{"id":9176,"date":"2011-08-30T05:01:31","date_gmt":"2011-08-30T11:01:31","guid":{"rendered":"https:\/\/staging.opexlearning.com\/resources\/?p=9176"},"modified":"2014-09-26T11:35:36","modified_gmt":"2014-09-26T16:35:36","slug":"zipcar-customer-experience-variability-utilization-queueing","status":"publish","type":"post","link":"https:\/\/staging.opexlearning.com\/resources\/zipcar-customer-experience-variability-utilization-queueing\/9176\/","title":{"rendered":"Zipcar Late Return Penalty and Variability, Utilization, Queueing"},"content":{"rendered":"<div class=\"a296a24fa2fc69ef5487857f02f111e8\" data-index=\"9\" style=\"float: none; margin:10px 0 10px 0; text-align:center;\">\n<script async src=\"\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js\"><\/script>\r\n<!-- Single Post readerboard -->\r\n<ins class=\"adsbygoogle\"\r\n     style=\"display:inline-block;width:728px;height:90px\"\r\n     data-ad-client=\"ca-pub-8207522353004717\"\r\n     data-ad-slot=\"1144967431\"><\/ins>\r\n<script>\r\n(adsbygoogle = window.adsbygoogle || []).push({});\r\n<\/script>\n<\/div>\n<p>Zipcar is a car sharing service that allows one to purchase the benefit of automotive mobility without having to actually buy the vehicle. Unlike traditional car rental services, Zipcar allows one to rent a car by the hour coupled with an annual premium, instead of by the day. This way, Zipcar allows customers to buy only the mobility they need &#8211; nothing more and nothing less.<\/p>\n<p>Late returning of cars appears to be a problem and long-standing theme with Zipcar. In fact, for late returning cars, the customer is charged a substantial late fee of $50. With such a high late fee rate, one can only surmise that late returning cars is a large enough of a problem and Zipcar&#8217;s response to this is to change the behavior with a large penalty.<\/p>\n<p>But, Zipcar&#8217;s response doesn&#8217;t address the root cause. Instead, high late penalty fees only addresses a symptom, but not the <a title=\"example of root cause analysis\" href=\"https:\/\/staging.opexlearning.com\/resources\/root-cause-analysis\/172\/\">root cause<\/a>.<\/p>\n<h2>Variability, Utilization, Queueing<\/h2>\n<p>I have never used the Zipcar service, but I am an admirer of such a unique and simple idea that adds tremendous value to people. So, I&#8217;m not speaking from experience, but I want to address the concept of <a title=\"variability tree diagram and types of variation in a queue\" href=\"https:\/\/staging.opexlearning.com\/resources\/the-variability-tree\/437\/\">variability and utilization<\/a> as it applies to the Zipcar business and the problem of late returning cars and late fees and also the concept of <a title=\"work in process explosion is a by product of little's law\" href=\"https:\/\/staging.opexlearning.com\/resources\/littles-law\/8035\/\">WIP Explosion<\/a>, which is a phenomenon we see in <a title=\"articles on queueing theory\" href=\"https:\/\/staging.opexlearning.com\/resources\/queueing-theory\/\">Queueing Systems<\/a>.<\/p>\n<p>Let&#8217;s contrast for a minute. For Zipcar, what would perfect performance mean? I submit perfect performance is the following:<\/p>\n<ul>\n<li>Each capable car is 100% utilized, meaning that each hour for each capable car, is &#8220;rented&#8221;.<\/li>\n<li>No car accidents.<\/li>\n<li>No car is ever late &#8211; that is, a returning car is never late so the next customer scheduled for that car does not have to wait.<\/li>\n<li>Each Zipcar car is returned with fuel levels at High and the Zipcar car is returned clean.<\/li>\n<\/ul>\n<p>Now, looking at perfect performance above, how likely is it that the above happens 100% of the time? Unlikely I&#8217;m sure. But why?<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-9177 aligncenter\" title=\"zipcar-coupon-nyc\" src=\"https:\/\/staging.opexlearning.com\/resources\/wp-content\/uploads\/2011\/08\/zipcar-coupon-nyc.jpg\" alt=\"\" width=\"604\" height=\"127\" srcset=\"https:\/\/staging.opexlearning.com\/resources\/wp-content\/uploads\/2011\/08\/zipcar-coupon-nyc.jpg 604w, https:\/\/staging.opexlearning.com\/resources\/wp-content\/uploads\/2011\/08\/zipcar-coupon-nyc-600x126.jpg 600w, https:\/\/staging.opexlearning.com\/resources\/wp-content\/uploads\/2011\/08\/zipcar-coupon-nyc-300x63.jpg 300w\" sizes=\"(max-width: 604px) 100vw, 604px\" \/><\/p>\n<h2>How Does Variability Degrade Performance?