Last weekend I rented a chain saw to take down an old apple tree that no longer produced edible fruit and was an eye sore in my yard. I called a local tool rental company and lined up a 20″ Stihl saw for four hours for a rental cost of $44.00. This seemed like a reasonable cost and enough time.
I have outlined the timeline of the rental and highlighted delays and interruptions in the rental.
Let’s look again at what the definition of value-added is. This is defined by the customer, not the process or company.
Useful activities that the customer will pay for are considered value-added. So, activities or elements of the product or service that the customer does not value or is unwilling to pay for are non-value added activities.
Here is the timeline.
Finish time for checkout: 10:29 am
Chainsaw due back by 2:29pm for the 4 hour rental price of $44.00 or $11.00/hour.
Delay # 1
Actual time left facility
with chainsaw: 10:44 am
The yard tech spent 15 minutes making sure the saw would start, finding and filling a gas can (included in the cost) before I could leave.
Delay # 2
Travel time from yard to my house.
10:44-11:04am or 20 minutes
Delay # 3
During cutting, the bumper guard safety feature was accidently engaged which caused the saw to stop. It took 15 minutes to call the yard tech to straighten this out. No instructions about this very good safety feature was provided prior to the rental and nothing was on the saw.
Dealy # 4
Twenty (20) minute drive to return the saw.
Actual Return Time of Saw–1:45pm
Accounting of Actual Time Used by Customer
Four Hour Time and Rental Price-4 hours for $44.00 or $11.00/hour or $.18/minute.
Administrative delay-the actual time began when the initial transaction was complete not when the tool was actually ready, or a 15 minute delay.
Travel time delay of 20 minutes each way or 40 minutes.
Problem resolution delay of 15 mintues.
Total delays equal 1 hour and 10 minutes.
The actual time used in productive work was 170 minutes. Calculating the actual rental cost is $44.00/170 = $.25/minute or $15.00/hour.
Twenty-nine (29%) percent of the actual rental time was actually delays and non-value added activity.
1.Map or walk the entire process and keep track of actual time spent in each step, including delays, administrative processes, fixes or customer service problems.
2. Look for start time as when the customer actually uses the product or service, not just when an administrative process begins or ends.
3. Look for training and safety instructions at the beginning of processes that could save time and how easily they could be understood by a consumer. Are they on the product itself, in plain language?
4. Look for travel time or transportation. I’m sure the tool rental company would not consider my travel time as their problem. However, if they calculated in an average travle time, explicitly made this a value added proposition (a Kano Delighter), customers would welcome this and perhaps pay more.
5. Calculate the cost of delays and inefficiiencies into the actual cost of the product or sevice, i.e. the actual cost per hour was $15.00, not $11.00.
If this process was not a tool rental process, but a work crew, would you not want to use those 70 minutes in productive work time?