Every mile logged in a company truck goes against the company’s bottom line in the form of fuel expenses, tyre wear and eventual maintenance costs, to mention a few. While the benefits of acquiring a fleet management solution are well documented and some industries have gone further down this route, there are still some concerns around this technology, writes Munesu Shoko.
As capital equipment-driven businesses fight to reduce operational costs and maximise efficiencies, fleet management solutions can provide significant cost savings and operational efficiencies. The benefits of a fleet management solution are many and might vary upon the nature and area of expertise from company to company, but there are generally some major pros that occur when the technology is adopted. These include lower fuel costs; improved route planning; increased employee productivity; improved cost control; and important data collection, among others.
While these benefits are clearly defined, there are still some issues around fleet management solutions, which are hindering uptake of this technology. At the heart of this is that fleet managers don’t realise that this technology, and the big data that can be derived from it, is more than just a device that spits out a whole lot of information. It’s an end-to-end solution – implemented in close collaboration with the service provider – that makes continuous improvement possible. The main challenges for local fleet managers as far as fleet management solutions are concerned are costs and management of data, as it is important for fleet managers to get the right data out of the system that is relevant to their business.
However, the logistics industry seems to be one fleet-driven sector leading the adoption of fleet management and tracking solutions with little concerns. With the Internet of Things (IoT) seemingly taking over and the number of connected devices increasing (research predicts over 46 billion devices will be connected to the internet in 2021), service delivery in many industries has improved significantly as fleet management and tracking has become a lot easier and much more interactive than in the past, according to Adam Orlin, head of Investec Import Solutions.
Orlin says the use of IoT connected devices can help manage risks that the transport and logistics industry are faced with on a regular basis. “Because these devices communicate and with the use of systems such as BlueLink, which Investec Import Solutions created and uses, customers are able to track their shipment and see the expected delivery time and can be alerted if there are any delays, providing them with any necessary information they need that can help mitigate any risk that may happen and prevent any undesired outcomes,” says Orlin.
Orlin adds that the adoption of this technology in the logistics landscape is being embraced more often than not. “Businesses in the logistics industry have this type of technology, which is offered to their customers at no additional cost,” he says.
The case of logistics
Orlin says in the import industry, IoT is able to improve customer service through the use of technology to track shipments and provide information to the customer on where and when their shipment is and when it will arrive.
Investec Import Solutions is a premium import and working capital specialist in South Africa and a pioneer in providing fully-integrated import solutions through bespoke systems and patented processes.
The company reasons that with the rise of IoT, big data and cloud technology is being incorporated into the transport and logistics sector as there is a growing need for instant and efficient customer service. Consumers are also becoming accustomed to instant connectivity and receiving any information they need, and it is for this reason that many are turning to tracking technology to ensure this is able to happen.
“In the import process, tracking technology is being used to improve customer service by tracking shipments and providing information to the customer on where and when their shipment is and when it will arrive. Additionally, it enables them to pull data from their shipment history for reporting processes as well as manage their supplier performance. This is all achievable through vehicles and shipment containers being connected with sensors that share the data instantly,” says Orlin.
Orlin says from a business point of view, the logistics industry understands the importance of using tracking technology as it has many benefits that translate into ROI and customer satisfaction. “However, knowing this doesn’t always translate to businesses implementing the solution, there might be some internal challenges that might outweigh the prospects of investing in such technology,” says Orlin.
“Innovative changes like these come with a lot of research from redesigning the way the business operates digitally, figuring out what you want your system to do and what your customers will get out of the system (more value for their money) and how much this will cost the company. For many this is not an easy task, especially if there are other issues at hand,” he says.
However, Orlin notes that this trend is growing with more and more companies incorporating tracking technology to monitor shipments. “What is crucial is making sure that what you are offering is unique to your business and your customers will not find it anywhere else,” he argues.
