Since 2000, the mobile resource management (MRM) market — GPS/wireless tracking of fleet vehicles, heavy equipment, and mobile workers — has been growing at an average rate of 20% a year, with a slight increase in market growth in 2003, following the rollout of cellular data networks (click here to see Fig. 1). Currently, approximately 3.6 million MRM devices are used to monitor fleet vehicles, trailers, construction equipment, and mobile workers, according to the “U.S. Mobile Resource Management Systems Market Study, 2009 Edition” by Palos Verdes Estates, Calif.-based C.J. Driscoll & Associates, which provides consulting and research services with emphasis on GPS and wireless products and services for both the commercial and consumer markets.
Released in May, the report is predicting the number of MRM devices in use will increase to more than 6.5 million units by 2012 — totaling $2.5 billion in MRM hardware and service revenues — spurred by decreasing costs for hardware and cellular data plans. For location-based services (LBS) and fleet management applications, the average price for hardware ranges from $300 to $400 per vehicle, according to Clement J. Driscoll, founder and president of C.J. Driscoll & Associates. “The price depends on if it's just a basic unit or if it's tied in to different sensors on the vehicle,” Driscoll explains (A Simple Plan below).
Beyond the hardware, the monthly service pricing averages from $30 to $35, which includes the wireless data fee. “Most suppliers bundle that cost in with their service fee, so there's only one fee a month for an end-user to pay,” Driscoll says.
Often, providers require a signed contract, some with a commitment of up to three years. Yet, there are some that don't, says Driscoll — and some with shorter contracts.
An additional driver for the MRM market is an increased awareness of the benefits of the systems. “Today, most fleet operators either have used a GPS tracking product, or they know companies in their specific field that are using them successfully,” Driscoll says. “As the market has grown and matured, more and more fleet operators have become aware of this technology, so there's much less need to educate end-users on what this technology can do for them. Most fleet operators have some sense of that, even if they haven't used one.”
However, despite lower prices and an increased awareness, the recession has slowed the growth of the market for 2009. C.J. Driscoll & Associates is expecting only an 8% to 10% growth this year. “It's still growing, but suppliers are seeing considerably less growth because of the economy,” Driscoll explains. “We're seeing some softening of demand among small fleet operators because some of them are having trouble financially. They're parking vehicles because they don't have enough work to keep their entire fleet active.”
Spend to save
Finding money in a tight budget for an MRM system may seem counterintuitive. However, LBS can have a direct effect on a company's bottom line. The services can reduce maintenance costs, save on fuel, increase billable hours, and cut overtime hours. “If we cut overtime, track on-time job-site performance, and remove excess waste, it gives us a leg up on our competition,” says Jonny Barr, service supervisor, Ellsworth Electric, Washington, D.C., in the recent survey report, “Service Workforce and Fleet Management: Driving Utilization with Location Intelligence,” published by Boston-based research firm Aberdeen Group and sponsored by GPS Insight, a Scottsdale, Ariz.-based GPS fleet and vehicle tracking systems provider. “We can then be more competitive in our bids and drive new business opportunities — something that's paramount in a tight economy,” Barr continues.
According to the report's information — taken from answers to a survey of 200 service companies — many firms that have successfully integrated location data in their service operations, including using it to aid scheduling and focusing on driver safety, have experienced as much as a 21% decrease in operating costs and a 29% increase in service profitability in the 12 months before the survey. The respondents that leverage the MMR system capabilities the most, what the report calls the “Best-in-Class,” receive the greatest benefits (click here to see Table).
A typical ROI for an MRM system occurs around the year mark, according to Driscoll. But it can occur in less time. For example, in the 10 months since Novato, Calif.-based licensed electrical contracting and transportation engineering firm Republic ITS installed GPS devices in 25 of its trucks, the company has recouped its initial output. “The savings have far outweighed the cost of the actual system,” says Josh Bailey, area manager.
The company's diesel trucks are not meant to be driven above 60 mph, so Bailey set a speed alert for no more than the California maximum of 65 mph. “If a driver goes over that for more than 5 or 6 min., the system alerts me, so I call the driver and say to keep the speed down.”
