Lean Homebuilding Part II: "Our production system is a blend of methodologies . . . "

(excerpted from The Pipeline; Lean Homebuilding Part I, also excerpted from The Pipeline, was published on Escape from Averageness in October 2009)

“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?

“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”, sighed 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.”

“What I am about to say is very important”, said the intrepid, results-based consultant. “We are going to use a lot of Lean terminology, and some other terminology. 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.”