Reasons That Fleet Telematics Projects Fail

11 Reasons Telematics Projects Fail

You Named the Project “The GPS Program” or “The Black Box Project”

What’s in a name? Maybe everything, if from the name, employees decide what a project is and how it will affect them.  Every project that a company invests time and resources into gets broad organizational exposure. You hear the hallway grumbling about “this or that project” that the company has underway. The name of the project can have serious impacts on what the organization thinks the project is and how it will affect employees (and management) personally. Let’s be clear – GPS stands for Global Positioning System and is a technology component that is becoming a standard in everything from vehicles to mobile devices. Like a clock on a microwave, or on a coffee maker or DVD player – GPS is simply an input into adding location information to the things that we value. Imagine if your company embarked on an extensive upgrade to your information technology infrastructure to benefit employees and customers – and named the project “The CPU” project.  Pick a project name that creates excitement for your company and meaningfully represents the results that you are seeking everyone to participate in achieving. The “Driving Excellence Project”, “Driving Performance and Safety Program” or the “Drive Green Initiative” – for example.

Ambiguous Project Requirements and Goals

Take control of the project. Assign a project manager who collaborates directly with key departmental stakeholders from Risk & Safety, Operations, Human Resources, Fleet Management, and Finance to define specific detailed project requirements that have tangible, measurable, ROI.  While this seems obvious, many companies will skip this stage and go right to applying a solution to jump start a project.  In-vehicle technology solution providers are constantly soliciting their services to companies with fleet vehicles. This is not a commodity market and not all solutions are equal. The impacts to your employees, culture, and financial return vary significantly from supplier to supplier.  Don’t assume requirements (such as project controls, management dashboards, application functionality, data, enterprise integration, measurements, policy, and workflow) are met.  ‘Telematics’ and other similar projects tend to fail and the companies usually encounter over spending, project restarts, rework, and/or unmet expectations. Many of you reading this – have a “trash heap” of in-vehicle technology past projects.

The Project Starts with “A Couple Free Devices”

 Frequently the technology vendor will show up and say “how about we set you up with a few free boxes?” Sounds great, right?  Maybe not.  While it may be attractive from a project startup cost standpoint – it’s potentially the start of a project that goes nowhere.  Right from the start this approach focuses on “the device” not on the people, process, and measurable results. If the goal of the initiative is to improve the driving culture – how are we going to do that on a couple drivers with a couple free boxes? What will these drivers think of their supervisors? Why were they singled out? How is does this initiative support the organizational goals for the fiscal year? Generally, this approach is more about the supplier getting in your door, then it is about your likelihood of sustainable organizational and financial results from an initiative.

Lack of Executive Support

Organizations focus, and apply resources, to approved projects that are based on solving defined problems and providing measurable results.  Executive sponsors champion, and key stakeholders rally behind, initiatives that have broad organizational visibility and resourcing approvals. Your “Driving Performance and Safety” initiative should have a highly visible executive sponsor, the goals/results of the initiative should foot to a fiscal year corporate objective (like “saving 10% of our fuel expenditure, reducing the frequency and severity of crashes and risk by 40%, and eliminating CO2 emissions for a greener planet”). Your executive sponsor and stakeholders can add weight and momentum to a project that is tied to corporate goals.

Large Changes to Project Requirements and Scope

Beware of the “Driver Performance” initiative that turns into the “Vehicle Maintenance” project. The reward of having a robust requirements list and involvement of stakeholders comes at the risk of your project core ROI being hijacked.  It also runs the risk of requirements becoming so large and broad that the technology is unavailable to satisfy – so the project goes nowhere waiting endlessly for the all inclusive technology that may someday become available. Meanwhile, real value – the largest ROI, potentially – is left languishing in hope of future technical advances. The most prevalent of this example is projects that start from the premise of providing ROI based on fuel and risk savings through driver feedback and coaching that turn into initiatives that require predictive maintenance based on diagnostic fault code data. There are many initiatives that have been derailed as the issues of vehicle data standards across year/makes/models, integration of diagnostic data with in-sourced (or outsourced) maintenance services, and OEM warranty impacts  – confuse the initiative and grind otherwise successful projects to a halt. Years of lost savings from fuel and risk reductions alone are wasted at the expense of solving the complexities of the motor company products and data.

 Failure to Establish Employee Expectations and Benefits

WIFM – “What’s In It For Me?” All participants in the initiative need to have the WIFM question answered. It’s unfair to ask employees to participate in a work changing process with no clear understanding of the benefit.  “GPS projects” that are seen as data collection initiatives to track  employees – communicates that the organization thinks their employees are stealing (time) from them and that they are lazy and should be working harder. It may also communicate that supervisors are inefficient in how they schedule and manage resources.  “Video camera projects” that are seen as demeaning/spying technology is not going to be widely received with approval by the employee base. The extra burden on supervisors who will have to police these videos may not be received well. What is the message you are trying to communicate to the employees and supervisors? What does the initiative (and technology) say about the employee/employer relationship? If you have a corporate goal to “be the best place to work” how is the initiative supporting that goal? What are impacts to hiring and retention? How is the initiative supporting the employee goals for each fiscal year? Answer WIFM for each participant in the initiative and you will be much more likely to achieve success, and organizational support.

