anebyhus

Workshop on industrialization of prefabricated
houses
Prof Lars Stehn and Ass.Prof. Helena Johnsson
Division of Timber Structures
Luleå University of Technology
Workshop idea
1. Customer focused effectiveness tools and methods
(do we do the right things)
2. Lean Production efficiency tools and methods
(do we do things right)
1
Customer
process
2
Production and
design processes
Considerations from a market
perspective – what is a
business model and how are
they used in Sweden?
The Swedish industry of single family
timber-based houses
• Consists of approximately 50 companies, with a total turnover
of approximately close to one billion euro for 2009.
• 13 companies represents approximately 80 percent of the
industry with a total net turnover of 77 million €,
• Each company has a total net revenue ranging about 11
million € and upwards
• What business models are viable/profitable
• What is a business modell?
Business models for single family housing
in Sweden
Business model
1
2
3
Exclusive customer fit
Market
position and
offering
Operational
platform:
Design
adaptation
Operational
platform:
Production
Top of the line –
High status. A
unique house
that is customer
fit
Customer-driven
development
Mostly manual
unit production
Customized from a broad
product range
A broad range of
houses for every
need
Low cost and strictly
standardized
Low cost and
value for money
Very few choices
High degree of
adaptation. More
Manual
product and
combined with
component
automated unit
platforms
production
Lean production
Standardized.
towards mass
High degree of
production of
platform thinking
certain modules
Company
Älvsbyhus
Smålands-villan
Eksjöhus
Trivselhus
Västkust-stugan
Myresjöhus
LB Hus
Business
model(s)
Number of standard
models in catalogue
3
16
3
12
2+3
1
2
48
>60
40
2
54
2+3
39
Average revenue margin
2001-2009 in %
31.6
(266 M€)
21.5
17.7
16.5
14.9
10.3
(125 M€)
8.8
(105M€)
Götenehus
Willa Nordic
Värsåsvillan
Anebyhus
A-Hus
2
51
8.0
1
2
2
2+3
>60
51
42
35
7.3
6.8
5.4
4.8
Finndomo
2+3
55
-10.9
Tough situation for Swedish single family
houses companies
• Historical single family houses rate to total residence
construction 40-45%. Now 25%: Lost market shares
• Low price increase but higher customer demands on quality
and standard raise: Smaller company profits
• Maximum 85% of house price through mortgage loans: Fewer
get loans
• Crisis in world economy: Fewer will or wait to invest in
housing
• Harder demands on energy efficiency and higher municipality
services and inspection costs lead to price increase:
Suppressed investment interest
The connection between market
success and production efficiency,
the concept of decoupling point
(customer adaptation), the trade off
between customization and
production
Standardization versus Flexibility
Higher option for customizaton
design level
NON feasible
match between
production set up
and design
organization
market offer
Code based
design
Open building
systems
Closed
building
systems
Standardization of
manufacturing
product specific
Catalogue
houses
Site
construction
Flat element
production
Module
production
Mass production
Market demands should be matched to
production capability
Production strategy
Market strategy
Manufacturing capabilities
Quality
Delivery (dependability)
Cost efficiency
Flexibility
Market demands
Production design
Fixed assets and equipment
Organization
Product planning and control
Supply chain integration
Process technology
Market offer
Product type (customized to standard)
Product range (wide-narrow)
Demand volume
Price
Conformance to Quality
On-time delivery
General strategy to increase production
capabilities
• If a producing company seeks higher effectiveness
• The general production strategy is to employ methods for:
1. Attaining higher quality (getting quality right and no need for
rework)
2. More accurate and predictable delivery of houses
If a company has its quality, delivery dependability under control
3. increasing cost efficiency, and flexibility should be
implemented
Quality
1
Delivery
Cost
2
3
Flexibility
Two examples on how to connect market
demands to production solutions
The main question is how to meet market fluctuations
1. Can fluctuation of market demands (volume and
product type) be balanced by prefabrication based
on forecast, i.e. smart build up of inventories?
2. Can fluctuations in market demands be met by
delivering different product types (standard to
customized houses) using one production facility
design?
Market fluctuation
vs.
smart inventories
Singe family housing manufacturing
production
• House production is initiated only after the contract
for a new home has been signed
• No unsold homes are held in stock – no inventories
‒ Reduces homebuilders’ exposure to financial risk
‒ Provides possibilities to deliver customized homes.
‒ The order-pushing results in longer delivery times
A volatile market is a problem
• The fluctuating market demands in terms of variety of
homes and variability of volumes creates:
‒ Planning difficulties to keep own personnel and
subcontractors
‒ In times of high demand problems of keeping delivery times
– levelled production
• The balance between fluctuation and stability of the
production system is important for homebuilders to
stay in business
Research tool
Value stream mapping (a Lean tool)
Research tool
Lean: stable and predictable
production based on planning
Agile: response to fluctuating market
demands, geared towards satisfying clients
• The point in the material flow where the clients’ orders
penetrate
• This represents a structured inventory of semi complete
systems components
Research tool
At the start of the production
process: customization is
maximized
At the end of the production
process: customization
minimized
Smart inventory management can speed
up the delivery time
• By using simulation of the mean time and standard
deviation between clients’ orders
• The delivery time was shown to decrease with 10%
while keeping the same work force and work load
Lu, W., Olofsson, T. and Stehn, L. (2011) 'A lean-agile model of homebuilders'
production systems', Construction Management and Economics, 29: 1, 25 — 35
Market fluctuation
vs.
product diversification
Can one mix different market and
production strategies in one company?
• Calculations on annual results for a single family
housing company offering and mixing the production
4 different product ranges of houses
• What if scenarios were created by calculation
different types of product mixes and assuming:
– 100% of the factory’s capacity is utilised, all of the houses sold
– Company will reduce their throughput time by 10% when
producing narrow range of house types
Can one mix different market and
production strategies in one company?
Business model 3:
Business model 2:
Low cost and strictly Customized from a
standardized
broad product range
Business model 1:
Mix of business model
Exclusive customer fit 2 and 3 :
Contemporary state
Standardization versus Flexibility
Higher option for customizaton
design level
Code based
design
BM 3
Open building
systems
Closed
building
systems
BM2
BM1
Standardization of
manufacturing
product specific
Catalogue
houses
Site
construction
Flat element
production
Module
production
Mass production
Can one mix different market and
production strategies in one company?
• Although the company was able to produce
customised elements the manufacturing facilities is
mainly adapted for a product range representing a
low price strategy
– To produce customised houses the production line and
resources have to be much more flexible.
• The second reason for the differences in annual
results relates to the company’s calculations of the
contribution margin for each product type
– The pricing of customised house types needs to be
developed