Article

What can Construction learn from its Manufacturing cousins?

Exploring the six big challenge areas of Waste, People, Process, Finance, Technology and Quality

At the 2019 Digital Construction Week conference AEC sector specialist Andy Bates brought along Manufacturing sector specialist Dan Burrows to discuss a Manufacturing perspective on the current challenges facing Construction.

They set out to explore six big challenge areas of Waste, People, Process, Finance, Technology and Quality, looking at what differs in manufacturing and where lessons could still be learned.

Here’s how it went…

Waste

andycircle “On waste in the construction industry. The sector accounts for 60% of all materials used, creates 33% of waste and generates 45% of all CO2 emissions in the UK. We have a pretty bad reputation here. How does Manufacturing manage waste in materials?"

dancircle “Manufacturers spend a lot of time optimising up-front. Before a product is deemed production-ready, the bill of materials is scrutinised throughout its whole in order to maximise efficiency of materials use and minimise waste. During production, this process continues; the very essence of Lean manufacturing being to seek out and eliminate waste at all stages of the production process, in materials, process time, and production manpower. In a true Lean environment, waste optimisation is a responsibility devolved to every member of the production team, with each empowered to identify and put into practice ways to reduce waste”.

People

andycircle “In construction we have an aging workforce of people, and it’s often seen as unattractive employment. There is a tendency towards cheap labour, and Mark Farmer recently commented that we have too few leaders with the right skills for the future, including digital Are these also challenges for manufacturing, and how does it differ in approach from construction?"

dancircle “Manufacturing has exactly the same challenge. For many years, engineering and manufacturing education has decreased in popularity, with a resulting skills gap. The manufacturing workforce’s demographic is similar to construction’s, with more young people choosing to pursue service careers than factory careers. Over the last decade or so, this challenge has been recognised and manufacturers have spent a lot of time on engagement in education to raise their profile and dispel myths. Factories are no longer the ‘dark Satanic mills’ many perceive them to be. New apprenticeship schemes, and high-profile engineering and manufacturing projects like Bloodhound LSR have done a great deal to attract young people to technical subjects, and numbers engaging in them are starting to rise. It will be some time until we see the real effect, but the signs are encouraging”.

Process

andycircle In construction some archaic processes prevail. For example assets are designed by architects, redesigned by engineers then re-engineered for construction and assembly by contractors; only for a supply chain partner to fail and delay the whole project. A culture of “we’ve always done it this way” is omnipresent. So, how do Manufacturers address process and ensure supply always meets demand?"

dancircle “Manufacturing, across an enormous range of products, is increasingly moving towards a model whereby production is highly automated, rapid, and facilitates customisation. Large warehouses full of stock are very costly, so efforts to reduce the amount of finished stock held are truly valuable. With customers demanding everything from mobile phones to cars with a wide range of personalisation options, manufacturers are widely looking to develop an approach which allows them to produce in ‘the batch size of one’ – delivering a tailored product at high quality on demand. Automation, robotisation and digitalisation of processes are core to manufacturer’s ability to predict, produce to, and meet changing market demands; those who can adapt their process well to this way of working are highly likely to be the success stories of the future.”

Finance

andycircle “Financing of construction projects is based largely on lowest capital cost tendering. Teeny margins are commonplace and subbies are motivated by ‘piece work’. Projects are sometimes poorly managed with respect to costs, and factors such as vulnerability to raw material costs, defect handling, variations, late payment and offset investing can all contrive to threaten the bottom line. An unfair distribution of risk exists across the sector and the upshot is that many companies are ‘surviving’ instead of ‘thriving’. What is different about the way manufacturing companies bid for, and manage their work financially?"

dancircle “Manufacturers are nothing if not both realistic and pragmatic. In Construction, it appears that there is a ‘porous bottom line’ to bids; meaning that costs always seem to be able to be cut, even where it seems obvious that there will be a detrimental impact on product quality. Manufacturers simply don’t do this – the cost to make a product (from its raw materials + labour costs + transport costs + other costs) IS the cost. If you can’t buy the raw materials any cheaper, or lower other costs further, the product cost can’t come down. OK, so you could move production from a high-value economy with high labour costs to a developing economy, but there is always finite room for improvement. If I asked Volkswagen to produce me a new car with the performance of a Bugatti Veyron, the space of a Passat, the equipment of a Bentley and the ease of parking of a Polo, and to do it for the price of a Skoda Fabia, they would simply tell me it cannot be done. Construction companies must gain control of their costings and make sure they know, exactly, what is the REAL minimum cost that they can reach; and they must not be afraid to tell potential customers “we’re sorry, but you simply can’t have it all”.

Technology

andycircle “Technology adoption and data management in the sector have suffered from insufficient investment, available skills and support. There are too many proof of concepts going on and the ‘minimum viable product’ culture is not really present, yet. There is an abundance of data not being collected, and when it is stored it is not being used to inform performance. Again, most of the innovation risk is with the main contractor. How does Manufacturing successfully adopt new technology?"

dancircle “Well, the answer is, honestly, “not always well”! Joking aside, manufacturing is generally reasonably good at technology adoption, often driving others forward. The Industrial Revolution drove forward the global economy in the late 18th and early 19th century, and manufacturing was behind that. Fast forward to the late 19th century and the adoption of mass production, assembly lines and electrification of factories was the same story. Same again in the 60s and 70s, when manufacturers adopted computer controlled production capabilities, process automation and the first robotised production operations emerged. There’s a good reason why the current revolution in automation, AI, the Internet of Things, Cloud technologies, 3D printing and the like is referred to in manufacturing circles as ‘the fourth Industrial Revolution’ – because manufacturing is once again at the forefront of technology adoption. Individually, manufacturers incentivise good technology adoption by upskilling workers who engage well and paying them accordingly, whilst those who don’t will remain in the lower skilled roles on lower pay rates. Customers tend to drive manufacturing forward as well – would BMW provide 15 quadrillion combinations of Mini that can technically be specified if there wasn’t a demand from customers? The days of Henry Ford’s “any colour you like, as long as it’s black” are long gone. Manufacturers are faced with a stark choice; adapt and adopt technology, or die”.

Quality

andycircle "In construction poor quality fuels a performance gap in built assets. Buildings simply do not perform as well as they should, and the root cause is often costs cutting. Value in the construction chain is often difficult to quantify, and clients are often not inclined to push value or set measures. Poor brand presence does not help, and often there is no name over the door other than the architect. Buy a house and expect a snagging list of problems. Buy a car and anticipate trouble free motoring. In construction it is often the case that a building does not perform to specification, and that this a ‘norm’. Why is this not the case in manufacturing?"

dancircle “I think this is down to poor expectation setting. We all instinctively KNOW that if we buy a newly built house it will come with a list of snags a mile long, which the builder will take ages to fix, often badly, and some of which we’ll either learn to live with or fix at our own cost. Why is that the case? We don’t expect a new car to need us to open the bonnet every week, do we? Go back to the 70s, though, and if you bought a new Morris Marina you knew you’d end up underneath it with reasonable regularity. What changed? The revolution in automotive quality was driven by challenger brands like Honda, Datsun (Nissan), Mazda and the like. Some manufacturers made huge efforts to improve product quality to compete with the new brands, and some died away; but the industry-wide quality improvements reset our expectations. The famous VW ad campaign which ended “if only everything in life was as reliable as a Volkswagen” did wonders to manage consumer expectations that a new car meant reliability, quality, and safety. Until such a challenge comes to shake up construction, and consumers are led to expect higher quality products, things may not change dramatically. Changing customer expectations is absolutely key”.

Technology in M&A Event

22 January 2020

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