A short crash course in KPIs
What is a KPI?
“If it cannot be measured, it cannot be managed.” – Peter Drucker, Austrian-American management consultant described as the founder of modern management.
KPI is an acronym for Key Performance Indicator. A KPI indicates the progress that is being made towards reaching an intended result or goal. It provides focus when strategic and operational improvements are being made and creates an analytical basis for decision making.
When developing a KPI, you:
The format of a KPI usually includes Action, Detail, Value, Unit and Deadline. For example, “Reduce your entire fleet’s fuel usage by 40% by 31 December 2022.”
KPIs must always follow the SMART format. Keep it specific, measurable, attainable, relevant, and time-bound.
Why are KPIs important for fleets?
Utilizing KPIs demonstrates to fleet managers, owners, and supervisors whether the fleet management strategy is effective or not and guides them towards the areas that require improvement or helps them see whether they should take another approach.
In the world of fleet management, KPIs are generally used to boost efficiency, enhance productivity, and control operating costs.
Setting fleet management KPIs is only the start, but the next step (of meeting them) is more important. To do this, you need access to reliable fleet data to effectively communicate with the responsible team what you’re planning to do and how their actions can affect the measurable outcomes.
Here’s a quick overview of 8 KPIs all fleets should measure for success:
KPI 1: Speeding incidents
Excess speed increases the risk of car crash-related injuries and deaths. According to the WHO, an increase in average speed is directly related to both the likelihood of a crash occurring and to the severity of the consequences of the crash. For every 1% increase in speed, there’s a corresponding 4% increase in the fatal crash risk and a 3% increase in serious crash risk. Tracking and curbing incidents of speeding can greatly decrease the risk of fatalities on the road.
Not only does speeding negatively impact fleet safety, but it also decreases fuel economy. According to the website, fueleconomy.gov, gas mileage decreases rapidly at speeds above 50 mph (approximately 80 kph). It is assumed that for every 5 mph (3 kph) driven over 50 mph, you are paying an additional $0.18 per gallon for gas. By monitoring and reducing speeding incidents, you are likely to see a fuel saving of between 7% and 14%.
KPI 2: Harsh braking and acceleration incidents
When more force than necessary is applied to a vehicle’s brake or accelerator, telematics technology will trigger these events. Both could indicate that a driver is engaging in unsafe or aggressive behaviors on the road.
Regular harsh braking events can indicate distracted driving or tailgating and is often a sign that a driver is narrowly avoiding crashes frequently. This behavior increases fleet safety risk. Consistently applying unnecessary force to the brake will increase wear and tear to brake pads and tires. In turn, it will increase the need for maintenance and shorten vehicle lifespan.
Harsh acceleration and harsh braking go together as the former is usually preceded by the latter. Both are thus equally important to take note of.
Measuring these two indicators can help to identify drivers who need training to learn how to drive more smoothly. Smoother driving reduces the risk of crashes, vehicle wear-and-tear, and excessive fuel consumption.
KPI 3: Crash incidents
Crashes of any kind pose a threat to the safety of your fleet. It also affects fleet efficiency (because of resultant downtime) and, brings on unnecessary costs due to repairs and possible insurance claims.
In the event of a crash, you need to know what happened, who was involved, and why it happened. The “why” can be viewed as the most important measurement. Establishing what caused the accidents can help you determine whether the driver was at fault and, if that is the case, provide training to prevent the same incident from occurring again. Should the driver not be at fault, you have data to back you up when insurance comes into play. Dashboard cameras linked up to fleet management software can be extremely useful in this instance.
KPI 4: Fuel economy
Fuel economy refers to the relationship between the distance travelled by a vehicle and the amount of fuel consumed. There are two ways consumption can be measured. One is the volume of fuel it takes to travel a certain distance and two is the distance travelled per volume of fuel consumed.
