CRU Computer Rental
Richard Sarkis, General Manager for CRU Computer Rentals, was studying the sales and financial figures for the first quarter of 1997 and was at a loss to explain the numbers. After a period of declining sales towards the end of 1996, sales had picked up over the last quarter. However, profitability continued to decline and was in fact worse than 1996. Richard had scheduled a meeting with his Vice Presidents for sales and operations and was wondering how to proceed. He had asked them to come prepared with data for the meeting.
CRU is one of two national computer rental companies. It was started in 1990 and has seen its business grow rapidly. CRU ...view middle of the document...
If certain models are no longer in demand, CRU sells them in the open market as used machines. So far, CRU has generally managed to recover the undepreciated value on the machine.
CRU Operations and the Rental Cycle
CRU currently has two main warehouses (or “Mega Centers” at Naperville, IL and Fullerton, CA) and 23 local retail centers (LRCs) located throughout the country. Exhibit 1 shows the Mega Center and LRC locations. All equipment that is available to rent is stocked at one of these locations with over 90% of the equipment at the Mega Centers. All equipment when returned from the customers is returned to the Mega Centers for repair and reconfiguration.
The high level flow of orders and units through the CRU system is as follows. A customer calls a toll free number or a local CRU rental services number. Calls are automatically routed to either a nearby LRC or to one of the two Mega Centers with groups of Sales Specialists. The Sales Specialist identifies the customer (existing or new), verifies credit, and takes the order. The Sales Specialist has access to the Available for Rent inventory in each warehouse, by item code, on a screen in front of her. She assigns a particular unit in a warehouse to be shipped to the customer. Once an order is taken, these units are removed from Available for Rent inventory (status 20) to a reserve status (status 32). Sales Specialists are trained to search for substitutes in case a specific piece of equipment is not available. They recommend these substitutes to customers and work with the customer to find something suitable.
Once an order has been entered into the system, it is routed to Quality Assurance and Picking where it prints out automatically from a printer linked to the order taking system. The printing takes place as soon as the Sales Specialist finishes entering the order. The printed document contains the details of the order as well as the due date. It may also contain specific instructions with regards to the order that may have been entered by the Sales Specialist. After reviewing the order for accuracy and delivery date, the picker locates the specific item(s) in the warehouse, picks it (them) and delivers it (them) to holding area in the Configuration section. Technicians pick up orders for configuration along with the order form from this holding area. They are required to pick orders in sequence. There is, however, a tendency to pick orders that are perceived to be easy.
Machines in the warehouse are stored in a standard configuration in terms of hardware and software. Most orders have some variation from standard in terms of memory, hard drive size, other hardware or even software. The technician in the Configuration section configures the equipment as per customer request by cleaning the equipment, installing any necessary hardware (e.g. memory chips, print cartridges etc.), and loading appropriate software. All technicians are capable of installing all types of hardware...