Implementing Telematics to Save Money and More

April 1, 2013

The descriptor “game-changing technology” is thrown around so often that it has almost become a cliché, especially in telematics—a more accurate phrase would be “money-saving technology”—as that’s the optimum outcome when equipment managers correctly implement telematics.

The descriptor “game-changing technology” is thrown around so often that it has almost become a cliché, especially in telematics—a more accurate phrase would be “money-saving technology”—as that’s the optimum outcome when equipment managers correctly implement telematics.

“It’s saved us one engine already,” says Michael Brennan, CEM, fleet manager for Manatee County, Fla. “We had an incident that created a massive loss of oil pressure on a machine; the operator was aware of it, but we were aware almost the same time the operator was. We made the call to the operator and found out he had already shut the machine down.”

But what if Manatee’s machine wasn’t outfitted with telematics to send a warning or alert to a manager? What if the operator had been concentrating on a particularly difficult grade or wasn’t looking at his monitor because he was on a crowded job site with other workers in his area? The scenarios aren’t difficult to imagine.

“Say we had an oil-line blowout and the operator was not aware,” Brennan says. “If you run that engine for just 2 to 3 minutes in a full-load environment, you’re going to burn that engine up. In our case, due to telematics and everyone’s alertness, we turned what would have been a catastrophic failure and a major engine overhaul into a minor repair.

“We probably saved in the neighborhood of $15,000 to $18,000 on that one incident.”

One user’s telematics example

Brennan, a 2009 and 2013 AEMP and Construction Equipment Fleet Master winner, was an early adopter of telematics. “We brought telematics in with new machinery. When you’re replacing equipment, it is an option that becomes affordable,” he says.

“To get an aftermarket system and install it in equipment that’s already out in the field, and then incorporating that data in, it’s certainly doable, but we wanted to ease our way into it,” Brennan says.

Brennan started in 2007 with four Caterpillar D7 crawlers for work in county landfills. “Now we have telematics on a lot of our primary equipment. These are the units we need to monitor on a daily basis and actually have the capacity to go in and look at the operations, to see what the operating temperatures are and what the machines are doing, so we can incorporate that into our PM program,” he says.

“The technology was already installed in the equipment. So we looked at the software and what kind of advantage this was going to bring us in the long run if we continue the process across the construction fleet. Then we decided who needs visibility to it, who needs to have access, and who needs to be notified of a pending or imminent failure. Those are all the things you have to look at when you try to implement this,” Brennan says.

Manatee’s local dealer taught Brennan and his staff how to look at performance data in real time, and over a historical period. The dealer also gave the county recommendations on who should be accessing the software. “It was very helpful and cut the learning curve down significantly,” Brennan says.

Manufacturers such as Caterpillar (Product Link), Komatsu (Komtrax), John Deere (JDLink/WorkSight) and Volvo (CareTrack) offer their systems for free with the purchase of much of their new equipment—the hardware and software are built-in from the factory, and the interface/service is often free for a set number of years before a low-cost “subscription” kicks in. There is mixed fleet capability with many systems, and OEMs also offer retrofitting for certain machines.

Aftermarket providers are also making their technology easier to adopt and more affordable as a turnkey solution.

Brennan says achieving the buy-in on telematics from his staff and his superiors wasn’t difficult at all. “My staff is eager for advancements in technology, and for superiors and the finance folks, it was a lot easier to do it during replacement of equipment. We simply had to explain the potential benefits and what it could probably do in cost savings if we had an issue,” he says.

Brennan cited benefits beyond avoiding an imminent failure. “If a unit has an intermittent problem, we can use telematics to go back through the historical record to help diagnose the problem more quickly.

“A dealer can also go in and look at it, and if we have to call them in for additional service, they’ll already know what’s wrong with it, having the same information we do,” Brennan says. “That can save technician hours, as well as the downtime for the equipment.”

Volvo Construction Equipment’s Bill Sauber, manager for remote technology, points out a related money-saving situation. “If you’re about to dispatch folks to use or maintain your fleet, you can access a map with the correct location,” Sauber says. “You can send the GPS coordinates right off the telematics’ mapping system and not waste time and money.”

Without telematics, equipment managers might miss the full cost of excessive idle time. “There are all sorts of hidden costs,” he says, “like using up your warranty period faster and putting more hours on the machine.”

Consider two machines with 10,000 hours of use, both on the auction block. “If your machine with 10,000 hours has 8,000 of those hours spent idling, you’re giving away a ton of money unnecessarily,” he says. “You could be selling it as a 2,000-hour machine, and there’s a huge cost associated with that. Small changes possible from using the technology and information to improve your operating methodology not only saves you at the day-to-day operating cost level, it saves you on your capital expenditure as well, at the recovery side.”

Sauber also notes there’s a shock effect in seeing how dollars can add up with the fairly small changes in operation that can be discovered through telematics. “One or two gallons difference per hour of fuel use is never left at that; you should always multiply that by $3 per gallon, times 40 hours per week, times 50 weeks a year, times five years of ownership per machine. Over a 50-week year and a five-year ownership period, you can easily run into $15,000 to $20,000—that’s a lot of Tic Tacs!”

Resale factors in, too. “If you think about a single machine owner-operator, a system like Komtrax can help him run the machine efficiently and also realize more resale value when he can use the data to explain to the next owner how the machine has been used and maintained,” says Komatsu’s Ken Calvert, director of machine support systems. “With larger fleets, you can multiply those benefits.”

