Pipeline Workshops™: Finding TrueNorth

Posted December 9, 2018 By Fletcher Groves

Scott Sedam is President of TrueNorth Development, Inc., and is the industry’s foremost Lean Production practitioner.  A well-known, well-respected Lean Building purist, Scott is a Bill Pulte protégé, who’s roots go back to Edwards Deming and TQM.

He is a friend, and longtime fellow consultant.

In 2013, after the first edition of The Pipeline: A Picture of Homebuilding Production© was published, and as I was planning the first-ever Pipeline workshop™, I suggested that Scott attend as SAI’s guest, so that he could see pipeline-thinking for himself.

I wanted his opinion of the workshop, but I also wanted him to share with those first-time-ever attendees his thoughts on applying Lean Thinking beyond the margin side of economic return, towards what we were now terming the velocity side of Return on Assets.

Scott graciously came to that first workshop in March 2014, functioned just like any attending builder in the discussions and in the Pipeline games™, and was a panelist with me on blending improvement methodologies towards a solution that works best for homebuilding.

Afterwards, this is what Scott wrote in a discussion on the BUILDER group on LinkedIn:

“If you are ready to challenge your brain, get out of your well-sealed ‘Builder Box’ and make a huge leap forward in understanding schedule and its impact, come to this workshop and bring a few of your better thinkers.

“The roots of [this] workshop are in Goldratt’s Theory of Constraints, which is at first-blush exceedingly simple, but you can spend years studying the intricacies.  Fletcher puts it all in builder language and forces you to go deep into the impact of our most common builder practices.

“If all builders learned and followed the principles in [a Pipeline workshop™], our industry would take a huge leap forward.  The winners would not be the builders alone, but also homeowners and especially our suppliers and trade contractors.  Fletcher does not know I am writing this, but I strongly recommend his Pipeline Workshop™ to everyone who has the will to change for the better.”

Come. Participate.  Learn.

 

The next Pipeline workshop™ will be held March 20-21, 2019, at the Ponte Vedra Inn and Club, in Ponte Vedra Beach, Florida.  The cost is $895.00;  the cost during early registration, open through January 3, 2019, is $750.00;  for team pricing, inquire here:  (flgroves@saiconsulting.com).

Sponsored by BuilderMT and Specitup.

For more details:  www.buildervelocity.com

 

The Pipeline: A Picture of Homebuilding Production, Second Edition© is available on the publisher website (virtualbookworm.com), as well as through the major book sellers (amazon.com, barnesandnoble.com, and booksamillion.com).

 

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Pipeline Workshops™: Come. Participate. Learn.

Posted December 2, 2018 By Fletcher Groves

In the weeks leading up to a Pipeline workshop™, we explain to attendees what they are about to encounter.  We describe the tools that they will have to learn to use, the facts of the business case they will confront, the knowledge they will take away from it, what they should expect to see.

We explain the challenging, disruptive, competitive nature of the learning – the degree of interaction, the level of intensity – they will experience.

At a Pipeline workshop™, it is learn-by-doing, applying production principles and disciplines to production simulation, and measuring the resulting operating performance and economic return.  We communicate our expectation that builders come prepared to learn that way, that there is no place to hide, so they need to check their sense of entitlement at the door.

Still, many attendees tell us afterward they should have studied more and prepared harder, in advance of the workshop.

Clark Ellis and I make no apologies for the extraordinarily demanding nature of a Pipeline workshop™.  It is intended to not just inform your thinking, but also to reform – and to re-form – that thinking.  It is designed to challenge your beliefs, to change the way you see production.

Pipeline workshops™ are intended to test your understanding of how production systems work and how daily operating decisions drive business outcomes.

We constantly remind builders: there is a big difference – a big difference – between being in the home building business, and being in the business of building homes.

You have to come to a Pipeline workshop™ prepared for what is going to be thrown at you.

Here is an example of what we are talking about:  the RB Builders: Lessons from the Pipeline© business case, which is revised for every Pipeline workshop™, requires the use of financial tools like Breakeven (using a variable costing approach, Cost-Volume-Profit Analysis), the DuPont identity (for determining ROA), and the Cost of Variation.  It requires an understanding of production physics, including Little’s Law* (duration, cycle time) and the Law of Variability Buffering.  It requires the application of multiple improvement methodologies (Theory of Constraints, Lean Production, Six Sigma).

You can read the book.  The Pipeline: A Picture of Homebuilding Production, Second Edition© is carried in stock on amazon.com;  it is also available on-demand directly from the publisher’s bookstore (virtualbookworm.com).

If you want it all handed to you, don’t bother to attend.  If all you care about is binder material you can underline and put on your bookshelf, don’t waste your time.  If you aren’t willing to own what you take away from it, a Pipeline workshop™ is not for you.  If you believe improving the margin side of Return on Assets is the only game in town, a Pipeline workshop™ is about a different game.

