Sunday, December 27, 2009

Time for the News

One year ago I could have answered most any question you had for me on current events. I faithfully listened to NPR both to and from work. I had RSS feeds from CNN, BBC, NFL, and various other alphabet soup organizations that ensured I knew the minute something happened, anything. Then we had another child. I ran out of time to do much of anything. When I started seriously looking at what I needed to cut back on to free up enough time to just get the absolutely necessary tasks completed, I noticed that I was spending a lot of my time keeping up with the world. Sure I could readily converse on nearly any topic in the news, but I was missing workouts, rushing the trash to the curb just ahead of the trash truck, not making any progress in the books that I needed to be reading, and getting "the look" from my wife far too often when sitting at the computer. I decided that knowing the status of the current government scandal was no longer worth the time that it took to acquire the details. It was time to cut back. When I began to look at what I really needed to know and the information that I was actually taking in it quickly became clear that I had no real need or interest in roughly 80% of what I was taking in from my various news streams. After sitting down with a blank sheet and a pencil and a little focused thinking I was able to identify the things that I am truly interested in knowing on a regular basis. A few more minutes research and I was able to identify blogs or twitter feeds that had good updated information for those areas. Now all of the news that I really want comes to me with a minimal amount of gossip, scandal, opinion, blatant lies, or general sensationalism. So far I don't miss it. It actually makes me feel go dd to say things like "I have never heard of Lady Gaga" or "There is another political sex scandal? Huh, guess I missed it" I'll keep you updated on my low information plan. Special thanks on this one to Tim and the
4HWW.

Christmas is the season for getting...

In past posts I have mentioned some of the ways that we super size our lives for convenience. This Christmas has really brought home to me the mindset of getting more stuff as an agenda. Yesterday a cashier at Walmart was talking to my four year old son. Her first question was "Did you have a good Christmas?" Her second question was "Did you get a lot of good stuff?" Perhaps this is a clever marketing technique that the multinational mega-retailer is pushing, but other interactions over the last few days have convinced me that she was just voicing the general thinking about the holiday. No matter how many times we say that Christmas is about giving, most people seem more concerned about getting. In a strange twist, many people I have spoken with seem happy for others that have gotten large numbers of expensive gifts. Not only do we want to get lost of stuff for ourselves, but we want everyone else to get lots of stuff too! This would be fine if everyone had plenty of money, stable jobs, and not debt. Unfortunately very few families find themselves in that situation. I am not advocating a miserly lifestyle absent of fun and things that make you happy, but the idea that more stuff is better needs to be laid to rest.

Monday, August 24, 2009

Kaizen Mind

To a Kaizen Mind nothing is ever finished. This frustrates those without the kaizen mindset. Things are simply the best that they can be at this moment. The Kaizen mind always seeks perfection while knowing that it cannot be achieved. It is living in the moment. At this moment this thing is the best that I can make it, but I will strive in the next moment to achieve perfection yet again. Perfection can never be achieved, yet must always be sought. The reward is looking back at your long slow climb to where you are from where you were.

Sunday, July 19, 2009

Visualization

One of the most powerful tools for eliminating waste is visualization. If you can clearly see that you are throwing away money, time, or any other resource, you will generally do something about it. It is much more likely that your losses or shortfalls are hidden. Seth Godin had a great post related to this today. Why should you even display something that does not help you to improve? Generally the metrics that are displayed around your house, in your car, and at your job, are those things that are easy to track and display. Seldom do they allow you to directly see what is needed to reduce waste. Your thermostat displays the temperature in your house. From this information you can indirectly estimate what your energy bill will be wrong. If you had a meter that showed the rate of power consumption and the cost to you at the current rate, what would be your reaction? Mine would be to search the house turning off lights and unused electronics until I could minimize that consumption. How do you think that would affect my spending on power? Going back to that thermostat, you probably have one or two of these in your house. These measure temperature where they are positioned in the house and control that temperature. How often do you sit beside your thermostat? Do you care what the temperature is there? Thermocouples could easily be positioned throughout the house and routed back to the thermostat to give you an overall overage temperature, or you could select the one room that you will be using most and control the temperature based on that. This also could have a large effect on energy consumption. Visualizing is a great way to control consumption.