You Did Not Lead With a Positive Launch

This will come as no surprise – people are resistant to change. Change, regardless of the end-result, goes through the SARA process (Shock, Anger, Resistance, and Acceptance). Any change in corporate process or policy will be subject to the SARA rule. Why would this initiative be different? Can you imagine that sticking a GPS/Black Box/Video camera into the employee’s “office” (the vehicle) is going to be seen in anyway positive – if the imitative does not clearly have a benefit to them and isn’t attached to a positive consequence from the beginning? There are several ways that this can be accomplished. Starting with integration to existing employee benefit programs, the construct of new incentive programs, individual and team competitions. What is clear is that employees want the autonomy to do their jobs well. They want tools that they can use to measure themselves against the corporate policies and goals BEFORE supervisor intervention. The best employees will compete to continue to be the best. Lesser employees want the chance to be the best. Self-direction and autonomy are the keys to support both of these employee types. How is your in-vehicle project providing the employee tools and technology to achieve self-direction and autonomy, before supervisor intervention?

Measurement and Metrics

Beware the project that introduces financial or reporting metrics that are not leveraging/interfacing/enhancing as much as possible existing financial/budget reporting. For example if the fleet fuel budget is currently reported to the CFO, and the project expects to demonstrate fuel savings, the existing measurement/reporting process that finance uses needs to show demonstrable positive change. Introducing a new measurement, disconnected from how fleet expenditures are captured and report today, will be difficult for finance to support as demonstrable change. Fuel consumption data and existing MPG reporting show be examined and subsequently integrated with and enhanced to drive accuracy – as opposed to creating a new MPG or consumption reporting system. This holds for risk management, crash management, and fleet management (vehicle lifecycle costs).

 Unrealistic Timelines and Deadlines

When considering the project goals, metrics and measurements – make sure the business cycle supports the expected change. For  example if through high performance driving we expect to replace fewer tires and have fewer brake maintenance transactions (or other routine or catastrophic transactions) a complete maintenance lifecycle against control data needs to be evaluated – and this particular metric may take a year, or longer, depending on year make an model.  Installation of technology needs to be considered in the project timeline. The upfront design of the program needs sufficient time before the installation project begins.

 Insufficient resources

And finally, given steps 1-9, it should be apparent that adequate resources from all participants need to be planned for. The one resource that is critical and is sometimes not included is the drivers. A representative driver, a driver committee, the driver union, needs to be a critical participant in the process. Driver buy-in to the program, the benefits, will be a critical success factor.

Price vs. Value Choice

Chances are that you looked at several Telematics companies when considering choosing a solution. Many of the companies had solutions that when properly implemented, you saw the value that they could bring to your company. The main problem was that your company chose a solution based on PRICE and not COST, from a non-local company that offered cheaper monitoring or slightly cheaper hardware. In telematics and the companies that represent solutions, you definitely get what you pay for. If your goal as a company is to gain long term benefit from your investment into the technology, when possible, choose a local company that can work closely with you to help you grow and learn how to gain the most profitable ROI from your telematics project. It’s one thing to invest into the technology; it’s another to understand how to really benefit from it.


For more information, contact Vincent Rush of Lynx Telematics at (866) 314-0461 

 For more information on how Lynx Telematics, an OEM located in Cincinnati, Ohio can help your fleet become more operationally efficient or custom design a solution to meet your fleet management needs, contact Vincent Rush at (866) 314-0461

LynxTelematics is an OEM that controls design, engineering, firmware, software development, IT support and manufacturing processes of our product, allowing us to produce the highest quality product in our industry, while offering our customers competitive pricing.

As your partner, we provide ongoing training and support to insure that the product is properly sold to the end user, maximizing the re-sellers profitability.

As one of the pioneers in telematics technologies, Lynx Telematics provides our clients with powerful end-to-end vehicle telematics tools. Our technology offers a real solution that delivers safety, saves money and provides an unprecedented level of peace of mind to our customers. 

Our product, LynxSafe, is the newest and most advanced in-vehicle communication system currently on the market. It combines GPS/satellite and GSM cellular technology to provide users and family members with immediate access to real-time information delivered directly via any internet enabled device including I Phone and Android smart phones.

All of our devices benefit from the innovation of U-Blox technology and a 3D Accelerometer, providing the industry’s most accurate pin point locating technology to within a 3 ft. radius.

Steps 1-10 originally written and posted by David Colman, Senior Vice President of Global Business Development for Green Road Tech. 

