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1、2004 Akel, Tommelein, and Boyers. All rights reserved. Proceedings 12th Annual Conference of the International Group for Lean Construction IGLC 12 Copenhagen, August 2004 1 APPLICATION OF LEAN SUPPLY CHAIN CONCEPTS TO A VERTICALLY-INTEGRATED COMPANY: A CASE STUDY Nadia G. Akel1, Iris D. Tommelein2,
2、J.C. Boyers3 ABSTRACT This study focuses on the application of lean supply chain concepts to a vertically-integrated pre- engineered metal building manufacturing company, Butler Manufacturing, in order to help streamline its order processes. Specifically, the study discusses illustrates the applicat
3、ion of value-stream mapping tools to reduce cycle time for the Butler order process. While value stream mapping tools have been used before in construction cases, this paper presents an analysis for a different context (that of a Butler order) as well as a different industry sector. In addition to t
4、he value-stream analysis, the paper discusses specific supply chain metrics that are used in this case study to analyze order data that cover Butlers in-house supply chain from order-taking to shipment. The overall aim of this research is to assist Butler in determining to what extent vertical integ
5、ration is appropriate for them in order to entrench itself in the pre-engineered metal building market. KEY WORDS Vertical integration, value stream mapping, supply chain management, lean production, pre- engineered metal building systems, Butler Manufacturing, change orders. 1 Ph.D. Student, P.E.,
6、Civil and Envir. Engrg. Department, 215 McLaughlin Hall, Univ. of California, Berkeley, CA 94720-1712, TEL/FAX 925/465-4655, 2 Professor, Civil and Envir. Engrg. Department, 215-A McLaughlin Hall, Univ. of California, Berkeley, CA 94720-1712, 510/643-8678, FAX 510/643-8919,
7、3 Corporate Alliance Team Operations Manager, Butler Manufacturing Company, 700 Karnes Blvd. (64108) P.O. Box 419917, Kansas City, MO, 64141-0917, 816/968-3914, FAX: 816/968-4385, 2004 Akel, Tommelein, and Boyers. All rights reserved. Proceedings 12th Annual Conference of the International Group for
8、 Lean Construction IGLC 12 Copenhagen, August 2004 2 INTRODUCTION This research investigates lean supply chain practices at Butler. Butler engineers, designs, manufactures, and erects pre-engineered metal buildings and components both domestically and internationally. The Butler supply chain compris
9、es supply in-house, reaching from one functional division (e.g., design) into another (e.g., fabrication). It also reaches outside of the organization, upstream to third-party vendors and downstream to independent contractors. The companys vertically integrated nature creates a unique opportunity wi
10、th regards to improved supply-chain practices in the otherwise fragmented AEC industry. For instance, Butler is able to fabricate all primary and secondary structural steel components of a 100,000 ft2 building in a 13- day time window after release of detail drawings. Butler offers a variety of pre-
11、engineered metal buildings, ranging from more standardized, modularized designs to 100% custom designs. At one Butler fabrication facility, for instance, the standardized, modularized designs make up about 2/3 of the total number of orders. Standardization and modularization create unique opportunit
12、ies for efficient supply chain practices. The researchers, jointly with their Butler sponsor, therefore decided to study these most standardized products, which Butler calls the A-cell buildings, particularly since A-cell buildings comprise 60% of Butlers orders. A-cell buildings are based on a kind
13、 of parametric design that allows for customization while also considering efficiency and cost-effectiveness of fabrication. While Butlers product takes advantage of Butlers in-house design and fabrication capabilities, information and materials do not flow as smoothly as they could across internal
14、organizational boundaries. As a result, the product lead time from order taking to materials delivery on site is larger than it could be, when considerations for continuous flow are taken into account. The purpose of this case study is therefore to explore the benefits of applying lean production an
15、d supply chain management practices to Butler. The study focuses on Butlers supply chain practices with regards to the design and fabrication of its A-cell buildings in order to investigate the possibilities of achieving closer alignment between Butlers design/manufacturing arm and its construction
16、arm. This entails identifying internal hand-offs and buffers, and then creating flow and implementing other lean practices in Butler and its subsidiaries. Alignment may be achieved by implementing lean production principles not only within but also across organizational boundaries. BUTLER BACKGROUND
17、 Butler performs the design of its pre-engineered metal buildings in-house because the required structural engineering knowledge in cold-formed steel design is neither widely taught nor readily available. In fact, Butler has engineering design offices in each of its six U.S. manufacturing facilities
18、 to serve regional markets. These design offices handle the more routine designs of smaller projects. In recent years, the pre-engineered metal building industry has moved from modular, fully standardized buildings to custom buildings. Butler has followed that move but many of its processes rely on
19、parametric designs so that the company can still take advantage of modularity in its order-taking, materials-procurement, and fabrication processes. Butler brings its building systems products to market through various agreements with general contractors. It sells its materials predominantly through
20、 two construction channels Butler Builders, a network of local, independent general contractors authorized to sell and erect Butler Buildings, and Butler Construction (BUCON), Butlers own construction arm. Butlers two main types of distributors serve different construction markets and therefore do n
