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COI vs. ROI: how to use these tools together in telematics?

Managing a fleet while breaking the new grounds is anything but easy. A fleet manager always has extensive goals to be accomplished while keeping into account the time constraints, fluctuating trends in costs, workforce availability and company’s interests. It is difficult to maximize the fleet management efficiency with so many restraints but it can be achieved if proper strategies are implemented.

Many of us are familiar with the idea of return on investment (ROI) but do you know the concept of cost of ignoring (COI)?  ROI is the financial ratio that calculates the benefit of investment received vs their investment cost. Whereas COI stands for the Cost of Inaction or Ignoring. It is the cost that an organization has to bear by not buying or fulling utilization of the products and services available. In other words, it is the penalty paid by an organization by losing savings or paying a higher cost for not making the strategic business investment which if made could increase the operational efficiency.

The return on investment (ROI) and cost of ignoring (COI) shares the same objectivity to maximize profitability. However, that is the only thing in common in them. ROI is based on the strategy of maximizing the revenue by focusing on ways to invest money at right place whereas the strategy of COI is based on focusing how much can we save and where can we save it by minimizing the operating costs.

Many companies underuse COI or don’t calculate it at all. It’s not about either ROI or COI but it should be about thinking yin and yang. Both tools are of significant importance when implementing the telematics solution.

To understand this let us consider the scenario where a fleet has to bear the hefty amounts on the maintenance and repair of their assets due to the negligence of ignoring maintenance schedule and immobilization of their assets. Here telematics solution such as Eagle-I can reduce the cost with its powerful solution by issuing an alert when the maintenance is scheduled. This is COI, where you can avoid the emergency repair cost by preventive maintenance. However, the vehicles were immobilized due to the lack of proper utilization of assets. Again this can be resolved by Eagle-I by its asset management module that helps in managing your assets by determining the under and over utilized assets with its powerful solution. Now this utilization of assets can prevent the extra maintenance costs of immobilized vehicles and can generate the revenue by utilizing the asset. This is ROI.

Both ROI and COI are interconnected that helps you in maintaining the perfect control over your fleet by addressing the problems and making the adjustments that you need to keep your fleet running like a well-oiled machine.

 

Looking for more information? We are here to help.

 

Please call Mr. Jamal +966 56 638 7859 or write us at news@dms-ksa.com

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About Ayesha Amjad

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