The Core of Lynx Telematics and Auto Dealerships

With innovative and easy-to-use services, Lynx Telematics, Inc. connects you to what you need, whether it's a coffee shop in Cincinnati, an ambulance in the middle of nowhere or the location of a loved one. As an OEM we serve our customers by offering a comprehensive suite of services to consumers, auto dealers, and fleet managers. We are also able to tailor our offerings to the distinctive needs of our partners and personalize the connected experience for customers

Lynx Telematics aggregates best in class wireless services into robust and adaptable solutions that can be tailored to any platform. Our solutions are built around the next generation architecture, which is an open telematics platform allowing for inter-connectivity between multiple content providers, call centers and hardware platforms. Our solutions employ innovative, scalable technology developed for the future and delivered today. We offer a comprehensive portfolio of proprietary connectivity solutions, LynxSafe for individual end users and Lynx Telematics for fleet based transportation and sales based companies.

The connected solutions within the Lynx Telematics products revolve around five service categories: Safety and Security, Navigation, Convenience, Infotainment and Diagnostics. All customers will have access to a customized Web portal where they can view diagnostic reports, download directions to the vehicle or even unlock the car’s doors.

At the core of the LynxSafe solution lays enhanced safety and security features, including critical services such as Automatic Crash Notification, Emergency Calling, Stolen Vehicle Location Assistance and Roadside Assistance. Through our Emergency Call Relay Center, we utilize certified emergency response specialists that are APCO - and NENA-certified and have direct public safety experience as firefighters, EMTs or police officers. The ECRC uses the most accurate and up-to-date Public Safety Answering Point (PSAP) location data, and customer calls are prioritized within the 9-1-1 system at a high level.

Services Include:
• Automatic Collision Notification
• SOS/Emergency Calling
• Safe Ride
• Roadside Assistance
• Stolen Vehicle Tracking
• Automatic Alarm Notification
• Emergency/Crisis Management

The Convenience solution is designed to provide customers with an enhanced ownership experience and assistance with vehicle interaction.

The LynxSafe telematics diagnostics solution allows customers to proactively manage the maintenance of their vehicles, saving time and money. Services include communications regarding the vehicle’s systems status, maintenance reminders, recall notifications and user maintenance scheduling with dealers. In addition, Lynx Telematics is always working with regulators to develop remote emissions programs, which continuously monitor emissions metrics and notify the customer if the vehicle is not compliant, improving not only the “health” of the vehicle but also the health of the overall environment by preventing the emissions of harmful greenhouse gases.

Services Include:
• Automatic Maintenance Reminder
• Recall Notification
• Remote Emissions Monitoring
• Interactive User Manual
• Diagnostic Email
• OEM Quality Data/Error Code Monitoring


What separates Lynx Telematics, located in Cincinnati, Ohio is the fact that, we don’t just sell you a solution…we actually teach you how to sell the solution through your auto dealerships F&I department or as an over the counter product through a specialty retailer.

With nearly 20 years of working with Auto Dealerships across the United States as a world class sales organization, we can help you achieve maximum profitability with a product that very few dealerships currently provide, yet 84% of your customers are asking for. (According to an independent survey by Accenture)

For more information or to arrange a web demonstration, please contactVincent Rush, Business Development Manager for Lynx Telematics at 513-965-6318

Fleet Management Made Easy With Telematics

Discover why Lynx Telematics users are surprised about how easy our GPS tracking system is to use. 
With just the click of a mouse, you’ll experience all the benefits of real-time GPS vehicle tracking. These include: 

• Increased workforce productivity
• Improved driver safety
• Reduced fuel costs
• Enhanced truck and cargo security
• Improved vehicle maintenance 

Our fleet management software is 100% web based, so there’s never any physical software to buy or troublesome updates to download.
And you can quickly integrate it with other routing and dispatch applications to further improve your fleet management.
What does all of this mean for you?
You can cut fleet costs by leveraging your GPS tracking information online to better manage drivers, trucks, and cargo.    
The Lynx Telematics GPS tracking device even alerts you when drivers violate perimeters you set for speed, idling, routes, seat belt usage, unauthorized vehicle use or fuel card abuse as well as reducing your companies’ liability by preventing texting and driving.
It’s just that easy.
As an OEM that stands behind our product with a lifetime guarantee, we can also custom design a Telematics fleet solution for your company needs.


Don’t you think fleet management should be THAT easy?
Contact Vincent Rush of Lynx Telematics today for more information.
Vincent Rush
(866) 314-0461
Vrush@LynxTelematics.com 

Lynx Telematics is an OEM that controls design, engineering, firmware, software development, IT support and manufacturing processes of our product, allowing us to produce the highest quality product in our industry, while offering our customers competitive pricing.

As your partner, we provide ongoing training and support to insure that the product is properly sold to the end user, maximizing the re-sellers profitability.

As one of the pioneers in telematics technologies, Lynx Telematics provides our clients with powerful end-to-end vehicle telematics tools. Our technology offers a real solution that delivers safety, saves money and provides an unprecedented level of peace of mind to our customers. 

 

Our product, Lynxsafe, is the newest and most advanced in-vehicle communication system currently on the market. It combines GPS/satellite and GSM cellular technology to provide users and family members with immediate access to real-time information delivered directly via any internet enabled device including I Phone and Android smart phones.

