RERMAG

E-Volution

Five years ago it was all the rage. It was a new millennium and everybody was plugging in. Rentals would be done over the Internet, nobody would be able to do business without a palm pilot, and any company that didn't have an e-commerce policy had missed the boat.

It didn't quite happen that way. Online rental reservation portals never did catch on, and executives from “dotcom” start-ups in many an industry would soon be papering their walls with their stock options as they looked for new jobs.

But, as in any new business concept, initiatives that truly add value usually find their way. And quietly, electronic solutions have taken hold in the rental industry, both in services offered by rental companies and distributors to their customers and in solutions offered by manufacturers to their distribution channel.

E-commerce, encompassing a wide array of electronic services, is now permeating many facets of the rental business and the relationship between rental companies, distributors, manufacturers and their respective customers. Although many rental companies — and more importantly their contractor customers — don't want to go more high-tech than a telephone, others facilitate customers' access to certain account records and inventory information online, perform rapid online credit checks, buy parts and file warranty claims over the Internet, and rely on manufacturers for the electronic transmission of parts and service manuals. Many manufacturers are developing mechanisms to provide a constant flow of updated information in regard to parts serial number changes, product changes, evolutions to the product, inventory availability information, and shipment tracking capacity, to their customers via direct connection. If a manufacturer adds data, the information instantly can become part of the rental company's system. And the processing of warranty claims by some manufacturers has gone, in the words of Jim Peters, vice president of information technology for Genie Industries, “from months to minutes.”

The ultimate goal is a seamless interconnection between rental companies and their customers, as well as between rental companies and their suppliers. There are many steps to be taken toward that goal — some are taking them, others not, but the trip down that highway has begun.

The purveyors of electronic services are, for the most part, aware that not everybody wants to do business electronically. While some companies offer their customers the ability, for example, to check account status online and find out what products they have on rental or how much money they owe, many customers are far more comfortable picking up a telephone and asking a live person for the information they need. While online rental reservations are finding a group of interested users, many, particularly onsite contractors, value the personal contact with their rental representatives. This is, after all, as Don Ahern, CEO of Ahern Rentals, says “a belly-to-belly business.” And while many manufacturers are offering online parts-ordering capability, the telephone is still the way many distributors and rental companies prefer to go.

“Our customers spread the gamut when it comes to technology,” says Ellen Steck, vice president of marketing for Scottsdale, Ariz.-based RSC Equipment Rentals. “There are traditional customers who would prefer talking to a person instead of leaving a voicemail message. They want to see someone face to face, and they want to sign a real piece of paper.

“On the opposite extreme, we have some customers who want to do everything electronically. Rather than see or talk to a person, they prefer to do everything in a self-service mode, where there is a confirmation of the transaction, everything is detailed and there's a record trail. And it's not just these two extremes, most of our customers are in a “comfort zone” somewhere within that spectrum, so we need to be ready to accommodate many different preferences.”

In providing online services to rental customers, rental companies concentrate in several key areas. For RSC, one area is offering reports, another is the ability to call equipment off rent and another is rental reservation for qualified accounts.

Reports have become popular with a considerable range of customers. The field staff of rental companies has, in recent years, been besieged with questions from customers about how many assets they had on rent at a particular moment, or how many pieces they had rented over a 12-month period and at what cost.

“Most of the questions were historical but some were about active accounts,” says Steck. “They'd ask ‘What's my status now in real time?’ So we asked some customers, “If we had an online tool that allowed you to log in any time of day, on your own in a password-protected environment so it was secure, to check on these questions, would that be of interest to you?' And a lot of people said ‘Oh, yes, then I don't have to call the sales person.’ And of course, on the flip side, the sales people were interested because their customer could have the information immediately without needing to wait for the salesperson to pull the information.”

Chicago-based NES Rentals makes available a copy of every rental contract to users with authorization. “We also provide service history, which is more applicable to those companies for whom we do service work on their equipment,” says Michael Disser, vice president of marketing for NES Rentals. “This is important for more industrial accounts to be able to show inspections and reports on particular pieces. Some have equipment on rent long-term and need documentation for inspections.”