Wednesday, July 15, 2009

Try the Buffet

Lately I have noticed that the majority of my tasks are completed online. I pay bills, research projects, follow interesting developments on my favorite blogs, shop, look up reference information, and keep up with friends all through the computer. This has the advantages of reducing the amount of paper I must keep track of, limiting the number of books that I need to keep handy, and making my projects available from any location. The downside is that I end up tabbing through multiple sites to get to the applications and information that I really need. I am also easily distracted by shiny objects, which results in my following links that look interesting but are completely unrelated to what I am trying to get done. The list of sites that I was using on a daily basis included:

1. Hotmail
2. Twitter
3. Amazon
4. Triiibes
5. The Four Hour Work Week Blog
6. Litemind
7. Seth's Blog
8. US Bank
9. Google
10. Blogger Dashboard
11. JustPlainMoody
12. Facebook
13. Various Blog Statistics
14. CNN.com
15. The Springfield Newsleader
16. Fidelity.com

Opening all of these, even with the tab function of Firefox was very time consuming, and refreshing all of the tabs to keep things current only added to the total. A few weeks ago I discovered iGoogle and Google Reader. Together they have made a huge difference in my online activities. I now have collected all of the sites that I need into one page that opens quickly and has only what I need. In this lighter form, my daily tasks have been reduced so much that I sometimes feel that I am done too quickly. The best part about iGoogle is the buffet style selection of gadgets that can be displayed on your page. These gadgets are very easy to search through to find what you need and are extremely easy to add and subtract from your iGoogle page. I found myself searching through them and adding ten or so gadgets then trying them out and removing all of the time wasters of slow loaders. Now I can open one page and scroll through everything that I need look at in five minutes then move on to other important tasks. I highly recommend this tool for reducing wasted time.

Sunday, June 28, 2009

Real Cost

Anything that you pay for has an advertised cost and a real cost. The real cost is often invisible due to marketing plans, or the difficulty of seeing cost versus usage. In this post I would like to discuss one of the real costs in my life and how they compare to the advertised cost.

Everyone has a cell phone these days. There are thousands of phones and an even greater array of calling and data plans. I am a very basic user when it comes to wireless services. I do not text, and I do not surf. Thus I need only calling minutes. The plan we decided to go with is a pay as you go $.075 per minute. This seems pretty good: 300 minutes for $20. When I began to investigate our actual usage and what we were being charged for I found that a majority of our calls were far short of a whole minute. We were however being charged in rounded up full minutes even for calls that ended exactly on a whole minute. See the data below.



In the first chart you can see that every call that was made resulted in an overcharge for minutes. This resulted in the real rate per minute being slightly higher than the advertised rate on average. On very short calls the real rate was extremely high.

The real cost of our cell phone service comes out as $.088 per minute (20% more than the advertised price)

Unfortunately unless you live in Peru (one of the only places I can find that charges by the second for airtime) you are stuck with the roundup policy. The only real result of this analysis for me is a new tendency to not call anyone if I am not sure of getting through. Also if I think the conversation will take less than one minute I send an e-mail instead. Overall I am now using fewer minutes, and spending less

Sunday, June 14, 2009

Paying Bills

I have already covered reducing time paying bills in another post (Family Values) and thought that I would share the next steps that I have taken. After a little research I discovered that the satellite and phone bill including internet can be set up for auto pay using a credit card. Sounds scary I know. By following up with setting the credit card bill to auto pay itself in full from our checking account each month, I can make sure everything is paid on time while at the same time earning rewards points that quickly add up to more purchasing power without me ever having to think about the bills. With paperless statements added in, I can let all of those companies digitally archive my statements and also avoid having to file them. Also it is very simple and fast to access them online at a planned date once per month to check for accuracy. We now have only three bills that require action each month and they are set up for bill pay. Total time now required is four minutes per month.

Sunday, May 31, 2009

Lean Yardwork

There is almost never time to mow the yard and trim during the week. By the time I get home from work and eat dinner with the family, it is too late to mow the whole yard. My general method has been to spend two hours or more of the weekend getting my yard into step with the retirees around me. I hate losing that time. It always hangs over my head when I am planning for the weekend. This weekend I tried something different.

