Archive for October, 2009

Lean Homebuilding

Posted October 29, 2009 By Fletcher Groves

(excerpted from The Pipeline)

The intrepid, results-based consultant helps RB Builders understand the benefits and limitations of Lean Production:

“This part is going to be production physics. It is going to seem very theoretical, and I am not even giving all of it to you. You are going to have to trust me and accept it as laws of physics. Not blindly. With an open mind. I need you to grasp the basic concepts, and just stick with me. I promise I will give you something concrete.

“But – you simply cannot understand what we are doing in reality, unless you understand the concept.

“I apologize. That is the way it is.”

“Do not apologize”, said the CEO. “Just do it. We have trusted you in a lot of ways, and, so far, you have not let us down. We will do our best to keep up with you.”

The intrepid, results-based consultant smiled, nodded appreciatively, and then continued. “From an overall enterprise standpoint, RB Builders has decided that it wants to embrace – as strongly as possible – the tenets of Lean Homebuilding, particularly when it comes to standardization of work, elimination of waste, visual management, kaizen, PDCA problem-solving, A-3 planning and policy deployment, and other areas.

“Culturally-speaking, RB Builders has decided that it wants to become a Lean Homebuilding enterprise, embodying the most useful and transferable elements of Lean Thinking. In the case of RB Builders, Lean Homebuilding’s most beneficial contribution, to this point, is having embedded a process of continuous improvement.

“However – Lean Production, even crafted as Lean Homebuilding, is not the total answer. By itself, Lean Production – or Lean Homebuilding – cannot get RB Builders to where it needs to go.

“As useful, beneficial, and vital as Lean Homebuilding has been in the area of continuous improvement, it has not been as effective in the area of production management, in the areas of what is generally known as “flow”, at least, not straight out-of-the-box.

“Like every other worthwhile production method, Lean Production does not come from a homebuilding environment. That is a problem, because – as a homebuilding company – RB’s production system has different parameters, faces different conditions, and imposes different requirements.

“We could discuss this for hours, but we do not have the time”, she said. “Let me give you several quick examples to highlight the type of “Lean issue” we see in various areas of production.

“First of all, Lean Production places a heavy emphasis on what it terms “Just-in-Time” replenishment, or JIT – the principle of producing only what is needed or ordered, leveling demand, leveling production, pull, continuous flow, etc.

“But – how does that work in homebuilding?

“As the second example, consider production leveling, or heijunka. A typical Lean manufacturer levels production based on forecast orders, not actual customer orders. Some companies are better at making and adjusting forecasts than others, but, at best, it is a mix of “change-to-order” and “build-to-order”. It is really “build-to-forecast”. To the extent there is variation in the forecasts, they either have to carry a large inventory of finished goods, have to promise very long delivery dates, or have to live with a lot of excess, and unused, capacity.

“That would be the equivalent of RB Builders having to very accurately forecast the demand for every plan it offered in every community – or – live with some combination of an enormous inventory of completed homes, in addition to its required work-in-process), live with long delivery date promises, or live with a ton of unused production capacity.

“How in the world does something like that ever work in homebuilding?

“Finally”, she said, “consider the challenge of achieving continuous flow with a totally outsourced labor force, in a fragmented value stream, with as many manufacturing facilities or production plants as we have communities. How would we make that work?

“Think about it.”

“So – are you saying that we should abandon our commitment to Lean Homebuilding?”, asked the VP of Construction.

“No. That is not what she is saying”, answered the CEO. “She is saying find a way to use the tools that work best for us, without regard to the religion or the denomination from which they came.

“She is saying, understand the playing field. She is saying, understand the parameters. She is saying, understand the world we live in.

“She is saying, do what works. She is saying, above all, get results.”