Sharing Details - Loan Durations

30.11.20 06:37 PM Comment(s) By Tim Willison

Durations Have Significant Impact

There are a lot of things you can measure at a Tool Library. The trick is to know how to interpret all of that information. One statistic is the most valuable indicator of success. In this article we will look at that measurement, and one of the main factors that affect it.

The real value of a library of things - the metric that matters most - is the number of exchanges that happen. It's the number of times people came in, got an item, took it out for use, and brought it back. The entire reason for the existence of a library of things is to facilitate this flow of exchanges per person.

Viewed this way, practices that cut down the number of exchanges are a problem. And chief among these are lengthy loan durations.

What?! How could longer borrowing durations be bad? Read on for a look inside the function of an active tool library.

Lengthy loan durations are a problem because they reduce tool exchanges to one or two per project. Tools are out longer.  This means that members have much less chance of getting the items they need from the library, particularly the popular tools like table saws and mitre saws.  Imagine having a brand-new membership, then having to wait weeks to get the items you need - not very nice. To meet the demand MORE of such items are needed to be stocked. 

Stocking multiple backups of the same item is a slippery slope.

The longer the loan durations, the more backup stock is needed. And this need is compounded during the busier season, when certain categories of tools go out at a much higher frequency.

Why is this a problem?

That stock has to reside somewhere, which leads to increased storage needs. Inventory becomes complicated because as space is used up tools will move around, packed into the space vacated by tools that are out in circulation, instead of each thing having it's own dedicated home.

Also consider seasonal demand. Lawn mowers aren't going out during winter, but they still need a place to live! If multiple mowers were accumulated to cover the busy season, they ALL sit taking up space during the rest of the year. (Nobody needs a lawn mower for two weeks.)

Additionally maintenance needs are vastly increased with more items. This is particularly true with donated items, which tend to come in from a wide variety of brands. Instead of being able to well-stock a part supply for a few frequently borrowed tool brands, it becomes necessary to stock parts for a wide variety of dissimilar tools - which again contributes to the space problems, because parts need to be stored somewhere, as do tools held for maintenance. As you can imagine, all of these issues increase the stress on human resources in addition to space requirements.

These problems easily lead to a situation where the only solution is.....more space! This is not a real solution.  Space is not free, and it is typically not part of the sharing economy. Space is where the sharing economy ends, and the traditional economy begins. Much like wages and batteries, having space requires traditional cash.

Lengthy borrowing terms can lead directly to a situation where the cost of space and all the related operational costs overwhelm the revenue generated from memberships. Meanwhile, only a fraction of the inventory is actively being borrowed. 

And for what benefit?

I have worked every shift for the last five months - six days per week. I have talked extensively with members at every membership tier as they worked through projects. I have responded to eight hundred help tickets, and answered hundreds of phone calls.

Nobody is asking for two-week loan durations. Most members need to use tools for a few days at a time - the ability to hang on to items for 14 days is a convenience, but not necessary. I think most members of the community would happily flex on that point if 1)they knew how back-breaking those durations are for the library, 2)it helped keep membership costs low, 3)it ensured the items they need are available when they need them.

This is not theoretical - most rental departments ensure their loan durations are short by pricing them higher. One of our long-time enthusiasts happens to work at the busiest hardware rental in Canada - where they have a total of 4 mitre saws, and 3 table saws. This is a third of the inventory even a smaller Tool Library will carry, but it meets their demand because people return their tools much faster. Most people rent these tools for no more than two days, and many try to return them same-day because the rental is expensive.

We are not trying to be expensive. But there is something to be learned from these logistics.

The biggest danger to a tool library is stagnation. Tools sitting on shelves at the library, or sitting unused in a member's garage, are an indication of real problems. Like stagnant pools of water, they are a sign that the flow is interrupted.

With 14 day durations, members will take out everything they need for all stages of a project at one time - demolition and rough work, cuts, and finishing work all at once. This means that at any given time 2/3 of the tools will be sitting idle - that breaks the sharing model. The alternative is making a couple more trips, taking out the tools needed for each stage of the project at the time they are needed. This is not a new concept - it is what people do to avoid punitive high costs from traditional rental services.

How did TTL land on 14 day borrowing terms then, if they are problematic to the sharing model? Well those terms were decided on based on camping gear, not tools. Given that everything came under one membership those durations got applied to every item in the inventory. Clearly these are very different categories of items, with very different needs.

The big question then becomes "how does this get fixed"? Having set a precedent of 14-day terms for High Five memberships, how do they get adjusted without having members feel like they are being duped?

Hopefully articles like this one help - being able to acknowledge an error on our way to discovering how the sharing economy works alongside the traditional economy.

Next it means making the effort to really understand how members use the tools - and frankly that means using them ourselves. Having people who regularly go hands-on with the items is the only way to make decisions that benefit the members while ensuring the sustainability of the organization.

And most importantly it means having effective communication channels. That falls to two categories - outbound, and incoming communications. The help-desk ticket system has been very good for ensuring incoming communications don't get lost. But we have work to do on the outbound communications, which are more complex given all the platforms our members use.

But one thing is certain - this is a situation that needs to get fixed! Like any project, it doesn't happen by delaying the job or applying endless patches.

Tim Willison

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