How Efficient is Your Home Efficiency Business?

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Muda in home performance - Waste reduces value and hurts profits

We talk a lot about “efficiency” and “reducing waste” in homes. But what about efficiency and reducing waste in our home improvement businesses? Can we do better–become more profitable and deliver more value–by getting leaner?

Lean home performance is an approach to design delivery systems, whether we’re talking audit, air-sealing, or air-conditioning, to minimize waste of materials, time, and effort in order to generate the maximum possible amount of value for the customer. Some practitioners do focus on the value to the customer. Others focus on the positive impacts on profitability. Of course, the two are closely linked.

I’ve seen too few companies pay attention to this. Yes, it is harder in a residential retrofit setting since the projects are smaller and different when compared to the workflow of a production builder for example. It’s harder—but that doesn’t mean there are a lot of systemic opportunities in the soup to nuts cycle of retrofits.

The benefits? There are many including:

  • Fewer mistakes, oversights, and omissions
  • Lower costs
  • Faster production
  • Higher job satisfaction
  • Better value to customers
  • Increased competitiveness
  • And yes, increased profitability!

Dissecting a business or even a project from beginning to end is beyond the scope of this post. Even covering the many elements of Lean is a lot. But let me take just one some component and illustrate some of the potential by looking at an energy audit and the ways muda, or waste, might be increasing costs, decreasing value to the customer, and hurting profitability. Muda encompasses seven areas, and while the concept was developed for manufacturing, it can be translated to a service business, too.

Note, you have to look at this in the broader context of your business, and what is waste for someone might not be waste for you. Or maybe it is! Some things to consider with respect to the audit alone might include the following. (Thank you, John Tooley, for the reintroduction to Demming, Ohno, Kaizen, and muda.)

Transportation

What is the cost of not doing any necessary testing while you’re in the house for the first time? Does extra driving back add value beyond what could have been done on an earlier visit?

Inventory

Now, in the manufacturing world, inventory is the raw materials, work-in-progress, or finished products. With audits, we can think of the audits themselves. Unfinished audits, sitting in a jumble of notes or on a computer represents a real investment in time, gas, and more that hasn’t yet generated income or delivered value to the homeowner. (I would actually also consider this a defect in the service.) Reducing inventory in this case means finishing the report hand-off, whether to the customer or internally, as quickly as possible. “I can’t finish the audit reports in less than a couple of weeks because I have to do the other audits.” A direct quote from someone in our world–and sheer madness.

Motion

How many trips back and forth to the truck do you make in the course of a single audit? How much time to you spend rummaging through a bag looking for a tool, a plug, or a form? How many trips to you make up and down the stairs? After you set up the blower door, do you have to go back outside (another trip to the truck? Ensuring the outdoor hose is placed sufficiently far from the fan?)

Waiting

Waiting for a model to complete an audit ties back to the “inventory” issue above. Waiting for the second person on a two-person time means downtime. Waiting for pricing information so you can determine cost-effectiveness (why not have your pricing information standardized and ready?). And forcing a customer to wait, whether on an audit that takes too long, or for an audit report that takes weeks or months to be delivered even more directly impacts the value to the customer.

Over-processing

Over-processing is when more work is done than is required by the homeowner. Get this. In the traditional view of muda, this also includes using tools that are more precise, complex, or expensive than absolutely required. Whoa, that rings a bell with some of the audit approaches I’ve seen! Is it necessary to get precise window measurements? Is that duct-blaster test needed if you’re about to replace the duct system? Why, Bruce Manclark demonstrated you might not need a duct test even on the back-end if you’ve trained folks right. Our home performance world is rife with opportunities to turn visits to the home into science projects with no heed to providing value to the customer. (Fine, if DOE is the customer, have at it.) This is not a call to cut corners or do less than necessary to ensure quality. But doing more than is necessary to ensure quality means increasing costs and reducing value.

Over-production

Over-production is when you produce more product than is required at that time by your customers. This leads to excess inventory, including the spending money on storage space and protection, things that do not benefit the customer. This hits big on the installation side, but it make not translate as well to the audit service the way the over-processing does. (Maybe you, gentle reader, can add some thoughts?)

Defects

Obviously defects aren’t good. Screwing up an audit and having to rework it results in unnecessary labor costs, and adds to the “work-in-progress” inventory. That is within the delivery of the audit itself. Think about how defects in the audit might push forward and impact the retrofit installation themselves. Clearly defects are to be avoided. The danger is that if this isn’t done wisely we focus too narrowly and introduce other waste—like over-processing, for example. The question is how to avoid both defects and other types of waste, too, not merely to substitute one type of waste with another.

It may well be that any step you improve saves only a few pennies or a few seconds. It may be, though that eliminating a trip saves you 25% of your total labor. What if you were able to save over the course of a handful of audits, just 1 hour per week? That adds up to more than a week over the course of a year that you can apply to either increased production or more vacation! And it may be possible to save a whole lot more than 1 hour per week. Apples to apples in terms of house size and complexity, I’ve seen audits completed in two hours that were more thorough than 4-5 hour audits. I’ve seen reports generated in an hour that were more helpful than reports that took 4 weeks to complete. But a fast, efficient audit process doesn’t happen by accident. You’ve got to work to eliminate waste to get there.

Remember, this is only the narrowly defined audit. You really need to look at your entire business, the office processes, installation, even accounting.

There are pathways to delivering more value to your customer and improving your own profitability. The right paths focus not on compromising quality, but on eliminating waste and actually improving quality. We should be talking a lot more about this. Let’s!

Cheers,
Mike

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About the Author:

Mike Rogers is the President of OmStout Consulting. A nationally recognized expert in residential energy-efficiency, he works with contractors and programs to scale sustainable market approaches to improving homes. More on Google+

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