The 2017 NAFA Institute & Expo in Tampa offered a week of education and networking
From the June 2017 print edition
Fleet managers are constantly looking for ways to manage the cost of their fleets while simultaneously seeking ways to increase profitability. But it’s becoming more difficult to identify those savings. Most are familiar with identifying the return on investment (ROI) of initiatives, it’s rare for fleet managers to look at the COI, or cost of ignoring.
This was the theme of a panel discussion, called ROI versus COI: Finding New Savings to Reduce Fleet Costs, held at the North American Fleet Association’s (NAFA) Institute & Expo, held in Tampa in April. The continent’s largest show for fleet professionals, the annual I&E draws over 1,000 professionals from around the world. The panel looked at several areas—safety, fuel maintenance and productivity—to show the audience how fleets can estimate potential savings in these areas and ensure nothing is overlooked. On the panel were: Colin Sutherland, executive VP, sales and marketing, Geotab; Erin Gilchrist, director of fleet operations, Safelite; and Mike Baessler, fleet manager, Rollins-Orkin.
Up first was Sutherland, who discussed how to take a deeper look at the data that’s available, as well as different ways to use that data to increase profitability and cost savings. To start, he noted that ROI is only as good as the culture in a business. For example, realizing a potential savings of $2,000 can be hindered if senior management doesn’t want to make the necessary changes. But there is “hard-and-fast ROI” that fleet managers can pursue, with fuel being among them. “This session is about how to change the discussion within your organization,” Sutherland told the audience.
What is fleet’s role in a connected world? The traditional fleet manager’s role is evolving, he said, and there’s a cost of ignoring technology. The telematics world began around 2000 as descriptive analytics, which focused on solving problems by looking at ‘what happened?’ while measuring things like fuel, carbon footprint and output. “It was really just gathering things for the first five or six years,” he said.
From 2007 to 2015, the shift was to predictive analytics, which is a maintenance-based approach with the vehicle telling us it needs to be maintained, Sutherland said. This approach asks the question ‘what could happen?’ But since 2016, the shift has been towards prescriptive analytics, which looks at the question of ‘what’s the best action?’ As well, the use of big data and connectivity are becoming the norm. “It’s a trend where you’re going to see, without your option it’s going to happen,” Sutherland said. “All of your vehicles and your businesses in the next two to three years will be connected. And you’re going to decide how you’re going to relate to that connection.”
The quality of data used in fleet management is also improving, he said. Data will be able shave off 7 percent of mileage from the routes that vehicles drive by navigating vehicles to where they should park rather than just the street address. Sutherland advocated that the audience shift from ‘vehicle thinking’ to ‘last-mile thinking’, whereby fleet managers concentrate on the cost of fuel, safety impact and so on per delivery.
The next speaker was Mike Baessler of Rollins-Orkin, who noted that his company started with telematics in 1998. When they began, the company had over 10,000 claims and 33 percent of their vehicles were involved in an accident. As well, 25 percent of the company’s employees were injured and the cost of risk was 7 percent of revenue. But as Rollins-Orkin began using telematics the company saw good results, Baessler said. For example, only 8 percent of their vehicles were involved in an accident and their total claim costs dropped by 50 percent.
The initiative to use telematics has senior management support, added Braessler, noting that reducing and preventing accidents is a high priority for that senior management team. As well, earlier this year the company restarted an idling policy, he said. In that program, if the vehicle idles for 20 minutes and one second, an email gets sent to a branch manager saying the vehicle violated the policy. “We anticipate that we’re going to have somewhere between $285,000-$300,000 in fuel cost savings for the rest of this year,” he said.
ROI continues to be a critical topic, said fellow panelist Erin Gilchrist, underscoring the need to be able to define how her company is paying for the technology. At first, paying for telematics through picking low-hanging fruit was easy, Gilchrist said. But after a while, it becomes more of a challenge. “It’s what we’re not measuring and not managing, that’s what keeps me up at night,” she told the audience. “The cost of ignoring, that’s our next ROI.”
Telematics has been great for Safelite, Gilchrist said, noting safer drivers, reduced fuel consumption and lower insurance reserves among the advantages.
The executive view
The I&E fleet management executive panel returned to the stage this year, giving attendees the chance to hear directly from the leaders of major fleet management companies. Panelists touched on trends on the horizon for areas including procurement, sourcing, inventory, sustainability and global expansion.
The discussion also covered technology such as autonomous vehicles and connected cars. Dan Frank, president of Wheels, Inc., told the audience that the cost for technology is dropping. Given the benefits of much of the technology those costs won’t be a problem in the next five years. Another possible hurdle is regulatory issues, which Frank said is less of an issue than people think. The benefits to society—higher productivity, safety, reduced congestion, reduced congestion, to name a few—likely means regulators will work to get such technology running. “I think there are a lot of motivated regulators who are trying to move this forward as fast as they can,” he said. Another potential impediment to autonomous vehicle adoption is societal acceptance, Frank said, citing a statistic that 78 percent of people have reported being uncomfortable with the notion of autonomous vehicles. But people are likely to get more comfortable with such technology as the grow accustomed to it, he added.
The panel was asked about challenges and opportunities regarding data management for fleets. Norman Lyle, president of EMKAY Canada, noted several challenges. The first challenge revolves around what data will be available, followed by how to make that data pertinent within fleet management as well as security. “I believe that what we’re witnessing now and for the next five to 10 years, depending on what you’re looking at, is the major convergence of technology in our vehicles,” he said.
Technology can now monitor much about not only the vehicle but also the driver, Lyle said. Companies must now figure out not only how to collect that data, but also how to manage the information and set it up so that it’s useful to fleet managers. “The next thing is making sure that data is usable and flexible for different fleets,” he said. “On top of that, the next challenge is making sure that data is secure as well as making sure that the vehicle is secure
Chris Conroy, president and CEO of ARI, touched on how to develop new leaders within the industry. One concern is having enough good people, Conroy said. No “fleet management university” exists for fleet employees, so training needs to happen organically. The certification program through NAFA is a “tremendous tool,” he said, and companies can also have programs to develop employees internally. For its part, ARI has its own university that features online training. The company is shifting away from an annual review process to individual development plans for employees, Conroy added. ARI also has a formal mentoring program that allows newer employees to learn from veterans in the field. The company participates in Fortune magazine’s Great Places To Work. “It tells us what we’re doing well as a company, where our weaknesses are and allows us to help modify the behaviour of our employees and our managers,” Conroy said.
Kristi Webb, president and CEO, North America, Element Fleet Management, commented on safety technology. Safety applies to everyone’s life whether they’re at work or not, Webb told the audience. Telematics can now yield information about driver behaviour and technology that also gives data about the vehicle, she noted, while analytics and insights can help change driver behaviour. Through the convergence of these factors, tools exist now that can not only save lives but also make fleets “safer, smarter and more productive,” Webb noted.
Overall, NAFA’s Institute & Expo provided a rich source of insights and advice for fleet professionals on how to grapple not only with the present but how to embrace the changes and challenges on the horizon.