being the rental sales desk, the rental checkout process, our transportation, and our check-in process. All of those are vitally important to improving your overall performance, but the service process and quality control, I will have to say, probably is the area that is lacking across the board for most dealers. And this goes back to somewhat the analogy about the car rental company and a car dealership. There's an urgency issue. There's a space issue. There is controversy over technicians and who should be involved. And so I'm going to try to clarify some of the distinguishing differences between a normal dealer routine and what we're trying to establish for a rent-to-rent fleet and the support of that fleet. So first of all, let's talk about the technicians. We have learned in this particular rental course about a service technician and that this person can be low to medium skill with low to medium experience, as opposed to a dealer technician, generally is higher skilled and someone that has more experience. Honestly, the service technician in a rent-to-rent support mode literally could be a type of apprenticeship to move into potentially going to some type of training and make them a more advanced mechanic and potentially be able to work over on the tractor side. So we do not need the same skill level in technicians for doing preventive maintenance as we would do on a dealer service side. The shop facilities, most of the time, again, we are not focused on breaking down engines. We're not doing engine rebuilds. We're not doing big repair jobs in rent-to-rent preventive maintenance. It's a high-speed check-in, check-out, move it through. Dealer services, on the other hand, they need better tooling. They need larger spaces. They need bays that can potentially occupy a machine for maybe a week or 10 days as they've got a machine pulled apart. The tooling for rental is minimum. A dealer needs generally more extensive tooling. The duration for rental, generally a few hours or maybe a day or two. In a dealer, generally, stuff is sitting in the bays much longer. Preventive maintenance is very vital to the rent-to-rent fleet and not so much on the dealer side because they're usually repairing machines. They might do some routine service. But training for the technician is generally focused on maintenance, whereas a dealer technician that's going to be trying to troubleshoot and do major overhauls, they may need much more factory training. The service flow is critical to rent-to-rent because who's paying the bill? When we are inefficient, we are really burning our own time and our own fleet is sitting still. So the flow and how things move around through our service department is really, really important. On a dealer, on the other side, the customer is helping offset the cost of any inefficiency, and the margins are usually very, very good on the dealer service side. The rent-to-rent mechanic is not a profit center. We don't expect to make any money with this person. They are 100% expense, whereas on the dealer side, we're trying to use the leverage of that mechanic and keep him busy and make a profit off of his efforts. The parts support for rent-to-rent is generally much less. It's wear and tear items, maintenance items, whereas to support the repair business at a dealership, you need a much more extensive inventory of parts. The field service requirement for rent-to-rent and maintenance is generally more field PM, and if there's a major breakdown, we're generally trying to swap that machine out rather than go fix that machine in the field. Meanwhile, on the dealer side, it's quite common for a customer to want to have a technician to come out and fix it in the field. They want the speed, and they also don't want to pay for the transportation to relocate that machine to your yard. So let's take a look at how the inefficiency in our service department starts to really cost us money. So I've laid out a chart here to kind of show you how things process through for us. So a machine is on rent. We're making money in the green box. If you go to the back side of the arrow, now a customer has called us and said, I want you to take that machine off of rent. So now I'm no longer making any money as of that moment on that machine. So it behooves me to get that machine back in as fast as I can. So we're going to look at that blue button, and that's going to be our transportation. From the time the customer calls till I can get it back in my yard, that's what's in that segment. Now when we look at the red boxes, that is now back in my yard, and I've got to do certain things to this machine to get it back over to the available for rent space. So we're going to look specifically at the red boxes and try to figure out how much time we're wasting. So for most businesses, we are trying to get a time utilization on our fleet of somewhere around 60%. And if you can go higher than that, that's much better. But we'll just use 60% as an example. And we're going to assume that you are renting equipment on four-week cycles rather than 30-day cycles. So if we use this example of 60% time out, that means out of a 28-day cycle, 17 days that machine is out on rent. I'm going to suggest that maybe that equipment sits in our yard for five days out of every 28 days. So at that point, we have a little bit of a sales problem or a demand problem. Then I'm going to suggest that hopefully we can get the equipment back in the yard within 24 hours of when the customer calls it off rent. So that means that to equal 60% time out, I've got to get the machine in my yard. I've got to get it inspected, refueled, maintenance, any repair that needs to be done to push it back out to the blue. So that's what the meaning of those numbers are. So now let's take a look at what that inefficiency means. So if I've got the machines out at 60% time out utilization and I happen to have a $3 million fleet and 60% of it is out on rent, that means that about $1.8 million of equipment is out on rent. The balance of that is in my yard. It could be that it's waiting to be picked up. It could be that I haven't washed it or fueled it or I haven't inspected or I can't seem to get it through the service department and get it routine maintenance done or have that machine repaired. So what's the impact of that? I'm going to look at an example here. So let's just say that you had eight machines parked outside your service bays and they've been there for a few days or a week, but the reality is there always seems to be a pile of those machines sitting out there waiting to be picked up. But the reality is there always seems to be a pile of those machines sitting out there. We just don't ever seem to clear it. So let's just say those eight machines had a combined value of $250,000 and if our financial utilization for those machines for the $250,000 was at 40%, what that means is at the end of a year I would have been able to make about $100,000 revenue with that equipment. And so if I divide that by 12 months, what that means is it's costing me $8,500 a month for that equipment to sit behind my service shop. Okay, so the point to this is when we cannot push the equipment through our service department because of either lack of manpower or maybe your wash rack isn't big enough, you can't get enough machines through there, I believe that for $8,500 a month you can come up with another solution. So this is one of the areas where when I work with equipment dealers and I look at their processes and I see consistently that they're behind in servicing rental equipment, I usually ask the question, how would you know if you could afford another mechanic? Or at what point do you decide to hire another one? And usually what they tell me is that I don't think we could afford another mechanic because we might have to pay $40,000 or $45,000 to get a mechanic. Okay, so let's just do a little bit of math. What if you paid $48,000 and that guy cost you $4,000 a month? And that would be a really good one. What I'm losing here is $8,500 a month opportunity. So the point is to solve the problem in our service department, we need to think about not what does it cost me to have a better flow in that shop or what's the high price of another mechanic. What we need to be thinking about is how much money are we leaving on the table because we can't get the equipment through the shop. So that is where the decision-making should lie, is let's take a look at how much equipment is sitting out here. Is this a one-time thing? Do I need to let the mechanics work overtime for a week and we can solve our problem? Or no, this seems to be an ongoing problem and we need to solve it. So this is, I believe, one of the biggest areas that a dealership is struggling, is being able to process the equipment smoothly through the service department. So I hope you'll take some good notes through this thing and hopefully find application at your own dealership for improving the process and service.

service processes

rental industry

preventive maintenance

efficient service flow

potential revenue loss