Fleet technology and vehicles are being updated and safety is improving. However, the number of accidents remains unchanged. The rising cost per accident is a sobering statistic for fleet companies. Proper management and a proactive focus on improving safety can significantly impact the final cost of fleet accidents.
Security measures are not a one-time event. Security systems are constantly being updated. It is the responsibility of fleet managers to ensure that security measures are continuously improved, otherwise the company will face the consequences of the so-called
THE DIFFERENCE BETWEEN THE TWO STRATEGIC APPROACHES CALLED: COST OF IGNORE (COI) AND RETURN ON INVESTMENT (ROI)
COI (Cost of Ignoring) can be considered as the amount of lost savings that occur when a company fails to make a strategic business investment that would otherwise improve operational efficiency. In other words, for fleet managers, it can be considered as the increase in operating costs that result from the incorrect use of telematics (or in some cases, the complete lack of telematics).
Although COI shares the same strategic objective as its more familiar cousin ROI (Return on Investment), there are some key differences, as outlined in the table below. In summary, the cost-ignoring approach focuses on reducing operating costs, while ROI is focused on maximizing revenue.
To summarize, the costs of ignoring updates to equipment, processes, and other factors in the workplace may bring temporary positive financial results in the short term, but they also carry the risk of greater costs that will arise as a result of technical and software failures, accidents, insurance, etc.
4 WAYS TO PROACTIVELY REDUCE FLEET MANAGEMENT COSTS
There are four specific areas where savings can be found: safety, fuel, maintenance and productivity. Let’s take a closer look at each.
1. SAFETY (reduction in traffic accidents): Each work-related accident costs employers between EUR 10,000 and EUR 500,000, depending on the severity of the accident. Insurance companies have reported that vehicles that use or have additional safety telematics installed reduce the number of accidents and costs by as much as 50%.
2. FUEL (controlling fuel costs based on driving style): The U.S. Department of Energy reports that rapid acceleration and hard braking can increase fuel consumption by up to 33% on the highway and 5% on city roads. Combined with effective driver training initiatives to reduce aggressive driving and telematics, fuel costs can be reduced by up to 14%
3. MAINTENANCE (reduction of repairs and maintenance): Scheduled maintenance is a standard part of vehicle ownership, but unscheduled repairs due to aggressive driving and vehicle abuse fall into the category of unnecessary costs. The costs resulting from less scheduled maintenance services range from 400 to 700 EUR per day. Telematics technology helps a company reduce both scheduled and unscheduled vehicle repairs and maintenance by up to 14%.
4. PRODUCTIVITY (increased workforce efficiency): Driver compensation is often a large component of a fleet’s overall operating budget. Market research shows that telematics can increase workforce productivity and reduce labor costs by up to 12%.
Telematics significantly contributes to a better financial plan and improved fleet vehicle safety. The best technology on the Slovenian market that proactively improves fleet management and realizes the savings described above is GEOTAB.
By clicking on the word GEOTAB you can read the details of the telematics and order your package.