There are a wide variety of factors that influence how economical your fleet is when it comes to fuel consumption including:
KPI 5: Empty miles
Empty (or underutilized) miles refer to instances where revenue-creating vehicles are operating without carrying a load of passengers. For example, if a truck completes a delivery and then drives back 500 miles without carrying anything, that truck has driven 500 empty miles. Those miles have essentially not generated income.
It’s easy to see that empty miles are a waste of fuel, time, and money. But many people do not realize that it can also be a safety hazard on the road. If a truck or similarly bulky vehicle is driving around empty, it can more easily sway and flip over in windy weather conditions which can lead to accidents. Even more reason to monitor those empty miles!
KPI 6: Drivers’ hours and drivers’ violations
If you have drivers driving either goods- or passenger-carrying vehicles, there are specific rules that must be followed with regards to the number of hours they can drive and the breaks that need to be taken in-between driving.
These rules obviously depend on the type of vehicle being driven and the country in which the driver is operating. Tracking drivers’ hours helps to achieve and maintain compliance with country and industry-specific laws and regulations. Non-compliance is considered an offence and has an impact on drivers and operators. It can lead to significant penalties and even, in some extreme cases, imprisonment.
Aside from the compliance benefit, measuring the drivers’ hours KPI also improves the safety of a fleet. Laws relating to drivers’ hours were originally designed to combat driver fatigue. When drivers are working too many hours and not sleeping enough, it can cause drowsiness. Drowsy drivers pay less attention to the road, have slower reaction times, and overall cannot make good decisions.
Although calculating the exact number of sleep-related accidents is difficult, research has shown that driver fatigue is a contributing factor in up to 20% of road accidents, and up to one-quarter of fatal and serious accidents. These types of crashes are 50% more likely to result in death or severe injury than other types since drivers who have fallen asleep cannot brake or swerve to reduce impact. Commercial drivers, shift workers, and drivers who do not get enough sleep due to work are at a higher risk of driving drowsy. Taking all the above into account there’s no doubt as to the importance of closely monitoring drivers’ hours.
KPI 7: Fleet asset utilization
Fleet asset utilization is a great way to measure how efficiently your fleet is operating. There are several factors you can look at to know this KPI and some of these include:
When fleet assets are not used to their full capacity at the most optimal times, you end up losing time and money.
KPI 8: Number of red and amber drivers
The driver scoring model places drivers in red, amber, and green categories dependent on their driving behavior. Drivers in the green category are making good choices while driving and very rarely, if ever, speed, brake, or accelerate harshly, and so forth. Those in the amber category are engaging in risky or unsafe driving behaviors on a more frequent basis than those in green while drivers in the red category are consistently driving poorly and need urgent attention and training to prevent accidents and fines.
Since drivers in the red and amber bands are the highest risk to your fleet, it’s important to keep an eye on them to see which events are increasing their score. Identifying and training high-risk drivers to eliminate their participation in these events helps make your fleet safer as many of the behaviors tracked are associated with accidents. Not only that but reducing aggressive driving and idling time lowers fuel consumption and reduces vehicle damage (which, in turn, lessens maintenance costs).
About MiX Telematics’ KPI Dashboard solution
After decades of working with fleets from all industries, MiX Telematics has gained extensive knowledge on what it takes to develop a successful fleet and perform optimally. To illustrate the point, our KPI Dashboard solution provides managers a guide on how to set organizational goals and related KPIs, determine deadlines by when to reach targets, measure performance using data gathered from on-board computers, and then provide insights on whether goals have been reached and if not, offer guidance as to what action to take.
The KPI Dashboard solution provides a variety of graphs and statistics and can be filtered to display according to defined periods with drilling through to sites, drivers, and/or vehicle information. See your KPI target and how it compares to the actual result. You are also provided with an overview chart that automatically shows your best-performing sites, drivers, vehicles, and periods versus your worst performing so you can determine where to place your focus. The aim is to be able to identify anomalies that are preventing you from reaching your targets pro-actively on as regular basis as desired and affords a customer all the opportunities possible to ensure they achieve their set KPI targets easily and effortlessly.