Reasons behind non-adoption
While there is a larger uptake of fleet management solutions in logistics, some fleet-driven businesses are still reluctant to make use of these solutions. John Loxton, head of WesBank’s fleet management division, says the local fleet management industry can comfortably be described as world class, yet it is difficult to explain why local fleet owners do not make more use of professional fleet management services.
Loxton sheds light on the reasons why fleet management does not have as much support as in developed economies. “We probably have lack of trust here in the ability of service providers,” he says, adding that the apparent lack of trust may have a number of possible causes, including perception around outsourcing and confusion as to what fleet management is.
Speaking about outsourcing, Loxton says fleet owners have the perception that they can achieve the same benefits as professional fleet management companies can offer. “In the majority of cases this is unfortunately a myth. The principal of economies of scale is as old as the mountains and is a proven form of optimising costs,” says Loxton.
In the majority of cases the professional service providers in the fleet management industry manage fleets in excess of 20 000 vehicles. “It should, therefore, be logical that the buying power of these service providers will be more powerful than that of an individual fleet owner with, for example, 500 vehicles,” says Loxton.
Loxton says that professional service providers not only provide economies of scale, but also structure, pro-active planning and discipline. It is therefore superficial to measure the value of fleet management by only comparing relative buying costs. “Consider the complete value chain to see the full extent of fleet management in context,” he says.
Loxton also weighs in on the confusion as to what fleet management is. “There is a whole legion of companies who refer to their services as so-called ‘fleet management’. The owner of a workshop in Johannesburg cannot possibly claim to be delivering comprehensive fleet management services as much as a telemetry provider in isolation cannot claim it either. Yet these services are advertised as such and this adds to the wrong perceptions about what fleet management actually entails,” says Loxton.
Loxton says the maintenance management and telemetry of a fleet are merely components of fleet management which in isolation cannot offer the same advantages as the holistic approach of professional fleet management.
He further argues that to reduce fleet management simply to a matter of comparing “costs”, is to negatively and unnecessarily affect the perception of effective fleet management. A holistic approach to fleet management, combined with the right fleet management partner, should without doubt and too much trouble lead to considerable savings. A common aim are savings of 10-20%, according to Loxton.
“My advice to any fleet owner is to select a fleet management service provider based on experience and reputation, form a strong partnership with the service provider and ensure both partners enjoy the benefits of such a relationship where their interests and objectives are aligned,” adds Loxton.
Greater alternative
Letlotlo Phohole, CEO of LeoTracking, says while the benefits of telematics in business are well-known, the problem is that with the current economic climate, most companies in the transport business are experiencing unpredictable orders, while paying for a fixed monthly fleet management and tracking fees regardless. This, at times, leads to cancellation of the vital fleet management service, which leads to further losses.
“This is not fair when some of the fleet is literally parked for days and not generating any income,” says Phohole. “This is where we realise that many fleet owners are eating into their bottom lines, daily, and unnecessarily so.”
LeoTracking is an innovative company, owned and managed by technical and financial professionals that identified gaps in the fleet management market and has come up with the concept of Pay-As- You-Track. “Our new offering is aimed at business where you manage how they drive; schedule and manage tasks and know if executed in time or not,” says Phohole. “We support over 400 tracking devices, and customers can bring their own device to save on the previous investment made.”
With Pay-As-You-Track, also known as Pay-As-You-Drive, you get charged a daily rate per vehicle. This gives the fleet owner the power to directly manage driver behaviour (Manage-How-They-Drive) and save cash every time part of the fleet has not moved for the whole day. “This is a direct money saving option and you own your data,” says Phohole.
Also, Pay-As-You-Track, just like the Pay-As-You-Go in the cellular business, implies that you own the device and it’s a month-to-month contract offering. “It is only fair to also look at the alternative – Pay-As-How-You-Drive, which is used by insurance companies to reward you for good driving.
The rewards can be cash but the difference is in who owns the data and what can they do with it,” concludes Phohole.
