noah
Sep 23, 07, 1:07 am
From the New York Times, some insight into changes occurring at Hertz:
http://www.nytimes.com/2007/09/23/business/23hertz.html?ref=business&pagewanted=all
Excerpt:
At a Hertz outpost in a parking lot on the outskirts of O’Hare Airport in Chicago, the changes under private equity’s watch are easy to see.
When Mr. Frissora joined Hertz from auto supplier Tenneco last year, he sent a team of managers to O’Hare for a “waste walk-around.” Armed with stopwatches, digital cameras and clipboards, the group members evaluated every aspect of the business, from the airport shuttle buses to the lighting in the bathrooms.
What did they find? The time it took to refuel and clean cars between uses was far too long. There were too many steps.
When a customer dropped off a car, it would be moved to a waiting pen, then taken to a gas pump. From there, an attendant would have to pull the car up to the cleaning station, where it would be vacuumed. It would then go through a washer. “And someone would run out of supplies every 15 minutes,” Mr. Frissora said.
At the end of the evaluation, he made changes almost on the spot. Within days, the seven cleaning stations were moved to where cars are refueled so cleaning could be done at the same time. Eight hours of supplies were provided so that nobody ran out.
According to Mr. Frissora and his private equity bosses, the changes doubled the number of cars that could be processed every hour. That meant Hertz could have more cars on the road and fewer cars in its fleet.
Mr. Frissora also noticed another inefficiency: Too many Hertz cars were sitting idle on the weekends at airport areas, but were sold out in locations away from the airport in Chicago and nearby cities, where renters needed them for short trips. So now 20 employees, called “transporters,” arrive every Thursday night at O’Hare and shuttle more than 300 cars off the airport lot into cities for the weekend. On Sunday nights, they take them back to O’Hare.
Now Hertz plans to use more transporters all over the country. The various changes at O’Hare have added $1 million in revenue.
Then there is the greatest inefficiency: the buying and selling of cars. Some rivals, like Enterprise, are so good at it that rental income is just icing on the cake. Hertz, however, had been getting so much of its fleet from Ford for so long that it didn’t bargain hard on price with other companies. “I’m used to beating each other up a bit on price,” he said.
So Hertz has put into place professional purchasing methods, centralizing the process so it can wring better deals from automakers. Hertz was also taking too long to sell cars; it took an average of 36 days once Hertz took the car off the lot, found the title, fixed the car and found a dealership or auction to sell it. “Every day that the car sits it’s depreciating,” Mr. Frissora said.
Now, Hertz has cut the time to 15 days, saving the company $30 million a year. And it is selling cars directly to the consumer online and using its facilities as a virtual dealership.
Hertz is aggressively renting environmentally friendly hybrids, a move that has helped in marketing and the bottom line. The hybrids have been so popular with customers, who pay $6 a day more to rent one, that it plans to expand its fleet to about 3,500 by the end of 2008.
And if Mr. Frissora can pull it off, Hertz will solve most rental car customers’ biggest nightmare: paying sky-high prices for gas when returning a car. He wants to offer gas at a competitive rate — which alone might make the buyout worth it.
http://www.nytimes.com/2007/09/23/business/23hertz.html?ref=business&pagewanted=all
Excerpt:
At a Hertz outpost in a parking lot on the outskirts of O’Hare Airport in Chicago, the changes under private equity’s watch are easy to see.
When Mr. Frissora joined Hertz from auto supplier Tenneco last year, he sent a team of managers to O’Hare for a “waste walk-around.” Armed with stopwatches, digital cameras and clipboards, the group members evaluated every aspect of the business, from the airport shuttle buses to the lighting in the bathrooms.
What did they find? The time it took to refuel and clean cars between uses was far too long. There were too many steps.
When a customer dropped off a car, it would be moved to a waiting pen, then taken to a gas pump. From there, an attendant would have to pull the car up to the cleaning station, where it would be vacuumed. It would then go through a washer. “And someone would run out of supplies every 15 minutes,” Mr. Frissora said.
At the end of the evaluation, he made changes almost on the spot. Within days, the seven cleaning stations were moved to where cars are refueled so cleaning could be done at the same time. Eight hours of supplies were provided so that nobody ran out.
According to Mr. Frissora and his private equity bosses, the changes doubled the number of cars that could be processed every hour. That meant Hertz could have more cars on the road and fewer cars in its fleet.
Mr. Frissora also noticed another inefficiency: Too many Hertz cars were sitting idle on the weekends at airport areas, but were sold out in locations away from the airport in Chicago and nearby cities, where renters needed them for short trips. So now 20 employees, called “transporters,” arrive every Thursday night at O’Hare and shuttle more than 300 cars off the airport lot into cities for the weekend. On Sunday nights, they take them back to O’Hare.
Now Hertz plans to use more transporters all over the country. The various changes at O’Hare have added $1 million in revenue.
Then there is the greatest inefficiency: the buying and selling of cars. Some rivals, like Enterprise, are so good at it that rental income is just icing on the cake. Hertz, however, had been getting so much of its fleet from Ford for so long that it didn’t bargain hard on price with other companies. “I’m used to beating each other up a bit on price,” he said.
So Hertz has put into place professional purchasing methods, centralizing the process so it can wring better deals from automakers. Hertz was also taking too long to sell cars; it took an average of 36 days once Hertz took the car off the lot, found the title, fixed the car and found a dealership or auction to sell it. “Every day that the car sits it’s depreciating,” Mr. Frissora said.
Now, Hertz has cut the time to 15 days, saving the company $30 million a year. And it is selling cars directly to the consumer online and using its facilities as a virtual dealership.
Hertz is aggressively renting environmentally friendly hybrids, a move that has helped in marketing and the bottom line. The hybrids have been so popular with customers, who pay $6 a day more to rent one, that it plans to expand its fleet to about 3,500 by the end of 2008.
And if Mr. Frissora can pull it off, Hertz will solve most rental car customers’ biggest nightmare: paying sky-high prices for gas when returning a car. He wants to offer gas at a competitive rate — which alone might make the buyout worth it.