A strong and efficient parts department is vital to success when it comes to the rental industry. Let’s take a look at how to increase profits and efficiency in the rental parts industry, as well as how Rental360, a cloud platform designed specifically for the industry, can help.
In a recent article, Tony Lake, a parts department manager of an equipment rental and sales company called HR2, gave eight steps he has found essential in increasing profits and efficiency in the parts department.
1. Be Observant
The only way to improve efficiency is to find the part of the operation that is slowing down the process. So, don’t ignore problem areas simply because you “don’t have time” to investigate it.
Be observant of each step of the operation to determine where improvements could be made.
2. Pay Attention to Detail
Hone in on the small things. Areas of the department that are overlooked often give the greatest opportunity to increase efficiency. For example, Lake suggests taking a closer look at purchasing. “I really paid attention to make sure that we weren’t just ordering things because someone said to order them.”
3. Start Small
Set realistic expectations and goals. Lake explains, “I started with the philosophy that pennies make dollars…I knew that if I tried to go in there and save large chunks of money right off the bat, it would be a battle I wasn’t prepared for.”
4. Cut the Excess, Minimize Inventory
Sitting on unused (or rarely used) inventory is one of the most overlooked problem areas of any parts department. You need to determine what assets are worth keeping, and which ones are simply wasting funds. Rental360 helps you determine that.
From acquisition to retirement, Rental360 presents an easy way for you to manage your assets while keeping tabs on their status, depreciation, and revenue generation, all in real-time. By utilizing these dashboards, you can see exactly how much revenue is attributed to each asset.
Here are a few examples of how Rental360 helps you manages your assets:
- An easy to navigate Equipment List allows you to quickly see how many assets you have and what their status is, providing you the ability to filter and focus on a specific group.
- Each asset is given its own Rental Equipment page with purchase history, service history, and calibration dates.
- The Complete Equipment Transaction History feature begins from the time of purchase and tracks each movement of the asset, following location, reason code, start and end date, and order contract, making transaction history easier than ever to follow.
- The On Rent dashboard provides any information you need for equipment that is currently on rent. It shows the original equipment cost of on rent assets, as well as what equipment is on rent and where it’s located. You can filter to see where all of a particular type of asset is located, the total number outstanding, and the equipment value. This dashboard provides all the information you need for equipment on rent in an organized and easy to navigate manner.
5. Create a Transparent System
The idea of checks and balances isn’t a new concept, but Lake observes that implementing this is key to maximizing efficiency. Since each facet of a business is dependent on the others, all critical business data needs to be accurate and accessible to all departments and employees.
Because Rental360 is a single platform, it creates that transparent, unified system that you need. The dashboards and analytical functionality within Rental360 enable users to see, customize, and analyze their key metrics at a glance. This gives everyone secure access to all of the information needed to take the best next step within their role.
6. Have a Scalable Game Plan
Lake explains that a system with multiple locations and multiple warehouses needs to have a proper flow. For HR2, this involves one location being the main hub, while other locations stock varied specialized items. Rather than each location storing every part, they divide it and ship between locations as needed. This greatly saves on inventory costs and improves efficiency.
7. Make Use of OKRs
OKR stands for objectives and key results. Use these to define objectives and measure outcomes. HR2 does this quarterly. “Our success is measured through our quarterly inventory checks. We go through and make sure that everything is where it should be four times a year.”- Tony Lake
Well defined objectives are easier to measure. In this way, you can know where your company stands and how the rental department is doing in the way of efficiency. Lake explains if an area isn’t meeting objectives as required, they investigate the department to find the problem and troubleshoot it.
The dashboards and reporting capabilities built within Rental360 make keeping track of OKRs easy and reliable. Notice a few key features:
- Quick access to revenue trends and what’s causing them
- Role-based and customizable dashboards with security measures to limit data displayed according to the viewer
- Industry-specific dashboards, focusing on equipment utilization and revenue recognition
8. Incentivize Employees
Incentives are known to increase employee productivity. “We have a bonus program that goes along with inventory. We determine numbers and we have each part room try to meet the criteria. This makes them eligible for said bonus of each quarter,” Lake says. The dashboards in Rental360 effortlessly keep track of employee sales, making incentives and bonus programs easy to implement.
Managing rental parts inventory can be challenging, but by following these eight steps and taking advantage of Rental360, you can not only successfully manage your department but can take it to the next level.
See all of these Rental360 features in action with this recent demo on demand!