Rental Utilization

The Rental Utilization model analyzes the equipment usage of the business. Both time and monetary values are used to analyze the performance of the business. Utilization is analyzed by a machine or a group of machines, by division, by facility, by calendar (time), etc. This model supports comparisons of actual value versus potential value. Several KPIs and metrics are associated with utilization, but in general terms, these utilizations are key calculations:

  • Time (physical) utilization on the assets, which refers to the time the equipment is actually rented out compared to the number of available rental days. The higher the time utilization, the more the equipment is being rented out.
  • Financial utilization on the asset, which is measured as the rental revenue achieved over a period of time against the potential revenue that could have been achieved.

This model provides insights into these topics:

  • Underutilized equipment that take up valuable space within the warehouse
  • Over-utilized equipment that leads to equipment shortages and re-rents

The measures in this model can be analyzed by Rental Period Date.

Source information

The Rental Utilization model is based on the M3 table STUTIL, which is populated by using the Utilization Update Routine (STS655) function of M3 BE. The concepts of Rental Day and Time On-Rent are central for the calculations of this model. To calculate Rental Days, a calendar of 365 (or 366 for leap year) is used. Rental equipment is considered on-rent for a specific day, if the equipment is in possession of a renter. This means that the on-rent parameter can assume two values only, 0 or 1, for any given day. The time utilization measurement is based on a solution that counts days, not hours. For example, an asset, which is rented out for one hour, will be calculated as one rental day. The commission date describes the actual date the item or asset was put into use. This is not necessarily the acquisition date nor the date put into stock, rather the commission date should be set to the earliest date possible for rent of that piece of equipment. The commission date is the utilization start date.

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