Rermag 4439 Shutterstock110603453b 1
Rermag 4439 Shutterstock110603453b 1
Rermag 4439 Shutterstock110603453b 1
Rermag 4439 Shutterstock110603453b 1
Rermag 4439 Shutterstock110603453b 1

Upcycle Strategy

May 21, 2013
Use your rental management system to manage business changes during the period of positive growth.
When the United States economy sank into recession companies of all kinds scrambled to stabilize their situations. For many rental businesses this meant trimming staff, adjusting rates and letting inventory age without replenishment. These actions often had to be taken quickly, with little time to manage a transition.

Now we’re finally in the upcycle, and rental operators are faced with the same challenge – stability. It may not be the first word that comes to mind when business improves, but the fact is that even positive change can create a difficult business environment.

To keep your rental business on track as conditions improve, take a proactive approach to change management. Start with considering the human aspect of change. Managers tend to lie awake at night thinking about big issues like the cost of new rental fleet or whether they should add a branch.

Employees, on the other hand, lose sleep over things that touch their jobs: can they keep up with maintenance on a wave of new equipment; will they rent something for a “recession rate” by mistake. And since change has to be managed at the individual level, employees must be taken into account as the most important part of the process.

That’s where your rental management system comes in. It can be a powerful tool for maintaining stability during operational ups and downs. And in the current situation, your system can make the difference between merely riding the cycle, and staying out in front of opportunities.

Seven ways to manage change

Training on new equipment. If you haven’t replenished your inventory for a year or two, you’ll want to take advantage of the new models that have come out in the interim. The “latest and greatest” can attract new customers, but it also puts a strain on your sales and shop staff.  

As you add items to inventory, build the manufacturers’ specs, operating instructions and safety instructions into your rental database. Some systems can even retrieve this information over the Internet from supplier websites. Then set your system to automatically print out safety and warning messages on contracts. You can include URLs in messages as well: for example, a number of manufacturers offer online “how-to” videos, and these links can be set to print on the contract.

Maintenance workload. Your mechanics, like your salespeople, will need to learn about new inventory at a time when more equipment is flowing through the shop. You can take some pressure off by utilizing software functions such as preventive maintenance scheduling.

Your rental system should be able to automatically generate PM work orders based on hours rented, meter readings or other factors. This will eliminate manual tracking, and reduce the amount of time your inventory is unavailable for rent. 

Parts and consumables. As rental levels increase, so does the demand for parts and consumables. Use your system’s automated purchasing function to manage stock levels. Take advantage of historical data to set triggers for dynamic inventory reordering. As with work orders, this eliminates a manual task and helps manage the maintenance process for new equipment.

Consumables represent an up-sell opportunity, and can be set to automatically prompt as recommended items. Demand for consumables will typically increase as rentals increase, due in part to the convenience factor — so use your system’s capabilities to avoid out-of-stock situations that could mean lost revenue.

Rental capital expenditures. Use your software’s reporting and analysis capabilities to identify the inventory categories you’ll want to augment, as well as underperforming inventory that should be sold off.

The analysis will be well worth your time, particularly if you’re entering a phase of inventory rebuilding. Changing your mix could give a much better return on your investment. Mix is also a strategy that can help you retain important customers.

If a lender is involved in your capital plans, use your system’s reporting and analysis capabilities to demonstrate that the expenditures are justified. Lenders want to see that you can manage any change in your business conditions through disciplined and informed decision-making.

Complex rate changes. The rates that you can get today may be much more attractive than 12 or even six months ago. This goes beyond price; you should also consider the impact that certain rates will have on inventory availability.

For example, you may want to encourage behavior that will lead to more revenue by setting rates that encourage timely returns on high-turnover items. Availability can be just as important as price when rental activity picks up, so review all of your rate structures to ensure that they’re optimal.

Rate flexibility is a core strength of the best rental systems. Don’t just skim the surface; use the full spectrum of your system’s capabilities to manage everything from large-scale rate changes to more targeted changes by inventory segment or customer type. Some systems will even allow you to apply rate changes or discounts by individual customer without affecting rates for the broader customer type.

Security control of workforce changes. Staffing increases elevate risk unless you manage the security of your data and business processes. Utilize your system’s security functions to manage changes in your workforce: on-boarding or off-boarding of employees, trial periods, promotions to new positions, and revisions to job descriptions.

If your system offers security roles in a tiered structure, an employee who moves into jobs of increasing responsibility can be given higher access at key points along that path. In similar fashion, newly hired employees can be assigned low-access security roles; then be given more access as they successfully complete trial periods.

Marketing for competitive advantage. As business picks up, marketing may seem unnecessary, but it’s actually more important than ever. Now is the time to set the stage and make sure you get a good chunk of the growing pie.

When setting up marketing programs, give some thought to the selection criteria that makes the most sense for your locale, such as customer types, activity dates, postal codes, seasonality, and customers with a history of renting certain types of equipment. Apply those criteria to spot the trends in your market or predict future trends.

If you think of marketing in terms of managing change — and not merely reacting to the cycle — you’ll see that your market is far from homogenous. Certain customer types will recover faster than others. Analyze revenue trends and communicate with customer types or geographies where business conditions are likely to improve first.

In addition to the recommendations above, give some thought to how your rental system can improve overall efficiency during growth periods. In the rental business, functionality such as mobile and website connections, signature capture, GPS readings and online reporting tools all equate to better customer service and higher return on assets. These functions — or even a new system altogether — should be in your strategic repertoire.

Ultimately, a sharp, sustained increase in business can be nerve wracking – but it’s also a good problem to have! As a rental owner, you can manage through it using informed decision-making and the support of strong technology. rer

J.J. Shea is general manager, Solutions by Computer.