The Adoption of Vehicle Tracking Systems

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1 The Adoption of Vehicle Tracking Systems Incorporating findings from the DigiCore Vehicle Tracking Survey DigiCore White Paper 2010 Copyright 2010 DigiCore Ltd. All rights reserved.

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3 Synopsis Adoption of Vehicle Tracking Systems The nature of fleet management is set to change - it is no longer just a case of managing vehicle fleets, considering leasing, purchase and rental options. The impact of increased regulation and the ever changing energy prices are a constant concern for senior management. Fleet management is now influenced by the following factors: Aftermath of the recession Requirement to focus on cost control, human resources and risk management. Arrival of greener vehicles (Sustainable Development in Government (SdiG) programme, carbon reduction targets Many companies are starting to realise the benefits of vehicle tracking systems. The benefits cross all industries and both the commercial and public sector. Small companies running just a few commercial vehicles, through to blue-chip nationals with large HGV, van and car sales fleets can benefit from considerable savings per year in different ways. Tracking makes it easier to eliminate fleet inefficiencies such as journey duplication/overlap and unscheduled journeys. It also encourages a safer, more economic driving style among mobile employees and more efficient call placing. Other benefits include reduced vehicle wear and tear and reduced administration time associated with meeting health and safety policies. These factors require a fundamental change in the way that van and car fleets are managed. Not only must a fleet manager be responsible for the daily issues of the vehicle management servicing, availability, replacement/depreciation and insurance and tax - they must now also focus on business transport needs, including basic operational issues and cost control. Managing a fleet economically and ecologically has never been more important. Now is the time for fleet-dependent firms to start looking at ways of maximising vehicle and driver efficiency as a means of maintaining their competitive edge. There is no doubt that awareness of the need to manage a company fleet effectively has increased. A new approach is required that demands specialist software and systems to monitor and measure fleet activities efficiently and provide information to the business on: DigiCore s survey results indicated that the need to manage fleets by increasing efficiencies, reducing costs and meeting legislation has resulted in a growing number of tracking systems being deployed to manage a range of company assets. In the sample surveyed, 55% of organisations were using vehicle tracking of some description. The findings represented a significant overall increase from the survey conducted in April 2008, which showed a market penetration of around 25%. Vehicle Tracking usage by sector Local Authorities 100% Logistics & Transport 81% Service Management 66% Utilities 63% Managing fuel consumption/tracking systems Reducing mileage business travel audit/allocation of vehicles required for journey/car pooling /Short term rental Driver education efficient routes and driving/reducing consumption Promotion of energy efficient vehicles Use of cleaner fuels. Risk assessments (Grey fleet issues old technologies less efficient, higher emissions, higher risk and costs) Driver/Lone worker legislation and protection Construction 48% Manufacturing 45% Sales 45% Other 41% Within the various sectors, 82% of logistics and road transport companies use vehicle tracking, there was 73% take up in the service management sector, 66% in utilities, 57% in construction, and all of the local authorities contacted are using vehicle tracking. The potential benefits of a vehicle tracking system can be immediate, with enhanced fleet reactivity and productivity making it possible to generate a fast return on investment and increase business capacity. It can also assist wth meeting the needs of government legislation and security for mobile employees. DigiCore s recent Vehicle Tracking Survey (December 2009) investigates how organisations have adopted technologies to address some of the issues highlighted above. This White Paper discusses some of the findings from the survey. What type of mobile assets do you track? Commercial Vehicle 41% Car 26% HGVs 9% Plant 1% Trailer 1% Van 70% Motorbike 1% Other 4%