After some thinking about what takes so long in this process, I noticed that the mower bogging down during passes through the taller sections of the yard reduced my speed to 33% of my normal pace. By adjusting the height settings on the mower I was able to get an acceptable cut at my normal pace by sacrificing only 1/2 inch in cutting. The yard still looked good and I was able to cut the entire yard in half the time. Of course I may need to cut it more often if the rains keep up, but I do not think that I will get a sign in the yard for violating community statutes about yard maintenance.

My List

In the last post, I discussed how to identify the things that you should target for waste elimination. Reflecting on my own life I developed the following list:

1. Mowing the yard
2. Paying bills
3. Dishes
4. Laundry
5. Groceries
6. Vehicle maintenance
7. Meal preparation
8. Trip preparation
9. Commute
10. House cleaning
11. Trash / Recycling
12. Workout
13. Morning routine

I have already worked on a few of these. It is time to get to work on the rest

What Must be Done

As I have said before, applying the principles of waste reduction to your personal life is a little different than it is in business. Aside from being your own customer, there is another consideration. You do not need to save time in everything you do. There are some things that you want to spend your time doing. It is enjoyable. You do not want to take the waste out of these. The things that you want to cut to the bone are the tasks that you MUST do. Eliminating the waste from these gives you the freedom to blow all of the time that you want on hobbies, seeking out new things to improve, and just relaxing...if you want. The first step of understanding what to work on is defining the things that you must do, but do not enjoy.

Thursday, May 21, 2009

I guess I might as well....

I have talked about trying to avoid Paying for the Peaks but what do you do if you have already paid for something, and cannot get back the investment? I have been thinking about this scenario since reading Seth Godin's post about sunk costs.

One way you can use past mistakes to your advantage is to distribute what you need to do over your current capacity. If you already have dropped a lot of cash on double oven it serves no purpose to remove it and install only what you need for daily use. Instead you can use the current oven at a reduced capacity to take advantage of what you already have spent.

This may seem like common sense, but it really has a huge effect on how much of your time is taken to accomplish your required activities. If you have a sudden increase in demand for something, and you have already spent the money in the past, you can balance your need over the extra capacity and not have to work as hard to accomplish your goal.

I have seen a similar effect at work. When a products life is over and the production line cannot be used for anything else, we do not remove it until we need that space. It costs money to remove things. I saw the most extreme example of this in Japan. New space was needed inside a plant. The calculated how much would be required, then instead of destroying the old building, they cut out only what they needed and left the remaining building standing until more space was needed.

Monday, May 18, 2009

Marking Time

As I have discussed before in Setting Good Targets you have to measure what you want to improve. In this post Gina Trapani gives you a great tool to measure the balance in your life. I really like the way she refers to comparing the ideal to the actual to show the way to improvement.

Kaizen

I found this article today regarding the principles of kaizen (improvement). It is nice to see that I am not alone in my fight to eliminate waste. While I agree with a lot of what the article says, it focuses more on lean thinking that the true philosophy of the Toyota Production System. You cannot address ony muda (waste) without reduction of muri (overburden) and mura (unevenness).

Sunday, May 10, 2009

I'm Not That Old Yet

I kind of swiped this idea from a speech that I heard at work, but I liked it and it fits. My family tries to be healthy. Eli has vitamins, Crystal is pregnant and has prenatal vitamins, and I have abused my body and need glucosamine and fish oil to keep things from creaking when I move. On top of that are the regular daily supplements to make up for the things that I don't eat enough of. This makes for a mess in the cabinet, and consequently it gets hidden away. Sometimes we forget, because there is no visual cue to remind us to open the cabinet and take our vitamins. In the midst of the kitchen reorganization from the previous post I also took some measures to ensure that we all get the vitamins we need every day.

I really hate those little daily pill counters. Not only would using one make me feel much older than I am, but it takes a lot of time to count out all of those doses for the week. I had to find another solution.

