Archive for October, 2018

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 . . . “)

 

Part I: Lean Homebuilding

Posted October 16, 2018 By Fletcher Groves

“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.

©Mark Eaton, Dreamtime.com

“I apologize. That is just the way it is.”

“You don’t need to apologize”, said the CEO.  “Just do it.  We have trusted you in a lot of ways, and, so far, you have never 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 that.”

“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 everything else, get results.”

 

(excerpted from The Pipeline: A Picture of Homebuilding Production, Second Edition©.  Initially published on Escape from Averageness® in March 2009, as the intrepid, results-based consultant helps RB Builders understand the benefits and the limitations of Lean Production)