We are continuing to take a look at the activities that a rental manager has on a monthly basis. We just finished talking about the people aspects, and now we're going to look at the products. So, it requires a lot of analysis. Remember you are an asset manager, and these dollars that are invested are trying to drive revenue. And so, fleet utilization, we're going to talk about various measurements on that. But fleet utilization is something that you're constantly paying attention to, and you're looking at it on a trend basis. On any particular day, you're not going to get too excited about a lot of units available or not, but it really does start to be concerning when over a longer period of time, equipment is sitting still. So, we're going to look at some things in this course that will give you some measurement tools. But, generally on a monthly basis, you've got revenue that was produced, and the revenue was a function of equipment being busy. So, if the revenue was greater than you expected, you may not dig too deep into the analysis because your assumption is everything worked okay. But if your revenue falls short, the very first thing you're going to do is look at your fleet and try to determine, okay, what was working for me and what was not working for me? And where do I have opportunity to push inventory out into the marketplace, and what's it going to take to do that? So, you're also looking at maintenance and repair costs, and am I staying within the budget that I had predicted, or are my maintenance costs running high, and if so, why? Am I missing some things in my routine preventive maintenance that's kind of catching up with me later? And when equipment gets damaged, which it will, am I recovering that cost? Am I identifying the damages quickly, communicating with the customer, either getting them to pay me back directly or filing an insurance claim, but how am I doing on recovering the costs that are just not wear and tear? And then my profitability goals. This is a, rental is a very dynamic business, meaning that generally you have equipment that's coming and going, and you have equipment that is aging. And so, it's dynamic in that respect. And so, maybe if you're just getting started in rental, maybe it's static for you. You've got 20 or 40 or 50 units, and that's what you have, but as you stay in the business for a while, and you start to have a fleet that becomes two or three years old, you'll have new equipment coming in, and you'll have older equipment rolling out. And so, you're then really starting to look at your total ROI on products, which is return on investment from what you paid for it, the kind of money you made during the time you owned and operated it, and then when the machine was rolled out of your fleet, did we make money on the backside as well? You're also looking on a monthly basis, do I need to tweak any of my rental rates to be able to get equipment out the door? Maybe I've got real high utilization on something, and the reality is maybe I can tweak my rental rate to go up slightly, because there is great market demand out there, and maybe there's an opportunity for us to charge a little bit more. And then I need to also, when I'm thinking about my machines and their earnings, it's actually possible to have machines that are very busy, and they miss their earning objective. And one of the reasons that happens is because somebody is discounting the products too much, and so you should have some type of exception report run off of your computer that allows you to figure out any rental item that, let's just say, was discounted more than 10%, or maybe your cut line is 15%. But somehow, without having to examine each and every rental ticket, you should be able to get an exception report that you can look at and determine, okay, what machine was it that got discounted, and who did it, and to what customer? And it's just a means of being able to check and see if you're giving away money. So then our monthly activities for process, we've looked at people and products, now we're looking at process. And so we mentioned earlier about the number of times. So everything we do in this business has to do with trends, and you're looking at it over a period of time. And so on a day that a machine fails, yeah, you have to put the fire out, but you're starting to look now at the frequency of how often do we have to make field calls, and what's the nature of those field calls when we go out there? And is it something that could have been prevented? And so that tells you a little bit about your process. And so for your service process to get tighter, and your quality control to get tighter, you need to measure every time there's a problem in the field, was it something that we could have prevented? Because when we have a crisis in the field, that means we have to stop everything we're doing and react to it. We'd much rather be in the preventive maintenance business rather than in the crisis business, and your customer would like that too. We talked briefly before about billing errors. That's a process. So if we are sloppy in the way that we close out tickets, or we don't put the right information in there, or we don't get the hour meter correct, or the amount of fuel, we're sloppy with transportation charges, any of those things are billing errors, or we charge for one too many days. That's actually part of the service that you're giving to the customer, and we can get everything right, and if we can't get the billing right, we can frustrate them. So consider that as a process improvement opportunity, and then look at your safety aspect of what kind of rental department are you running relative to your employee's safety, and then also our customer's safety, and are people getting hurt with our equipment? What's the frequency of that? You need to be really on top of this one in terms of, from a liability standpoint, making sure that