“Customers can look at types of equipment by month and have a more detailed understanding of what they're renting from us,” says George Cinquegrana, United Rentals vice president of information technology. “If they paid us and they have some questions, they can look at the invoices online, they can look up the checks that they've sent us and see how we've applied the checks to their account so they can understand the whole payables piece and we found that to be very useful as a side benefit that has really taken off. They can look up all detailed billing, all the invoices, payment history, job costing. They can call equipment off rent online. So it allows them to understand what business they are doing with us currently as well as look at a historical view of business with us.”

Using custom-made programs or existing off-the-shelf rental management systems, rental companies can configure reports and analyze data from a variety of perspectives and then transmit it to the customer in the manner they want it, whether it be through an e-mail once a week sent to a particular executive at the rental company or posted in a Web account or whether it be in PDF, Excel, Word or any other format at the customers' discretion.

By making programs like these “Web-enabled,” rental companies can avoid the cost, logistical difficulty and business sensitivities of integration with the systems of their customers.

“The most popular report is ‘What's on rent today?’ says Steck. “Many of our customers have several different active jobsites and/or have multiple people making the rental decisions. Customers want to know what they have on rent right now, because in some cases, there are assets they really only intended to rent for a couple of days and two months later they realize it's still on rent. This helps them to be more efficient.”

While common wisdom might make one think that interest in online access would come primarily from large customers, this is not necessarily the case. Rental people agree that a lot depends on the personality of the customer and their comfort level with using the Internet. On the other hand, NES' Disser points out that smaller companies often are more interested because staffs are smaller and someone who wears many hats and doesn't have a staff to delegate to may be more likely to have to do things for themselves and seek out electronic shortcuts.

Electronic billing, although not as widely requested as many rental companies expected, is nonetheless an area growing in interest on the part of some customers. As more contractors become accustomed to banking online and procuring parts and other supplies from suppliers online — often given incentives and discounts to do so — the adoption of electronic billing is likely to increase. Shipment tracking is becoming increasingly popular in the case of courier deliveries — customers can track the whereabouts of expected deliveries in real time terms that say when the package left a warehouse, when it was loaded or unloaded from an airplane and when it arrived at the courier's loading dock in another city and loaded onto a local truck for delivery — likewise rental customers are asking about being able to track equipment deliveries in like fashion. Quite a few manufacturers have already incorporated this service into standard business practice and advanced rental companies are looking into incorporating tracking technology to enable customers to find out the status of an expected delivery.

Friday morning, 8 a.m.

When the dotcom craze hit the rental industry in the late 1990s, the first application to draw widespread attention was online rental. Several companies sprung up with the premise that rental customers would go to a central Web portal to find equipment, and that rental companies would participate by bidding for particular rental contracts. For a lot of reasons, these portals never took hold and rental operators were lukewarm to the concept. Nonetheless, although online rentals has not been the leading application of Internet technology in the rental industry, a number of companies that decided to experiment with the idea found surprising sources of interest in online rentals. And while national rental companies tend to orient their online rental toward large account customers with agreed-upon pricing and pre-certification, smaller rental companies have succeeded to a surprising degree with online rentals to a wider customer base, including first-time renters.

Simplex, a Quebec rental chain with 28 locations doing business primarily in French has enjoyed success with an estimated 25 to 30 online rentals per month. Newport, Ky.-based Art's Rental Equipment, which has 11 locations in Northern Kentucky, Ohio and Indiana, has enjoyed a similar rate, as has Sacramento, Calif.'s, Aba Daba Rentals, a two-location company.

Smaller companies that target a wider customer base for online rentals do not fully automate the procedure. In most cases, the customer states, in the rental reservation, the type of equipment they want, when they want it and the intended application. The rental company then contacts the customer by phone to confirm the reservation, although some offer electronic confirmations of the reservation itself. The phone call allows the rental company to discuss rates and delivery and ask questions to ensure the right tool or machine for the intended application is being rented.

