Driving Costs Down for Small Business using Vehicle Tracking

A taxi service in Gibraltar had a problem some time ago. The territory is small and the drivers realized that there was a lot more money to be made taking tourists around and showing them the sights than in driving to the airport to take people to their hotels.

So that's what many of them did. Realizing this, the Gibraltar taxi association revised their licenses, precluding them from competing with licensed tour operators.

They did what most enterprising small business would do – they ignored the edict and continued with the more lucrative work. That is, until their taxis were fitted with GPS vehicle location equipment that could tell the association where they'd been and how frequently they'd turned up at the airport.

Vehicle tracking is a type of telematics and is often associated, like a lot of advanced technology, with larger businesses. It doesn't have to be, though – and it's useful for more than just keeping a few drivers in line.

Matt Farrall of family business Farrall's Transport installed a vehicle tracking system, almost two years ago and confirms that benefits started to materialize immediately, by installing 48 tracker devices onto 60 trailers. The business problem that prompted it was increasing fuel prices. "Fuel is one of the major costs for a transport company so we wanted to tighten down on that and which drivers, routes, and which weights were costing us the most," he explained.

The information a good vehicle tracking system can offer can be a help in this. It will look at driving styles, how heavily someone leans on the accelerator, braking, how often they use cruise control and a number of other indicators. As the user, Farrall was able to set parameters of acceptability and encourage the right drivers to retrain where necessary; the company was able to reduce one driver's fuel consumption by about $6,500 per year.

The hardest part, said Farrall, was getting the drivers on-board and keeping on top of them, but once they were financially incentivised to drive better, most of them caught on that this wasn't just Big Brother in the cabin. He said: "We have a series of indicators and when drivers hit five green lights they take home more money." When the whole team is pulling in the right signals, the company looks again and works out new incentives for further improvements. Only a small minority want to continue as they are – it's a positive means of cutting expenditure without human cost. With only about 40 vehicles reaping benefits in Farrall's case vehicle tracking is clearly not just for the massive enterprise.

As with any technologies, there can be pitfalls. Jane White, head of fleet operations at an independent fleet management group, points to planning:

"A lot of work needs to go into the implementation phase with clear direction on the outputs required before any contracts are signed," she said. "In any event, and in our experience, much of the data manipulation is manual in order to achieve beneficial levels of analysis to truly measure how effective the system is in driving down costs and improving driver behavior and, in turn, safety."

"Fleets are most successful when they take the time to develop an internal deployment plan for telematics." "In this plan, they identify what to focus on first and what they expect to master in the first few weeks, months and years in order to realize the greatest ROI.

"Fleets are also successful when they communicate clearly with drivers on the business reasons and planned use of a vehicle tracking system. The best results happen when fleets use the data to coach drivers and provide an incentive to improve their behavior rather than to punish them. Fleet managers need to describe how the data will benefit the business, and as a result, benefit the driver. In addition, fleets can also use the system to exonerate drivers in the case of false blame. All companies receive complaints, but in most cases, it is not the driver's fault. Exoneration in these instances will also increase driver buy-in."

William Park, managing director of a property maintenance company City Response, has used a vehicle tracking system for about three years on their 200-strong fleet and sees many benefits. "In the first six months alone, we saw a 25% reduction in fuel consumption through improved job scheduling and fleet efficiency," he explained.

"When we receive a customer call-out we are able to identify the nearest driver to the job, and instantly deploy this driver. We've been able to significantly cut down on unnecessary driving time while improving customer service. Customer satisfaction is at an all-time high of 97%. As well as near real-time fleet visibility, vehicle tracking technology delivers comprehensive reporting which allows us to control unauthorized vehicle usage, while delivering strategic insights to allow ground level improvements in performance."

He firmly believes this won't apply only to companies with hundreds of vehicles in their fleet: "Whatever the size of the organisation, the same fleet regulations and business pressures still apply and we've seen first hand how vehicle tracking can not only improve operational efficiency and compliance, but have a direct, tangible impact on our bottom line."

Done right, benefits can multiply in unforeseen ways. Farrall's, for example, is using the data gathered to reassign different vehicles to different routes and to plan its next vehicle purchases so that it spends less on doing the same work with the same amount of people.

So, costs driven down, nobody losing their job and many actually getting paid more. That sounds like some sort of business nirvana, doesn't it?