GPS can help the ROI of your Enterprise Mobility Project
We asked Mike Forbes at Electric Compass to explain how GPS can help the ROI of your Enterprise Mobility Project.
GPS navigation is a trans formative technology for both consumer and business users. It definitely fits the statement that “Any sufficiently advanced technology is indistinguishable from magic.” And why not? – GPS knows where you are and takes you where you’re going…just like magic.
But the real magic is in the return on investment it can bring to fleet operators.
What follows are some quick and powerful ways you can quantify the ROI magic and sell it to your business. And keep reading, the real ROI magic may not be what you think it is.
How to quantify the ROI of Turn-by-Turn GPS Navigation or Tracking
There are two main areas where a fleet can benefit from deploying GPS navigation or tracking solutions.
Use less fuel and reclaiming unproductive driving time. Here, we’ll look at how you can show these savings as concrete numbers and then combine them to make a very persuasive case for GPS.
Note: We are using miles/gallons/dollars in the examples below, but these can be easily translated into KMs/liters/Euros or other currencies. Replace labour rates and current fuel costs with what you expect to see in your area.
Ask colleagues how much fuel they think they’ll save by using GPS and they’ll be hard pressed to provide an answer. Odds are, they’ll agree there will be savings but have little idea of how much. Here is an approach you can use to determine what level of fuel savings a fleet customer will see:
Benchmark: 12% Fuel Savings for mix of routine and non-routine travel. Research from a large digital map supplier showed that users of GPS saved an average of 12% on fuel. If the fleet manager can provide a number of miles traveled per vehicle per week and an average miles per gallon rating for fleet vehicles, this is a pretty easy calculation. For this example, we’ll use a figure of 400 miles a week and 12 miles per gallon per vehicle.
GPS Fuel Savings Example: 250 vehicle fleet
Miles Traveled per week: 400
Miles Per Gallon per vehicle: 12
Fuel Used per vehicle: 33.33
(Miles Traveled divided by Miles per Gallon)
Fuel Cost per gallon: $ 2.66 – will be much higher in EU. Check for average prices here.
Weekly Fuel Cost per vehicle: $ 88.66
(Fuel Used multiplied by Fuel Cost)
Weekly Fuel Cost Savings per vehicle: $ 10.64
(Weekly Fuel Cost multiplied by .12)
Yearly Fuel Cost Savings per vehicle: $ 532
(Weekly Fuel Cost Savings multiplied by 50 weeks)
Yearly Fuel Cost Savings for 250 vehicle fleet: $ 133,000
(Yearly Fuel Cost Savings multiplied by 250)
With enough ROI from fuel savings alone to justify GPS navigation, the real magic of GPS actually kicks in when you look at the field worker labour time you can save. Here is a way to determine what the savings per driver will be:
Benchmark: 54 Minutes Saved per day by using GPS. In research by a major mobile computer maker fleet operators reported an average savings of 54 minutes a day per field worker for a total labor savings of $5,484 per year. That works out to an hourly labor rate of about $26 an hour. If the fleet operator you are working with has a different hourly rate for its drivers/technicians, you can plug in that number instead. If you round the minutes down to 45 per day, you can show savings of $19.50 per day. How does this play out for a fleet:
GPS Labor Savings Example: 250 vehicle fleet
Hourly Labor Rate: $ 26.00 – add your rate here.
Daily Labor Savings per driver (45 minutes): $ 19.50
(Hourly Labor Rate multiplied by .75)
Weekly Labor Savings per driver: $ 97.50
(Daily Labor Savings multiplied by 5 days)
Yearly Labor Savings per driver $ 4,875.00
(Weekly Labor Savings multiplied by 50 weeks)
Yearly Labor Savings for 250 vehicle fleet: $ 1,218,750.00
(Yearly Labor Savings multiplied by 250)
Yes, that’s over a million dollars a year for 250 drivers or technicians.
Think you can’t save 45 minutes a day?. Even if the savings is only 45 minutes a week, the yearly savings are still $975 per worker and over $240,000 for a 250 vehicle fleet, representing a payback time of a matter a months.
And while time savings can translate into lower labour costs these savings could also allow fleets to schedule more stops and more customer facing activities per driver per day. For example, if an average stop takes 20 minutes based on the 54 minutes of time reclaimed an additional stop could be added to each driver’s schedule. This translates into significant savings as a leaner fleet can service the same number of stops or the current fleet can add more stops.
Add It Up
Now, let’s look at the total savings from using GPS navigation on a per-vehicle and total fleet basis:
Per Vehicle/Driver Savings
Yearly Fuel Cost Savings per vehicle: $ 532
Yearly Labor Savings per worker: $ 4,875
Combined Yearly Savings: $ 5,407
Yearly Savings by Fleet Size
So, this is how GPS can help the ROI of your Enterprise Mobility Project. If you have ever had any questions about how to present the value of GPS tracking or navigation to colleagues in your business, just let the numbers speak for themselves…they are magic….!
Mike Forbes at Electric Compass