ROI and Business Justification Abound for GPS Deployments

At Geoforce, one of the questions we are commonly asked by business units considering GPS tracking is “Can you help us justify this investment?” While our tag line is: “Field operations don’t have to be chaotic”, the real meaning of chaos to a lot of people is “un-necessary cost” or “wasted revenue opportunity.”

The cost-savings and increased revenue produced by GPS tracking can often be quantified – given good information. So Geoforce has developed an interactive ROI calculator tool to share with our customers.
Some of the many quantifiable use cases our calculator addresses include:

• Missed Rental Days – Missed rental revenue is recouped by proving (via GPS) that rental equipment was on site
• Increased Utilization – Equipment is used more often – because it is easier to find – resulting in less need to buy new equipment
• Value Added Revenue – Revenue is increased because of higher day rates due to offering GPS as part of a rental or service
• Lost Equipment – Less equipment is lost, reducing the need to buy replacement equipment
• Wasted Trips – GPS cuts downs on the number of wasted truck rolls which result in not being able to find equipment
• Lost Jobs – Revenue is increased because fewer jobs are lost when equipment cannot be found
• Reduced Cost of Inventory – Costs of counting inventory are reduced because of fewer man hours required
• Un-necessary Hot Shots – Last minute trips are eliminated because of better visibility of equipment
• Faster Revenue Recognition – Shipments can be invoiced more quickly due to immediate proof of delivery
• More Efficient Deliveries – Cost is reduced by staging deliveries properly so un-necessary transportation and handling costs are reduced
• Reduced Maintenance Expense – Maintenance cost can be reduced when it is based on need, rather than time; for example engine runtime can be monitored to help schedule service calls.

It’s clear from these examples that many standalone business justifications exist today which can be measured to support GPS deployments. Interestingly, most of our customers indicate that there are multiple justifications for GPS tracking. For example, customers may have issues with both Asset Utilization and Lost Equipment. Sometimes, an individual use case may not justify a GPS deployment, but when multiple benefits are combined, the ROI becomes very compelling. That’s why our ROI Calculator has a “roll-up” function, which accumulates ALL benefits together.

Shown below is an actual screen capture from a Geoforce prospect that is considering tracking railcars. In this case, the combined ROI was based on both Increased Utilization and Value Added Revenue. The latter benefit was relatively small (compared to utilization), but it still helped drive down the time to investment payback by an additional two months.

ROI calculations are not a panacea for all business decisions, nor are all GPS programs based on strictly financial considerations. But we encourage customers who want to learn more about the potential ROI for their programs to schedule an interactive session with our sales and business solutions team.