But, if you are determined to create sustainable competitive separation, by learning to thrive on the velocity side of Return on Assets®, by learning to excel at a discipline other builders find too difficult, too rigorous, too daunting, then a Pipeline workshop™ is precisely the right place for you to be.

Come.  Participate.  Learn.

 

The next Pipeline workshop™ will be held March 20-21, 2019, at the Ponte Vedra Inn and Club, in Ponte Vedra Beach, Florida.  The cost is $895.00;  the cost during early registration, open through January 3, 2019, is $750.00;  for team pricing, ask (flgroves@saiconsulting.com).

Sponsored by BuilderMT and Specitup.

For more details:  www.buildervelocity.com

*We will entice you a bit with Little’s Law.  Consider this scenario:  C/T=120 days;  WIP=80;  Closings=240.  Little’s Law says:  CT = (WIP ÷ C) x 360;  WIP = (CT x C) ÷ 360;  C = (WIP ÷ CT) x 360.  Therefore:  CT = (80 ÷ 240) x 360 = 120 days;  WIP = (120 x 240) ÷ 360 = 80 units;  C = (80 ÷ 120) x 360 = 240 closings.

 

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Pipeline Workshop™ No. 11: Save the Date

Posted November 26, 2018 By Fletcher Groves

The next in the series of production management workshops in the open, sponsored Pipeline channel, Pipeline Workshop™ No. 11 will be held March 20-21, 2019, at the Ponte Vedra Inn and Club in Ponte Vedra Beach, Florida.

“This is my second attendance to the Pipeline Workshops™.  All I can simply say is WOW!  Fletcher and his team strive to improve the workshops and make [them] even more relevant.  I especially enjoyed playing the Pipeline Game™ again  and learning about [the] Velocity Accelerators®.  I look forward to attending in the future!”  (Carlos Alvarez, President, Alvarez Homes, Baton Rouge, LA)

“The Pipeline workshop™ was really effective in showing how operational decisions affect business outcomes and how risky a ‘more for more’ approach to growing a home building company really is.  The Pipeline games™ were not only fun, but they were super-effective in showing how unbalancing the production system, managing the constraint resource, and managing the right amount of WIP, creates predictable operational results and maximizes financial outcomes.

“At the end of the day, running a successful business is about how much money you make on the amount of money you invest.  The Pipeline workshop™ helped me understand this better than any workshop or seminar I’ve ever attended.

“I highly recommend it.”  (Charles Roberts, VP – Operations, Providence Homes, Jacksonville, Florida)

Welcome to the most intense, demanding, interactive, and challenging homebuilding production management learning experience on the planet.

And – it just keeps getting better.

In recent workshops, we have trended toward doing more with the Velocity Accelerators®;  for Pipeline Workshop™ No. 11, we are narrowing the focus, reducing the number of deeper-dives from five to just three – Business Process Improvement, Critical Chain Project Management, and Epic Partnering™ – and touching on the remainder.  The emphasis will now be more on what is immediately-available, while still casting a vision toward the future.

Doing fewer Velocity Accelerators® will allow us to do more scenarios with the production simulator and business game famously known as the Pipeline game™.  Over the course of the Pipeline workshops™, now in their sixth year, we have:  (1) shortened the game, made it faster and easier to understand;  (2) introduced an operating statement format that mirrors the attributes of homebuilding operations;  (3) found ways to transfer the learning – make the connection between operating decisions and business outcomes – faster;  and (4) started to examine areas of disruptive innovation.

Pipeline workshops™ are unlike any other homebuilding conference.

The learning split is 70% simulation/business case, only 30% lecture;  the format is intense, interactive and competitive;  the Pipeline game™ production simulations and the RB Builders: Lessons from the Pipeline© business case test attendees’ understanding of production management and challenge their ability to solve production problems.

Pipeline workshops™ build an intuitive, instinctive understanding of production principles and disciplines, and they draw the subtle-yet-crucial distinction between being in the homebuilding business and being in the business of building homes.

And – we somehow make it all incredibly fun:  the Ponte Vedra Inn and Club is a terrific AAA Five Diamond oceanfront golf and tennis resort venue;  there is a relaxing and enjoyable reception at the end of the first day;  recommendations on outstanding local dining;  plenty of opportunity for networking.

Creating a visual image of homebuilding production;  establishing the connection between operating decisions and business outcomes;  building a new way of thinking systemically towards solving core problems and managing constraints;  managing limited capacity and resources, doing more with less;  dealing with variation;  managing homebuilding production for what it is – workflow that is multi-project with surrounding, supporting, and embedded processes;  placing the emphasis on the actions that accelerate production velocity, that do more with less.