Alerts can save companies thousands of dollars in repair and fuel costs. “The alerts create a more efficient use of vehicles,” Driscoll says. “Firms can be sure the drivers aren't putting extra miles on the vehicle at the company's expense and are adhering to assigned calls, which can save fuel and vehicle wear-and-tear.”
In addition to speeding, the systems can monitor excessive braking, hard acceleration, and idling times. “These things can waste fuel or wear out the brakes, requiring more maintenance and service for a vehicle than should be necessary,” Driscoll says.
Bailey has alerts set on his system to go off after 30 min. of idle time. “That's the most common one I get,” he says. “But because of the field of work we're in, the drivers sometimes have to leave their trucks running.”
MRM systems can also support vehicle diagnostics. A well-running vehicle can increase miles per gallon by 4%, according to the U.S. Department of Energy (DOE). In addition, promptly addressing grave mechanical problems can increase mileage by as much as 40%. The units used by Republic ITS support sensors that plug directly into the engines' computers. “They assist me in calling our mechanics and giving them the code that the truck is outputting,” Bailey says. “They can tell me if it's urgent or if it can come in whenever.”
Along with vehicle performance, MRM systems can improve worker productivity. The Aberdeen Group report found that organizations with small fleets experienced a 23% increase in the total number of service calls completed per day per technician, once GPS vehicle tracking was installed in their fleets. “The biggest motivator has always been driver productivity,” says Driscoll. “They track when a driver arrives for a call, and when the job is completed. Overall, along with driver productivity goes reduced overtime.”
In addition, the systems can streamline dispatching. “The dispatchers can locate the closest available vehicle to respond to a call, which can save a lot of time and is good for customer service as well,” Driscoll says. “You can let the customer know you've got a driver who's 5 mi away and will be there in a few minutes.”
This dispatching feature has evolved for Milam Refrigeration and Electric, Harrison, Ark. “We'll get a hot call and maybe one of the telephone exchanges in Green Forest has lost power, so I'll click and see if Ben is still in Green Forest,” says Bruce Barrington, the company's office manager. “If he is, I'll tell him to pack up where he's at, go over there, and get the phones back up.”
Many companies first adopt a system when they suspect moonlighting or other unwanted employee behavior. On-call electrical service employees are often allowed to bring vehicles home. “You've got to be able to go 24/7,” says Barrington. “We had a couple of guys who we figured were doing side jobs, and, to our chagrin, we caught the guys red-handed. We told them not to run side jobs anymore and explained liability.”
Before Barrington installed the devices in the trucks, he gave his staff fair warning that they may be monitored. “We bought an extra unit and brought it in,” he says. “We told everybody to take a look at it and said, ‘These are going in the vehicles.’ The employees have adapted. There was no big hoopla at all over it.”
Other firms don't make the transition as easily. “Nobody likes to have GPS put on their trucks, because they feel it invades their privacy and you don't trust them,” Bailey says.
In particular, one employee protested against the device, but Bailey eventually sold him on its usefulness. “I told him that it's not in any way to attack him, if he does his job,” Bailey says. “I'm looking more toward this as a basis to help with fuel efficiency.”
In the beginning, many of the drivers were setting off the speed and geofencing alerts, but Bailey remained courteous during phone calls to correct the driving. “Although they fought it, it has helped them a lot with the maintenance of the vehicles,” he says. “The resistance died really fast because I wasn't hounding them about it every day.”
The ubiquity of GPS systems also helps with the initial implementation, according to Driscoll. “Ten years ago, there was a lot of resistance,” he says. “But now that GPS is widely used in the consumer market, people understand what it is and are accepting of the fact that it can help the efficiency of operations and help their employer cut costs.”
In addition, employers rarely constantly monitor each driver. Many systems are used for aggregate reports or special alerts. “They're only looking for things they need to pay attention to,” says Driscoll. “Is there somebody who's putting way more miles on a vehicle than makes sense because he's not supposed to be driving that far? Are there drivers who never seem to arrive somewhere on time? Are there drivers who are constantly speeding?”
The last person Bailey tracked was several months ago. “When I first got it, I let go of four people,” he explains. “It really straightened a lot of people out. They were good workers, but they had some bad habits.”