4 Of the fleets surveyed, most consisted of a mix of cars, vans and commercial vehicles. HGVs, plant, motorbikes and trailers are also being tracked in many organisations. Other items tracked included tractors, low-loaders and fuel tankers. Vehicle tracking systems usage Established users The potential business benefits of vehicle tracking span every sector and vehicle-type. For haulage fleets, the main advantages include improved asset management, enhanced customer service and more efficient load placing, more accurate timesheets and assisted compliance to Working Time Directive legislation. For van fleets, vehicle tracking can also improve efficiency in job planning and allocation, resulting in greater employee productivity. In some cases this can also help companies to meet service level agreements and key performance indicators. The technology can make it easier to analyse driving time against chargeable time and engineers are able to work uninterrupted by service centre calls. Using vehicle tracking can enhance the safety of those employees working alone and it can also serve as protection from claims of late or non-appearance on site. When companies were asked what key features their vehicle tracking system provided, the survey results indicated that standard real-time tracking was by far the priority, indicating that managers were realising the benefits of having the latest information on vehicle locations. What does your system provide? Web-bassed Access 63% Small-trail Tracking 62% Real-time Tracking 96% Routing and Scheduling 60% Driver Hours Management 53% Satellite Navigation 44% Exception Reporting 40% Job Allocation 40% Driver Communication 37% Productivity 37% Asset Utilisation 32% Driver Profiling 32% Vehicle and Load Management 29% Virtual Security Fence 26% Other popular features (also highlighted in the survey) are web-based access, snail-trail tracking (also sometimes known as bread-crumb tracking), routing and scheduling and driver hours management. A further question asking why the company had selected a vehicle tracking system indicated that improved productivity was the main reason. What are the main reasons why you have adopted vehicle tracking? Asset Management 15% Fuel Management 12% Legislation 7% Health and Safety 5% Customer Services 22% Vehicle Security 21% Improving productivity 41% Since implementation, many firms report a range of benefits. Indeed only 4% said that the system did not add value to the business. The main benefit was reduced costs, followed by increased productivity and increased security. The adoption of such systems clearly reflects the challenges that fleet managers face. By far the biggest challenge for fleets of every size across every industry highlighted was fuel costs. Other challenges, although significantly less so, were increasing productivity, Duty of Care, driver communications and Working Time Directive. How has the vehicle tracking benefited your business? Meeting Tender requirements 22% No value add to the business 4% Increased security 52% Duty of Care 49% Enhanced Asset and Employee Management 26% Better informed business decisions 14% Reduced Costs 77% Increased Productivity 64% Fleet and Employee Performance 51% Drilling down further, the survey questioned where the savings that had been identified had been made. Fuel Theft Alerts 19% Panic Alarms 18%

5 Of those that reported reduced costs, 56% claimed reduced fuel costs and 29% reduced overtime claims. Few were able to quantify their savings, but those that could, reported significant savings, with one interviewee stating 50% on fuel and others claiming 25% saved on fuel. Where have savings been made? Administration 11% A further noteworthy fact was that of the companies that had vehicles lost or stolen, they were all now using vehicle tracking and in 50% of cases this had resulted in finding the vehicle. None of the companies that were not using vehicle tracking admitted to having lost any vehicles in the previous twelve months. Non-users Communications 11% Reduction in Fleet size 7% Insurance premiums 4% Overtime claimes 29% There are still some companies who do not use a vehicle tracking system for many different reasons. The survey indicated that most non-users have found the cost of implementing such system prohibitive, although of these, many were considering adoption either to meet legislation or reduce operating costs. What will drive adoption of Vehicle Tracking in your organisation? Legislation 22% Driver Profiling/Performance 10% Fuel usage 56% Cheaper Solutions 40% The move to Green Fleet management Managing a fleet economically and ecologically has never been more important. Green fleet management goes far beyond just glancing at the fuel bills: it has to be a part of the corporate culture to run cars and vans efficiently and cost-effectively. A green fleet is one that does its best to minimise fuel consumption and exhaust emissions. It also seeks to minimise the amount of traffic it generates by using vehicles efficiently, and by using alternatives to the car wherever possible. Some companies even question the need for business travel and encourage home working, video conferencing and virtual meetings. A green fleet is also a safe fleet. There is an investment to train drivers, encourage them to drive safely and efficiently and not put under pressure to do excessive hours behind the wheel. It also chooses vehicles with safety in mind not just that of the occupant but also of other road users. There are now many government publications available providing guidance and advice on green and driver legislation issues. TransportEnergy and the Mayor of London have produced a guide to support fleet managers, entitled The Fleet Operator s Guide to Green Fleet Management, An essential guide on how to run your fleet efficiently. 1. Yet many companies have not considered introducing Green Band Driving or Eco Routing. In the survey, 30% of those that are using vehicle tracking are considering its introduction. However, those that have implemented Green band driving are already seeing the benefits of reduced fuel bills and reduced emissions. If you HAVE implemented Green Band Driving or Eco Routing what benefits have you seen, or expect to see? Fewer Accidents 14% Reduced Emissions 43% Reduced Fuel Bills 43% Greater Functionality 7% Integration of Fleet Technology 0% 40% of those that responded said that solutions would need to be cheaper than current levels before they would adopt vehicle tracking and 22% said that legislation would be required before they considered adoption. Adoption of a system was not hindered by the reputation of the vehicle tracking industry, since most respondents said the vehicle tracking industry did have a good reputation.