21、ot compete with each other. Akel et al. (2001) describes Butlers organization and distributor network in 2004 Akel, Tommelein, and Boyers. All rights reserved. Proceedings 12th Annual Conference of the International Group for Lean Construction IGLC 12 Copenhagen, August 2004 3 further detail. Tommel
22、ein et. al. (2003) describes Butlers supply chain process in greater detail than this paper. BUTLER ORDER DATA While this case study focuses on Butler as a national corporation, most of the data was obtained in working with personnel at their Visalia, CA plant. This choice was driven largely by prox
23、imity of this plant to U.C. Berkeley (4.5 hour drive each way) but also by the fact that personnel at this plant already took significant effort in mapping their processes and implementing lean production practices. Such practices consistently lead to improved supply chain performance. The data for
24、the value stream mapping analysis are based on 21 actual Butler Visalia Pronto orders. These are all the Butler Pronto orders for a single, larger-sized Butler Builder placed in 2001. These 21 orders correspond to 18 projects in the California Central Valley. Therefore, for the most part, each of th
25、ese Butler Builder projects corresponds to one Butler order. From all the data, there was one Builder project that was broken down into three Butler orders. Valley Steel orders were selected because Valley Steel is Butlers largest Builder, in terms of dollars accumulated. METRICS At its production f
26、acilities, Butler uses three main metrics: value added time (VAT), manufacturing cycle time (or throughput time), and manufacturing lead time. These terms are defined below along with other supply chain metrics that are used in this case study to analyze order data that cover Butlers in-house supply
27、 chain from order-taking to shipment. The definitions used here are from Hopp and Spearman (2000), the Supply Chain Operations Reference (SCOR) Model Metrics (SCOR 2000), and the Lean Construction Institute (LCI 2002). Cycle Time unit of time: The time for a product to go from the beginning to end o
28、f a production process; i.e., the time the product spends as work-in-process (Hopp96, Lean02). Cycle time includes three components: (1) value-added time, (2) setup time, and (3) wait time; these are defined next. Butler refers to cycle time as the manufacturing lead time (MLT). Butler also uses man
29、ufacturing cycle time (MCT) to denote VAT and Setup Time. Cycle Time = VAT + Setup Time + Wait Time = MLT = MCT + Wait Time Value-Added Time (VAT) unit of time: The time necessary to actively work (design, engineer, fabricate, etc.) on an item (such as a project design, a beam, a clip, etc.). The ti
30、me spent to perform a conversion task. VAT does not include setup or wait time. Setup Time unit of time: Time it takes to change over and ready a machine or production unit to start the next task or operation. Queue Time unit of time: Wait time. The time that an item is sitting around waiting in a q
31、ueue. Throughput (or Throughput Rate) unit of quantity/unit of time: The average output rate of a production process (machine, workstation, line, plant) per unit time (e.g., parts per hour) (Hopp96, Lean01). The limit on the throughput is the capacity. Capacity unit of quantity/unit of time: an uppe
32、r limit on the throughput of a production process (Hopp and Spearman 2000 p. 216). 2004 Akel, Tommelein, and Boyers. All rights reserved. Proceedings 12th Annual Conference of the International Group for Lean Construction IGLC 12 Copenhagen, August 2004 4 Schedule Plan Stability: The number of times
33、 the scheduled delivery date changed after it was fixed once it appeared within the critical time fence. The critical time fence defines the moment in time after which changes to the order become significantly more expensive to accommodate than they were, had they been made earlier (e.g., materials
34、that were obtained and partially completed may become obsolete). It is the boundary between flexible and fixed capacity SCOR (2000). Delivery Performance to Scheduled Commit Date: The percentage of orders that are fulfilled on or before the original scheduled or committed date (SCOR 2000). Planning
35、Horizon: The average days between planned start and actual start of construction activities Time Work Time/Elapsed Time: A utilization measure, intending to identify when work was not possible. Note to nadia: Good but not enough data to be used. ANALYSIS AND OBSERVATIONS VALUE STREAM ANALYSIS: BUTLE
36、R ORDER PROCESS Value stream mapping is used by the Toyota Production System practitioners to depict current and future, or “ideal,” states in the process of developing implementation plans to install lean systems. A value stream analysis of the Butler order process was performed in order to assess
37、information and material flow, to identify the sources of waste, and to help visualize the entire order process. Per Rother and Shook (1998), Brunt (2000), Rother and Harris (2001), and Jones and Womack (2002), a value stream consists of all the actions (both value and non-value added) currently req
38、uired to bring a product through the main flows essential to every product: (1) the production flow from raw material into the arms of the customers, and (2) the design flow from concept to launch. Value Stream Map: Current-State To create the value stream map for Butlers order process (Figure 1), a
39、n order was followed from the point at which an order is placed by a Builder to the point at which the Butler product is shipped to the construction site. The value-adding steps are shown as rectangles, and the hand- offs with delays are shown as triangles. 2004 Akel, Tommelein, and Boyers. All righ
40、ts reserved. Proceedings 12th Annual Conference of the International Group for Lean Construction IGLC 12 Copenhagen, August 2004 5 Project Order Assigned Engineering Design Design Check Engineering Detailing Engineering Release to Manufacturing ShipFabrication 5 days2 weeks (not including permit del
