What OEMs Should Know Before Implementing a Fleet Telematics System

July 10, 2015  |  By Michael O'Shea  |       


Demand for integrated fleet telematics is on the rise. In the latest Fleet Financials annual survey, fleet managers and automakers indicated they are looking to OEMs to improve fleet telematics systems. As stated by survey respondents:

“OEMs should have factory options for full telematics solutions available for fleet customers. All the technology is in place, but not the full integration….

“I wish OEMs would accurately state fuel economy under real-world conditions. To calculate fuel economy in a lifecycle analysis, I actually test drive the cars under consideration to get actual mpg results. Some manufacturers are very accurate, while others are not near the published mpg. As a fleet option, I think all the vehicles should transmit telematics information. Buying the little devices and keeping them plugged in is a challenge.”

According to Donlen, telematics usage increases with the size of the fleet. In fleets of less than 100 vehicles, 80 percent of those surveyed are not considering telematics, whereas in fleets of 300 vehicles or more 80 percent are either considering or using telematics. The survey also shows that the cost of telematics isn’t really a factor (only 17 percent cited cost), but the benefits are clearly understood. Most respondents plan to use telematics to improve driver behavior, increase route productivity, and gain fuel savings.

The ROI from Fleet Telematics

First, to be clear, telematics are much more than simple GPS tracking. The term comes from combining telecommunications with informatics, and combines location information with computerized business applications.

The most common applications for fleet telematics are to track fuel usage and route information to reduce operating costs. For example, UPS used telematics data as part of big data project that resulted in savings of $1 billion annually. The same telematics data also revealed that making left hand turns was inefficient, and that by encouraging drivers to make right hand turns, UPS saved 10 million gallons of fuel and eliminated 100,000 metric tons of carbon emissions over an eight-year period.

While UPS may be an extreme example of telematics in action, what fleet managers are finding is that tracking vehicles for business analytics can pay off in a number of ways, such as:

  • Tracking vehicle downtime to reduce repairs.
  • Extending the life of tires and brakes by more than 10,000 miles.
  • Controlling the number of vehicles in the fleet.
  • Tracking fuel consumption against fuel card purchases and routs.
  • Reducing risk of accidents.

So what do OEMs need to know about fleet telematics? Here are some considerations that both OEMs and fleet managers need to examine.

Smart Vehicles Need Smarter Telematics

When OEMs are looking to implement a fleet telematics strategy, they should first consider the fleet manager’s goals and expectations. We have outlined a number of potential ROI scenarios above and there are dozens more. It’s important to understand what fleet managers expect from telematics.

For example, fuel efficiency and route management seem to be universal concerns for large delivery fleets. However, different types of fleet operators are going to have different concerns. In the case of a construction or service fleet, such as plumbers or electricians, the concerns may be more along the lines of driver safety (e.g. speed notifications) or geofencing (e.g. tracking proximity to job or delivery locations).

To set the right goals, fleet managers need a baseline for fleet performance. They want to understand metrics such as vehicle usage, gas consumption, idle time, trips per day, time out of service to use as a starting point to establish objectives. It’s up to the OEMs to make sure that the right metrics are available to provide those baselines. Smart OEMs will collaborate with their customers to identify the right key performance indicators (KPIs).

Increasingly, telematics are becoming an integral part of the Internet of Things (IoT). As part of IoT, the data generated by in-vehicle telematics may be used for other analytics programs and applications, such as diagnostics and even big data. Telematics data will need to be accessible in a format that suits analytics, including the ability to access data from the cloud or some central data repository.

The growth of IoT also is driving remote access to telematics data via mobile devices, such as tablets, smartphones, and even smart watches. Increasingly fleet managers will want to have real-time access to telematics data from anywhere, anytime, using third-party devices so they can check on driver locations and schedules.

IoT sensors are also being used with telematics for maintenance. Pioneer, for example, is developing new strategies to collect telematics data via an onboard diagnostics port. Performance data is gathered from hundreds of sensors throughout the vehicle, stored for export, and then uploaded to the cloud. As Internet access become commonplace in vehicles, telematics will be extended to collect performance data that can be shared with the dealer and the manufacturer to alert owners about pending failures and systems that need maintenance.

As vehicles continue to get smarter, fleet owners are going to expect data that has more value from telematics. The OEMs challenge is to stay ahead of demands and develop telematics systems that can meet the evolving needs of fleet managers. The more OEMs stay abreast of fleet owner needs and expectations, the better they will be able to compete with new telematics systems that deliver all the insight fleet managers demand.


Topics: Fleet Telematics

Michael O'Shea

Michael O’Shea is the Founder and CEO of Abalta Technologies. He is responsible for all aspects of executive management of Abalta and a direct participant in many client engagements, particularly in management advisory projects.

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