6 Summary There is no doubt that the adoption of vehicle tracking systems has significantly increased over the last year. DigiCore s survey results indicate that there is now a market penetration of over 50% in most sectors. Fluctuating fuel costs and fuel management continue to be by far the largest concern for fleet and transport managers and are the business drivers for the adoption of a fleet management system. As well as considering green and eco issues, fleet managers are continually looking for ways to manage operational costs better. Often while the green issues are driven by corporate social responsibility, many organisations are also seeing cost benefits as a result. Despite relatively high profile news coverage, however, green initiatives still have a relatively low uptake. Indeed, in the survey, only 5% of respondents stated that they are actually implementing Green Band Driving or Eco Routing. However, a further 24% of organisations are considering introducing these initiatives. The potential benefits of a vehicle tracking system result in a more reactive fleet, with increased driver productivity, providing a return on investment and enabling the business to have increased capacity to meet demand. This is supported by findings from the survey, with 96% of companies using vehicle tracking claiming that it has added benefit to their business, with saving on fuel costs claimed by 77%, and increased productivity claimed by 64%. For many organisations safer driving initiatives are increasingly top of the agenda. There are clear benefits to tracking driver hours, both to identify drivers at risk to themselves and other road users through excessive speed or driving hours. Background The Vehicle Tracking Survey 2010 was conducted by DigiCore Limited. Interviews were completed with 150 organisations from October to December The contacts at each company were manager level or higher, with responsibility for the fleet operations of the business. The companies contacted had fleets of all sizes from less than 10 to over 1000 vehicles, from a cross section of industries. This is the second Vehicle Tracking Survey run by DigiCore and it is anticipated that it will be become a regular undertaking. Aim The aim of the survey was to research whether companies use vehicle tracking systems, and if so, how they are using them. It also researched whether there are any benefits (cost, efficiencies and green benefits) to using such a system. If they are not using a vehicle tracking system, the research questioned whether they are considering adopting them in the future. References 1. The Fleet Operator s Guide to Green Fleet Management, An essential guide on how to run your fleet efficiently. (Produced by TransportEnergy and the Mayor of London) Free TransportEnergy Best Practice guides and resource packs are available on fleet management, haulage or travel plans, There is evidence that deployment of vehicle tracking systems does require a cultural change, since it can be associated with a big brother type of management control. A sympathetic approach is required to ensure that it is clearly understood that the tracking system will be used in a housekeeping rather than disciplinary capacity, and that it can offer lone worker protection and security. There are technology solutions available today that can help organisations manage their fleets and meet the challenges of increasing costs, compliance with legislation and protecting and safeguarding employees. Fleet management is no longer simply the task of looking after company vehicles, it is a complex management mix spanning finance, human resources, sales and customer service. The company that can manage its delivery and driver fleet successfully will reap returns on the bottom line with employee productivity and organisational efficiencies.

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8 DigiCore Ltd Sage House 319 Pinner Road Harrow Middlesex HA1 4HF UK Tel: 44 (0) Fax: +44 (0)

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