Although to many construction is a rudimentary and primarily physical series of tasks, the reality is that the Internet is now playing a vital role in its development. And contractors, from large commercial construction firms to small, independent subcontractors who operate from the back of a pickup truck, are now looking for electronic services from their suppliers and partners — including large and small rental firms.
The advancement of technology is making it more practical for smaller contractors to include laptop and palmtop computers as part of their tools of the trade. As prices of computer equipment come down and as the Internet becomes an increasing part of daily business functions, even smaller contractors are making use of more accessible technology. In a recent study by the American Subcontractors Association, 82 percent of respondents said they use e-mail regularly and those that use the Internet are online for an average of five-and-a-half hours per week.
Larger construction firms are placing higher electronic expectations on rental companies who want to do business with them.
Greg Kittle, equipment manager for Ryan Inc., Janesville, Wis., says that although availability of equipment and proximity to jobs are major considerations when his firm looks for rental suppliers, Ryan has a lot of electronic requirements for preferred vendors.
“We like to be able to do a multitude of things” Kittle says. “We like to look at invoices online, oil sample data, parts and service manuals, warranty management, asset lists, equipment availability and core tracking information.” Kittle also values access on a 24/7 basis.
Kittle, who does most of his rental business with Caterpillar dealers, says the ability to perform these electronic services was a major factor in making that choice.
Although he values electronic services, the ability to arrange the actual rental transaction through the Internet was not highest on Kittle's priority list, preferring to place equipment orders through a Nextel two-way radio. Most contractors seem to place greater value, at this point, on the ability to access parts and service information online at any time.
“We've been procuring parts over the Internet for some time,” says John Costo, equipment superintendent of Conti Construction in Plainfield, N.J. “We also like to see real-time inventory.”
Industry participants are saying the adoption rates of electronic systems are extremely fast in the construction industry.
“In a matter of months, we're going to have just about everybody we do business with on the Internet.”
— Dan Coogan, Deere and Co.
“In a matter of months, we're going to have just about everybody we do business with on the Internet,” says Dan Coogan, manager, channel management, Deere and Co., Moline, Ill. “It's not just another channel or distribution means, but also a tool to form a closer relationship with our contractors. It will be an opportunity for us through our dealer network to provide a wider range of services and offerings and technology to contractors.”
Many in the industry also believe the current slowdown may propel further Internet use. If contractors find a shortage of work in their particular areas, they might be more likely to seek jobs farther away from their home bases.
“If contractors are going about their workdays, doing routine simple things they've been doing for 20 years, they are less likely to get onto the Internet,” says Jerome Meier, president of Watertown, Mass.-based Rentmaker.com. “But if it is a departure, something different, they are more likely to go to the Internet. When contractors, large or small, are doing work far from home, they are more likely to go on to the 'Net for information about terrain issues and weather as well as suppliers. They'll be looking for where to get supplies and also to rent equipment.”
Contractor use of technology forces those who want to do business with them to adapt to their needs. If a general contractor wants to communicate with a group of subcontractors via e-mail, for example, those few that might not be plugged in will have to do so if they want to be included on jobs. Similarly, if a contractor wants electronic access to invoicing, inventory availability, parts and service manuals online or even rental reservation online, rental companies have two choices — prepare their internal infrastructure to accommodate the client or watch their business go to a rental company that will.
“There is a lot of pressure on the supply chain to use technology,” says Timothy Perini, CEO of Cephron Inc. “One end of the supply chain — owners, engineers, architects, general contractors, and a lot of companies that are traditionally savvy with technology — influence the decisions across the chain. Subcontractors, distributors and manufacturers are forced to go along.”
Access to inventory information is cited by many contractors as important.
“When contractors, larger or small, are doing work far from home, they are more likely to go on to the 'Net for information about terrain issues and weather as well as suppliers.”
— Jerome Meier, Rentmaker.com.
“We do a lot of work seven days a week, 24 hours a day, at times when most [distributors and rental companies] are closed,” says Costo. “We are able to go in and look at the inventory lists and make decisions. If we have a machine down, we can go in and search a company's inventory and make decisions on whether we replace a motor or if an order goes through to replace a part the next day. Or if we know a part is not available and we need to replace a machine, that decision can be made overnight instead of waiting until the next morning. We have large crews working that cost a lot of money. [Access to information] makes planning a lot easier.”
Although not all contractors say that reserving rental equipment online is their top priority, the consensus is that if the service is available, they'll try it out and see if it works for them.
“We now can do rentals online and our foremen have laptops in the field,” says Barry Schlouch, president of Blandon, Pa.-based construction firm Schlouch Inc. “If our foremen can access what's available in a rental store, they're going to go to it. We're looking at how we can get that information right out in the field.”
Schlouch and other contractors point out that electronic services should be seen as an enhancement of the basic contractor-supplier relationship.
“I find that many [distributors and rental companies] aren't willing to make the investment in just getting to know us,” he says. “Going out to a job site and getting to know us and what we're about, instead of just trying to sell us all the time. The other thing is follow-up, staying connected and keep being there. The Internet is an enhancement to what we're already doing.”
While building relationships the old-fashioned way cannot be replaced by a few keyboard clicks, once that relationship is established, the need to respond in a sophisticated manner to contractors' increasing electronic needs cannot be ignored by rental companies whether big or small. Rental companies that don't have an evolving Internet strategy are likely to find themselves having to play catch up with an exploding technology that won't slow down.
Michael Roth can be reached at [email protected]