A plan that focuses on health and safety when operating in a new business environment.

A plan that focuses on health and safety when operating in a new business environment.

ARA Insurance is a leading insurance company that is a member of the American Leasing Association. Because leasing is our only business, your success is closely related to us.

ARA provides many opportunities to communicate and learn from peers

ARA supports the equipment and event rental community through initiatives that serve the industry.

Through ARA Rentalytics, ARA members can access macroeconomic data and information about income conditions and rental income drivers.

Each issue contains information, including risk management recommendations, store introductions, business management stories, products, and more.

When I talked to leasing companies, so far, their biggest concern in the business—aside from supply chain issues—is the shortage of skilled labor. This may take 12 to 18 months, but manufacturers will increase supply to meet demand. However, the problem of labor shortage is much more complicated, it takes years, and it may take a generation or more to have a meaningful impact.

As an association and industry, we are doing many things to attract talent, raise awareness, create career paths, establish education and certification programs, pay attractive salaries, and retain talent. However, the root of the problem is that not enough young people choose to become mechanics or drivers and other trade career paths. We are committed to it, but it is a long road.

Attracting and upgrading skilled labor needs to be a priority, but we often forget that labor is just one of many levers in our business. This can be easily distracting, because traditionally, an effective and efficient way to deal with business growth is to increase the number of employees and the size of the fleet. This is not the only solution. As we continue to address labor shortages, it is time to turn our attention to improving operational efficiency in our business.

software. Although some people think that certain technologies are just a distraction, most technologies aim to improve our processes by making them simpler or easier and eliminating wasteful efforts. I think we all agree that the efficiency of handwritten income statements is very inefficient, but in many areas of our business we are still continuing with manual processes that are more difficult to repeat and extend.

You should first check your current rental software provider. I have reviewed how hundreds of leasing companies implement their leasing software and can guarantee that you are not fully using the tools you have paid for and other features they may provide will also have an impact. There are many reasons why we did not favor technology in the past-it is difficult to change, new processes and habits take time to develop, technology has a cost, and so on.

However, from the perspective of labor saving, technicians only need to save 6 minutes per hour to improve efficiency, which is equivalent to saving 5 more than 40-hour work weeks per year.

In 2017, my leasing company conducted a published study using SmartEquip. When the research was released, we focused on the return on investment. If we pay more attention to labor efficiency, it will paint a different picture. Our average time for picking up manuals, ordering parts, approving, paying, etc., including all relevant personnel, is an average of 60 minutes.

Once we use SmartEquip to digitize our workflow, the average time drops to 6 minutes. Each part order saves 54 minutes. I am not saying that SmartEquip is a solution for everyone, but it is a perfect example of how quality technology investments can have a huge direct impact on your labor needs. Therefore, the next time a software vendor shares innovations with you, whether it is ordering online for customers or digitizing the inspection process, you should consider your labor savings. It may be easier and cheaper to buy more software than to buy more labor.

Electrification. Although there are still some obstacles to electrification, it is a fast-growing market segment that will eventually dominate the workplaces of modern contractors and the backyards of weekend warriors. When we consider changes, it is easy to focus on negative factors such as upfront costs, but when we look at electrification from the perspective of labor shortage, we will find some huge positive factors. The maintenance cost of most electric engines is very low. Most leasing companies regularly service the equipment after each lease and preventive maintenance. Your team spends a lot of time on gas and diesel engines. You can save time for service technicians and mechanics every time you add a new device with an electric or internal combustion engine.

Six sigma and 5S. The Ford production line was created to improve efficiency. Toyota later completely changed this idea by creating six sigma. The simplest form is to eliminate waste in the system. Waste can be many things, including errors, time, and movement. The Six Sigma organization is always looking for ways to eliminate waste. When you look forward to the future of modern rental shops, it is time to look for waste in every process we perform.

When was the last time you stood in your store and analyzed traffic? This is an eye-opening process. Is everything your team needs accessible? Is it in as few steps as possible? Is there a more effective way to perform this task? Is the location or home of each item and tool visible so that everyone — new employees to sales representatives — can return it without error, etc.? The right equipment or tools can help us eliminate waste. When we recommended the mini skid steer loader to the gardener, we knew this intuitively. It comes with attachments that can turn three people into a one-person job, but it's easy to forget in our own store.

analyze. Most modern industries have invested heavily in data and analysis to improve decision making. The equipment leasing industry is not an early adopter or a big investor in big data. This needs to change. We should invest in telematics, analysis software, and share data anonymously with manufacturers, customers, and other rental companies.

The data industry most often mentions three types of analysis—descriptive, predictive, and prescriptive. We have become accustomed to and use descriptive data. Our sales, customer and utilization reports for rental software are a good example. The opportunity to improve efficiency lies in predictability and regulation. When we consider telematics on the machine, descriptive analysis will tell us the engine temperature, predictive analysis will use multiple data points to tell us that the machine may have problems or will encounter problems soon, and normative analysis will remind us Replace the unit and test the hydraulic system before major repairs are required. From rental rates to fleet management, there are many other use cases that can be significantly improved with more data.

We are in the early stages of data-driven decision-making in the equipment leasing industry. High-quality analysis, especially predictive and normative analysis, requires a lot of data. The more data, the better the result. This kind of information benefits everyone from our suppliers to customers, but it needs to be shared and invested in new ways in an open way. If we jointly decide to share our data and invest in analytics, we will all benefit. If we ignore this opportunity, then only large companies with the largest budgets can profit from this opportunity.

This may not be obvious, but better data can lead to better decisions and thus require less labor. For example, if we can prevent overhauls through telematics or better manage demand through dynamic pricing and fleet analysis, then we will be able to better focus our workforce on the most valuable goals.

Productivity dividend. If you ask ordinary leasing company owners what their most important indicators are, income tax, earnings before depreciation and amortization (EBITDA) and profitability usually appear as in any industry, but the most commonly used lease-specific indicators are U.S. dollars and Time utilization. Now is the time to implement the third item: productivity. We need to start tracking income and EBITDA per hour of work, and regularly compare with our peers, always looking for how to improve this ratio and assess how the concepts and investments mentioned earlier in this article affect this number.

There are many opportunities to build a more efficient business, which will be the focus of the ARA Leasing Innovation Conference and Exhibition scheduled to be held in Dallas from March 9 to 10, 2022. Mark your calendar now, because this will be a great opportunity to see the best innovations in the industry to help ease your labor needs and improve your business. 

Josh Nickell is the Vice President of the Equipment Division of the American Rental Association (ARA).

Nickell is a veteran with 20 years of experience in the rental industry. As a third-generation owner, he spends most of his life in the home rental business. His experience also includes working for a national leasing company, an international leasing software provider, and serving the industry as a consultant. Through decades of experience, he has gained unique perspectives and knowledge in the construction, industrial and general tool rental industries. Nickell leads the program development and member participation of the ARA member equipment section.

Don't miss the latest news in the equipment and event rental industry. Click here to subscribe to "Lease Pulse" and "Lease Management" magazines.

The official publication of the American Rental Association. Produced by the rental management company. Copyright © 2021 Lease Management All rights reserved

There was a problem loading content.

Want to know the latest news and trends in the equipment and event rental industry?

Get your own free subscription rental management magazine.

©2021 American Rental Association. all rights reserved.