Rental Management and Microsoft Dynamics 365 Finance and Supply Chain Management

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When it comes to rental businesses, there are effectively two kinds. One is a retail center that allows customers to rent what they need. For instance, Home Depot offers machine rentals such as power washers. Construction companies will also rent large equipment for jobs, such as cranes, backhoes, road graders, etc. Then there are the specialty rentals that supply lights and speakers for concerts, for example. Our focus here at Sikich, however, is not on these rental retailers but on the manufacturers that make the products to sell or rent. These manufacturers need a rental management solution, such as one that D365 provides, to grow with the company as it grows its rental business.

Components of a Rental Transaction

Rental has roughly two components. First, there is the financial transaction involved in the rental. There’s typically a rental contract with terms and conditions as well as terms of payment. Next, there’s the physical part of the rental, the actual asset that is being rented as well as serviced and repaired. When a construction company rents large equipment for a job, that equipment will need to be maintained and repaired over time. These manufacturers need software that supports all of these business processes, from the financial part to the physical element.

One popular management application for rental businesses is DynaRent, and fortunately, it fully integrates with Dynamics 365 Finance and Supply Chain Management (D365FSCM). Manufacturers that already use D365FSCM can have the same user experience they’ve already had with another module within the software system.

Rental application wishlist

Manufacturers looking for a new rental application, whether it’s for their legacy systems or not, have specific needs for this software. Specifically, they want the rental application to connect to all of their systems. Naturally, we suggest a system in the cloud where all components can seamlessly connect, such as D365.

D365 provides that space where the rental product will land and be produced, and then our PLM Connectors bring it from that CAD system inside there that’s fully bi-directionally integrated. Once it’s built and it’s in your inventory—ready for you to either sell, service, or rent it—you want the information that’s there from that build to be available for the service repair folks in the field or people who are coming back bringing equipment back to get serviced.

In addition, you want your maintenance employees to be able to access the as-built and as-maintained structure of that product. So when they put in a new starter, hydraulics, tracks, etc., the software keeps track of that. So you have a cradle-to-grave beginning-to-end history, not just to the production of that piece of equipment or that machine, but then also the servicing of the product.

How is Service Managed in D365?

Microsoft does have a product that focuses upon field service, Dynamics 365 Field Service, which is based on the D365 Customer Engagement (CE) platform. This Field Service product can manage rental servicing, but D365FSCM also handles field service. It’s also possible to integrate the two, or even just CE and FSCM. From a field service standpoint, CE is great, particularly when you’re doing service in the field and you’re deploying people with trucks as well as invoicing.

However, when you bring those pieces of equipment back inside the building, back into a repair facility, FSCM can easily handle managing service, especially with our Advanced Management Module. We include this module in either project management software or within DynaRent, which we recommended earlier. We additionally have integrations we can build from D365 CE and Field Service.

As for which option is best for your company, it will depend on how you interact with your customers and how you service that equipment. When you partner with Sikich, that’s something we could work with you and your customers on to decide what’s the best way to manage that business process. 

Asset as a service

Manufacturers are expanding their footprint more and more these days, and technology is asking manufacturers to do things they never imagined doing before. Many manufacturers never imagined having a web store to sell stuff, and now they’re doing that. They didn’t imagine that they would be doing direct to consumer potentially, because they’d have struggled with supply chain over COVID. So there’s a lot of models that are up for revision and renewal, and being able to capture things like the rental market is an opportunity for a manufacturer that maybe hadn’t thought of it before.

As for thinking of asset as a service, let’s take a pump manufacturer. What the company is really manufacturing is a fluid movement system. They’re helping someone move water, fuel, etc. with their pump systems. Instead of just selling them the pump, manufacturers are now renting these pumps over a period of time and servicing them to customers over time. That asset, as a result, stays in the manufacturer’s books. The manufacturer receives the benefit of the depreciation, keeps ownership of it, and they have a revenue stream from the asset to offset the costs.

With this model, the customer doesn’t have to take the financial outlay of buying the product and possibly financing the product via a third party. Not to mention, if the customer rents from you over a five-year period, when the contract ends, they’re more likely to come back to you and get another piece of equipment to rent for the next five years.  

Industry 4.0 and the Modern Technology Impact on Rental Management

IoT

Industry 4.0 technology with IoT (Internet of Things) and AI additionally transform rental management. By making the rental product a “smart device,” aka have IoT capabilities, that product can constantly send data back to the manufacturer. The manufacturer would then use its rental management software to analyze the data, and with AI, you can know ahead of time when a piece of equipment needs to be serviced. The equipment can even relay via IoT when it’s broken ahead of when the customer will notice.

Mobility

Sometimes not all data can automatically upload from IoT and AI, such as when workers need to manually input data into the system. The easiest and most efficient method is via mobile, as everyone has some type of mobile device. With mobile software, the worker can see real-time data about the product and therefore be better informed and provide any new information they have in real-time as well.

This eliminates the need for manually adding data to Excel spreadsheets or penciling information for someone else to add to the system.

What type of manufacturers can benefit from this D365 Rental Application?

We deploy globally, so location doesn’t necessarily matter. Generally, however, we look at manufacturers that generate about $25 to $50 million in annual sales revenue as the starting point. If your business is generating that level of revenue and you have some really complex processes that you have to manage, then you can make the investment needed to deploy both D365 and the DynaRent solution. On average, most customers that can justify that level of investment generate $100 million and more in revenue. Our largest customers generate $5-6 billion in revenue and require global deployment across multiple countries and sometimes multiple continents as well. So, it can fit any of those business sizes, but the first thing you need to do is figure out how complex the rental business is and what you can invest in solving this complexity.

Another point of consideration is how much of your revenue is from the rental business. For example, a manufacturer may generate $500 million a year total, but the rental business only brings in $20 or $30 million of that total pie. There are arguments in this case for and against deploying these solutions for the rental side, but it’s important to consider how much potential the rental business has for growth over the next five years. It’s possible that the rental business only brings in 10% now, but it could grow by 50% year-over-year for the next five years. By then, deploying these solutions will make complete sense, so perhaps it’s best to get ahead of the curve now?

Why DynaRent vs. competitive rental solutions?

Most of the other solutions out there focus strictly on rental management. In other words, these solutions do not manage the manufacturing side at all. Some do not handle logistics and distribution either.

Our rental management solution with D365FSCM and DynaRent has everything in place for the manufacturing, distribution, logistics, and rental aspects of the business. Since D365 focuses on the core functions of a manufacturing company, this solution is more flexible for manufacturers overall. It supports their businesses now and provides support for future business changes when it comes to rentals and equipment servicing.

Ready to talk about next steps for your manufacturing business to move into the rental management sphere with D365? Please contact us at any time.

This publication contains general information only and Sikich is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or any other professional advice or services. This publication is not a substitute for such professional advice or services, nor should you use it as a basis for any decision, action or omission that may affect you or your business. Before making any decision, taking any action or omitting an action that may affect you or your business, you should consult a qualified professional advisor. You acknowledge that Sikich shall not be responsible for any loss sustained by you or any person who relies on this publication.

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