Reducing Fuel Costs with GPS Vehicle Monitoring

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1 Reducing Fuel Costs with GPS Vehicle Monitoring Businesses with mobile field-based operations carry a large cost and operational burden related to the vehicles their workers use in operations. Whether part of a company owned fleet or workers property where they are reimbursed for miles, the way that vehicles are driven has a major impact on fuel consumption. Given the already high and increasing cost of fuel, this ultimately plays an important role in business performance and profitability. This whitepaper looks at four driver behaviors that have a direct impact on operating costs, and describe how those behaviors drive up costs and by how much. Finally, we review how today s GPS-based vehicle monitoring systems can help you identify those behaviors and describe the impact that reducing them can have on your business. Four Driving Behaviors That Impact Your Operating Costs The four behaviors listed at right, speeding, idling, inefficient routing, and unauthorized vehicle use, each can have a big impact on fuel cost. Let s examine each in more detail. Speeding According to the U.S. Department of Energy, each 5 miles per hour in excess of 60 miles per hour has the effect of increasing fuel costs by $.21 per gallon with gas at $3 per gallon i. That represents an 8% hike in your fuel costs. In larger vehicles, the impact of speeding is even worse. According to study completed by Kenworth ii, every mile per hour over 55 lower fuel efficiency by.1 mile per gallon. Vehicles that average 65 MPH drop 1 MPG in fuel efficiency. For medium and heavy duty trucks, this adds up to significantly higher fuel consumption. Driving Behaviors that Drive Up Fuel Costs Speeding Idling Inefficient Routing Unauthorized Vehicle Use Figure 1: Impact of Speed on MPG While the highest fuel efficiency differs for different vehicles, mileage iii generally suffers above 55 miles per hour, as shown in figure 1, at right. Key Takeaway: Keeping your fleet average speed at 55 MPH rather than 65 MPH will increase your fuel efficiency by about 15%! TeleNav, Inc. All rights reserved.

2 Excessive Idling According to the US Department of Energy, only about 15% of the energy from the fuel you put in your tank gets used to move your vehicle down the road iv. More the 60% of the energy is lost in the process of converting chemical energy into mechanical energy to move the vehicle, due to heat, friction and inefficiencies in the engine and drive train (these are exacerbated by speeding). The second worst culprit is idling, which steals more than 17% of your fuel s energy v. In an 8-cylinder passenger vehicle or light truck, every hour of engine idle time burns a little more than half a gallon of gas vi. For medium and heavy duty trucks, this number is even higher closer to one gallon. In addition, at idle, your engine is operating at a lower temperature, meaning fuel is being burned inefficiently, leaving residue deposits on your plugs and your cylinders, and further decreasing efficiency by as much as 4-5% over time vii. Key Takeaway: Vehicles at idle get 0 MPG. Every hour of engine idle time eliminated saves you between $1.50 and $3.00 in fuel, plus vehicle wear. Inefficient Routing The routes your workers take during their work days can add extra costs to you operation. A number of factors can yield poor routing: - Un-monitored workers: let s face it, not every worker makes the right decision for the business 100% of the time. In some cases, a worker may be consistently and aggressively gaming the system, racking up miles to waste time or boost mileage reimbursement. In other cases, a worker makes an innocuous decision to drive several miles out off route to meet friends for lunch. As the simple calculator at right illustrates, even small increases in out of route miles can significantly impact your bottom line. - Cris-crossing routes: planning routes with maps and spreadsheets and paper and knowledge of the area can very frequently yield excessive windshield time for drivers. Route planning and optimization software, coupled with wireless dispatch to vehicles, can significantly reduce this waste. 10 mobile workers 5 out of route miles/day avg 250 working days per year $3.00 per gallon of fuel 10 mpg average fuel efficiency $3,750 in extra fuel costs - Dispatching decisions: when dispatching work on the fly, selecting the worker that is closest to a customer site (or at least closer than others) can help improve your service levels and decrease the fuel needed to get to the site. When dispatching with paper-based systems and radio or push-to-talk communications, selecting the closest worker can be difficult. Key Takeaway: Using location information to monitor vehicle routes and enhance dispatch decisions will reduce unnecessary driving and fuel costs TeleNav, Inc. All rights reserved.

3 Unauthorized Vehicle Use When workers elect to use company vehicles for unauthorized use whether personal matters or even running side jobs it increases company risk, vehicle wear and tear, service costs, and fuel costs. For companies that allow workers to drive vehicles home at night, it s important to ensure that the company vehicle doesn t turn into the family vehicle. Key Takeaway: Monitoring vehicles enables you to quickly identify unauthorized vehicle use and deter future violations. How GPS Monitoring Systems Help You Reduce Fuel Costs GPS vehicle monitoring systems are increasingly used to solve the operational problems associated with vehicle fleets, as they bridge the information gap that exists between operations management and mobile workers. The table below looks at the four problematic behavior problems discussed above, along with the information and tools provided through GPS vehicle monitoring that help you control them and mitigate their impact. Problem Behavior Speeding Excessive Idling Inefficient Routing Unauthorized Vehicle Use GPS Monitoring Capability and Benefit - Real-time speeding alerts with custom speed settings help you identify speed violations as they happen and correct them - Historical reports include vehicle speed, providing a tool for driver training, safe driving reward programs or remediation - Real-time alerts provide information about stops and engine off-on status, helping you identify periods of engine idle - Engine idle information and reports directly from the onboard computer give you visibility and help you control idling - Visibility of fleet vehicle location in real-time helps dispatchers select closest worker for service requests - Geo-fence, landmark and route tools let you identify key customers, distributors or route corridors to ensure drivers are staying on task and hitting stops as schedule - Real time map view with location and geofence alerts provide immediate notification of vehicle entry/exit from pre-defined areas. - Immediate real time alerts to vehicle status change (location, motion, engine status) give immediate notification of usage - Alerts sent to mobile device via SMS or means easy management without need to use computer browser - Breadcrumb and activity reports provide detail on dates, locations, times and routes that vehicles were in use TeleNav, Inc. All rights reserved.