The fundamental proposition of a Pipeline workshop™ is this:  thriving on the velocity side of economic return – thriving on the velocity side of Return on Assets – is the best way to create sustainable competitive separation.

Registration for Pipeline Workshop™ No. 11 opens December 3, 2018.

Come.  Participate.  Learn.

 

Here is the permanent link to the website:  www.buildervelocity.com  As soon as early registration opens, all of the information, including the agenda and schedule, will be updated, along with the event registration and hotel reservation links.

The site also provides information about the workshop, provides reviews from builders who have attended previous workshops, and provides a downloadable Adobe PDF file with detailed information about the venue, agenda, and schedule.

The cost is $895.00 per person;  the cost during early registration (opens December 3, 2018, runs through January 3, 2019) is $750.00;  for team pricing, inquire here (flgroves@saiconsulting.com).

Sponsored by BuilderMT and Specitup.

 

      

“Our production system is a ‘pull’ system, but that wasn’t always the case”, the CEO said.  “The current system – which is new – replaced a ‘push’ system.  Like the current system, the old system had a start matrix, too, but it controlled both the rate and order of starts in a community.

“The starts slotted into the start matrix were regarded as untouchable – once they were scheduled, starts were not supposed to be missed under any circumstance.

©Mark Eaton, Dreamstime.com

“It was noted that the entire building process is protected by a buffer of available starts, which protects the start matrix from fluctuation in sales with an ‘inventory’ of starts.  That’s what we call the start buffer, and it actually sits in front of the start-to-completion process.

“Every other homebuilder proudly calls this their ‘sales backlog’, as if having a six-month backlog of contracts that they can’t start is something they actually want.  Under the old system, we looked at the backlog that way, too – the longer the backlog, the better.  We would sell a house in April, with no intention of starting it until October.  Now, we take a different approach.

“If our controls will allow the start, we certainly don’t want to miss it, but – over time – we concluded that a start buffer with a 60-day backlog provides sufficient protection for the start matrix, and corresponds to the current length of the contract-to-start process.  Any lengthier backlog – a start buffer that’s any larger – is muda; too much to manage, too much that can change.  Our homebuyers hate the wait, and it really is counter-productive.

“Under our old system, the matrix did a good job of producing starts at an even rate, and gave needed order to what was previously a totally chaotic process, but pushing starts into the system without regard to the throughput – the rate of closings – resulted in higher levels of work-in-process.  Absent any increase in either productivity or production capacity, RB Builders’ cycle times would lengthen, to the point of sometimes reducing the rate of closings.”

The intrepid, results-based consultant picked up where the CEO left off.

“That’s a good explanation”, she said.  “For most of us, once we’ve had a chance to think about it, ‘pull’ makes immediate sense, because it is linked to the demand that justifies the production.  But, the issue of capacity – whether it should be balanced or unbalanced – is less intuitive.

“It is a paradox.  It is a paradox that a production system with balanced capacity cannot achieve an even rate of production.  The term ‘balanced capacity’ means a production system that has its capacity distributed evenly throughout the system”, she explained.  “It means a production system designed with the same capacity at every resource.

“A production system with the same production capacity at every resource – in other words, a system that purposely levels its capacity across all of its resources – cannot have even-flow production.  Intuitively, we believe the opposite, that a ‘balanced’ system – one in which resources have the same capacity – produces balanced results.  However, in a production system with balanced capacity, variation and uncertainty anywhere in the system will affect production everywhere in the system, making it impossible to control or predict.

“Moreover, production systems with balanced capacity tend to be very rigid and difficult to manage.  They are not the adaptable, agile, easily-managed system we want RB Builders’ production system to be.

“Even-flow production – which we want – is an outcome, not a mechanism.  In order to have an even rate of production, we have to purposely unbalance the system that produces it, and create production ‘pull’ instead of production ‘push’.  We have to live with some amount of excess or reserve capacity on the non-constraint, on the non-pacemaker resources.”

“Doesn’t this fly in the face of Lean and TPS?”, asked the VP of Construction.  “If we want to embrace Lean Homebuilding, don’t we have to do heijunka – don’t we have to do production leveling?”

“In a controlled manufacturing environment with continuous flow, production leveling works”, said the intrepid, results-based consultant.  “The plant can move equipment, cross-train workers to do other workers’ jobs, shift production cells, change product mixes, adjust production runs, etc.  Problems can be solved much more rapidly in that environment.

“However, in an environment like homebuilding, heijunka is exponentially more difficult to achieve.  Homebuilding is not a controlled manufacturing environment.  It is the equivalent of building cars in people’s driveways.  Instead of teammates, we have trade partners that are independent sub-contractors and suppliers, who also work for our competition.  We deliver materials to hundreds of jobsites.  The more inherent variation and uncertainty is to a process, the more difficult it becomes to level production.