Basically I found a tray that holds all of our various vitamins and put it in the cabinet with the breakfast cereal and coffee. When I take out the breakfast stuff I put the tray on the counter so it is visible. I take everything off of the tray and as I open each bottle and take out the vitamins, I replace the bottle on the tray. When the tray is full again, we have everything that we require for the day and I can put the tray back in the cabinet. Simple and effective.



Friday, May 8, 2009

Morning Routine

Lately I have been trying to gain more free time to spend with Eli and Crystal. Also I would like to be able to take Mattie for a walk in the mornings before work. We have a lot going on in the mornings and I thought that I would try to improve the process a little without affecting the rest of our lives. Here is the current morning routine and the organization of our cabinets.

The circles represent activities:


As you can see there is a lot of walking around involved. Here are pictures of the cabinets with the items they contain.

After a little thought, a few false starts and a lot of reorganization I ended up with this:


I have to use this for a little bit before I can tell you the time savings, but just from looking at the walking and the space saved in the cabinets the improvement is obvious.

Savings:
Before walking distance = 84.75 feet
After walking distance = 45 feet

Total saved distance = 39.75 feet

Changing Gears

I originally intended this site to be about how to save money by eliminating waste. Today I realized that I was being shortsighted. Eliminating costs is a great thing, but identifying waste and removing it from your life has benefits far beyond money matters. I would like to help you free up more time, create more freedom for you to do the things that you want to do, and have the things that you require to enjoy a fulfilling life. Vacations, spending time with family and friends and just taking time to do something that you love all by yourself are not wasteful activities. My purpose is to help you reduce the time and money demands that prevent you from being able to do these things. With this in mind I want to begin a series of posts that will show how the time required to do all of those things you must do can be minimized so you have more time to do the things that you want to do.

Sunday, May 3, 2009

Getting to the Root of Your Problems

In the previous post I discussed how to break down your overall goals to get to specific problems and set simple measurable targets. This is not usually the end of the fight however. Most of the time you must go deeper to find the root cause of the issue. A root cause is like the thorn in your finger that got infected, caused you to have swelling, a fever, and a headache. You could take aspirin to alleviate all of your symptoms, but the thorn is still in there and as soon as you stop taking your daily dose everything will come crashing back on you immediately. If you dig the splinter out, it may hurt terribly for a short time, but soon the swelling goes down and everything heals up. You can hide the aspirin bottle back in the medicine cabinet and go on with life.

Let's return to the previous example. You now know that you dessert habits and your Sunday morning appetite are causing you to balloon. You might just say "OK I need to stop", and leave it at that. But then dinner is wrapping up on Saturday night and you convince yourself to have just one bite of your wife's cheese cake. On Sunday you get home from church and the whole family wants to head to your normal buffet breakfast. You go along, telling yourself that you will stick to the fruit bar. Soon you have decided that you need to get your money's worth and that you will start your Sunday dieting next weekend.

With some further investigation however you might find that you generally are full after your Saturday entree, but your wife (all 120 pounds of her) does not feel like a dinner is complete without dessert, and you have fallen into the habit of ordering something yourself, just to avoid sitting there twiddling your thumbs.

On Sunday you discover that you have a snack when you get up, but then starve yourself all through Sunday School and the service. Not only does this cause your metabolism to slow down, but you are so starved by the time you get to the buffet that you overrun the finish line of your meal all of the way into indigestion. Now you have two specific root causes to address.

If you order your wife's desert early, you might still have some food to get through as she downs her sweet treat, and if you pack a few snacks to sneak into the gap between Sunday School and the main service at church you might not overeat quite as much at the buffet.

By getting at these root causes you can help solve the specific problems without having to rely on sheer will power.

Setting Good Targets

People make resolutions every year as soon as their hangover wears off. They will lose more weight, stick to a budget, pay off their credit cards...the list goes on. On reason most of these goals are never accomplished is they are plucked from the air with no thought. As such they are often too ambitious and not very measurable. As anyone who has ever tried to break a bad habit will tell you, going cold turkey is very hard. The key to setting targets that you can actually achieve lies in understanding what the problem really is and what specific things you should attack to get closer to your goal.