41、ays) 3 weeks Permits 1 mh (assumed)4 mh for standard projects2 mh16 mh2 wk to 2 yr 0 mh (assumed)3-4 days Screen Order Shipment on Site 123 4 Average Total Queue fast-track delivery is plagued by uncertainty: For A orders, the planned overall average duration (from order assigned to ship date) is cl
42、oser to the actual than for B orders. This discrepancy is primarily due to the fact that orders with COs have a much longer actual average engineering release to ship date lead time (11.4w) than orders without COs (6.1w). This suggests that change orders adversely affect fabrication scheduling, ther
43、eby hampering its ability to deliver the product in a reasonable manner. (fabrication forecasting is hard / what % of capacity is Visalia running?) Schedules always slip: For all Butler orders (those with or without COs), actual ship dates exceed original and revised planned ship dates by several we
44、eks, about 3 weeks for A orders and about 5 weeks for B orders. This suggests that Butler Plants fabrication scheduling can be improved so that planned dates are less optimistic and closer to actual dates. DELIVERY PERFORMANCE TO SCHEDULED COMMIT DATE Of the 21 orders analyzed, only 17 had informati
45、on relating to actual ship dates. Among these, only 4 were fulfilled (actual delivery) on or before the original planned ship date. Therefore, the Delivery Performance to Scheduled Commit Date ratio is a mere 4/17 or 23.5%. The actual ship date of these four orders coincided exactly with the origina
46、l planned ship date, so that none of the 4 were shipped early. The percentage of orders that were fulfilled within a week and three from the original planned ship date is 41.2% (7/17) and 47.1% (8/17), respectively. In order to better comprehend the reasons behind the poor estimation of original pla
47、nned ship dates, Butler should compile the reasons for failure and a conduct a root cause analysis. LESSONS LEARNED Several lessons are learned from analyzing the Butler case and its desire to succeed: Elasticity in production capacities: Since frame production is usually the fabrication constraint
48、at the Visalia plant, Butler always runs frame production (primary steel fabrication and its associated connections) at this plant 3 shifts per day, 5 days per week. The other materials typically do not run at capacity. These typically run on 1 or 2 shifts per day, depending on the component produce
49、d and demand for that component. This elasticity in the production capacity (by controlling the number of shifts used per day) to accommodate market variability has helped Butler maintain competitive delivery schedules while mitigating costs of non-critical production activities. Modularization and
50、its impact on the production process (supply chain): By categorizing designs according to degree of project customization, Butler was able to improve the efficiency of its design function and fine-tune it to take advantage of its fabrication capabilities. Reaping advantages of vertical integration:
51、Butler has realized many advantages by integrating design and construction with manufacturing. Some of these advantages are economies of combined operations, information, stable relationships, avoiding market transactions, and production (internal control and coordination); an enhanced ability to di
52、fferentiate; ability to enter a higher return business; assuring supply and/or demand; and elevating entry and mobility barriers (Akel 2001). Serving customer needs supplier design for constructability or mistake-proofing (poka- yoke): Butler spends considerable time and effort learning from its Bui
53、lders and BUCON 2004 Akel, Tommelein, and Boyers. All rights reserved. Proceedings 12th Annual Conference of the International Group for Lean Construction IGLC 12 Copenhagen, August 2004 13 what the degree of constructability is of their products. The company invests heavily in research and developm
54、ent in order to make its products more appreciated by building erectors as well as owner-operators. For example, Butler worked with an upstream supplier to engineer a new kind of sealant (a putty-like material with tiny cubes in it) that a worker cannot compress too much during installation (doing s
55、o would squeeze the material out from the joint and thereby prevent sealing action). This putty material comes is rolled with layers separated in easily removable, non-tear plastic strips, and one side of the strip is precut lengthwise to allow for easy positioning of a screw through it. Gaining ins
56、ight into product demand: In recent years, Butler has established a Corporate Alliance group that courts large owners, users of large Butler buildings. Because these owners have facilities around the country, sometimes even around the world, no Builder is in a position to serve them consistently. Bu
57、tlers Alliance group was formed exactly for that reason. In developing a close relationship with them, Butler also is gaining insight into upcoming demands for their products, which is of course extremely valuable from a production viewpoint. Standardization: Butler has been able to provide a relati
58、vely short made-to-order delivery time by standardizing products, automating large parts of the design process, maintaining approximately 3-month worth of inventories, and distributing production capabilities around the country so as to be close to delivery locations. CONCLUSIONS AND RECOMMENDATIONS
59、 Although Butler is proactive about improving its processes, its application of lean production resides primarily at the plant level. By applying lean production principles across its internal functional divisions, Butler can realize additional improvements, in areas such as: Batching: The batching process from order-to-phase-to-manifest could be improved to facilitate flow. The design information may not be needed all at once (as Pronto demands now), given that only some information is needed to start production. For example, the primary structurals can be designed first and released into pr
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