Blog (3 of 4) The current state of Paper-Based Rental Operations
I’m going to give you some examples of companies that my team has had experience of. Your company may be different, so forgive me if what I’m about to describe doesn’t apply. Information gets written on paper, then keyed into the ERP system and there are errors from three main sources; Illegibility of handwriting, transposition of numbers (e.g. 9075-4136 can easily become 9075-4163) and information that simply never gets there because paper is lost or damaged.
There are delays in processes, because Rental Office, depot staff and field technicians aren’t connected with each other in real-time, which means that a hold-up in one area often leads to gridlock in another. There are recurring problems – because operations staff don’t follow-up problems with root cause analysis. Root-cause analysis is not the favorite pastime of operations staff, plus, they are often too busy and under pressure. The business results are that Days Sales Outstanding grows, equipment is underutilized and there is revenue leakage.
Do you know what the percentage rate of data errors are in your operations?
Companies don’t know how many errors there are in operational data, because they don’t have any empirical evidence to tell them. The result is that underlying problems persist for years as largely hidden costs, because they’re resolved by operations staff on an incident-by-incident, day-by-day basis and many good ideas from operations teams are never implemented, because ERP systems just aren’t flexible enough to make the process changes quickly and costs-effectively.
Do you know what the percentage rate of data errors are in your operations? Well if not, don’t feel bad, because I’ve never had an accurate answer (senior executives included) in 13 years. If anyone reading this would like to know what you can expect in terms of operational errors, then please email me to set up a call and I’ll give you my best estimate.
Your Depot Managers run the business
Let’s look at Depot Managers and at this point, I’m going to be a little irreverent. Seasoned depot managers share several common characteristics. They have strong personalities and are known, on occasion, to have strong language to match. They have pride in their work and a real drive to get things done. They have long-term personal relationships with customers that matter to them (that word TRUST again). Their primary focus is getting equipment to customers and anything else that stands in the way of that is usually someone else’s problem. They believe they know best how to run their operation (and maybe the entire company). They are task, more than process, oriented and if they need to modify or, on occasion, even break a corporate process to get the job done they will likely do it.
When a depot manager loses TRUST in the information they get from the ERP, for example, the system is telling them there is equipment available and there isn’t, they lose TRUST in what they’re being told and start hoarding equipment and calling their buddies to double check whether ERP system is right or not. They do that by creating their own ‘covert’ spreadsheets and running parts of their operation on those. Senior management might not even know the spreadsheets exist and I’ve seen that happening on more than one occasion.
Since each depot manager has their own variant of how things should run, the Board may have spent multi-millions of dollars on their ERP investment, but end up with parts of their operation being run on multiple covert spreadsheets. The key to avoiding this is to give the operations teams data they can TRUST, so that your customers can TRUST your company. That way, you retain the flexibility and work focus that exists in your operation, but ensure the ERP system gets the accurate, timely data it needs to produce invoices. You get invoices to the customer sooner, reducing Days Sales Outstanding and driving the financial results that you want in the spider diagram.
What makes a successful mobile solution implementation?
A properly implemented mobile solution helps everyone get what they want; customer TRUST; more productive happier staff and better financial performance, a real example being DSO down by 33%.
Let me take you back to Depot Managers. At the first training course in one of our customers a Depot Manager (let’s call him Davie) stopped my business partner in his tracks by saying in front of the whole class “Hold it there son. Before you start I just want you to know – I hate computers.” Then as the training was about to resume, he said “And another thing, I hate wee (small) computers even more. Now you can start”. Six months later, I asked Davie what he would do if I took our mobile solution mobile away and you went back to paper. Davie said, “I’ll break your arm”. It’s not the best customer marketing quote I have had, but that’s what I call a happy customer – one who’s prepared to break your arm if you take his solution away! 13 years later, that customer is happily using our solution globally.
All rental companies spend on marketing and the key message they’re trying to get across is fundamentally one of TRUST, because if your customer doesn’t trust you, they’re not going to do business with you, because the consequential cost to them of customer disappointment is too high.
TRUST is the fundamental belief rental companies need from customers, for long-term customer relationships.