Lets look at everyone's favorite problem. You have eaten your way into the next pants size and now you are ready to get back to your high school wrestling weight. Of course you should change your diet and exercise right? But what does that really mean?

First you have to define a gap between the current reality and where you would like to be. Let's say you are 200 pounds, and you would like to get back to your college playing weight of 180. Good you have a gap, twenty pounds. That is the easy part.

Next you have to break down that gap to understand what makes up that extra. The best way to understand this is to as yourself the questions who, what when, where and how much.

All of these questions require a little investigation and understanding the facts. For example, if you begin tracking your weight twice a day every day, you may find that on Sunday night you always hit your highest weight of the week.

This answers the when question, and tells you that you need to look closer to what you are eating during the weekend. By looking at the nutritional information from what you consume during one weekend, you might find the desert on Saturday night followed by the breakfast buffet on Sunday morning account for 70% of the calories that you consume during the weekend. In fact you might find that Cheese cake with chocolate sauce pancakes, bacon, hash browns, cinnamon rolls, and a muffin add up to roughly 4000 calories. This is great! Did I lose you? You have answered the what question. You have to avoid these two things.

OK there are 3500 calories in one pound of body fat. This means if you keep everything else constant and cut out the dessert and the breakfast buffet and replace it with something that only contains 500 calories, you should be able to lose one pound per week. I am greatly simplifying things for the sake of example, but the logic holds true. This also allows you to set a time line for yourself.

Thus your target becomes By cutting out Cheesecake and Shoney's and continuing everything else I am doing I will lose 20 pounds in the next 20 weeks.
Now you have a specific activity that you can easily track to meet your overall goal.

By defining your overall goals then breaking them down into specific sub-catagories you can get to the specific problems that are plaguing you and decide where to begin the fight.

Thursday, April 30, 2009

STOP!!

In the manufacturing industry companies obsessively track and try to reduce defects. The worst kind of these are those that repeat. When you are not making a product, defining defects becomes much more difficult. For families, defective products often take the form of bad purchases. Here again the most damning are those that repeat. The key is to STOP when you are doing something wrong. Let's take a look at what I mean.

This happens all of the time in manufacturing. A machine is making ten defects for every one hundred pieces produced (90% good). It will take two hours of downtime to fix the problem, and the production line will lose fifty pieces of production in that time. A short sighted manager would say keep running it, we cannot afford to lose all of that time. Looking deeper however, we find:

Production rate = 50 pieces / 2 hours = 25 pieces per hour

at 90% good: 25 pieces per hour * .90 * 4 hours = 90 good pieces

if we fix the machine:

at 100% good: 25 pieces per hour * 1.00 * 4 hours = 100 good pieces Thus the production chart for overall production looks like this



The circle in the middle shows that you regain the loss within the first day, and thereafter you keep gaining on where you would have been if you had not fixed the problem.


Now lets look at something more interesting. You join a gym. It's a good idea. You could stand to lose a few pounds, right? I applaud you, but they always sign you up for the automatic draft from your checking account these days. Three months in, you have not been through the gym doors for two weeks. You know that you should cancel the membership, but you let it drag on for another month, then another. It is only $40 bucks a month right? Hey, you might go back, and besides they always hassle you to stay when you try to cancel. You don't have the time to deal with that right now. After a year you have shelled out nearly $500 and still have only your guilt to show for it.

They important thing to note in both of these situations is that however painful it might seem, when something is wrong you should STOP! Nagging problems are far more costly than they at first seem.

Sunday, April 26, 2009

Saving Time Online

I love the web. Sometimes though I fall down the rabbit hole and cannot even tell how I have gotten wherever it is I am. This is great when you have a relaxing few hours to burn up (and I hate you is this is you), but in general I need to quickly accomplish my online tasks and move on to the next project. This is where two more principles of waste reduction come in. Standard and work and kaizen are core concepts to eliminating wasted time.

Applied to your internet experience, this means getting what you need as efficiently as possible. Standard work is the current best method of performing the task as quickly as possible with the highest quality. Kaizen is a philosophy of continuous improvement in small steps to achieve long term goals. Below is an example from my daily internet use.