“Moreover, homebuilding is not the continuous, single-piece flow process that Lean prefers.  It is a build-to-order process”, she said, motioning for the SR Chorus to keep their seats.  “Lean gives you its first clue about the feasibility of production leveling in a build-to-order process, by recommending that the most constrained resource – the bottleneck – become the pacemaker.  If the capacity and production rate of every resource is leveled to the capacity and production rate of the constraint, then, theoretically, there is no constraint.  And – theoretically – you would have unlimited capacity.

“Yet, we know systems do not have unlimited capacity.  There is always a constraint.  There is always a weakest link in the chain.  We are far better served purposefully placing the constraint and subordinating everything else to it, than we are fighting for a system with balanced capacity.”

 

(excerpted from The Pipeline: A Picture of Homebuilding Production, Second Edition©,  published in Escape from Averageness® in March 2012 under the title Lean Homebuilding:  “Even-flow is an outcome, not a mechanism.”)

 

      

Part II: Lean Homebuilding: Where does Lean fit?

Posted October 28, 2018 By Fletcher Groves

“I’ll admit, at first, I didn’t understand it”, said the CEO.  “Or, at least, I didn’t fully appreciate it.  I had a hard time accepting the proposition that all the methods of Lean Production – in particular, the methods dealing with scheduling and flow – didn’t automatically translate into something we could use.  After all, if Toyota could do it, why couldn’t we?

©Mark Eaton, Dreamstime.com

“What I have since come to understand is this:  Our production system is a blend of methodologies, but, it is also – by design and by necessity – a unique, proprietary expression of how RB Builders plans and manages production from the standpoint of what it is – a homebuilding enterprise.

“Our production system is part of what differentiates us from other builders, and creates a sustainable competitive separation.  That’s what we want.  We may not be there yet.

“But – that’s where we are going.

“What we do – from the standpoint of production management in a homebuilding enterprise – combines elements of Lean, Six Sigma, Theory of Constraints, and other methods, but doesn’t mirror any one of them”, the CEO continued.  “It takes different methodologies and makes sense of them from a homebuilding perspective.”

“I’m sorry”, pleaded a superintendent, looking at the CEO.  “Please explain to me why we need to know production physics.  Why don’t you just tell us what to do?  You’ve obviously spent more time at this than us.  We would be content to get our start packages, manage our jobsites on a daily basis, and leave the understanding of production physics to someone else.”

“Fair enough”, replied the CEO.  “As an enterprise, we haven’t always been as diligent or interested as we should have been in getting those of you who actually do the work – contract it, schedule it, inspect it, approve it – to also design the work and solve problems.  There is no shortage of justification for empowering teammates to make decisions and get results.  The emphasis on results-focused, team-based performance compensation should be evidence of that.

“But – restricting the answer to the topic of discussion – RB Builders’ production system calls for more than managing jobsites on a daily basis, and assuring quality construction.

“It also calls for planning and managing production at the community level, through all three community life-stages, which includes paying attention to upstream and downstream marketing, pricing, flow, capacity utilization, maximizing throughput, controlling WIP, allocating resources – basically, everything required to plan and manage homebuilding production at the community level.

“Superintendents have to manage the schedule for each of their jobs on a daily basis, even though we also have to manage all of the schedules for all of the jobs as part of a portfolio, at both the community and company level.  Recall what we said about systems.  The parts have dependent relationships, and what affects one affects all the others.

“So, you have to do your part”, said the CEO.  “And – you can’t do it, unless you understand it.  This deep knowledge and understanding of production principles and disciplines has to become second-nature to you, a rapid, instinctive, and intuitive response to the conditions that you see, same as many other areas of RB Builders’ production system.

“As leaders, we can’t spend all of our time telling you how to do it”, he said.  “That’s not continuous improvement.  Principles and disciplines don’t change, but our deep knowledge and understanding of them – and our ability to effectively apply them – improve continuously over time.  This ongoing process of continuous improvement is as much a part of your job, as anything else.”

“Understand this”, said the intrepid, results-based consultant.  “We are going to use a lot of Lean terminology, and some other terminology, as well.  Don’t get distracted or hung-up on the terms that we use.  From a production management standpoint – from the standpoint of how you manage a production system – all of these methods have terms that can be difficult to apply in a homebuilding environment.

“We have defined the terms that are important in RB Builders’ production system.  Learn the concepts.  Adapt and apply that understanding in the context of our system.”

 

(excerpted from The Pipeline: A Picture of Homebuilding Production, Second Edition©,  published in Escape from Averageness® in March 2012 under the title Lean Homebuilding: “Our production system is a blend of methodologies . . . “)