Employees authorized to receive reports from the system vary by firm and usage. “When we do primary research with fleet operators, we talk to the responsible people who make the decisions about these systems, and it varies somewhat,” Driscoll says, noting that fleet managers and dispatchers usually receive the reports.
For a small fleet, the president of the company or CEO may glance at the reports. Often, more than one person per firm will receive reports and use the information.
At Barrington's firm, only Barrington, the owner, and the owner's secretary have access to the reports. By contrast, anyone in upper management at Bailey's company can view the reports. “Anybody in the office can download the information — even the guys in the field,” Bailey says. “We have a shop guy here, and he helps me with the fleet management by assigning vehicles and monitoring if a truck needs service. There are quite a few people with access to it.”
To guard against disgruntled drivers, the devices are generally tamper-proof. Also, many units can be concealed from the driver through low profiles and a small size. In addition, the employer will be alerted if a driver tampers with it. “You can't just deactivate a system that the employer is paying a service fee for,” Driscoll says. “They're installed in such a way that it's not inviting itself to be tampered with anyway.”
Some service firms may be tempted to drop their service after the system has straightened out their personnel problems. “Some say ‘I had a particular problem with a couple of drivers, I've resolved that problem — either fired them or they've straightened out — and I don't need it anymore,’” Driscoll says.
Also, despite ease of use and manufacturer training, some companies may not understand additional uses for the system. “Some may not use it effectively.” Driscoll continues. “There's information coming in for them, but maybe they don't set it up to give them the reports they need — or it gives them the reports but they're busy doing other things and not paying attention.”
However, many companies invest in the technology for one reason and wind up keeping it for others. For instance, Barrington's firm originally bought it to prevent moonlighting. “We've just found so much you can do with it versus what we originally bought it for,” Barrington says. “It was basically a nanny system. Then the problem — the side jobs — just kind of evaporated, and it's turned into an incredible tool for us. Oddly enough, we've ended up using it to justify bills.”
In the last year, many of Barrington's customers have begun quibbling over the service bills. The ability to print out vehicle location history is especially useful. “People will argue with the bill, so now we can call up the reports and give them a time line,” Barrington continues. “When you've got something like this, people won't argue with you.”
Another benefit for Barrington's firm is lower insurance premiums. The systems decrease insurance rates on the vehicles in which they're placed because they can be tracked after theft. “If someone does steal a vehicle, it'll show us where to find it,” Barrington says.
Finding additional uses for the systems is common, says Driscoll. “The main benefit isn't what they originally thought it was going to be,” he says. “It provides other benefits or there is something else it did for them that was even more important than what they were planning to begin with.”
Sidebar: A Simple Plan
A basic mobile resource management (MRM) tracking unit consists of a black box with no display and an antenna. The core set of features includes location tracking and history, alerts, such as geofencing (establishing prohibited or accepted zone), speed, and idle time. Most systems will refresh every 2 to 5 min. Driver interface technology, such as a navigation screen or a data terminal, is optional. In addition, systems can support sensor activation, including connection to the truck's engine's computer for remote vehicle diagnostics. Typically, customized reports are available through the provider's Web site.
“Most of these systems are really not very complicated,” says Clement J. Driscoll, founder and president of C.J. Driscoll & Associates, Palos Verdes Estates, Calif. “In fact, ease of use is a big selling point. They're not running software. The end-user is just logging into the supplier's Web site, putting in the right password, and viewing the reports.”
Devices with fewer bells and whistles can cost less than the average $300 per unit. After looking into several different systems, Milam Refrigeration and Electric, Harrison, Ark., decided on a consumer system that targets parents who want to monitor their teenage children. The price for the unit — about the size of a pack of cigarettes, according to Bruce Barrington, office manager at Milam Refrigeration and Electric — is about $100 per each of the company's 10 technician vehicles. The devices provide location updates in map, satellite, or hybrid format every 10 minutes through the provider's Web site. “We did a lot of research because these things are expensive, and we're kind of a mom-and-pop operation,” says Barrington. “You don't need one of these really expensive setups that downloads every 30 sec.”