Small Business Guide to Fleet Management

By Joseph Moran | Posted April 02, 2015

If your small business maintains a fleet of vehicles—be they delivery vans, taxis, or cars for a mobile sales force—it carries significant costs in terms of fuel, insurance, maintenance, and repairs. Ensuring that your employees use those vehicles in ways that keep operating expenses in check is a difficult task for busy business owners and managers.

Do you ever wonder whether your:

  • workers are driving in a safe manner
  • vehicles are used only for legitimate business purposes
  • vehicles are running properly and being serviced in a timely fashion
  • fuel costs are appropriate for the number of miles driven

If so, fleet management technology can supply those answers.

How? Place an Internet-connected monitoring device inside a vehicle, and suddenly you have the ability to automatically track its location, engine condition, and myriad other performance metrics in real time. Your vehicle telemetry is collected and typically viewable from a Web browser (or possibly a smartphone or tablet), where you can slice and dice it into reports, charts, and graphs to identify patterns and trends.  You can also receive the info via text or email so that you or other designated parties know instantly when a problem arises that may require immediate attention.  

The Benefits of Fleet Management Technology

The insights gleaned from this kind of information go a long way toward improving employee productivity and vehicle efficiency, which can ultimately reduce your operating costs. Here are some of the ways fleet management technology might benefit your small business.

Location Awareness

Today, chances are the only way for you to know the current location of a company vehicle may be calling the driver to ask. But when a vehicle monitor's integrated GPS receiver constantly updates its whereabouts, determining the location of a given vehicle at a given time is a relatively simple matter—just log into your online console, and you'll see them all overlaid on a map.  

Fleet management viewing console

Figure 1: Fleet management systems can show you at a glance where a vehicle is, where it's been, what kind of mileage it's getting, and more.

Once you can locate your vehicles on demand, a host of capabilities become possible. For example, when an impromptu dispatch to a customer location arises, you can route a response vehicle based on which one is closest to that destination. (Many systems will also let you text or email turn-by-turn directions to a driver if necessary.) 

Location tracking can also help ensure that your employees use vehicles appropriately. Geo-fencing lets you define the boundaries within which a vehicle should operate—either as a simple radius from the office, or as a far more precise four-or-more-sided polygon in which you define specific streets as borders. Geo-fencing can also be time-based, which tells you if employees drive company vehicles outside of business hours (i.e. for personal use at nights or on weekends).

Knowing where a vehicle's been is often as important as knowing where its current location, and most fleet management systems let you review a vehicle's "breadcrumb trail" by playing back its travels for a previous time period. Depending on the system, this information may be retained for a month, a quarter, or in some cases as far back as a year. (Systems that use on-premises—rather than cloud-hosted—software often let you store this historical data indefinitely.)

Fleet management software's location-tracking capability also greatly enhances the odds of recovering a stolen vehicle (as well as any pricey equipment it might contain) in a timely fashion.

Maintenance Tracking and Engine Diagnostics

Business vehicles tend to put on a lot of miles, often at an inconsistent rate, and this can make it hard to know when a vehicle needs scheduled maintenance. At a minimum, fleet management products precisely track all miles driven and will let you know when a vehicle needs its next oil change, brake job, tire rotation, etc.

Systems with OBD-II- (OnBoard Diagnostics) type monitors can directly query the car when the "Check Engine" light comes on and report diagnostic codes that reveal the underlying cause of a problem (e.g. a cylinder misfire leading to loss of power), sometimes even before the driver notices any symptoms.

Timely scheduled maintenance and identifying engine problems as early as possible can help prolong the life of your vehicles, keeping small problems from becoming large ones that ultimately lead to a breakdown and major, unexpected repair bills.   

Fuel Consumption and Safety

Fuel is often the biggest single vehicle operating expense, and fleet management systems can track and report the number of fuel gallons a vehicle consumes as well as the resultant miles per gallon. Moreover, they can let you know when high fuel consumption or low mileage is likely attributable to things like excessive idling or high speeds.

Driving at high speeds can also be a safety issue, so it makes sense to set a maximum speed limit and to receive alerts whenever a vehicle exceeds it.  Some fleet management systems also use mapping data to correlate a vehicle's speed with the posted speed limit of the road it's on. This avoids the problem of setting a high speed threshold that might be appropriate for interstate travel but not for local roads.   

Thanks to the accelerometer built into vehicle monitoring devices, you can also be alerted to risky driving behaviors such as hard acceleration or braking. Knowing that the company monitors driving behavior can encourage employees to drive more cautiously, thus reducing the risk of accidents, lawsuits and, over time, potentially lead to lower insurance premiums.

Fleet Management Hardware and Pricing

Vehicle monitoring hardware generally comes in two types. One type is hardwired into the vehicle (often hidden under the hood or behind the dashboard), while the other is a dongle that plugs into a vehicle's OBD-II port, which is found in every vehicle manufactured since 1996 and is usually easily accessible under the dashboard just above the pedals. 

Fleet management hardware

Figure 2: Some vehicle monitors are hardwired under a vehicle's hood or behind the dash, while others conveniently plug into the OBD-II port, which is usually located in the driver's footwell.

Other than interfacing directly with the engine computer to deliver diagnostic codes, the benefits of an ODB-II dongle include quick, no-cost installation (compared to hardwired devices that typically require a professional install). This makes dongles a good choice for businesses that do short-term vehicle leases, because the expense of a hardwired installation is harder to justify.

On the other hand, OBD-II devices are more susceptible to tampering (i.e. disconnection), loss, or theft since they're in a relatively visible and accessible area (though most systems will alert you when such a device goes dark). They also may not have as many features as hardwired devices.

Vehicle monitors typically transmit data via built-in cellular data modems; though satellite links are often an option in areas of weak cellular network coverage. Some systems lack persistent connectivity and instead store data on an SD card, however, you must download the information periodically.

Other systems store data in built-in memory during the workday and then transmit it to a server via a proprietary, short-range wireless link once the vehicle returns to its base in the evening. Such systems cost less than the always-connected type (since they don't require mobile data usage), but this savings comes at the cost of not having real-time visibility into your fleet activities.

So how much should you expect to pay for fleet management technology? Pricing naturally varies depending on provider, features, number of vehicles monitored, etc., but as a rule you should expect to pay between $30 and $35 per month per vehicle per month—roughly $1 per vehicle per day—for fleet management that provides persistent connectivity.

This price usually includes the cost of the vehicle-monitoring hardware, though some vendors give you the option to save a bit on the monthly recurring charges by purchasing the devices up front. Installation, if required, is almost always a separate charge.

It's also worth noting that pricing for this type of fleet management product is often quoted based on a one-, two-, or three-year contact. Fleet management products without real-time tracking can typically be had for around 50 to 60 cents per vehicle per month.

In addition to the capabilities discussed above, many fleet management products include (or offer as options) additional useful features such as employee time tracking, job costing, integration with fuel credit cards, and in at least one case (Verizon NetworkFleet—see link below), roadside assistance.

To be sure, up to a buck a day per vehicle for fleet management is an expense itself (and not necessarily a trivial one), but that investment can very often pay for itself in savings on fuel, maintenance, and insurance.

For more information on fleet management offerings from various vendors, see the following links:

Joseph Moran is a veteran technology writer and co-author of Getting StartED with Windows 7, from Friends of ED.

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