On any given day I have six sites that I MUST check to know what is going on in my version of the world. When I first began surfing, I would type all of these into the browser and load them individually to get my daily fix. This took a lot of time. Another problem was my following all of the story links from the main pages, and getting hopelessly sidetracked trying to find the interesting stuff. (Total estimated time 2 hours)

Next I discovered bookmarks (hey this was a long time ago OK?) I could load the page that I wanted from a bookmark, then click the next one when I had finished. I still had to chase down the individual stories from each of the main pages. (Total Estimated time 1 hour 30 minutes).

Then came Firefox and tabbed browsing. Now I could hold control and click all of the bookmarks that I wished then they would load in the background while I was reading the first page to load. If there was no new content however I still had to load the whole page to find out. (Total estimated time 45 minutes)

My current iteration uses RSS live bookmarks in tool bar. With this feature I can click on the RSS feed, read all of the headlines, hold control and only click on the stories that I am interested in or have yet to read, then let them all load while I read the first page. (Total estimated time 3 minutes)

I was performing the same work in each scenario, but over time I made small improvements by learning new ways to accomplish the task with the least wasted time. Now every morning I open the laptop. Click once above the live bookmarks and find maybe five stories that I would like to read from the fifty that are posted.

Of course kaizen philosophy dictates that I can never rest and never be satisfied with what I have.....I just need a new tougher goal to challenge me.

Thursday, April 23, 2009

Visualizing the Problem

Waste is a very insidious character. It sneaks up on you then takes every opportunity to camouflage its existence. If you cannot see a problem you can never fix it. Think of all of the produce that has rotted in the bottom drawer of your refrigerator. What about all of the extra money you have spent on new summer or winter clothes, only to find everything you thought lost neatly labeled and stored in the attic. A key offender in the battle against hidden waste is "putting things away". I am all for neatness and organization, but often to achieve a clean look we add cabinets, drawers, and boxes to help everything look tidy. Soon cleaning up involves shoving things into these like a ten year old asked to pick up his room. However cliched, out of sight, out of mind succinctly summarizes this phenomenon.

I often suggest that people remove the doors from all of their cabinets. In this way everything contained within is readily visible, be it sixteen cans of pears bought on sale two years ago or a tangle of electronics cords, 90% of which you no longer need. There is the added advantage that you have just eliminated a step to accessing anything contained within. Finally whether making a grocery list or searching for a 1/4-20 socket head cap screw everything is easily seen.

Visualization of problems can be applied in other areas as well. If you have ever looked down at the last square of toilet paper on a roll and reached for a new one only to find an empty cabinet, you will understand the benefits of this next suggestion. For critical items (yes TP qualifies) it is not difficult to set up a visual system that alerts you before a crisis that action is required. First of all you already have the door off of the bathroom cabinet now right? Now paint the area under the location of the last stored roll bright red and add a label recommending purchasing more. Sounds silly, but it works. I have a friend that set up a system for breakfast cereal. When he empties a box the rule is he tears the top from the box and places it in the drawer with the grocery list so it will not be overlooked during the next trip to the store. This practice is referred to as a kanban system. Kanban is Japanese for card. Japanese companies have used such card systems for years as a visual tool to manage inventories and production.

These are only two examples of how making problems visual can go a long way toward both solving them and preventing recurrence. Give it a try and let me know how it works for you.

Monday, April 20, 2009

Family Values

Value is a very important concept in the quest to eradicate waste. Activities that add no value should be minimized to free up as much of your time as possible. This seems like common sense but often it takes long observation of an activity to identify and eliminate non-value added work. A quick example can be seen in financial transactions. In paying bills the only activity of value is transferring funds from your account to the account of those you must pay. For many years my wife and I took the traditional route when paying bills. We would wait until all of the bills had come in for the month, then sit down to write checks and mail them all out in a large batch. Our bill paying process flow at that time is represented by the diagram below.



Not only is there much non-value added activity in this process, but there are additional costs beyond those of paying the bills. Stamps, envelopes, and gas must be consumed and paid for. Also there is the time required to collect these items and the delays that must be endured before the payment has cleared. Any mistakes may not be detected for some time and penalty fees or credit problems can result.

