The market for renting plant and machinery has always been complex. But never quite so complex as it is today. Today’s multi-location companies are also multi-lingual, multi-currency and work across multiple time zones too.
Doing business globally can be a logistics nightmare with customers in one country urgently needing kit that’s currently on the other side of the world and with varying rental lengths which, in an unpredictable world, may or may not need to be renewed. Close-knit supply chains mean that late delivery or unavailability can have a financial impact on customers and, in turn, their customer too – and so it goes on.
With the growing sophistication of machinery and the increasing reluctance of contractors to have large specialist equipment with limited exposure on their asset registers, there’s little doubt that rental has great potential. But growing competition means that in many regions, hire rates have become stagnant. So how can companies profit from growing demand, without falling prey to the pitfalls?
Inevitably, multi-faceted companies have multiple IT systems to deal with the diversity and variability of their business. Larger companies have grown through acquisition, which probably means inheriting a jumbled IT architecture, often made up of second or even third generation systems. These are often rich in functionality because they have grown over time, but nonetheless tend to function as silos and are difficult to integrate across the entire organisation.
These are also making it difficult – if not impossible – for rental businesses to gain an overarching view of worldwide availability and to generally manage their order lifecycle, from the initial inquiry by a prospect to sending out invoices and collecting money in a consistent and efficient manner. So increasingly, rental companies are finding ways to bring together their six, seven and in some cases even more systems to provide an integrated reliable, current and easy to access information hub, using industry-standard solutions such as Microsoft Dynamics AX, tailored to their own individual processes and workflow.
Take the system we have recently implemented for a large global corporate heavily involved in the rental industry. Working across different time zones meant that there was always a lapse of intelligence and insight on utilisation and, indeed, the current state of the business. Now all the data across all their geographies is reflected in coordinated universal time (UTC) so whether a hire begins at 3am UTC in Singapore or 10am in Brazil, users view this consistently from every location.
In other words, regardless where they are working from, the business processes are identical. Documents such as invoices are all in the appropriate languages and currencies, but fundamentally they are consistent and standard.
Other rental companies found they were investing too heavily in buying new equipment to hire out simply because they found it difficult to keep tabs on where their existing assets were across the globe and whether it could be transferred in time. Having totally current and accurate data has increased their utilisation dramatically and so is helping to save on capex. After all, a few hundred pounds to move a DMS Heave Sensor from Singapore to Aberdeen, for example, if the customer is going to keep it for three months is nothing compared to the cost of having to buy a new one.
New technology can also help release ‘hidden’ kit; for example, equipment such as heaters and driers held in warehouses and kept in an ‘under repair’ status so that they don’t appear available to rent out. Latest systems show how long these have been held at this status and these timings are linked to the warehouse KPIs – which can usually help to jog memories and ensure they are soon back in circulation, to help further increase utilisation levels.
In fact, having a central source of real-time information can help ensure all equipment is returned on time and help with financial planning. But, in the case of one of our customers, making this information freely available at first created some controversy within the sales team. Some were reluctant to chase their customers unless the equipment was needed elsewhere, believing that it was better if the hire time was extended by default rather than asking if the equipment was ready for return.
However, having this information at their fingertips is now helping to increase business rather than lose it. The sales team are now proactively calling their contacts regularly, who now see this simply as great customer service. They save up their requirements in anticipation of the call, as it’s far easier for them to give the business to someone they know, than have to make more calls and take it elsewhere. In other words, the rental company has made more friends – and money – by having a list of everything that’s due to be returned.
New enterprise systems also make it easy for rental firms to introduce an element of CRM to keep track of prospects – and to price and quote to potential and existing customers. Because an order may be made up of many different components – particularly for those companies dealing in low-cost, high volume goods - it may go through many iterations before everything on it is ordered and delivered. Automating processes can dramatically cut the time taken to do this, as well as increase accuracy.
Some of these improvements may seem relatively small – others, such as the introduction of CRM could become huge. But they all illustrate the importance of being totally on the ball when it comes to the current state of play across an entire organisation.
In my view, the rental industry has an extremely bright future; just look at how servitisation and subscriptions are taking over beyond the world of plant and heavy industry. However, promising prospects usually lead to increased competition. Only those willing to optimise their use of technology will be able to cut through the complexity to maintain and grow their profitability.
Rental Services Director
Read more about Dynamics Rental, our market leading solution developed on best practices which will enable you to have a better grip on your rental business and drive business growth.