Equipment Rental Providers Operations Issues

Currently equipment rental providers experience several problems. In terms of poor turnover, one problem many equipment rental providers face is the late return of equipment (Hall, 2005). This problem is also known as service theft, which occurs when someone returns equipment late without paying additional rental fees or late charges (First Research, 2010). Theft of services are not covered by insurance companies because the equipment is eventually returned, and can lead to more lost revenue than outright theft of equipment. Finally, problems with low turnover may result in overstock, stock-outs, and obsolescence (Muller, 2003; Hedrick et al., 2010).

Inventory inaccuracy is another problem that plagues equipment rental providers. Luton (2004) cites the following reasons for inventory inaccuracies:

• No one responsible for inventory count/inventory count performed by poorly trained people

• Companies are not consistent about inventory review policies

• Companies do not have established database for inventory records

Allocation of responsibilities is one of the root causes of low inventory accuracy. According to Vries and Zomerdijk (2003) inventory control policies and high qualified personnel can play a crucial role in improvement of the inventory accuracy.

Another widespread problem in inventory control is inconsistencies of companies with their review policies, for instance inventory count are performed differently from year to year/month to month (Luton, 2004).

Without effective integration of information technology in the inventory management inaccuracy is inevitable (Heese, 2007). Nearly 50 percent of all rental companies do not have computerized inventory management systems, which results in the lack of a firm understanding about the exact quantity held in inventory, i.e., the quantity in the system does not match the actual quantity of equipment on the shelf (Shreibfeder, 2003). To be useful, the inventory management system should contain as much...