How does fleet management work?

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Active and passive GPS tracking, telematics, and fleet management software explained

fleet management software
(Image credit: Photo by Rodrigo Abreu on Unsplash)

According to MarketsandMarkets, the fleet management market, including GPS tracking and telematics, is expected to grow from $19.9bn in 2020 to $34bn by 2025 at a compound annual growth rate of 11.3% during the forecast period. The MarketsandMarkets report suggests that the key reasons for growth are the strict government regulations, an increase of cloud-based solutions being used, growing Internet of Things (IoT) use, and the rising demand for big data analytics. 

So what is fleet management and which businesses use it?

Put simply, fleet management is the organization and administration involved in coordinating business vehicles. The ultimate aim is for companies to be able to control the entire lifecycle of the fleet, and this would subsequently allow them to improve efficiency, reduce costs, increase productivity, reduce risks, and ensure compliance with government regulations.

Work vehicles are a huge part of the economy and are used in almost every industry in some way. Companies with fleets include hauliers, couriers, sales, repair and service industries, utilities, public transport, oil and gas delivery, and emergency services. Even if a particular business does not have its own fleet, it is likely that it relies on a fleet for some part of its supply chain and may outsource this to another company.

The components of fleet management

There are many components of a fleet management technology solution. Here we look at the main parts:

Fleet tracking

Fleet tracking uses GPS to monitor assets – vehicles, workers, or equipment. It uses telematics technology to collect data in real-time so it can provide actionable insight for fleet managers straight away.  This enables managers to make swift and informed decisions on things such as dispatching vehicles, estimating return times, responding to customer queries, and rerouting drivers for a safer journey, thus enhancing overall operational productivity.

Software

Fleet management software enables managers to have all the information they need about their fleet in one place. It effectively acts as a database, which can help organizations keep track of everything from expenses, driver dispatching, compliance tasks, driver behavior, and fuel consumption. Some of these will require different applications as part of a suite, but the data could be pulled in from the overall database, making the administrative process far more efficient.

Telematics

Telematics typically involves the installation of black boxes inside vehicles to monitor their location, and performance, and provide fleet managers insights into driver behavior. For instance, it can tell them if a driver is accelerating too much or braking hard, resulting in additional fuel costs. Operational data collected by telematics systems include vehicle speed, miles per gallon, fuel consumption, weight of load, gear, braking intensity, and driving style. In addition, some telematics systems can inform the fleet manager if the ignition is on, if a vehicle’s doors are open, and if the panic alarm has been activated.  The data is sent to the company’s servers directly, or to a vendor’s server, which an organization has access to.

Security and safety

Security is usually embedded into the solution rather than as a standalone application or feature.

As the use of technology has grown, so has cyber security risks. This is why it is imperative that a fleet manager vets software and hardware products before selecting them. Those with encryption policies, identity and access management, and security validation are more likely to have the necessary safeguards in place to secure the software. Understanding the infrastructure employed and the location of data storage, along with awareness of third-party providers, is equally vital in ensuring comprehensive cybersecurity measures.

Most other security aspects are around maintaining the driver and vehicle’s safety. One of the features available in some solutions is driver identification, which allows drivers to easily identify themselves when they’re using a vehicle by using biometrics or a key fob. This feature comes in handy in cases involving speeding tickets or third-party insurance claims.

Additionally, vehicles can be programmed to start only when it recognizes an authorized driver. Coupled with alerts for door openings and closures, this keeps the fleet manager informed of any suspicious activities.

Tracking technologies such as telematics and GPS tracking can help detect dangerous driving patterns, anticipate a potential accident and enable fleet managers to swiftly intervene. They can also help to locate remote assets or vehicles to ensure that the asset and its contents are safe.

