a competitive edge or leveraging it to help right-size your fleet to adjust to freight variances will be critical this year – and both will contribute to your organization’s overall ROI. In addition, as the economy continues to shift, regulations get tighter and safety and environmental concerns move further into the spotlight, technology will become the deciding factor as to which fleets are able to successfully future-proof, and which are hindered by a lack of connectivity, mobility and flexibility.
To learn more about how modern fleet management solutions can drive positive ROI for your organization, download the full Fleet Tracking Report.