All of our devices benefit from the innovation of U-Blox technology and a 3D Accelerometer, providing the industry’s most accurate pin point locating technology to within a 3 ft. radius.

Vincent Rush, Lynx Telematics, 

Cincinnati, Ohio

(866)-314-0461

Telematics: A Definition

Telematics is the integration of wireless communications, vehicle monitoring systems, and location devices. The term telematics combines “telecommunications” and “informatics.” Literally defined, telematics is the integration of wireless communications, vehicle monitoring systems, and location devices. Telematics has become a tool to monitor idling time, help reduce bad driving behaviors, and eliminate unauthorized vehicle use. Vehicle telematics systems also are increasingly used to provide remote diagnostics. A vehicle’s built-in system identifies a mechanical or electronic problem, and the telematics package can automatically transmit this information to the vehicle manufacturer, fleet manager, or service organization.
GPS, AVL, MRM, WiFi, and RFID are just a few acronyms representing telematics systems and technologies. The growing list is only one indication of the expanding use and variety of applications telematics offer.

Lynx Telematics is an OEM that controls design, engineering, firmware, software development, IT support and manufacturing processes of our product, allowing us to produce the highest quality product in our industry, while offering our customers competitive pricing.

As your partner, we provide ongoing training and support to insure that the product is properly sold to the end user, maximizing the re-sellers profitability.

As one of the pioneers in telematics technologies, Lynx Telematics provides our clients with powerful end-to-end vehicle telematics tools. Our technology offers a real solution that delivers safety, saves money and provides an unprecedented level of peace of mind to our customers. 

 

Our product, Lynxsafe, is the newest and most advanced in-vehicle communication system currently on the market. It combines GPS/satellite and GSM cellular technology to provide users and family members with immediate access to real-time information delivered directly via any internet enabled device including I Phone and Android smart phones.

All of our devices benefit from the innovation of U-Blox technology and a 3D Accelerometer, providing the industry’s most accurate pin point locating technology to within a 3 ft. radius.

Vincent Rush, Lynx Telematics, 

Cincinnati, Ohio

(866)-314-0461

Hard & Soft Cost Impacts of Extended Vehicle Cycling

Lengthening vehicle replacement cycles significantly affects such bottom-line important issues as fleet maintenance budgets, fuel economy, resale values, safety and ergonomics issues, company image, and driver morale.

June 2010, Automotive Fleet - Feature

By Mike Antich

Click here for a PDF of the full article, including charts.
Part two in a two-part series on vehicle replacement examines the impact of extended cycling on fleet maintenance, fuel economy, safety/ergonomics, resale values, company image, and driver morale. Also included are the effects of extended cycling on vocational fleets.

Impact on Maintenance Budget

There are few benefits to the maintenance budget by extending replacement cycles unless an organization makes moderate adjustments to maintenance policy and manages the program very tightly. Small shifts in replacement policy may be acceptable; preventive maintenance expenditures may not increase, and the probability of catastrophic failure is not significantly increased. However, it is critical to establish and adhere to a policy that avoids additional sets of tires and brakes.

In most passenger vehicles, brakes generally are replaced every 30,000-45,000 miles, depending on the manufacturer and driving habits. Tires are typically replaced every 45,000-60,000 miles. Light-duty trucks, SUVs, and commercial vans follow similar schedules, but may follow a significantly shorter cycle dependent upon payload, application, driving conditions, and driving habits.

Increased preventive maintenance expense for items such as timing belts, spark plugs, etc., ensues if cycles are not carefully planned and executed. Unscheduled first-time maintenance repairs such as alternators, starters, suspension, and air conditioning become more probable and lead to thousands of dollars in unforeseen maintenance expense if vehicle replacement cycles are extended beyond manufacturer warranty periods. With increased mileage, the frequency and probability of catastrophic failures, i.e., repairs in excess of $2,000, sharply increase.

Prior to 2008, the number of maintenance transactions, and dollars associated with those repairs, was flat or in a decline. Since 2008, i.e., the period in which fleets began to extend replacement cycles due to the down turned economy, industry maintenance transactions and dollars spent have increased by 20-30 percent on average. As fleets continue the extended replacement cycle, these numbers are expected to grow exponentially. In fact, the trend suggests that maintenance transactions and associated dollars will grow to 28-38 percent on average in 2010.

Thus, if cycling parameters are extended to slightly below the next tire/brake/preventive maintenance interval, increased maintenance expense may be minimized and overall cost of ownership may be reduced. When fleets extend replacement cycles, consideration should be given to the impact on residual resale values; the potential costs and impacts of vehicle downtime and loss of productivity; the increased probability of safety-related issues; the impact deteriorated vehicles have on company image and driver morale; and the degradation of fuel economy. It is also significant to recognize if replacement order delivery is slow, the potential savings previously gained on paper may be mitigated by unforeseen circumstances and may not be recovered in the resale of the vehicles.


