How do you future proof your rental business?

Future proofing any industry is a challenge, requiring judgements on future social trends, technologies and markets. So, it was brave of Joel Särkkä, Renta Group’s CIO, to offer his recipe for how to future proof an equipment rental business.

His ingredients - a judicious mix of investment in technology and initiatives in sustainability and workforce development – may not be too surprising, but it was useful and reassuring to hear it from a one of Europe’s fastest growing rental companies, now with revenues approaching half a billion Euros.

Joel Särkkä, chief information officer of Renta Group, speaking at the IPAF Summit in Copenhagen in March 2024. (Photo: www.photographybymatthewjames.com)

Särkkä argued that rental has by its nature a bright future, focusing as it does on the efficient use of resources to support an increasingly urban existence; “I think we have a lot going for us. We have more and more people on this planet all the time and they tend to move to the cities. We need to build up those cities.

“Historically there’s always been growing demand on the rental side. So, the penetration of rental has been favourable for us.”

With that comforting thought established, Särkkä moved on to more tangible actions concerning technology and sustainability.

As a young company - Renta was established in 2016 – he said it was clear from the start that the business would be digital; “We understood that the digital world is where we’re aiming or we we’re going as a society, in a product context. And we took that as one of the cornerstones of our strategy”.

Intelligent rental fleets
And in that digital world, said Särkkä, it is intelligent fleets that are key; “We have tens of thousands of assets across eight countries - we have way more assets than we have employees. It’s crucial for us to have those machines equipped with intelligence. For them to tell us how they are doing? That’s the basis of everything. We can’t go check tens of thousands of assets, they have to proactively tell us. Am I running hot? Am I out of oil? We need to get this feedback.”

And then processes need to be digitised; “If you do a return inspection on a piece of paper, that’s kind of difficult to automate. There will be no digital traces of that.”

That leads logically to having actionable data and insights enhanced by machine learning.

Särkkä gave a concrete example; “Let’s take a scissor lift. It goes out on a customer site. It can tell us proactively what is happening to it and sends us a hundred data points. When it comes back to the closest depot we start the return inspection process. We can identify if it’s been running without oil for a few days.

Renta group is using machine learning technoloy to help workshops maiontain and service the machines. (Photo: Renta Group)

“We’ll provide our service technicians with the information, and which fault codes have been active during the last few months. They’ll take action on it and return it to rental ready condition.

“But before they do that, there’ll be a notification saying there is a major service coming up. And that’s where we are applying machine learning, because historically we can say that our scissors are being used X hours a month, and we can say there’s a service coming up in 20 hours and we expect that service to be triggered during the next 10 or 11 days. How about you preempt and get that sorted now. And that’s the actionable insight.”

These three steps – intelligent assets, digital processes, and actionable data – make it possible to provide “high quality customer facing solutions. But all of those have to be in place before we can take the next steps.”

Särkkä pointed out that this takes a lot of work and involves everything from hand-held tools to ultrabooms; “This is the work that we’ve done and we’ve been able to produce these services. And thus far we’ve been happy with the results, but it’s a never-ending battle to improve and scale the technology.”

Conversation with customers
The benefits can be startling and can create a whole new type of conversation with customers; “In my mind it’s the simplicity of the message. For example, with our customers, you can ask, would you like to save money? Customers say, yes, I would like to save money. Okay, well now we can tell you if you haven’t been using your machine for three days.

“We can ask, would you like to see how much things are costing you? They say, yes. Well, let’s automate a report for you. The communication has to be really clear: what is this, what is in for me?

Renta Group was established in 2016 and was focused on digital technology from the beginning. (Photo: Renta Group)

“Then we can take the next step. Would you like to know if the machine is being turned on at night? They’re like, yes, actually that might be something I would be interested in. And then, would you like to know if you’re running the machines without oil? Would you like to see how your small assets are being used?

“So, it’s a kind of a journey, but for the first steps at least, I personally feel that clear, precise communication in what it required.”