<\/h2>\n<p>There are generally two types of variability: Internal and External.<\/p>\n<h3>Internal Variability<\/h3>\n<p>Taking from the list of Perfect Performance Variables above, internal variability could be the following:<\/p>\n<ul>\n<li>Returning a car dirty, leads to delays for the next customer. This can be considered &#8220;set up times&#8221; in the language of Lean.<\/li>\n<li>Returning a car late, leads to delays for the next customer.<\/li>\n<li>A Zipcar Car breaking down. In Lean, this would be considered &#8220;down time&#8221;.<\/li>\n<\/ul>\n<div>There are likely more, but the above are a few examples. Internal variability impacts the customer experience.<\/div>\n<h3>External Variability<\/h3>\n<p>External variability is typically in the form of unknown, bursty, or irregular demand.<\/p>\n<h2>Variability and Utilization<\/h2>\n<p>As you can see in the above discussion on Variability, it is often not wise to schedule with 100% utilization as a goal. Doing so, will likely lead to the following:<\/p>\n<ul>\n<li>Wait times for the next customer of the Zipcar Car<\/li>\n<li>Customer complaints via customer service regarding the late fees<\/li>\n<\/ul>\n<p>The answer of high penalty fees for late returning cars will likely not be effective in itself. This is true because Variability is a given in dynamic systems. And, if a system is scheduled to 100% utilization with no regard to variability, the customer experience will be negatively affected.<\/p>\n<h2>The Concept of Buffer<\/h2>\n<p>By Buffer, I mean &#8220;slack&#8221; of a type in case the process doesn&#8217;t perform perfectly (as described above). Given the physical law of variability, there are typically responses to it:<\/p>\n<ul>\n<li><strong>Inventory Buffers<\/strong>: In case there are problems, there is an inventory buffer so the downstream processes can still perform.<\/li>\n<li><strong>Capacity Buffers<\/strong>: In case there are problems, there is a capacity buffer so the process can still perform (an extra machine, additional people, etc.)<\/li>\n<li><strong>Time Buffers<\/strong>: In case there are problems, we add slack of time, so that downstream service processes aren&#8217;t negatively impacted.<\/li>\n<\/ul>\n<p>In the case of Zipcar, the countermeasure that addresses the root cause of late returning cars is to add a time buffer in the system. In other words, instead of scheduling Zipcar cars every hour, add slack in the schedule between rentals &#8211; that is, if a car is scheduled from 9:00 &#8211; 10:00, schedule the next customer at 10:15 to add a 15 minute buffer. Couple this scheduling approach with a late fee penalty, then the root cause is address through both policy and by addressing the root cause of variability.<\/p>\n<!--CusAds0-->\n<div style=\"font-size: 0px; height: 0px; line-height: 0px; margin: 0; padding: 0; clear: both;\"><\/div>","protected":false},"excerpt":{"rendered":"<p>Zipcar is a car sharing service that allows one to purchase the benefit of automotive mobility without having to actually buy the vehicle. Unlike traditional car rental services, Zipcar allows one to rent a car by the hour coupled with an annual premium, instead of by the day. This way, Zipcar allows customers to buy [&hellip;]<\/p>\n","protected":false},"author":12327,"featured_media":9178,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[9],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v23.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Zipcar Late Return Penalty and Variability, Utilization, Queueing<\/title>\n<meta name=\"description\" content=\"Zipcar Late Return Penalty and Variability, Utilization, Queueing - what we can learn from queueing systems and dynamics.\" \/>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Zipcar Late Return Penalty and Variability, Utilization, Queueing\" \/>\n<meta property=\"og:description\" content=\"Zipcar Late Return Penalty and Variability, Utilization, Queueing - 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