4 What Makes Up GPS Vehicle Tracking Systems? Tracking devices: range from hard-wired black-boxes to small plug-in gadgets (even cell phones and asset trackers). Devices have a GPS chipset and antenna (internal, external, or both), and wireless transceiver to pass data over a wireless data network. The device interacts with GPS satellites to calculate latitude and longitude, and may read and deliver additional information (engine data, temperature, etc.). Wireless data network coverage: the network that carriers the signal from the devices to the suppliers servers. Most suppliers have agreements with tier 1 wireless carriers or their agents to provide highly available service. Software/Web interface: interface to manage the service, customize settings, view maps with vehicle locations, and pull reports. Many providers provide this as a web-based service accessed though a computer s browser. Selecting a GPS Vehicle Tracking System Because of the fast and significant return on investment that businesses typically achieve by deploying a GPS vehicle tracking solution, the number of solutions being purchased and therefore the number of suppliers is increasing rapidly. If you determine that you re ready to jump in, here s a quick checklist of considerations that will be useful as you get started. Selecting a Vendor Vendors range from smaller, regional players or with niche offerings to larger companies with diverse service offerings. Here are a few considerations to guide your search and decision making process. Is this is solid, proven company? The barriers for providing basic service are low, so make sure your supplier has the financial strength and industry experience needed to weather market downturns, ensure continued innovation and provide the level of service your business demands. What level of support is offered? Your business probably doesn t operate Monday through Friday from 9am to 5pm. Make sure your vendor is there to assist you on your terms. What types of solutions does the supplier offer? Do they have the specific devices and services to meet your specific needs? How well can their solution be customized for your situation? What does their web or software interface look like? Is it intuitive? Does it give you the reports and alerts and map views that you want? Ask for a demo and screen shots. Does the vendor have experience in your industry? Can it offer up references and case studies from existing satisfied customers? How does the vendor manage the deployment? Depending on the tracking device selected and number of vehicles you plan to track, the deployment may be complex. What types of project management services and tools does the vendor provide? TeleNav, Inc. All rights reserved.

5 Choosing Your Tracking Devices Most devices are similar, but check for these characteristics, which can make your deployment better and less expensive down the road. What is your need? Tracking only? Additional vehicle data? Do you want to track only vehicles? Do you also want to track assets and workers? Can the supplier help you in those other ways, or is their service limited. Is the hardware tested and proven in the market? Most suppliers acquire their hardware from one of several common manufacturers what s their reputation and how long have they been supplying GPS tracking products? If the supplier uses its own branded hardware, inquire about the number of units in market, and ensure steadiness of their supply chain. How sensitive are the internal antennas? Is an external antenna needed to get GPS and wireless connectivity? What are the cost and installation ramifications? How is the device upgraded or reset? Does it offer Over-the-Air device management? This eliminates the need to retrieve vehicles and touch the devices should you need to reset or upgrade the firmware that controls the device. Does the device offer store and forward (buffering) capabilities? Does the service provider take advantage of them? Conclusion Thousands of businesses, from small operations with a few vehicles to Fortune 500 firms with enormous fleets, have deployed GPS tracking systems, helping them increase control over their operations, reduce costs, enable revenue and reduce risk. The continued rise in fuel costs shines a bright light on the types of problems that naturally exist in operation with mobile fleets, as well as the solutions that exist to solve them. Over the past several years, GPS vehicle tracking systems have improved dramatically while the upfront and ongoing service costs have gone down. The benefits from these solutions have never been clearer or more easily attained by businesses of any size or type TeleNav, Inc. All rights reserved.

6 References i US Dept of Energy, Driving More Efficiently, ii Kenworth Truck Company, White Paper on Fuel Economy, March 2006, iii West, B.H., R.N. McGill, J.W. Hodgson, S.S. Sluder, and D.E. Smith, Development and Verification of Light-Duty Modal Emissions and Fuel Consumption Values for Traffic Models, Oak Ridge National Laboratory, Oak Ridge, Tennessee, March iv US Dept of Energy, Advanced Technologies and Energy Efficiency, v ibid vi Hamilton County, Ohio Dept of Energy Services website, vii Ibid About TeleNav TeleNav is a global leader in location-based applications delivered via a mobile device. One of the first to launch a GPS navigation and mobile workforce management service on a cell phone in North America, TeleNav is partnered with every significant wireless carrier and device manufacturer. TeleNav offers products in 29 countries on 16 carriers on 600+ devices. TeleNav began trading on NASDQ under the stock symbol TNAV in May TeleNav Enterprise helps organizations improve workforce and asset utilization, control costs and mitigate risk. It brings together the latest advances in GPS, mobile, web and integration technologies to deliver powerful productivity enhancements for more than 8,000 organizations TELENAV TeleNav, Inc. All rights reserved.

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