all the decals, and that you've got I's dotted and T's crossed, and if you've got quality control forms, that people need to be checking off all the boxes, they need to be putting the date, they need to be putting their initials. So there's real accountability in this particular area. So we looked at daily, weekly activities, we looked at monthly activities, and now we're going to look at those things that are annual activities for a rental manager, and these typically might be things like employee reviews, and I would suggest you do this in concert with your HR director if you have one, but it's really important for employees to know how they're doing, and I think an employee review should be two-fold. You should be telling them about the things that they do well, that you've observed, and where you think there's opportunity for improvement. I also believe that you should allow employees to speak to you during a review, and try to help understand their vision for being at the company, and maybe opportunities, things that they would like to get better at, maybe they'd like to go to some type of training, maybe they'd like to advance in the company, take on more responsibility, and then you need to talk about a compensation plan. And I think it's very important that you have incentive programs. You really need to drive the right behavior in your department, and most of the time that's associated with setting goals, and then rewarding people for achieving those goals. So think about what is it that this person's in control of, or that they can help, and I believe compensation plans should have two components. One, that measures them as an individual, and two, that as the whole department succeeds, they get to participate in that as well. So that they become really good team players, even though maybe individually they're not doing so well, we still want to keep them motivated for the whole team. Don't create programs that there is a winner in the rental department, because some salesman happens to be in the right territory, and he made all the money, meanwhile the rental department lost money. So then we get into annual activities for fleet planning. So when you're budgeting and you're creating a forecast for the following year, and I would suggest you doing this somewhere in the October, November time frame, you are making your assumptions based on how much inventory you think you're going to have. And so most people in the equipment industry load up their rental fleet, if they're going to make any type of increase, they usually bring that out in the spring, as business starts to pick up in the local market. So that means that you may have, maybe you're going to add a million dollars worth of equipment to your fleet in the coming year. If that was the case, you're probably not going to add a million dollars on January 1. You probably are not going to bring it in on February 1. You might want to think about gradually bringing that fleet in, so over the months of March, April, and May, you have really gotten that equipment on the ground, so now it can participate. The same thing goes with not bringing in a lot of equipment in the months of October, November, because usually that's dormant or slower months of the year, and why do you want to carry the cost of depreciation into a slower time frame? So there is some strategy associated with planning and adding fleet, and then what machines are going to come out of the fleet? And that needs to be closely coordinated with the used equipment manager, so that you can say, I'm going to have these three or four machines that are probably going to be ready to come out of the fleet mid-summer or third quarter, and you can make some type of plan, then I'm adding some and I'm taking away, I'm adding some and taking away. But the rental manager needs to really be involved in the fleet planning aspects of forecasting. And then lastly, we talk about budgeting and revenue forecast. This is so critical to the success of the department and actually from the company's perspective. So we need to talk about the fleet growth, and we don't just add machines for the sake of adding machines, there's got to be some market demand for that, and you've got to be collecting information and data to support the case. So when you talk to the senior management at your company and you say, I think we should add five more of these or two dozers, six loaders, five backhoes, there's got to be some supporting evidence for your optimism. Why should we be getting this stuff? So you've got to be able to show demand, you've got to be able to show activity, good time utilization and that type of things. And then setting the goals for the year that if we've got this much fleet, here's how hard it's going to work. We are setting some goals for time utilization and we are also setting some goals for financial utilization, which in fact is the revenue being produced by a certain amount of machines. So hopefully this review of the daily, weekly, monthly and annual activities of a rental manager will help put in perspective the variety of things that we talk about and learn that might be considered academic, but in the everyday world you've got to figure out when should I be focusing on this activity, when should I be focusing on that activity and the reality is people, process and products, we've got something to be looking at every day in that area. We've got something to be looking at every week in that area. We've got something every month to be looking at people, process and products and that's how you continue to drive the performance of the people, the quality within your fleet, which gives good customer satisfaction and the products so that they are generating the type of revenue and basically giving the profitability that we have been entrusted with.

rental manager

fleet utilization

maintenance and repair costs

market demand

process improvement