Chances are, if you are a company that rents out construction equipment and heavy machinery, you’ve probably given some thought to heavy equipment tracking while your inventory is in the field or in your yard.
This can be a daunting challenge, particularly in an industry where the business model hasn’t changed much over the years. Does this sound familiar? You purchase bankable capital equipment at a favorable price, and that equipment generates cash flows for you over time as you rent it out to others to use. Or, you have heavy equipment that you need for your business, but you are able to rent out spare capacity to help maximize its value. As an added benefit, you may get accelerated or bonus depreciation, depending on your jurisdiction and what the equipment is.
While the business models haven’t changed much, at Link Labs we frequently get inquiries about how we can help reduce loss, increase utilization, and help provide enhanced customer service by adding real-time location services (RTLS) to your rentals.
The most frequent use case we come across is also the easiest to understand - loss monitoring and prevention. According to the National Equipment Register (NER) and National Insurance Crime Bureau (NICB), losses from construction and farm equipment theft are estimated to be between $300 million and $1 billion annually, with most estimates in the range of $400 million. While theft and loss is more common with smaller assets that are easier to move, it is not unheard of in large equipment. This problem is exacerbated because large equipment is sometimes left in place for removal or retrieval by the rental company or by a 3rd party, or taken to 3rd party sites like depots or distribution hubs.
In cases where equipment isn’t where it is supposed to be, assigning blame is, at a minimum, a customer service nightmare, but because of the cost of the equipment this can’t be a case of “the customer is always right.” If liability in unclear and legal action has to be taken, not only do you lose a future customer, but you waste precious resources on lawyers and litigation, which aren’t core to your business and impact your bottom line.
Lower Machinery Rental Downtime
This is another simple concept, but rental equipment that isn’t being rented is money that is potentially not coming into your company. Some of this downtime is inevitable - things like cleaning, preventative maintenance, and refurbishment all take equipment out of the field.
Other downtime is simply because of lack of awareness of where assets are. For example, your customer’s rental period ended and the operator said they left the Bobcat at the customer site, but your runner says it’s not there. After a number of phone calls and emails (and more importantly several days), it turns out that the backshift supervisor had a flatbed to drop off some framing and happens to live by one of your other facilities. He thought he would do everyone a favor and drop the Bobcat off there. Little did he know it was actually needed at your depot across town.
While no one did anything maliciously, you still have to deal with an unhappy customer, lost revenue, and a hit to your reputation. While knowing where your stuff is can’t solve all communication problems, it can definitely help you resolve them faster.
Location and usage data can also be used to optimize processes, which can have major implications for the company’s bottom line. Do you know which pieces of equipment are most used, or do you have excess equipment sitting on your lot?
Using AirFinder provides you the analytics into your business to reduce excess inventory costs, calculate equipment turns and usage, and provide better customer service by helping your customers analyze and rent only the equipment they need. For example, a contractor could use AirFinder to monitor the time spent running each scissor lift on a job site. If 10 are being rented for a period of 8 weeks but only 6 are used frequently, they can update future rental agreements to cut costs.
While this may seem counterintuitive to your top-line, providing this type of customer service builds credibility and establishes the long-term relationship you want with your customers, as well as opens the door for more innovative business models that charge customers based on how they actually use equipment rather than treating them all the same. It also allows you to experiment with things like time-shares or pooling.
Ready to start tracking your heavy machinery rentals?
Partnering with Link Labs for asset tracking has allowed customers to reduce loss and improve equipment utilization within their heavy equipment rentals or leased fleet. The AirFinder SuperTag leverages both fine-grained positioning technology and wide area location tracking in one, long-lasting asset tracking tag to give you real-time intelligence about your most important assets.
Want to learn more? Reach out to us at Link Labs to find out how these technologies can work for you.
On Wednesday, March 3, at 1PM EST, Link Lab’s Glenn Schatz will be hosting a webinar on the value that can be found through applying asset tracking solutions to assist with heavy equipment rentals and leasing. Learn how you can save time and money, and get insights into your business and your customer’s business with asset tracking. You won’t want to miss this valuable industry information and learn the top 3 ways that asset tracking can help your business grow the top line and improve the bottom line. Register now here!