Additional Consequences to the Maintenance Budget

As vehicles age, more expensive and potentially catastrophic repairs will occur. Without proper routine maintenance, the timing of the unscheduled repairs becomes even more unpredictable. More expensive brake repairs and repairs to heating, cooling, engine, transmission, and cab/sheet metal will increase disproportionately as vehicles age.

For example, a less-than-500-unit fleet has extended the current vehicle cycle by about five months. (See Chart 2.) Total maintenance spend increased by 26 percent with most major increases due to brakes, tires, cab/sheet metal, and preventive maintenance. The average repair cost was $10 less per repair; however, maintenance spend still increased due to the number of repairs (329 more in 2009) and the type of repair (more expensive repairs). Furthermore, the number of maintenance rentals increased from 37 in 2008 to 201 in 2009, or an increase of approximately $10,000.

This is a result of an increase in more expensive repairs and repairs requiring more than one-day service, such as cab/sheet metal, engine, and heating and cooling systems. In a fleet of 1,000 vehicles, this expense would equal an increase in maintenance spend of more than $120,000 per year.

In short, budgeting for maintenance not under warranty is unpredictable, especially if routine maintenance does not follow recommendations. If the ultimate decision is to extend vehicle cycling, implementing a fleet maintenance management program is recommended to handle the repair negotiations, post-warranty recovery, and above all else, managing all the calls that will significantly increase. In the case previously cited, the number of repairs rose by 329 in 2009, or more than one call per business day (assuming a 260-day business calendar and a call required for every repair). The total number of repairs in 2009 for this fleet was 3,375 in 2009, or if using a 260-day cycle, almost 13 calls per day.

Impact on Fuel Efficiency

There are a multitude of reasons why an optimal replacement strategy is beneficial. Factors such as reduced fuel, maintenance, and downtime spend, plus improved safety features are just a few factors. Ancillary benefits include improved corporate image and driver morale. Deeper volume pricing discounts may be negotiated with the OEM of choice as vehicle order volume will increase.

The impact on fuel efficiency created by extended vehicle replacement cycles is two-fold:

• New model-year vehicles are continuously achieving better fuel economy.
• As an existing vehicle ages, the fuel economy deteriorates due to the increased inefficiency of the aging vehicle. New model-year vehicles get better fuel efficiency.

According to the Environmental Protection Agency (EPA) Web site (www.epa.gov), large sedans such as the Taurus, Impala, etc., have been realizing better average fuel economy year-over-year for the past five years due to a variety of factors, including lighter-weight vehicles and vehicles designed to run more efficiently. (See Chart 3.) In addition, car manufacturers are continuously developing and introducing new configurations, including more hybrid vehicles, to add to their vehicle lineups. Compliance with the changing CAFE standards will continue this trend.

As a vehicle ages, the performance of the vehicle deteriorates, affecting fuel economy. Declining performance, such as with spark plugs, injectors, and more importantly fuel systems and engines may reduce fuel economy, in some cases, markedly so when the vehicle gets very poor or no routine maintenance. Some industry data suggests vehicles can lose up to 1 percent or more fuel economy per year. Future fuel price increases will exacerbate the cost of the additional fuel expense.

For example, Chart 4 illustrates declining fuel economy at 1 percent per year for four years for a large sedan, while fuel prices increase by an inflation rate of 10 percent annually. Or, if starting at $2.90 per gallon today, a gallon of gas will cost $3.86 four years from now. Starting in the second year, the additional fuel cost per vehicle per year would increase $73 per vehicle and by the fourth year, $90 per vehicle per year. (See Chart 5.) For a fleet of 1,000 vehicles, this increase would result in $90,000 of additional fuel costs per year versus replacing the unit with a new model-year vehicle.

When a fleet manager extends replacement cycles, he or she gives up cost savings associated with a more fuel efficient-vehicle, whether for another make and model or with a similar replacement model as shown in Chart 6.

Safety and Ergonomics

As computer technology has increased exponentially, innovations regarding vehicle safety have come along with it. Pioneering features (such as traction and stability control, side air bags, etc.) on the most high-end vehicles just five or 10 years ago are now standard on even the most basic vehicles and across all vehicle classes from executive sedans to compact SUVs. Certainly, vehicle safety is paramount, so these enhancements make today's vehicles better, and far safer for the driver and occupants, than ever before.

The list of benefits from increased vehicle safety in newer vehicles is a long one: side air bags, anti-lock brakes, stability control, tire pressure monitoring systems, etc. These safety features are directly beneficial to the consumer market, as highway fatalities per mile driven are at the lowest rates since the 1950s. But are there any disadvantages to today's technological wizardry in terms of improving safety?

For one, as technology applies to used vehicles, older vehicles can be seen as less safe. Keeping fleet vehicles for longer cycles means drivers operate vehicles without the advanced safety features of current model-year counterparts. However, as in-vehicle technology increases, the cost to repair (such as in a collision) also rises dramatically.

Ergonomically, today's cars and trucks also have come a long way from just five years ago. Ancillary items, such as iPods, can now be used in most any vehicle. In addition, manufacturers have done much to make the driving experience more ergonomically sound with the advent of systems that integrate cell phones, navigation systems, and radio.