Rental companies that have had success with online rentals have been surprised to find homeowner customers more interested in the service than contractors. Homeowners are, frequently, less experienced renters, less likely to have ongoing relationships with rental companies. They will often make a decision on a rental center based on convenience of location, and if that rental center offers online rental, then it's all the more convenient for those comfortable with the Internet.

Contractor customers, on the other hand, tend to have regular ongoing communication with sales reps from a number of companies that visit their jobsite trailers on a regular basis. Therefore, picking up a phone and calling a rental center or sales rep is something they can do quickly and easily, discussing the particulars of accessories and delivery while on that phone call.

Larger companies tend to approach online rentals differently. “It's generally a customer that we've done some pre-certification on,” says United's Cinquegrana. “Even if we don't have a fixed price for that individual, they are willing to wait until we come back with hard pricing for them. We see a lot of this for businesses that are not on one jobsite, but are looking for equipment for multiple jobsites for a varied period of time. They'll say, ‘Over the next month, I'm going to need this equipment in this town, this equipment in this town, put together that package for me.’ We'll put together the package and get back to them with pricing and that whole transaction is done electronically. It's processed as a reservation, but it's a reservation with notes. And it requires an ID and a password to do that.”

Giant steps

While rental companies are working to enhance electronic services to their customers, they are also looking to their suppliers for electronic support, particularly in the product support arena. And many manufacturers have taken giant steps in the e-business area.

Many manufacturers are either well along in the electronic service they offer to their distribution channel or are taking serious looks at it. As margins tend to shrink on sales of new equipment, many manufacturers are re-focusing on the kind of long-term partnerships they can develop with their customers and hope to enhance those partnerships by offering efficient systems.

Many manufacturers offer to rental companies and distributors online access to parts ordering, documentation, product registration, product and operations manuals, rapid electronic warranty processing, real-time inventory information and order tracking. Some manufacturers are encouraging online parts ordering by offering substantial discounts to customers who order online. Manufacturers save costs through online ordering and find them to be more consistent and accurate.

Account access is growing in popularity. For example, Deere offers a commercial line of credit for contractors, who can access the account online around the clock. Rapid online credit approval is being looked at by many manufacturers as well.

Online services facilitate the ability of manufacturers to do business internationally. “We have customers who have difficulty reaching us because during their work day, it's night here, and vice versa,” says Paula Russell, marketing manager for Wooster, Ohio-based Rayco Manufacturing. “If they want to order parts, or look at their order, we don't have to be in the office for them to get the information they need.”

Once a company begins electronic services, they are always working to improve them. Rayco, for example, has a parts ordering mechanism. But the next step, says Russell, is for the customer to place the order and have it go directly to shipping, rather than go through the extra step of having the order processed by somebody at the parts desk. “That way, if an order comes in later, like 8 p.m., it could go out that night and not have to wait until the next day for the parts person to come in,” Russell says.

Internet-based programs help customers order parts support information and even order equipment. “We allow customers to enter a machine's serial number and it will tell them if there's been a release on their machine,” says Brandy LaFever, parts marketing services for Deere & Co. “Customers can order technical service information, such as operators' manuals, parts catalogs and technical manuals and component technical manuals online, and they can order those in electronic download, or printed, or in CD or DVD formats. We also allow them to configure equipment they might be interested in, so they can build their own product online, choosing which attachments they'd like online.”

The essence of electronic business is eliminating wasteful activity, reducing the amount of time spent duplicating efforts. The ultimate goal is the integration of systems between manufacturer and rental company/distributor, or between rental company and customer, so that once data is changed by the manufacturer, it is automatically changed in the system of the rental company.

“We developed our electronic systems because we saw the need for better information exchange,” says Juliana Hertzel, global content manager, Wacker Corp., Menomenee Falls, Wis. “We saw processing times and what we consider non-value-added activity. Why have somebody re-key something that somebody else already keyed and then faxed over?”

Wacker uses a system developed by Norwalk, Conn.-based SmartEquip, which has been adopted by quite a few manufacturers. SmartEquip works to integrate systems, so that any product-related information in the manufacturers' system is automatically integrated into the system of the rental company, without the need for data to be re-inputted by somebody at the rental company.

