Sub-components’ lead time optimization in precast concrete house-building industry

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Precast concrete appears to be promising in dealing with delays in housing construction, yet long lead times are apparent in this industry. Lead time refers to the time that elapses between placing and receiving an order. The construction company Janssen de Jong recognizes the problem of sub-components’ long lead times in precast concrete house-building. Sub-components are those products being integrated into the precast concrete components and they are supplied to the precasting concrete factory by various suppliers. The company seeks to optimize sub-components’ lead times, so as to increase its competitiveness. Accordingly, the current research focuses on identifying the sources of sub-components’ long lead times in precast house-building industry and optimizing them, in order to improve projects’ performance in terms of time and costs. The research draws on literature review, interviews, mathematical optimization modelling and case study.

Literature review and interviews with Janssen de Jong, a precasting concrete factory, a windows and frames supplier and an installation technology supplier revealed the large batch size of batch-and-queue manufacturing method, as the main quantifiable source of long manufacturing time, affecting significantly the delivery of sub-components and so, extending their lead time. Batch-and-queue utilizes the equipment to its maximum capacity, yet leads to stock creation at each production step. On the contrary, one-piece-flow manufacturing method (batch size of one), was indicated as a value-adding process worth to approach, yet not easily achievable, not so efficient and more expensive. One-piece-flow refers to moving the product step-by-step through each process step without non-value-added time. The conflicting interests of the suppliers and Janssen de Jong call for solutions that could satisfy both time- and cost-related interests.

The mathematical optimization model was built based on the identified conflicting relation between reducing costs and shortening lead times, in relation to the batch size. This was done considering the arguments in favor of and against both manufacturing methods. In this way, the bias is reduced. Weights are assigned to each of the objectives, denoting their relative importance to the client. A set of optimal lead times and costs is obtained, after running the model for each supplier separately, enabling Janssen de Jong to improve the project performance as per the priorities each time.

A project of 23 precast concrete houses was utilized as a case study for the model validation. Out of the involved suppliers, only the windows and frames supplier made some data accessible. This supplier already follows one-piece-flow. Access to financial data was restricted, so, a supplementary Greek company, which is active in the same field and it is highly representative of the case, was utilized. The developed model yields reasonable results compared to the real figures.

Concluding, the model proves to be effective in optimizing sub-components’ lead time in precast concrete house-building industry. However, it is recommended the model to be validated using companies from other fields (e.g. installation technology company) and incorporate further information in a future version –complex to include this in the current thesis– to achieve even higher levels of realism and applicability.