We have since abandoned this process for online bill pay. With this we receive most of our bills online, pay them immediately without the need for driving, stamps or envelopes, and the funds transfer time is shortened to two days at most. Now the flow chart looks like this:




With this flow we have eliminated all extra expense, as well as limiting our non-value added activity. I am currently working one the next phase of this plan by setting up bills to be automatically paid as they arrive, without the need for me to approve the transactions. If I am able to achieve this there will be no remaining non-value added elements in our bill paying process.

This is only one example of how identifying value can lead to increased free time and simultaneously save you money.

Friday, April 10, 2009

A Fine Line

In attacking waste, there are three criteria that must be satisfied simultaneously. The best quality with the lowest cost in the shortest amount of time is always the goal. We are focusing here on minimizing costs, but these factors are closely interrelated, and must all be considered. In the business world there is always a customer to define the levels of these targets. In our case however, you are your own customer. This means that it is up to you to determine what is necessary in terms of quality, price, and delivery time for any product you purchase. It is important to set precise goals for each, as the final cost is directly related to your specification. Lets take housing as an example.

The full spectrum of quality is always available in housing, but location is also a highly important consideration. Often families choose a neighborhood or a school district before they have decided on a house and only search within that area. The same house may be available for 25-30% less elsewhere, but your quality specifications (a house located in this neighborhood) require the extra expense. Similarly that particular house, within your chosen neighborhood, may not currently be available. In this case you are required to delay your purchase until the home you want hits the market. You could get the cheaper house in another neighborhood immediately, if you are willing to compromise quality. If funds were unlimited, you could easily knock on the door of the house of your choice and keep upping your offer until the owner cannot refuse to sell. In that case you could shorten your wait to zero. This logic applies to all purchases.

Quality, cost, and lead time are always in balance and can never be considered in a vacuum. To minimize cost without compromising the other factors, careful measurement and deliberation is required.

Wednesday, April 8, 2009

Digital Downsizing?

In a post a little while back I mentioned the advantages of digital products because they have a very short lead time. Another huge advantage is discussed here. With the Kindle2 and its clones looming on the market's horizon, matching the demand for books exactly to their production is becoming possible.

Monday, April 6, 2009

Paying for the Peaks

One of the key components of avoiding wasteful spending is only paying for what you need when you need it. This flys in the face of American cultural convention. As discussed previously buying in bulk is a risky proposition. This does not only apply to food however. There is a strong tendency to load up on everything. Let's focus on the automotive expenses.

The average family has four members, requiring four seats. The roads however are filled with minivans, and massive SUVs that easily seat seven and eight. The average increase in cost per seat is around 30% (according to KBB). Generally the excess room only sees use during excursions with extended family. This means many families are paying up to 60% more for transportation that is rarely needed. Is the inconvenience of driving seperate vehicles worth this cost?

Maintenance also holds costs of over capacity. Would be shade tree mechanics often buy specialized tools, or set up shops that gleam with lack of use. The sad reality is that nearly all of the necessary tools are available to be checked out for free from local parts stores. Not only is the cost of buying these tools to be considered, but the space they require for storage also has a cost.

As an example a ball joint press can be purchased here for $115 and a ball joint separator here for an additional $18. Ball joints are typically only replaced, at most, once in the lifetime of a vehicle. In this case it makes no sense to lay out $133 for something that could be borrowed as needed for no cost at all.

Bulging three car garages and detached sheds are often built to house these unnecessary collections.

Wednesday, April 1, 2009

Stocking Up

Discomfort is almost unknown in society today. Most people will go to great lengths and costs to avoid having to think or plan. One of the major indicators of this is the excess capacity we regularly build into our lives. From phones to furniture to housing, convenience is the order of the day. It is much easier to buy a mobile phone plan with unlimited minutes than to track their daily use. It seems simpler to keep an extra room for guests than to deal with hotels and arranged visiting times. You can size you furnishings to the grandest party you might throw, then spend all non-celebratory days paying for all of those unused seats. In every case excess capacity can result in hundreds and even thousands of dollars that need not be spent. The next several posts will deal in detail with this theme.

