Deliver the Goods

Sept. 1, 2009
Equipment delivery is a necessary service to provide to rental customers, but it can be an expensive headache. Here are some tips to help rental businesses measure efficiencies.

The concept of delivery is simple: get the rented equipment safely to the jobsite on time. The logistics of making that happen, however, can be much more complicated. Delivering the goods takes a balanced equation of equipment, transportation, communication, human interaction and knowledge of safety protocols. Variables include dispatching and rental management software, traffic and many others. But the bottom line is still simple. Delivery is a necessary service for rental customers, and furthermore, punctual delivery is imperative. Rental customers don't care what goes on behind the scenes to make that on-time delivery happen, they just care that it happens. How do the variables in your delivery equation add up?

Delivery is a point of service that rental companies can use to differentiate themselves from their competition. Not offering delivery is not an option for companies doing business with contractors. Though providing delivery the right way can be a costly part of the equipment rental business, getting it wrong, or not providing it at all, can prove far more costly to a rental company's bottom line.

“Delivery service is definitely an expensive aspect of our business and break-even at best, however it is very much a necessary service to our customers,” says David Arlinghaus, director of operations and co-owner of Art's Rental Equipment & Supply in Newport, Ky. “They demand and expect quick delivery service, and we strive to meet their high expectations.”

Another factor that makes delivery so important to the rental transaction is that it may be the only face-to-face interaction a customer has with the rental company, which adds a significant amount of weight to the impression that the delivery process and the delivery driver make on that customer. As a result, the appearance of the delivery vehicle and the delivery driver are both important considerations.

Scottsdale, Ariz.-based RSC Equipment Rental considers interactions between its delivery drivers and customers to be crucial because the driver is acting as the main representative of RSC when delivering and picking up equipment. “Our drivers are routinely trained on customer service issues in addition to the safe operation of our equipment,” says Heather Schlichting, corporate communications specialist for RSC. “Upon delivery, they train the customer on how to use the equipment as well.”

To prepare drivers for the customer interaction, RSC provides them with a monthly newsletter that highlights topics specific to their employment needs, including helpful instructions and advice on dealing with customers respectfully and efficiently. In addition, drivers are expected to wear a customized uniform and remain neatly groomed.

Like the driver, the delivery truck also makes a lasting impression on that customer. If the delivery vehicle does not appear to be well maintained and cared for, then what can that customer expect from the equipment he or she is renting?

“The appearance of the delivery truck is a signal to the customer of our company's level of attention and dedication to the delivery service itself,” explains Arlinghaus. “Our delivery trucks are all moving billboards for our company.”

The human element

Behind every good driver and on-time delivery is a highly knowledgeable dispatcher who understands how all the variables work together to keep business running smoothly for both the rental company and its customers. To hear rental business owners talk about their dispatchers, one might get the impression that these are the most important employees in the company. Words like flexible, communication skills, focus, calm, knowledge and understanding are commonly used to describe the qualities necessary in a dispatcher.

“A good dispatcher is like an experienced major league baseball catcher; you rarely find a winning team without one, and they share many of the same traits,” says Bill Strickler, vice president of innovation for RSC Equipment Rental. “A dispatcher obviously needs solid technical and communication skills working with issues involving safety, DOT, capacities, etc. Like a catcher, a good dispatcher is involved in every play, helping ensure all the players are in the right place and the right pitch is chosen. The dispatcher has to be able to focus on what is happening right now, while also having the tactical ability to think minutes, hours, even days ahead of the current delivery. Finally, the dispatcher has to be calm and cool, or the rest of the team risks failure as the delivery process breaks down. In baseball, it's the catcher who keeps the pitcher focused, especially when the pressure is on. A good dispatcher has these same skills and works behind the scenes to make sure the sales and delivery teams deliver as promised for the customer.”

Marty Hardin, director of operations for Birmingham, Ala.-based B&G Equipment and Supply, typically puts B&G's strongest person at dispatch. “We have used the store managers at dispatch because it is the funnel for everything. If you can't get your arms around the issues, work dispatch and you will soon find out.”

Though the dispatcher is just one variable in the delivery equation, he or she can make or break the delivery process, according to Jay Fry, dispatcher for Art's Rental Equipment & Supply. The dispatcher must have the flexibility to change his or her plans on the fly, because there are times when the plan for a particular delivery can change two or three times within a matter of minutes. Dispatchers are constantly on the phone and must be able to clearly, concisely and fairly communicate with both the drivers and customers.

