The fleet management space is a hotbed for technological innovation, thanks to solutions like Internet of Things (IoT) connected cars, autonomous vehicles and a bourgeoning SaaS ecosystem designed to boost control over all aspects of fleet, from repairs to driver time tracking.
The industry is slated to see a $54 billion fleet Software-as-a-Service market by 2027, as PYMNTS' latest Workforce Spend Playbook notes. But as digitization and technological innovation tread deeper into the fleet management arena, fleet spend can become an increasingly complex beast to tame.
The Workforce Spend Playbook's October 2019 Deep Dive explores the biggest challenges small and medium-sized businesses face in managing fleet operations and spend, as well as the opportunities that the newest technologies present in addressing that friction.
One of the largest hurdles in this arena, the Playbook noted, is off-policy spending. Recently analysis from spend management firm Oversight Systems found that more than 60 percent of finance executives say their firms struggle to identify wasteful spending, while more than 40 percent said their firms also struggle to forecast employee expenses.
A lack of visibility into company expenses – the result of a lack of platforms and systems to provide transparency into employee spending – has hampered companies' ability to identify excessive, off-policy or potentially fraudulent transactions. While adopting tools to aggregate data on employee transactions is a key first step, the Playbook notes that when it comes to fleet spend management, organizations have an even bigger opportunity ahead.
Driver spend is a key focus in fleet spend management strategies. Drivers on the go need mobile payment solutions that can connect back to central systems and provide visibility into their spending behavior for fleet managers.
But driver payments are far from the only spend category fleet managers need to manage.
"Every manager needs to consider cargo optimization, route planning, scheduling and dispatch, among other functions," the Workforce Spend Playbook noted. "Fuel must be purchased and vehicles must be serviced and eventually replaced. A single vehicle may last years, but managers should pay close attention to such long-term concerns to prevent operations from coming to a standstill."
Analysis from Fueltek recently laid out the top five concerns for fleet managers today, with fuel cost volatility landing at the top of the list (followed by driver discovery and retention, regulatory compliance and operator safety). For more specialized fleets, there are additional challenges to consider, including shipping cost forecasting and freight cost optimization.
Data is at the heart of managing all of these processes, making digital payments and spend management platforms essential to accessing the financial data necessary to analyze, forecast and manage fleet spend.
In the fleet space, though, SaaS isn't the only way to capture spend data.
Telematics technology has also continued to strengthen its role in fleet management, not only helping to optimize operations, but also to optimize spend. Telematics systems can support the calculation of vehicle operating costs, for instance, enabling managers to take proactive steps toward optimizing spend for that vehicle by sending a notification when it’s time to change the oil or rotate the tires.
Diving deeper into vehicle performance, telematics tools can also provide analytics into hard stops and quick accelerations, which limit fuel usage optimization and may lead to more frequent servicing. When combined with GPS technology, technology can promote route optimization, prevent speeding and help ensure driver safety (and compliance).
What's key to understand is that in the fleet management space, spend optimization goes far beyond simply aggregating driver transaction data. Emerging technologies to manage fleets not only boost efficiency, but can also lead to major cost savings in areas like vehicle maintenance, a space for which traditional driver spend data cannot provide insight.
As fleet management technology continues to grow more sophisticated, the opportunities for financial analytics will increase, too.
"Managers who keep their fleets in good working order and finance professionals who closely monitor field-based employees' spending habits will enjoy success for the long haul," the PYMNTS Workforce Spend Playbook noted.