Recently we caught up with Carey Boggess, Director, Footprint Development at United Rentals. Carey explained how the company uses Optilogic to optimize its footprint to make faster decisions on lease renewals and plan out the market strategy for their branches to provide exceptional service to customers.
Watch: Carey Boggess of United Rentals on optimizing facility footprint for superior service
Tell us a little bit about United Rentals?
Carey: The business that has been built over the last 25 years has grown United Rentals into the industry leader for construction equipment rentals in every way. We have over 1,500 branches and 25,000 dedicated employees, most of which are in the US and Canada. When we combine this network with our $20 billion in fleet, our ability to serve our customer needs is unmatched in the industry. This scale allows us to drive industry leading revenue and profit.
The company executes a three-pronged approach to growth:
- Growing our base business with our existing customers and products
- Deepening our penetration with customers and end markets
- Expand our offering, whether that’s through additional products, end markets, or additional geographies we can serve
We grow organically by investing significant capital, but we’ve also grown recently through M&A. Our most recent acquisition of Ahern Rentals was a play to grow in capacity, but also to deepen our penetration into markets where they had more depth in market share than we did.
What are the most important ways you serve your customers?
Carey: Customers want to know that we have the products they need. We have over a million assets, with a combined original equipment cost of over $20 billion. They also want to be sure we can respond when they need our support.
Many of our orders come in with less than 24 hours’ notice, so making sure we can say yes when those customers need us is important to being more responsive. This makes location and proximity to the customer of utmost importance.
We’ve built a network of over 1,500 branches so that we can ensure that the reach of each branch is wide enough to deliver products to the majority of our customers in less than half a day.
Your team is doing network design for the Real Estate department at United Rentals. Tell us more about that.
Carey: Our objective is to support the growth of the business by delivering properties that they can move into and start serving increased customer demand as quickly as possible. The industrial real estate market has nearly ground to a halt in the last couple of years, with vacancy rates below 3% in many markets, making it very difficult to find and acquire the real estate we need.
Footprint development and network design are part of an overall strategy for our team to predict real estate demand, guide Ops to make faster, more informed decisions, and close deals faster.
From a footprint development perspective, we focus on three key areas to drive growth and speed to market, and mitigate risk in our portfolio:
- Analysis of our portfolio and evaluating our entry and exit strategies
- We use Optilogic Intelligent Greenfield Analysis to achieve cost and service optimization for current and future market growth scenarios
- After those choices are made, we deliver a second level of analysis using geospatial tools focused on real estate analytics, customer behavior, and competitor attributes
Why did you partner with Optilogic?
Carey: After exploring the market, United Rentals made an excellent choice by partnering with Optilogic for network design. We have found the solution to be intuitive, accessible, affordable, and scalable, but above all of that, the team at Optilogic provides us with excellent support via their knowledgeable team.
We started with coaching services, which I highly recommend. It allows you to learn the process alongside one-on-one support who always knows your project intimately. We are now engaged with consulting services to power through the initial phases of delivering our results to the business.
How is United Rentals using Optilogic Cosmic Frog?
Carey: Our initial use case at United Rentals is focused on optimizing our portfolio by identifying opportunity in the current footprint, increasing penetration into underserved areas, and increasing our service levels. To accomplish this, we are focused on the actions of expanding, relocating, or opening new branches. The approach is to utilize stepped capacity functions, and several different applications of the Intelligent Greenfield Analysis.
Data and data aggregation strategies are an important component during the early phases of modeling a network. With coaching support, we made important choices, such as choosing to model by region to manage the level of detail we need to present to our Ops team. We also made decisions about how to aggregate customers, demand, and products, what demand and forecast data to give the model, methods to replicate our capacity requirements, and many different applications of sensitivity analysis.
How is Intelligent Greenfield surpassing your prior greenfield solutions?
Carey: Having used many traditional modeling tools, I have been delighted every time I found a prior limitation that Optilogic has solved for in Cosmic Frog. With Intelligent Greenfield, for example:
- The ability to consider capacity constraints
- Being able to consider high level cost saves time and effort once you move to full network optimization
- The ability to consider existing locations and set service bands based on demand
As United Rentals moves forward in its supply chain journey, how will you continue to leverage Optilogic’s growing functionality?
Carey: For now, we continue to optimize our footprint with Optilogic so that our regional vice presidents can make faster decisions on lease renewals and plan out the market strategy for their branches. We want to build a repeatable process to do this annually or bi-annually for each region.
We are looking at our portfolio over the next 3-5 years to make decisions about lease renewals and co-locate decisions between our business units. We look to achieve market penetration through the opening of new branches, while optimizing our service levels. We will provide our internal customers with information on cost-to-serve analysis and assist the M&A team with forward-thinking evaluations of potential acquisition partners.
We want to leverage modeling for M&A, and then long term, we hope to explore other use cases within the organization such as inventory simulation, which can be complex within our business, since all our products get returned and rented out repeatedly.
With the support of the Optilogic team, we are building a strong foundation for modeling our complex supply chain.