Sustainability and rental
Sustainability is the other key feature of future proofing, according to Särkkä. The term covers a wide scope of activities, from carbon reduction strategies to managing a workforce, and it has necessarily become an important focus for Renta, in part because it is operating in the Nordic region; “It has a very, very high priority in the Nordics. When we have discussions with our investors, with our customers, it keeps on coming up.”

He said the rental model plays into the circular economy; “Obviously assets are being used more when they’re shared more efficiently. And as a rental company, of course, we are very keen on having high utilization. So, the machines are being used as much as possible, and it’s our duty to give customers information so that they can increase utilisation. So, not just the days rented out, but how can we engage with our customers in a meaningful way that they can optimize their fleet usage.

“If we’re able to have four lifts and serve more customers than just one, because we’ve been telling the customer how much it costs, where is it and if they’ve been using it or not, or other insights. That’s a win, because we are using the assets more effectively, and more effectively using the raw materials that were dug out.”

Renta Group’s customer App. (Photo: Renta Group)

Renta is also trying to mitigate the environmental impact of its own depots, and to optimize the transport of its equipment.

The workforce challenge
Next comes the topic of workforce development. Right away, Särkkä said that having an effective health and safety policy is essential; “It’s the most important thing that everybody comes home at the end of the day. Whatever we can do within that space - through training, engagement, investing in and promoting safety, is super crucial for the continuity of the business.”

That led inevitably to a wider discussion of the challenges of recruiting and developing the workforce, which Särkkä described has a hard problem to crack; “According to Forbes, in the 700 best employers list, the first manufacturing company was ranked 34, and in construction, the first was placed 166. So, our industry as a whole is not necessarily being identified as the most desirable places to work.”

He said AI or machine learning can help businesses by becoming more productive, but even so, rental will remain a labour-intensive business; “Even though machine learning will tell us when the service happened, we still have to service the machine. We still need to install the telematics unit and we still have to erect the scaffold or move the site hut. It’s a very labour intense regardless of the impact of the AI.”

Workforce development is a key part of Renta Group’s sustainability plan. (Photo: Renta Group)

And the problem is likely to get worse; “Our aging pyramid is not really looking like a pyramid anymore. We can expect that the labour shortage is not going to get any easier soon. We have more and more experienced employees and obviously they’ll be going into retirement. So, we will have to attract more employees from a broader talent pool.”

Särkkä thinks rental businesses will have to draw from a broader cohort; “We have to make the workplace more inviting, whatever those activities may be that we need to put in place to show that we are an attractive employer and then communicate about the highlights of our industry.

“And there are great benefits. I personally joined the rental space from the IT consulting sector and I fell in love with the industry. I think it’s very unique – challenging and dynamic - and I feel like this industry is for the future.

“We have a lot going for us in terms of sustainability and we have a lot of areas where technology can make big improvements.”

Future proofed?
He thinks the outcome of all this work will be positive, with more services to customers, better use of equipment and resources, and an engaged and committed workforce; “I’m confident that in the end, rental penetration will be improving, and we will have a larger audience of customers to serve. It’s making the pie bigger as a whole.”

His final message to his Copenhagen audience was perhaps fitting coming from a CIO – measure your progress against targets.

Joel Särkkä joined Renta in 2018 and has been CIO since January 2019. (Photo: www.photographybymatthewjames.com)

“Okay, we installed 5,000 tracking units. Good, but what are we doing with them? It’s important for us to set the criteria on, how did that investment improve us? Are we more efficient? Are we burning less fuel? Are we getting more customers? Did we manage to win a big deal because of the initiative?”

That was another lesson from Joel Särkkä’s presentation, future proofing doesn’t come easy.

About Renta Group
Renta is based in Vantaa, Finland, and operates in Finland, Sweden, Denmark, Norway, Estonia, Lithuania, Latvia and Poland. Founded in 2016 it has grown rapidly organically and through acquisitions. It has more than 187 depots and employes over 2,000 people. In addition to its general rental activities, Renta is also a major supplier of scaffolding and weather protection services. Its annual revenues are approaching €500 million.