Maintenance tracking

As vehicles are one of the biggest investments for a fleet manager, it's crucial to adopt a proactive approach to maintenance

Maintenance software, often included as part of fleet management solutions, allows organizations to plan and track the servicing and repairs of each vehicle. A powerful maintenance solution can also create purchase orders for parts and suppliers, and send invoices to customers through its platform. In addition, it can store other documents such as warranties, claims, details of providers, and detailed maintenance history.

Using GPS fleet tracking, managers can track mileage, fuel use, and engine hours automatically. Based on preferences, they can set alerts when a vehicle is due for repairs or servicing. Aside from ensuring the vehicles are always in mint condition, this strategic move allows managers to plan how to best use their assets, budget, and staff in the most efficient and cost-effective way. In addition, the vehicle’s ROI will subsequently go up.

The difference between active and passive trackers in GPS tracking

When selecting a GPS tracker for fleet management, there are two different types: active and passive. Depending on your needs, either of these fleet tracking systems could work for your business.

Passive tracking systems can store GPS location, vehicle speed, and other data around driver behavior. Think of them as a data logger – similar to the GPS trackers on many fitness watches, they can record information, which can then be downloaded and accessed once the vehicle is reconnected to the fleet management software.

For fleets that only want to track mileage and basic information, have a tight budget, and does not need real-time tracking capabilities, passive tracking systems are ideal.

Instead of having to manually download and access the data, active systems use cellular networks – 4G and 5G – to send the data directly to the server. This means that businesses don’t have to connect the device to the server to download the data, instead, it is processed and delivered in real-time. This is ideal for fleet managers who want to have a better grasp of their fleet’s real-time location and vehicle information, and make sure their drivers receive notifications and alerts anywhere. These capabilities allow fleet managers to have more strategic control over their fleet. For example, those handling public transport systems or delivery companies can reroute their drivers in real-time to make them more efficient.

Businesses that want to set up a geofence – a predetermined area on a map – can do so on active tracking systems. This means if the vehicle arrives in or departs from the geofenced area, the fleet manager will be alerted. Ultimately, there are a lot more security measures in place for active tracking systems as they allow fleet managers to track the vehicle’s location if it is stolen.

As a result of the additional features in active GPS trackers, they are more expensive than passive trackers. However, software providers will argue that the additional productivity and efficiencies gained using active trackers would offset the cost difference.

To summarise, passive trackers are used to record and store important data, which can be downloaded at a later time.  On the other hand, active trackers record and store the same information, but also transmit this information in real-time, opening up further possibilities of how fleet managers can act on this data.

Main features and benefits of fleet management software, GPS tracking and telematics:

  • Many administrative duties such as quoting, invoicing, identifying and dispatching drivers, expense management and keeping customers informed can be simplified or automated
  • Fleet managers can track fuel consumption, check vehicles and drivers when there are cases of fuel overuse and monitor driver behaviour. By doing so, fleet managers can manage fuel fare more effectively. For instance, by analysing driver behaviour, managers can get insight into idle times which may be contributing to a large expense on fuel
  • Fleet management software can come equipped with workflow automation software, offering managers regular service and maintenance reminders based on factors such as date, mileage or time of use. By monitoring maintenance scheduling, managers can act before a vehicle shows signs of malfunction
  • Simplification of the way drivers are managed in the field with an application to communicate with them through messages and orders. In addition, vehicles can feed back updates in regards to the order and the estimated time of arrival.
  • Improved accuracy of data – telematics data would help to cut out redundant entries in fleet management databases
  • Regulatory and legal compliance can be better monitored as all of the information is kept up to date and notifications on expiry dates can be used.
  • All of the above can help fleet managers to become a more strategic part of the overall business, as they can help with budget and forecasting, sustainability efforts, and management of big changes (such as dealing with changes as a result of the Covid-19 pandemic).
  • Fleet management products also integrate with other software providers, making other tasks more seamless such as payments, route-optimisation, and HR tasks.

Overall, fleet management software, GPS tracking and telematics can help fleet managers to automate, optimise and ultimately lower costs.

Further reading

Sooraj Shah
With contributions from