Every supply chain consists of not just the manufacturing and warehousing of products, but their
Tracking and improving business operations has a lot to do with picking and measuring the right metrics. In general, these metrics are termed Key Performance Indicators or KPI that focus on specific objectives over time. Fleet management KPIs are crucial for logistics and transport operations as such indicators help fleet managers track particular metrics for their fleet. Based on the data collected, fleet managers can make necessary operational changes and chart out future strategies to make their fleet operation more efficient and cost-effective. In addition, tracking fleet management, KPIs can help fleet managers identify loopholes or inefficiencies in their daily operation and run their operation smoothly.
Why do we measure fleet management KPIs?
Fleet management KPIs include metrics like delivery time, speeding, engine idling, vehicle utilization, among others which are quantifiable and can be tracked by equipping the fleet with relevant fleet management solutions such as a vehicle tracking system. Such solutions help collect vehicle and driver data from the entire fleet over a period of time, process, and offer fleet analytics to the fleet manager. The goal is to compare current data with the data collected in the past to assess improvements, loopholes, inefficiencies, etc., take necessary steps, implement strategies for the future, and make the fleet operation more efficient. Measuring fleet management KPIs can also help gauge the performance of a newly implemented system or process, which can help companies take more accurate decisions regarding return on such investments.
What benefit does measuring fleet management KPIs offer?
In addition to the primary benefit of tracking result-oriented progress for the fleet, there are several other reasons to start tracking fleet management KPIs for your fleet.
It can help improve customer satisfaction and service
Transport and Logistics is a competitive industry, and offering excellent customer service that drives customer satisfaction holds the key to securing recurring and new customers. Delivery time is considered the most crucial KPI when it comes to customer service. Thus, by tracking the vehicles delivering goods, fleet managers can minimize unwanted stops or reroutes, ensure on-time delivery of goods to their customers, and offer estimated delivery time based on past records.
It can help reduce high maintenance costs for fleets
Large fleets make it difficult for fleet managers to track every vehicle precisely when it comes to vehicle maintenance. Such minor negligence could lead to expensive and long-term consequences such as vehicle breakdown, reduced longevity of the vehicle, high fuel cost, etc. Tracking vehicle maintenance can help fleet managers schedule timely maintenance of vehicles which can further avoid unwanted vehicle breakdowns, which can induce expensive repairs or poor engine performance resulting in high-fuel costs which can be avoided.
It can reduce inefficient vehicle use and reduce overdependence on drivers
Fleet managers are overly dependent on drivers when tracking vehicles on the route. Instances of drivers running personal errands, taking unwanted stops, rerouting to increase the distance covered, etc., are common occurrences and hamper fleet efficiency and cost. Additionally, instances of engine idling incur high fuel usage, which results in high fuel costs for companies. Measuring the right fleet management Key Performance Indicators can help fleet managers identify such instances and eliminate them to save cost and improve operational efficiency.
It can help improve safety compliance of vehicles
As data shows, the transportation sector in India is particularly vulnerable to road accidents and collisions, often resulting in financial losses as a result of damage to vehicles and goods. The fleet manager can track metrics like acceleration and deacceleration, speeding, and overall driving behaviour and identify potential safety hazards such as over speeding, rash driving, etc. Thus, it can significantly reduce the chances of accidents and collisions and make roads safer for own vehicles and others.
Right fleet management KPIs to track for transportation and logistics industry
As discussed, fleet management KPIs are specific and result-oriented metrics that can offer great potential to improve fleet efficiency and reduce cost. However, based on the requirement and use, there are several fleet management KPIs that can be measured. Fleet managers can track specific KPIs based on their needs, varying from measuring operational efficiency, cost reduction, driver performance, vehicle performance, or maintenance.
This section lists some of the critical and standard fleet management KPIs that every business should measure and track to increase fleet efficiency and reduce cost.
Fleet management KPIs for operational cost reduction
As already discussed, engine idling leads to high fuel usage and increases fuel costs for businesses. In addition to the cost factor, engine idling also leads to unwanted and higher emissions from fuel consumption, which increases engine use and its emissions. Thus, the benefit of tracking engine idling and limiting it reduces cost and reduces the company's carbon footprint.
Vehicle Utilization and Replacement cost
Tracking fleet management KPIs such as Vehicle Utilization can help companies track and measure the return on investment on each vehicle they purchase or replace. By tracking sub-metrics such as uptime, companies can track how well the vehicle has been utilized since their purchase and the cost of replacing vehicles with new ones. By tracking utilization and replacement, companies can also get a good measure of expense and returns for other metrics such as Total Cost of Ownership (TCO).
Fleet Management KPIs for reducing vehicle maintenance cost
Tracking the total number of vehicle breakdowns can be a good indicator of the vehicle’s health. A vehicle that breakdowns more frequently due to an operational failure requires more maintenance. Additionally, further investigation of breakdowns can potentially lead to the underlying reasons for the breakdown, preventing similar situations.
Vehicle maintenance downtime and inventories use
A non-functional vehicle incurs losses to the company both financially and operationally. If the downtime for a vehicle is higher, it indicates poor maintenance and vehicular health. If a particular part of the vehicle is required more often, fleet managers can track such trends and stock up their inventory accordingly to reduce vehicle downtime and maintenance.
Fleet management KPIs for improving efficiency and performance
Acceleration, Braking, and speeding
Frequent hard acceleration or braking is an indication of rash driving or accident. Thus, fleets equipped with fleet management solutions such as vehicle tracking systems can alert the fleet manager in case any vehicle accelerates or hard breaks the vehicle too often. Fleet managers can review both vehicle and driver performance based on the same and take necessary actions to reduce such instances and make their fleet more efficient and safer.
Route mapping and navigation
Effective route planning and navigation can help companies reduce the cost of choosing the most cost-friendly route for their fleet. However, fleets require tracking and monitoring if the pre-planned route is not followed. Thus, fleet managers can ensure timely deliveries, avoid fuel theft, offer more transparency to their customers, and reduce their operating costs by tracking vehicle and their route adherence.
Tracking vehicular fuel consumption is one of the most crucial fleets managements KPIs but is offered the least attention. Fleet managers can use efficient fuel management systems to track each vehicle’s fuel consumption in their fleet. Tracking fuel consumption helps keep track of fuel expenses in operation. It can be a key to addressing challenges like fuel theft and siphoning, which is a problem that has persisted in the transport sector for decades.
To conclude, fleet management solutions offer companies the tools and resources to improve operational efficiency and reduce costs. However, to achieve those goals, companies need to strictly monitor critical metrics and fleet management KPIs to help companies achieve the same.
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