Companies named as having "unfair advantage"

Jun 25, 2014
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Greentree-WE3-webGreentree ERP, the business solution that will empower your business and  give you an unfair advantage!

They have bucked the trend and now we can tell you how they did it.

palfinger-australia

 

 

 

"Greentree has provided the right tools to manage our core business activity with lots of future capacity."

Palfinger-success-story-print

matilda-equipment

 

 

 

Greentree handles the heavy stuff

Matilda-Equipment-success-story-print

national-fleet-solutions

 

 

 

 

 

ERP keeps those big wheels rolling

National-Fleet-Solutions-success-story-web

hydrosteer

 

 

 

 

 

Hydrosteer is driven by Greentree

Hydrosteer-success-story-web

Equipment service firms have to weather fluctuating demand, high capital investment costs and a customer base that expects instant service and no breakdowns. How do they do it? ERP Leaks found out. It took a lot of enquiries to get the lowdown on the equipment service industry - despite the fact that so many other industries depend on it, from construction to mining and many more, it tends to keep a low profile. What emerged from our investigations was a service industry that's used to weathering tough times. Whether they’re selling, leasing or servicing equipment, the businesses concerned know that their viability is intimately connected to the viability of their customers, who get especially lean and mean on costs when business is slow. For the equipment industry, not to mention its customers, downtime equates to loss of income, loss of reputation and loss of business.

Proactive maintenance is the name of the game, but to do that, each vehicle has to be monitored so that servicing is always up to date. Information about factors including customers’ locations and machine hours determines both utilisation and income. Matilda Equipment serves the mining industry and has to keep track of its leased equipment at remote sites. “We’re talking multiple machines that have multiple work orders underway at any one time,” says Chief Financial Officer Damien Wilson. “Tyres for some of these machines can cost $40,000 apiece, so we could have several hundred thousand dollars in purchases out there with no idea when those invoices might hit.”

ERP Leaks

 

 

 

 

Hanging tough in a demanding Industry

Equipment service firms have to weather fluctuating demand, high capital investment costs and a customer base that expects instant service and no breakdowns. How do they do it? ERP Leaks found out.

Tough IndustryIt took a lot of enquiries to get the lowdown on the equipment service industry - despite the fact that so many other industries depend on it, from construction to mining and many more, it tends to keep a low profile. What emerged from our investigations was a service industry that's used to weathering tough times. Whether they’re selling, leasing or servicing equipment, the businesses concerned know that their viability is intimately connected to the viability of their customers, who get especially lean and mean on costs when business is slow. For the equipment industry, not to mention its customers, downtime equates to loss of income, loss of reputation and loss of business. “It’s a very cyclical industry,” says Phil Newby, CEO of the Hire & Rental Industry Association (HRIA). “When the customers are facing tough times, the smaller hire firms have to trim down and ride it out until things improve again. They’ll put off buying new plant, cut staff and so on.” The global financial crisis triggered a collapse in new construction work, while mining companies are at the mercy of fluctuating mineral prices. The UK construction equipment hire industry’s revenue is forecast to decline by 2.0% annually in the foreseeable future [http://www.ibisworld.co.uk/market-research/construction-equipment-rental.html]. In Australia, the picture is more optimistic. The hire industry there generates $4.8 billion in revenue per year. A member survey conducted by the HRIA for 2011-12 found that while turnover was down, plant utilisation was up 10% and invoice value had increased a whopping 57%. While equipment companies can't control customer demand, they can control their own business performance to deliver the best service in their market - that means top-notch management of their services processes and cost structures.

HRIA's members range from those who rent out the super-heavy machines used by the miners down to the small-scale suburban owner-operators employing 15 people or less. The smaller hire operators tend today to offer specialised equipment, such as power generators. “They buy the gear that has the best support service and they often have return and maintenance deals with the supplier,” Phil explains. “It makes the service side more controllable because all they need is an on-call mechanic to deal with any breakdowns. It’s not so simple for the bigger organisations hiring out heavy machinery on longer-term leases. Some of it is very high-tech and the people who service it are highly qualified.”

BEING PROACTIVE PAYS OFF Investigations by ERP Leaks reveal that the capital costs for the heavy equipment industry can be massive – millions worth of specialised vehicles, from earth movers to trucks whose tyres are taller than the average human being. Regular users prefer to lease them for obvious reasons. The lease agreement normally includes maintenance costs, and the leasing company stands or falls on its ability to keep these giant machines operating on demand – even round the clock. It doesn’t take too many of these machines to be taken off-line before a usual half a million in income becomes a loss twice as big in unearned income and repair costs. Proactive maintenance is the name of the game, but to do that, each vehicle has to be monitored so that servicing is always up to date. Information about factors including customers’ locations and machine hours determines both utilisation and income. Matilda Equipment serves the mining industry and has to keep track of its leased equipment at remote sites. “We’re talking multiple machines that have multiple work orders underway at any one time,” says Chief Financial Officer Damien Wilson. “Tyres for some of these machines can cost $40,000 apiece, so we could have several hundred thousand dollars in purchases out there with no idea when those invoices might hit.”

MANUAL PROCESSES OUTPACED Keeping big machines operating also requires slick inventory management. Crane supply and servicing specialist Palfinger has a parts database covering some 10,000 items. Manual stock-taking for an inventory that size is time-consuming and can only get worse if the business expands. Financial management can become a growing pain in a similar fashion. National Fleet Solutions services trucks in 100+ locations in the United States and Canada. When it was acquired by a larger firm, the reporting requirements quickly outgrew its legacy systems. “We knew we were spending a crazy amount of time, effort and energy to meet the reporting requirements every month,” says Eastern Region Controller Vince Muglia. “Our old systems were just incapable of doing anything creative or efficient. “All those problems were solved by switching to a modern ERP system. We’ve slashed both time and paperwork, and my financial staff is also half the size of staff in other regions.”

BETTER SYSTEMS, BETTER PERFORMANCE The big players in the heavy equipment industry tend to have much more capital tied up in their operations, and so their financial management is more complex. They tend to be major users of business software as a result, but it's permeated even the smaller operators. The problems may differ according to size, but the solutions are much the same. “There’s a certain immediacy about this business,” Phil Newby says. “The customer wants something and they want it now. To handle those demands, a lot of our members have very sophisticated computer systems. They’re getting better at using them and the systems are getting better too.” By keeping their technology up to date, equipment companies aim to avoid those broken promises. Because their income can be seriously affected by the performance of their customers, reliability and cost control are crucial. They use their business systems to help trap and prevent errors, properly monitor maintenance, and identify stock discrepancies. They know that tough times are bound to come again. The players who don't employ the technological advances now available can be left stuck between a rock and a hard place.

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