Even in vehicles without a system integrating all the entertainment functions, significant improvements have been made to features such as navigation systems. These include capabilities such as real-time traffic alerts and touch-screen monitors, all designed with the intent of keeping the drivers' eyes on the road ahead.

One major drawback of keeping older vehicles in service is missing out on the productivity features of today's vehicles.

Leveraging New Technology

The benefits of newer vehicle engine technology are often overlooked in the decision to extend or delay vehicle replacement. With fuel one of the largest fleet operating costs, advanced engine technologies offer opportunities to reduce fuel spend through improvements in mpg.

Utilizing EPA data, combined fuel economy ratings for popular fleet vehicles shows an mpg improvement from a 2005-MY to 2010-MY vehicle of 8 percent. For a typical 500-unit fleet driving 20,000 miles per year, this improvement translates to a significant annual savings of about $100,000 based on a fuel price of $2.75 per gallon. As fuel prices increase, the impact becomes greater. With CAFE standards rising by 30 percent over the next six years, the effect of vehicle replacements on operating costs will continue to increase.

CAFE data is the sales-weighted average fuel economy, expressed in miles per gallon, of a manufacturer's fleet of passenger cars or light trucks with a gross vehicle weight rating (GVWR) of 8,500 lbs. or less, manufactured for sale in the United States, for any given model-year.

To combat rising fuel prices, combining a right-sizing model with an increased focus on mpg can aid with selector list evaluation. Fleets taking advantage of new engine technologies by replacement and moving to a smaller class of vehicle have on average realized a 10-percent reduction in both fuel spend and carbon emissions resulting from mpg improvements.

Impact on Company Image & Driver Morale

Starting with the assumption a given fleet is currently operating under a cycling policy established as "optimum" based upon the company's culture and goals and the fleet is now considering extending the lifecycle of its vehicles, it is further assumed, for these purposes, the fleet is knowingly, by choice, considering moving from "optimum" to something less. Such a decision is basically a "roll of the dice." Any short-term gain in reducing costs will ultimately not be offset by higher costs. For some, taking this chance may be worth the gamble for the potential quick win, but typically will not serve the fleet well in the long run.

Before the decision is ultimately made, many issues must be considered beyond "hard" costs. The "soft," but very real, costs of extending a fleet's lifecycle could include the potential negative impacts on the company image and driver morale. The degree of impact depends upon the severity of the change, the expected duration of the new policy, and the driving force behind the change.

If the driving force is unique to the company (i.e., drop in sales causing need to reduce expenses) and the change is not severe and expected to be temporary, most drivers likely will appreciate the situation and be happy to do their part to contribute. If the cause is more widespread (i.e., industry-wide), again, drivers will tend to accept the change and for a longer duration.

The more severe the change and the greater the expected length of the policy change, the greater the likelihood of negative impacts. As we all know, vehicles can be very personal, and for some industries, an important influence on recruitment and employee retention. The cost can be significant if it causes losing a top sales performer to competition that offers a driver-perceived better fleet vehicle/policy.

The cost will not hit the fleet's budget, but could have a dramatic impact on the company. Likewise, should the vehicle (or lack thereof due to breakdowns) impact the driver's ability to earn commissions or other compensation (i.e., route sales, services), clearly the situation would cause morale issues and again, the potential loss of valued employees - not to mention the cost of hiring and training replacements.

A company's image could also suffer as vehicles age, wear out, break down, and at the extreme, appear unsafe. Such an appearance can be interpreted as the outward signs of a less-than-successful company. The impact, of course, is greater when clients, customers, partners, vendors, etc., are exposed to the fleet as passengers or when the vehicle is on the road or parked in their facilities. Oftentimes, the driver and company vehicle may be the only tangible exposure someone has to the company, and as such, can have a significant impact on how the company is viewed by the outside world. It is important the vehicle's general perception is aligned with the desired perception of the company.

Further, regarding safety, should the extension of the cycle go to the point where vehicles are unreliable and proven unsafe, the liability exposure to the company is immeasurable.

Each company and fleet is different, so there can be no one answer to the question of the optimum cycle policy, and the impact of extending a policy will vary. As consideration is given to making a change, it is prudent to solicit input from all those who might be affected, directly or indirectly. It should not be solely done on the basis of bottom-line impact on the cost of the fleet. Sales, service, HR, risk management, and any other stake-holding departments should participate in the evaluation.