Tuesday, March 24, 2009

Zero Lead Time

I was reading a post on a friend's blog that was related to lead time and thought that I would share it here. With products that have zero lead time, you never have to keep anything on hand to clutter your house or hard drive. Movies, music, books, recipes, journals, artwork, pictures, and communication have all gone digital. This allows their lead time to be limited only by the speed of your connection. Also all transportation costs are eliminated, so the overall cost of the product delivered to you should be less.

A Leading Question

How can you travel lighter without sacrificing comfort on the far end of a trip? The answer to this question is another variation on the theme of lead time.

My family really only travels regularly (probably 90% of our travel) to two locations: my in-laws house and my sisters house. These are generally weekend trips at regular intervals throughout the year. Without fail the most likely time for everyone involved to be frustrated and impatient is during packing and loading the car. By understanding the concept of in process stock a lot of this frustration can be avoided.

In the manufacturing world, in process stock refers to a small quantity of product (usually one) that allows an operator to do other tasks while a machine is running.

The majority of what is packed for a weekend trip is clothes and toiletries. If these items were already waiting at the other end of the trip, the preparation process at both ends would be cut significantly. Thus you are using a small stock of travel supplies to free yourself from the hassle of packing the same things for every trip.

Negotiating a little space in a spare closet or drawer can significantly reduce both the stress and the preparation time for a trip. Spare toiletries are cheap and the space taken up by the the only risks of keeping extra clothes at frequent travel locations are that you will always be wearing the same thing in family pictures, or that you will outgrow them between trips.

The association is a little bit of a stretch, but it works.

Sunday, March 22, 2009

Faster Food Saves Cash

Let’s think a little bit about the waste in your life. How often do you clean out the refrigerator? If you are like my family this activity generally coincides with either a shopping trip (pushing fridge capacity to the limit) or an attempt to find “that smell”. During one of these purges, we tend to throw away a lot of food. The discarded items fall into several categories: leftovers, overbought and under used items, and things that got pushed to the back and lost or hidden in a drawer and forgotten. Nearly all of these losses are related to lead time. Lead time is the time between purchase and use of a consumable product. When you drop something into your cart at the grocery store a clock begins counting down. If you have not eaten your purchase within the time window for that item, you might as well have thrown the money you spent on it out the window on the way to the store. You cannot return the unused portion. Leftovers result from overproduction. You have cooked more than you needed and unless you plan to finish off the rest in the vey near future, the time window of all of the ingredients used just got a lot shorter. The key to avoiding these traps is to understand exactly what you need and when you need it. This principle is well known in business but is not well understood in the wider world. If these two things are understood, and all spending falls into line with them waste can be significantly reduced. To put this into practice for food expenditures requires:

1. Make a menu and stick to it. Plan for the shortest interval you can comfortably deal with. The absolute best case would be a daily trip to the store to buy only what you need for that day. This is difficult for some people based on time and transportation constraints. Start with one week then begin reducing the interval until you reach your own minimum.

2. Make a grocery list. Be exact in the required portions and do not buy one ounce more than needed. DO NOT BUY LARGE QUANTITIES TO SAVE MONEY!!! You often pay less per some quantity, then throw away all your savings at some point in the future. Meanwhile you could have held onto all that you overspent and had a cash reserve.

Tuesday, March 17, 2009

Wasting Away (but not in Margaritaville)

Right now everyone is trying to save money. Everywhere there are lists of the things that you can do to cut your expenses. They are all good suggestions, but rarely do the authors get to the real meat of the problem: Waste!

Much of the world has fallen into a culture of waste where convience has taken precedence over everything else. The disposable world surrounds and seduces us. Waste is everywhere in modern life. Prosperity has simply blinded most people to its existence. I am no saint in this respect, but recently I have begun to open my eyes. In studying the Toyota Production System, the ignorance that passes for common knowledge, and the wrong thinking that have led many families to ruin have leap into sharp focus. I hope to begin sharing my discoveries with you here. For those of you that come along for the ride, buckle up tight. Some of the principles will turn your present thinking on its head. One thing that I will never seek from you however is faith. The logic of the principles cannot be denied.

And so without further ado....