Overcoming intimidation, skepticism, or any confusion because of the sheer amount of data available is an important key to implementation.

“I think most of us would agree there are challenges to using our laptop, too,” says Terry Rasmussen, Americas Region manager, Caterpillar Construction Technology & Solutions. “However, at the end of the day, we use laptops because they increase our productivity. I show customers what telematics can do for their business challenges. Telematics can enable customers to transform their businesses. Once they understand what it can do for their business results, most see the benefits exceed the challenges and quickly become committed to move forward.”

Sauber says, “You’re not going to think about these things every day, but once you start doing them on a routine basis, it becomes second nature—we all use smart phones or Outlook address books—we all jump into technology.”

With a myriad of data, narrowing down your needs is essential. “You need to pick and choose what’s most important to your operation and assimilate that,” Sauber says. “It’s far better to use a little bit of information and use it very effectively than to get a whole lot of information and not use it to your advantage. Sitting and reading about all the stuff telematics does doesn’t help you at all. Just pick a few things and watch those—you’ll be far better off that way then getting a whole wagonload of things and not using any of them.”

Sauber advises focusing on idle time and running equipment at the correct rpm range rather than watching for particular alarms and error codes that can cause longer-term damage to your machine, such as high-speed shifting or over-revving the engine. “Don’t spend a half-hour every day pouring over all the little alarms or things that go off that are irrelevant,” he says.

How to start with telematics

“I think telematics has evolved to where you should jump in with both feet and start using it,” Sauber says. “You’re never going to get the benefits out of it until you start to really dig into its capabilities. As long as you’re just playing on the periphery, you’re never going to get there.”

Komatsu’s Calvert says equipment managers should start with a goal. “For example: ‘I will use telematics to improve the timeliness of completing scheduled maintenance.’ Once the direction is set, then the data can be used to quantify the goal, and as a feedback tool,” Calvert says. “Other examples of goals could be to reduce the number of days machines run with dashboard cautions, to reduce engine idle time, or to balance machine workloads. Start simple and begin with a first improvement. As the organization experiences some early wins, future improvement opportunities will materialize.”

Caterpillar’s Rasmussen advocates piloting telematics before deciding what you really want to do.

“Every customer I have worked with has changed their direction based on what’s worked for them. Additionally, I would suggest it’s important to think big, so you don’t paint yourself into a corner,” Rasmussen says. “While in the short term you may just use hours and location, you should consider the future. When we look back in five or 10 years, we will see that telematics has become a key business enabler not only to transform equipment management, but also productivity.”

A telematics pilot progression

Rasmussen reviewed a set of helpful recommendations for equipment managers before a packed house at a recent AEMP meeting. He started with simple questions. “What are your business challenges today and in the future? Where can telematics improve efficiencies or reduce cost?”

Here is his checklist:

  • Start small, identify a senior leader as a sponsor, and share others’ success stories with him;
  • Ask for support for a pilot project;
  • Identify a cross-functional pilot team.

“For the pilot, identify and prioritize opportunities,” Rasmussen says. “Saturate the pilot, and integrate it into your processes—distribute reports to site managers and equipment managers. Also, integrate it into applications, including maintenance and ERP. Measure the value.”

Rasmussen also stresses the importance of communicating the successes and benefits:

  • Cost savings
  • Improved utilization
  • Greater accuracy
  • Improved maintenance
  • Reduced emissions and compliance issues.

“Then develop a fleet implementation plan to replicate the pilot,” he says. “Quantify fleet benefits, and gain budget approval. All the while, you need to continue to communicate and measure your progress. Measure success in terms of cost reduction and increased productivity.”

As with any process, there are caveats as you move along. One is not to become buried in minutiae.

“Don’t think that telematics will automatically save you a bunch of money just because all that information is there,” Sauber says. “And don’t be so enamored with the accessibility and availability of data that you think you’ve got to absorb it all. You need to control it and not let it control you.”

Sauber also points out a possible “Big Brother” effect. Because telematics systems have the capability to let you know what’s happening with your operators, it’s possible to take comparisons too far.

Consider two machines, the same size, equipped the same way. Reports tell you there’s a significant difference in idle time and utilization between the two. “What you don’t want to do is run out there with a report in your hand and start jumping all over somebody before you understand what their application is compared to the other application,” Sauber says. “You need to be cautious how you use the data. For instance, I think it’s better to reward the guys who are giving you the best fuel consumption and idle time on a scorecard, and maybe put the results up in the lunchroom or send it out in an e-mail to the guys with some kind of reward.”

In other words, it’s better to drive behavior with a positive. “You don’t want people to not try the technology or to disable the technology,” he says. “You don’t want them feeling it’s putting their job at risk or putting them under scrutiny.”

Sauber likes to simplify the telematics decision. “Look at the things you do now and how you do them, and then look at what telematics can do. See if the things it can provide will offer a better, faster, more accurate, more dependable, more reliable alternative,” he says. “If it does, great, start using telematics. If it doesn’t, then continue with what you’ve been doing. I think it’s crazy not to use telematics.”

Manatee County’s Brennan remains a convert. He plans to look at incorporating telematics each time the county goes through the replacement process and vehicles hit their life cycles. “I think it’s almost a given that telematics is the way to go,” he says. “If you need to monitor your equipment, especially if it’s in remote locations and not readily accessible, telematics should be put on your equipment—especially your primary equipment—where you have one or two machines and can’t afford to have them go down. If you lose that primary equipment, the whole job shuts down.”