Pipeline Simulations: Shattered Instincts and the Learning Curve of Production Management

The first-ever open Pipeline workshop, sponsored by BuilderMT and Hanley Wood, was held earlier this month, at the Ponte Vedra Inn and Club in Ponte Vedra Beach, Florida;  it was everything we at SAI wanted it to be – limited size, intense, interactive, comprehensive.

Attendees and observers alike agreed that the most compelling part of the workshop involved the Pipeline simulations:  four teams of five geographically-diverse builders (and the occasional industry expert) that went through a progression of scenarios that were simulations of homebuilding production management.

The objective of this series of simulations was to reinforce the production principles taught in the workshop, specifically:  (1) the effect of variation on a production system, (2) pull scheduling, and (3) the importance of connecting decisions made on operating matters (like flow, capacity, duration, and work-in-process) to the critical business outcomes of profitability and return on assets.

With four teams playing every game with exactly the same rules and understanding, the results don’t tend to lie.  In every category – from throughput (closings), to work-in-process levels, to inventory turns, to cycle time, to net income, to return on assets – the teams made remarkable progress, often exceeding expectations.

After the initial shock of shattered instincts, every metric is in precisely the direction you would expect, if the production principles are true and if progress is being made.  Clearly, builders attending the first Pipeline workshop learned from their participation.

They learned the principles and disciplines of homebuilding production.

Pipeline simulations are board games that teach builders to “see” production;  in a Pipeline workshop, the progression of the games mirrors the progression of the learning.

The Pipeline: A Picture of Homebuilding Production described it this way:

“Change is a necessary condition to any improvement effort, but change is difficult, disruptive, time-consuming, and costly;  the effort can fail to produce the result.  Learning needs to occur without so much cost, disruption, and risk.  Managing production and improving operating and financial performance becomes intuitive and simple, but there is much to understand.  It is counter to what is taught, therefore, difficult to grasp;  it must be learned, and that is harsh when it occurs at the cost of real operating performance and actual business outcomes.

“Pipeline games simulate the fast-paced, rapidly-changing, uncertain, risk-laden, variation-filled environment in which homebuilding production decisions must be made;  it is learning based on experience and action, not words.  Pipeline games compress the learning curve, presenting production situations that are simple, fast, easy to see and understand, that can be modified and rerun, until the principles are understood.”

(for information on future Pipeline workshops, check the Pipeline workshop website periodically:  www.buildervelocity.com)