Applying Lean Manufacturing Principles to Development, Design and Construction- Post 1 of 2

James (Jim) McGibney-Development Services Consulting and Support
Commercial and Industrial Facilities
and
Phil Macey-National Director Collaborative Project Delivery, JE Dunn

The Beginning

“ I knew we were in trouble when the order arrived” a friend shared with me, while we were talking about Lean Manufacturing and the Toyota manufacturing processes being used by a wide range of Japanese businesses. David was in charge of a television manufacturer for a large US conglomerate, and had just received his first order of picture tubes from a Japanese Manufacturer. This was in the mid 1980’s and he had gone through a very intense negotiation for that order. The Japanese provider had questioned every term in the contract, and was particularly puzzled about the term Acceptable Quality Limit or AQL. (see http://qualityinspection.org/what-is-the-aql/). David took the time to explain, in detail, that AQL was a methodology of testing products during manufacturing that would allow you to arrive at a statistical measure of the percentage of defects you would accept in a large manufacturing run. In that instance the AQL was 1.5%.

“ About two months later the team that was managing the Receiving Department in the plant called me, and had some questions on how to process the first delivery from our new Japanese supplier, ” David continued . “When I got to the dock, I knew we were facing a new and powerful manufacturing paradigm shift. On the dock were two shipments. One had 98.5% of the picture tube order; all had been tested and could be moved to the manufacturing line immediately- no inbound inspection was required. The other shipment was 1.5% of the order and had the defects they had found during their manufacturing process. The Japanese were understandably puzzled as to why we wanted those defects. We changed our future orders.”

David’s initial comment turned out to be right. The manufacturing of picture tubes moved rapidly offshore to Japan and other parts of Asia, as they were able to produce a better product at a better price point. Manufacturing of the entire television went offshore a few short years later.

I was meeting with David as I had just finished a new DRAM (Dynamic Random Access Memory) manufacturing plant in Portland for Fujitsu Microelectronics, and had been introduced to a number of new plant design strategies that I was trying to better understand. The concept of the “Toyota way” was beginning to find its way into the daily conversation of manufacturing design teams. We were being introduced to Six Sigma (http://en.wikipedia.org/wiki/Six_Sigma) design strategies; Eliyahu Goldratt had finished two novels illustrating his ”Theory of Constraints”’ The Goal  – and  Necessary But Not Sufficient

“continuous improvement” was simply an entry point into the manufacturing discussion of that day.

In 1991 James Womack, Daniel T. Jones and Daniel Roos published
The Machine that Changed the World, which gave the world a new term—lean production– that could be used to wrap up a wide range of these new manufacturing strategies. The book looked at Toyota’s unique way of producing a consistently better vehicle. Very quickly, American car manufacturing began to change and adopt many of these ideas.

Toyota Motor Company was the founder of lean manufacturing and production, which consisted of a focus on;

– Reducing lead times ;

– Eliminating non value adding activities;

– Reducing variability.

The simplicity of the words belied the complex changes that had to be continually made to the manufacturing and procurement processes, and we were quickly introduced to; “just in time” inventory management; pull scheduling; buffer reduction; WIP (work in process) inventory reduction; continuous improvement; value stream mapping; team building; six sigma and “zero defects” as a requirement and not a goal. In short, the automobile industry was being “re-made” and in a very few short years. The process was not complete until the middle of the last decade —to the degree that a lean production process is ever considered complete.

Lean Production in Micro-processing and Wafer Fabrication

In the those years, a number of micro-electronic manufacturing companies were born across the globe. Intel, Micron, Fujitsu, — (see http://en.wikipedia.org/wiki/Microelectronics). It was and is, a deeply competitive, global industry, and when we started the design and construction of the Fujitsu Fabrication plant in Portland, we were told that a 3 month delay in “time-to-market” of their product, could easily reduce their margin on the product by some 40%. I had heard that metric from Intel and Atmel as well, so considered it to be a very serious focus.

The value of the plants that Intel and others were designing and building rapidly increased in scale and the market quickly moved from $250 Million plants being designed and built in 18 months, to $1B plants being designed and built in 12 months—typically the processor plants.

The manufacturing process became ultra clean and precise and the construction of the plant followed suit. The construction process required areas to be complete, closed off early, then cleaned completely. Once those areas were isolated, all work crews were required to be suited –including, tools , and there was continuous cleaning. The manufacturers understood that dust and debris, no matter how small, were disastrous to their process, and it was impossible to be too clean.

The design and construction process also moved to 24 hour days to meet the delivery requirements of the product. That meant a host of new safety requirements continually being reinforced on site, continuous training of the teams, the use of modular and prefabricated systems for speed and quality control, and a relentless learning process for all team members as the production tools became more complex.

In short—each project dealt with worldwide competition, significantly reduced schedules and significantly increased quality requirements—which led to a growing use of the ”Lean Processes” that Toyota had developed in the 1960’s. The high tech industries understood the need to streamline the design and construction process to meet the critical market deadlines and the design and the construction firms that serve those industries changed, and adopted the new delivery processes.

They developed specialized teams, that had their own educational cycles, from onsite, clean pipe, welding techniques using increasingly complicated orbital welders ( see http://www.danscertifiedwelding.com/free-consultation/ as one example) to offsite, fully inspected prefabrication of entire clean room components. It is an industry of constant change– even today.

What happened to the Conventional Design and Construction Market?

For a host of reasons- primarily cost, lack of skilled work force and lack of a client requirement- these new delivery techniques were not carried into the main stream of design and construction. But technology and urgency are finally arriving at the “everyday” job site.

As noted in earlier posts at GordianViews.com , today we are seeing the technology of the entire design and construction industry change and begin to adopt many of the tools that have been reserved for the manufacturing plants and for highly technical production projects in the past. There is an emerging focus on the entire design and build process and not just the individual focus on design, then review, then construction and finally occupancy. We are no longer responsible only for a part of the project —we are all responsible for the “whole”.

Today we see an emergence of a continuous customer focus; an understanding of the emerging workplace—how it is organized and how it will change; waste elimination at every step of the delivery process; 24 hour work cycles; continuous improvement in all project areas; world-wide sourcing of ideas and materials; and a rigid attention to quality. This process is managed by a new and emerging team of highly educated managers, skilled and degreed or highly certified construction teams, innovative and integrated design team members, and deeply knowledgeable vendors. In short—the processes of Lean Thinking and Lean Development are finding their way into all markets—industrial, health, office, educational– and the change will be relentless.

The Next Post

In the next posting we will address the changes that are underway and how we will adopt Lean Thinking into our businesses each day. We will address in detail what other firms have underway, and how we will need to change even faster to meet this new definition of Lean Delivery;

The Continuous process of eliminating (all) waste, defining and meeting (all) customer requirements; understanding and focusing on the (entire) value stream; and pursuing perfection in the execution of the project—from initial definition of the scope through move-in, occupancy and day-to-day operation.

Key References-

Application of Lean Manufacturing Principles to Construction– Lean Construction Review Journal 2005, by O. Salem and E. Zimmer;

The Machine that Changed the World– James P. Womack, Daniel T. Jones and Daniel Roos;

Lean Thinking- Banish Waste and Create Wealth in Your Corporation– James P. Womack and Daniel T. Jones;

Necessary but not Sufficient and The Goal- Eliyahu M. Goldratt;

Breaking the Constraints to World Class Performance – H. William Dettmer;

Goldratt’s Theory of Constraints– H. William Detmer;