“The dispatcher is often an intermediary between the driver and the customer, making sure the driver is safe and the customer is happy,” says Fry. “An excellent dispatcher will also have extensive knowledge of the delivery area, as well as a clear understanding of the equipment in terms of weight and what can be loaded on a particular truck.”

Bellingham, Wash.-based Birch Equipment, which shares its delivery fleet among all its branches, and covers a 6,000-square-mile area from southeast Alaska to Montana, counts on its dispatchers to stay level-headed and quickly come up with solutions when issues come up, work from a global perspective and understand day-to-day operations from both the store and driver perspective.

Bob Shaffer, president of Point-of-Rental Systems, Grand Prairie, Texas, which offers rental management and dispatching solutions to the rental industry, says: “A good dispatcher can make or break your delivery efficiency. Dispatchers have to be well organized, able to handle stressful situations without losing their cool, able to motivate drivers and crews, and finish the job to completion. A good analogy is: Experienced dispatchers play chess; inexperienced dispatchers play checkers.”

And with the help of modern dispatching technology, the dispatcher can be equipped with helpful nuggets of information previously not available, such as GPS tracking, real-time mapping, and route planning and troubleshooting.

The inhuman element

The function of a dispatch system is to maintain constant, real-time communication between the salesperson, the dispatcher, the delivery driver and the customer. This series of communication can happen in a number of different ways using different systems and tools, but it must happen to ensure a successful delivery and a satisfied customer.

“Any good process or system should provide a way to review scheduled deliveries, pick-ups and changing priorities,” says Strickler. “While some companies may still choose to use manual paper-based processes, modern tools and technology have largely replaced this practice in our service industry.”

Dispatching systems give rental businesses the ability to pre-plan a route or multiple routes for either a single day, or over several days. They can also provide date range views so the dispatcher can improve efficiencies by combining deliveries and pickups previously planned over several days into a single day. Being able to see the plan on a map helps dispatchers correct routing errors that might have otherwise gone unnoticed. For a rental company with multiple branches, a dispatch system provides the benefit of having a central dispatch that can make delivery and pickup decisions based on route efficiency rather than having each store doing its own thing without regard for potential efficiency gains.

“A good dispatch system in the hands of an experienced dispatcher can dramatically reduce delivery labor, vehicle overhead and fuel costs,” says Shaffer. “In other words, if a change is made at the last moment to a contract that is to be delivered these changes should automatically and in real time be sent to the dispatch module. It is important that last minute changes can be made without significantly altering the flow of the original plan. The interface must be user friendly and seamlessly assist the dispatcher in making efficient decisions.”

Another important factor to consider when choosing a dispatching system is integration. Can the dispatch module be integrated successfully with the rental company's counter system? Point-of-Rental's Shaffer suggests the answer to this question separates the haves from the have-nots. Integration gives the counter person the ability to answer customer questions about when a delivery is scheduled without wasting the dispatcher's time. In addition, it allows new orders to be scheduled at any branch location and immediately displayed in the module. Point-of-Rental's dispatch module also gives dispatchers the ability to lock orders, which prevents modifications by other staff members and eliminates surprises.

“The two most important factors in a good dispatch system are speed and accuracy,” says Art's Rental's Arlinghaus. “Dispatchers need fast, reliable computer software and mapping systems, as well as excellent communication with the drivers, the rental counter personnel, and each other. GPS-enabled delivery trucks that tie into dispatch software are a big benefit, providing not only a truck's current location, but a searchable history of the truck's movements as well. In a multi-store environment, a single dispatch center is key for minimizing empty trucks and expense, and maximizing your delivery fleet and response time.”

Michael Saint, president of Baton Rouge, La.-based software manufacturer Corporate Services, also stresses the importance of GPS integration with the dispatch system. Interactive communication between the driver and the dispatcher allows the driver to confirm when a delivery or pick-up is complete, or instantly communicate to the dispatcher when an obstacle, such as a locked gate, is encountered.

A dispatching solution clearly offers multiple benefits to a rental business, but at what size does a dispatching system make sense? According to Point-of-Rental's Shaffer, dispatching software is necessary when chaos becomes the norm once a week, to avoid chaos becoming the norm every day.

