By Chuck Ross
Constructing homes may seem to have little in common with building automobiles, but experts say contractors can learn a thing or two about operating efficiency from today's leading carmakers. "Just-in-time" (JIT) supply and other quality-improvement tactics have helped auto manufacturers increase efficiency and reduce costs so effectively that most will only do business now with vendors that have also demonstrated similar quality-assurance processes—and can prove it through specific certifications. Among the benefits of JIT programs is that they limit inventory carrying costs and storage requirements. Building pros say that these efforts can help contractors boost profits, as well.
Simply put, just-in-time delivery for builders means that building supplies arrive at the job site only as they are needed—not a day before and certainly not a day too late. As a result, contractors see less cash tied up in inventory and require less space to store materials. A bonus: Opportunities for thieves to make off with increasingly expensive building materials are significantly reduced; so are the accompanying costs and increasing insurance rates.
Getting just-in-time just right
Adopting a JIT program poses some obvious challenges for both general contractors and their sub-contracting partners. Project planning is crucial for the success of these efforts. If one trade falls behind for any reason—no matter how good it is— materials delivered for the delayed work can pile up or need to be returned and restocked, unless there is enough storage. Repeated problems can have a waterfall effect, with a potentially disastrous impact on project timelines and usually limited storage space.
"It's just hard for builders to grapple with, to make it happen," says Frank Alexander, director of the National Housing Quality (NHQ) program operated by the NAHB Research Center. "They have all the best intentions, but then a contractor gets two days behind and the order can't be changed."
Take a step back
To make JIT efforts work, logistical pros say, contractors need to take a step back from detailed delivery schedules. Instead, these experts argue, builders need to start with a big-picture plan for the project's overall schedule, and then stay on top of that plan on a daily basis as work progresses.
"Rather than looking at it as a just-in-time program, I think a contractor should start with a project-planning tool," says Carl Cullotta, a vice president and principal at the Chicago-based Frank Lynn & Associates, Inc., consulting firm and head of that company's Construction Practice Product Group. By working through an overall plan, Culotta says, builders can figure out where in the schedule it would make sense not to be holding inventory.
Suppliers can help
Once an overall plan is in place, builders can begin having conversations with their suppliers, Culotta says. These companies themselves have become more sophisticated at managing inventories and now are in a better position to match builders' requests for time-sensitive deliveries. "Kitting" of material—packing together the multiple products needed for a specific system installation—is one service Cullotta suggests builders or subcontractors consider investigating.
However, others note, as suppliers are boosting their JIT services, they're also becoming selective about the builders to whom they provide these offerings. If a scheduled delivery gets waved off because of job delays, the supplier has to deal with re-stocking the product in their own yard and redelivering it later.
"Suppliers are really looking for builders that have processes in place to ensure this doesn't happen," Alexander says. "They prefer dealing with some type of process."
Tools and training
Project-planning software now on the market can help builders manage this process, Alexander says. More sophisticated packages enable email notification of suppliers if project plans slip, he says. However, the software is only as reliable as the information available to it, so Alexander suggests daily status checks by field managers to ensure schedules reflect what's actually happening in the field.
Contractors and their subs also may want to consider training as they begin developing their own project-planning practices. The NHQ program (information is available at www.nahbrc.org/quality) trains building professionals how to develop their own quality-assurance programs and manuals. The group also has developed a certification program for both general and trade contractors of all sizes, which includes performance audits to review applicants' QA processes.
The program requires contractors to invest both time and money into the certification process. However, Alexander says the payback can make the effort more than worthwhile – and bottom-line results can become visible right away.
"You're looking at about four to six months to get to the point where they're ready for the certification audit," he says. "But they start to realize the benefits almost immediately."
Chuck Ross is a freelance writer based in Brewster, Mass. Besides building and construction, he has covered industrial topics including manufacturing.
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