For example, if a manufacturer sends out a manual or catalog in print or CD, once it is printed, it becomes out of date quickly if a manufacturer makes changes to a particular model. With technological integration between the companies, nobody at the rental company or distributor needs to input the information that a parts number has changed or that a model is no longer available, or that improvements have been made to a particular machine.

SmartEquip also offers schematics that facilitate the parts-ordering process. If a customer isn't sure of the name or number of a part, the customer can view the part online utilizing technology that gives him a 360-degree view of the item.

The staff of Redmond, Wash.-based Genie Industries found its customers were less interested in product ordering and more interested in service parts, warranty, getting information on open product orders and parts order history, product registration, drawings and manuals.

“One of the great benefits that came out of the collaboration we had with our customers was that it greatly reduced the cycle times of some very mundane transactions that took way too long,” says Craig Beymer, operations manager for Genie Access Services. “To transact a warranty claim took at best weeks or even months. We worked with our customers to come up with a system that would not just look good but would actually have a back end to it that meshed with everybody's processes and cut that cycle time to days and sometimes hours. It made everybody's life easier and more efficient.”

Genie's system emphasizes what's commonly referred to as real time. “If somebody goes into a system to order a part and sees that there are four on a shelf, then we've got four on a shelf right then and there,” says Beymer. “As soon as they order one of those parts and it's shipped, that immediately goes down to three. It's real-time live information; none of it is batched and there are no other systems between us. It adds a lot of credibility to the system.”

Content management

Conduit Internet Technologies, which has designed systems for a number of manufacturers, emphasizes the management of content. “We focus heavily on enabling organizations to organize content, manage it effectively and to share it with the people that need it,” says CEO Ethan Zoubek. “For example, in the area of market segmentation and delivering targeted content, instead of printing 20,000 full-line brochures and sending them out, our customers are able to allow their customers, rental operations and distributors, to configure a custom catalog specifically for their requirements. If a rental salesman wants to call on a masonry contractor, the information associated with products specific to masonry contracting is going to be different than what is relevant to a landscape contractor. By enabling a salesperson for a rental company in real time to configure and deliver custom market-specific content, they are creating more intimate relevant relationships with their end customer, which leads to greater profitability and a longer-term relationship.”

Conduit, says Zubek, is working with manufacturers that are “thinking outside the typical cycle of ‘make a unit, send it out, send information out with it’ such as a brochure or service information,” and then leave the distributor on its own. Conduit works on making its systems mobile so that field personnel for a rental company can quickly access parts or product information including account information where applicable. Its systems also enable the customers of a manufacturer to have quick electronic access to the typical questions sales people receive, which are all related to, “What is the status of my order?”

“We like to empower sales representatives to deal with more important issues,” he says.

Who wants it?

To many rental companies and manufacturers, electronic commerce is already a reality that permeates the way they do business. To others, these concepts are still futuristic. However, rental people and manufacturers involved with e-commerce agree on a couple of key points. No matter what kind of system is adopted, if any, it should be something the customer really needs.

“If you're going to provide the customer with an information system,” says Genie's Peters, “you have to listen to them and understand their processes, not just provide them with an interface.”

“With respect to e-business in our industry, we've taken a pragmatic approach,” says RSC's Steck. “We only build applications after we are confident that they will either bring value for our customers or bring efficiency internally. The most important part of the development process for us is listening to our customers and basing our decisions off of their needs. Occasionally, ideas that some of us at corporate thought were ‘no-brainers,’ were not always valuable for our customers — of course it's important to understand this before developing and producing the application online.”

Peters agrees. “We had some initial input about the type of tools and information our customers needed, so we purchased some development tools and started to put together some prototype screens to present to them,” says Peters. “But in one-on-one discussions we learned their true needs and priorities as well as their processes.”

Electronic development for its own sake benefits no one. But e-commerce initiatives that enhance efficiencies and solve problems will transform the way the industry does business.

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