“Many companies struggle on the edge of chaos and only at the point where they can no longer manage it do they look for a solution. They were probably ready for a dispatch system years earlier and are now stuck between being very busy, researching a solution, and then learning a new system.”

Saint points to the number of deliveries made by the rental company and the complexity of the routing rather than the size of the business as the factor to look at to determine whether the company would benefit from dispatching software. Saint says a dispatch system is practical when the routing system can reduce the manpower required to make deliveries, resulting in savings greater than the cost of implementation, and when it can reduce delivery errors, preventing lost orders and customers.

Determining delivery rates

Employing a dedicated dispatcher, drivers, and incorporating a dispatching solution into the rental management system are all costly measures for any rental business, so fairly pricing the delivery service is important.

Many rental companies price delivery at an hourly rate with variations taken into consideration such as the size of the equipment and delivery vehicle required. Other rental businesses choose to price delivery as a flat fee based on the type of equipment rented and the driving distance from the rental yard to the customer's jobsite. The flat fee is generally calculated by considering the type of delivery truck needed for the rented equipment and the time involved in loading and unloading that piece of equipment.

Another variable to consider when setting a pricing scale for delivery is whether to include a fuel surcharge to help cover the escalated price of fuel. Rental companies are divided on whether or not to include the fuel surcharge.

For Art's Rental Equipment & Supply, for example, the philosophy is not to charge customers extraneous fees, which to Art's include fuel surcharges and environmental fees. For Birch Equipment, the philosophy is similar; the company has never included a fuel surcharge and the thought is that fuel is just an ingredient required for delivery.

Conversely, when fuel prices spiked in 2008, RSC Equipment Rental implemented a fuel surcharge on all pick-ups and deliveries, but when the cost of diesel decreased a year later, the company reduced its surcharge by half. B&G Equipment & Supply also increased and adjusted its delivery rates in response to escalating fuel costs.

Though there is no right or wrong philosophy when it comes to the fuel surcharge decision, many rental companies agree that the high costs associated with equipment delivery make providing the service at no cost out of the question.

“From 2006-2008, the ‘free delivery’ offer from rental companies dissipated,” explains Arlinghaus. “However, with the decrease in rental demand in 2009, we have again experienced other rental companies offering free delivery to increase their business. Some of our customers have requested Art's do the same. Given the high expense of delivery, though, it is extremely difficult to rationalize such a business decision.”

Safety first

While the costs of providing delivery are both high and necessary, the cost of accidents and injuries are too great to bear, which makes ongoing safety training for drivers a must. Each rental company has its own safety protocols and lessons to offer.

“Safety is so important to us that we recently changed the type of bindings used to tie down loads from lever binding to ratchet,” explains Birch Equipment's information director, Cara Buckingham. “They slow our drivers down a little and are more expensive, but the risk of injury has been greatly reduced.”

In addition, Birch Equipment employees, including drivers, are required to undergo weekly training on equipment and before they can start delivering for Birch, drivers must complete a training log that reviews required paperwork, hitch configurations, weight loads, vehicle capabilities and proper tie down and loading. The training log is required on an annual basis, regardless of the number of years of employment with the company.

Similarly, Art's Rental requires all new drivers to pass Art's Driver Qualification Checklist, which includes drug testing and thorough driving record and background checks. And newly hired drivers ride with veteran drivers for several days before being placed in their own delivery truck.

“The most important basic safety training that must constantly be reviewed is the proper loading and unloading of equipment,” says Arlinghaus. “This is where injuries and property damage are most likely to occur. Quality driving skills, including safe driving speeds are also very important. Drivers should always strive to do what the customer requests, but should be empowered to say “no” when the request is unsafe.”

In addition to basic equipment loading and unloading safety practices, RSC Equipment has developed a safety training video for its employees that features a guided tour of an RSC branch and a guideline of RSC safety procedures in an interactive scenario. Safety precautions and safe driving techniques are covered in the video, which must be reviewed by all employees annually.

Three things are certain about equipment delivery: it is a necessary service, it must be done following all safety protocols, and the rented equipment must arrive at the customer's jobsite on time as promised. “Equipment delivery is all about speed and accuracy,” explains Arlinghaus. “The customer wants quality equipment delivered when they need it — not before or after. If the customer wanted the equipment tomorrow, they would call tomorrow. Therefore, we need to be able to respond today!”