Alternatives When Extending Vehicle Lifecycle

When facing a limited budget for vehicle replacements, alternatives are available to simply extending the lifecycle of the vehicle. Dollars can be stretched further by:

• Leveraging remarketing opportunities. Despite the challenges of today's financial conditions, there are opportunities for leveraging the current recession as part of the cycling plan. With many fleet managers extending vehicle replacement cycle, the result is a short-fall of lower-mileage used vehicles. This decreased supply - coupled with a lack of new product inventory - presents a rare opportunity for fleet managers to take advantage of a stronger-than-expected used-vehicle market
• Body transfers and refurbs. Some fleets perform refurbs on specific types of chassis to improve overall lifecycle expenses. Body swaps are more common and necessary when the upfit is more customized than the chassis. This strategy can decrease capital expenditures.
• Route optimization. When applicable, fleets may reduce miles driven through route optimization. This strategy frees up vehicles with remaining life for reassignment as replacements for aged units.
• Long-term rentals. Vehicles without extensive upfitting can be substituted with long-term rentals - at least until the next year's budget allows replacement. This tactic reduces major maintenance expenses on vehicles that have reached the end of their lifecycle.
• Proper financial analysis. This identifies when these options make fiscal sense in specific circumstances is necessary.

Managing Costs at Fleet & Vehicle Levels for Optimal Operations

Changing factors, including business, drivers, the automotive industry, and the economy, create the need to manage costs both at the fleet as well as the vehicle level to realize the optimal point of operation.

Extending vehicle cycles can be a short-term solution in tough economic times. Fleets taking a macro look at all costs and leveraging analytical tools can model and execute strategies that reduce costs with current or even reduced cycles.

These tools include:

Scorecarding. The ability to consolidate and trend all the historic costs factors into a single view to leverage with management is critical to understanding and communicating how fleet age impacts each cost category.   

Benchmarks. Peer and industry benchmarks provide insight into overall performance and help uncover potential changes to long-term strategy.
Lifecycle Optimization Modeling. Understanding the "what-if" of vehicle replacement must be leveraged with the overall projection of holding a vehicle.

By leveraging these tools, additional strategies emerge to help pinpoint the optimal replacement points, given the current demands.
Incentive Leverage. A fleet that orders more often can be in the position to leverage larger-volume incentives with manufacturers, generating lower capitalized costs.

Carbon Reduction. Many organizations focus on reduced emission levels, taking advantage of new technology sooner to achieve meaningful fuel efficiency and carbon reduction goals.

Vehicle Right-Sizing. Influenced by economic and environmental factors, many fleets select smaller vehicles with more efficient engines and lower capitalized costs.

Equity Position. The difference between a vehicle's fair market value and the remaining depreciated book value is equity, which can be leveraged in the future fleet operations. Currently, used-vehicle inventories are at favorable lows, with fleet sales now the largest supplier of vehicles to the used-vehicle marketplace.

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Lynx Telematics is an OEM that controls design, engineering, firmware, software development, IT support and manufacturing processes of our product, allowing us to produce the highest quality product in our industry, while offering our customers competitive pricing.

As your partner, we provide ongoing training and support to insure that the product is properly sold to the end user, maximizing the re-sellers profitability.

As one of the pioneers in telematics technologies, Lynx Telematics provides our clients with powerful end-to-end vehicle telematics tools. Our technology offers a real solution that delivers safety, saves money and provides an unprecedented level of peace of mind to our customers. 

 

Our product, Lynxsafe, is the newest and most advanced in-vehicle communication system currently on the market. It combines GPS/satellite and GSM cellular technology to provide users and family members with immediate access to real-time information delivered directly via any internet enabled device including I Phone and Android smart phones.

All of our devices benefit from the innovation of U-Blox technology and a 3D Accelerometer, providing the industry’s most accurate pin point locating technology to within a 3 ft. radius.

Vincent Rush, Lynx Telematics, 

Cincinnati, Ohio

(866)-314-0461

Telematics and UPS

Telematics Sensor-Equipped Trucks Help UPS Control Costs

Telematics helps the delivery company determine a truck’s performance and condition, as well as identify ways drivers can make small adjustments that yield major results.

July 2010, Automotive Fleet - Feature

By Shelley Mika

Known for its speed and efficiency, UPS recently announced changes that will improve both. By the end of 2010, the company plans to operate more than 22,000 delivery trucks at 144 locations (including two in Canada) equipped with telematics technology.

An Old Program Learns New Tricks

Since 2008, UPS piloted the technology on 1,500 delivery trucks across the country, testing the equipment in various geographies and climates. In 2009, the company installed telematics in roughly 10,000 vehicles and plans to expand the program to another 10,000 this year. That makes nearly a quarter of the company's 95,000 delivery vehicles equipped with telematics.

As part of the initiative, UPS is installing GPS tracking equipment as well as sensors in key areas, such as brakes and engine box, and on the exterior. These devices will help UPS track the location of its delivery trucks as well as identify ways in which drivers can make adjustments and improve their performance based on collected data. Two key areas the company plans to improve are idle time and route efficiency.

"Telematics isn't new to UPS. We've been using telematics for more than 20 years to improve the efficiency and safety of our tractor-trailer fleet," Donna Longino, a UPS spokesperson, said. "What is new is the proprietary information and sophisticated algorithms we developed to analyze the rich stream of data captured by more than 200 sensors on our delivery trucks."

