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Lean Construction
Supply Chain Thinking
by Larry Rubrich
In Lean Manufacturing, the idea of a Lean Supply Chain is common. Organizations moving toward World Class status understand that they cannot become a World Class organization without World Class suppliers, or put another way, organizations can never be better than their worst supplier. Lean Manufacturing generally measures suppliers in five different areas as shown on the example "radar chart" below:
Lean Manufacturing Supplier Measurements
Suppliers are selected by who has the lowest "total acquisition cost" of these five measures. Continuous Improvement activities like Lean and Six Sigma are important measures since they indicate that the supplier is trying to eliminate waste so they can improve their amount of value added which means they will be able to hold or decrease prices. Often, the selected supplier does not have the lowest piece price.
Ideally in the future, CMs and GCs will use preferred Lean suppliers and subs that are measured on "total delivered project cost" versus just the bid price. A Lean Construction sub and supplier radar chart could look like this:
Lean Construction Sub and Supplier Measurements
The rating system for each of the measures looks like the three examples that follow.
Continuous Improvement Activities: Owners are demanding more value at lower costs for every project. To meet this goal on projects means not only identifying and eliminating waste in the sub or supplier's operations, but also in identifying how to improve information and material flow for the entire project.
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Score |
Rating |
Rating Details | |
0 |
Unacceptable |
No CI program in place, no plans of starting one | |
1 |
Interim |
Organization currently evaluating implementation of CI program | |
2 |
Marginal |
CI program started, no ideas or contributions yet to organizational processes changes that would enhance project value by eliminating waste | |
3 |
Good |
CI program has produced improved information and material flow on most recent projects | |
4 |
Excellent - Partner |
Open, two-way communication with a free exchange of ideas and value improvements - both organizations are improved as a result of this win-win relationship |
Lean Construction Sub and Supplier Measurement Scores - CI Activities
Quality: Scrap, poor workmanship, and rework can add cost to the project, extend project delivery dates and reduce owner satisfaction. Suppliers and subs must be in the process of developing a "Done Right the First Time" culture that focuses on how their organization can improve their quality outcomes.
|
Score |
Rating |
Rating Details | |
0 |
Unacceptable |
Completing the project more important than quality | |
1 |
Interim |
No previous experience with this sub or supplier | |
2 |
Marginal |
Occasional rework required, generally passes most inspections and commissioning | |
3 |
Good |
Done Right the First Time culture. Passes inspections and commissioning on all projects. | |
4 |
Excellent - Partner |
Done Right the First Time culture. Passes inspections and commissioning on all projects.
Uses CI thinking, ideas, and suggested improvements to enhance the quality of the entire project. |
Lean Construction Sub and Supplier Measurement Scores - Quality
Reliably Meets Schedule: Owners want projects delivered on schedule. Schedule delays and issues put project quality and delivery at risk. Reliably meeting schedules require the use of planning tools like Lean Project Scheduling and the view of other subs and suppliers as team members in completing a successful project as measured by the owner.
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Score |
Rating |
Rating Details | |
0 |
Unacceptable |
Rarely does what they say they will do - does not use Lean Project Scheduling | |
1 |
Interim |
No previous experience with this sub or supplier | |
2 |
Marginal |
Uses Lean Project Scheduling but not effectively. Meets schedules but only after unplanned extra resources are applied toward the end which strains other sub and supplier schedules. | |
3 |
Good |
Uses Lean Project Scheduling to reliably meet schedules. Coordinates well with other suppliers and subs. | |
4 |
Excellent - Partner |
Uses Lean Project Scheduling to reliably meet schedules. Coordinates well with other suppliers and subs. Uses CI thinking, ideas, and suggested improvements to enhance the schedule for this and other projects. |
Lean Construction Sub & Supplier Measurement Scores- Reliably Meets Schedule
The impetus for a Lean Construction Supply Chain must come from as close to the owner in the process as possible. This can be achieved in a Design-Build or IPD environment if CM or "core team" recognizes that if they want a World Class project they must have World Class suppliers and subs.
An additional benefit from this subs and supplier development program is the teamwork that develops on a project carries over and is enhanced on the next project. The flow of information and material is also continuously improved. Projects are no longer a group of "low bid" organizations working together for the first time.
As is the practice in Lean Manufacturing, it is difficult to guide the development of Lean subs and suppliers unless Lean is already established in the CM or GC's organization so that their implementation can be used as the model and example.
This article was written with cooperation from Rob Chartier at CG Schmidt.
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