As drivers complete their routes the UPS telematics equipment captures streams of data via a 900 MHz radio and sends it in real-time to servers for analysis. At the end of the day, drivers return to their centers, and data is uploaded and sent to the UPS data center in Alpharetta, Ga. The telematics devices capture data on more than 200 elements, including speed, RPM, oil pressure, seat belt use, number of times the truck is placed in reverse, and idling time.

The charts shown are to illustrate the range of telematics data reporting solutions from Geotab and do not contain UPS specific information.

Telematics help UPS determine a truck's performance and condition, as well as identify ways drivers can make small adjustments that yield major results. Together, improved data and driver coaching help reduce fuel consumption, emissions, and maintenance costs, while improving customer service and driver safety.

"UPS is always looking for ways to improve efficiency and customer service, slash energy consumption and emissions, and make our drivers safer on the road," said Mike Hance, vice president of fleet operations. "We realized this cutting-edge technology enables quick, fact-based decisions to improve these areas."

Idling Reduced & Maintenance Improved

So far, the telematics initiative has yielded positive results, including reduced idling and fuel consumption, maintenance costs, and waste, as well as increased safety. Through telematics, UPS reduced idling by 15 minutes per driver per day, totaling 25 gallons of fuel per driver per year. While that reduction may seem a small change, on the large scale, it's a major improvement.

"When telematics is fully deployed in the small-package delivery fleet in the U.S., the reduction of idle time by 15 minutes per driver per day would save 1.4 million gallons of fuel annually," Longino said. "Multiply results like that by more than 90,000 drivers worldwide, and you can see the potential."

Maintenance is another key area in which UPS will benefit from the program. Prior to installing telematics, the company performed maintenance at regular time intervals, regardless of a truck's mileage or use. Now, UPS mechanics base maintenance decisions on the actual vehicle use and performance.

Telematics also helps identify which parts to replace. For instance, UPS found, in some cases, mechanics were replacing fuel injectors when the truck simply required an inexpensive "O-ring."

Because UPS can more accurately determine the right time to pull trucks off the road for maintenance, the company can reduce downtime and wasted maintenance expenses. Telematics also allows UPS to more accurately allocate replacement dollars, as the system helps identify trucks performing less efficiently, or when to simply place a vehicle on a shorter route. 

Safety is another critical area of improvement. While UPS already has an exemplary safety record, the company didn't shy away from improving it. One key metric tracked through telematics is seat belt use. Test sites showed that drivers wore their seat belts a nearly perfect 99.8 percent, up from 98 percent.

Likewise, providing drivers with information on the number of times they placed trucks in reverse - behavior UPS drivers are trained to avoid for safety reasons - reduced this behavior by 25 percent.

In addition to reducing idle time, telematics systems provide other environmental benefits. By helping UPS optimize dispatch planning and driver routine, the system reduces overall driver miles, cuts fuel consumption, and reduces emissions. Further, by optimizing vehicle performance and improving maintenance, telematics help UPS increase the useful life of parts and decrease the disposal of parts, including lead acid batteries and tires, Longino said.

Training & Information Management Keys to Success

With a large-scale implementation of telematics in its delivery truck fleet, UPS anticipated and planned for challenges. Hance said two areas were critical to the company's success: training staff and managing the information.
"We have some of the best-trained drivers in the world, and they are really committed to doing an excellent job. We find that quite often when a supervisor uses the data to coach drivers on improving safety, service, and performance, the response is very positive," Hance said.

In addition to training drivers how to improve driving behavior based on the reports, other UPS employees are also trained how to employ it to get the most from the telematics investment.

"Telematics is information-rich. Our reports and data are profiled to pinpoint what is important to impact results," Hance said. "We invested in training to ensure we leverage this technology to effectively impact service, safety, and cost."

UPS plans to continue using telematics technology, with the next major initiative focused on reducing idling time on its LTL (less than truckload) fleet at UPS Freight. Hance said telematics technology is also used to monitor several test vehicles, such as hybrid electric, hydraulic hybrid, and automatic transmission tractors, in the UPS fleet for efficiency, performance, and reliability.

*********************************************************************************

Lynx Telematics is an OEM that controls design, engineering, firmware, software development, IT support and manufacturing processes of our product, allowing us to produce the highest quality product in our industry, while offering our customers competitive pricing.

As your partner, we provide ongoing training and support to insure that the product is properly sold to the end user, maximizing the re-sellers profitability.

As one of the pioneers in telematics technologies, Lynx Telematics provides our clients with powerful end-to-end vehicle telematics tools. Our technology offers a real solution that delivers safety, saves money and provides an unprecedented level of peace of mind to our customers. 

 

Our product, Lynxsafe, is the newest and most advanced in-vehicle communication system currently on the market. It combines GPS/satellite and GSM cellular technology to provide users and family members with immediate access to real-time information delivered directly via any internet enabled device including I Phone and Android smart phones.

All of our devices benefit from the innovation of U-Blox technology and a 3D Accelerometer, providing the industry’s most accurate pin point locating technology to within a 3 ft. radius.

Vincent Rush, Lynx Telematics, 

Cincinnati, Ohio

(866)-314-0461