2004 Akel Tommelein and Boyers All rights reserved Proceedings 12th Annual Conference of the International Group for Lean Construction IGLC 12 Copenhagen August 2004 1 APPLICATION OF LEAN SUPPLY CHAIN CONCEPTS TO A VERTICALLY INTEGRATED COMPANY A CASE STUDY Nadia G Akel1 Iris D Tommelein2 J C Boyers3 ABSTRACT This study focuses on the application of lean supply chain concepts to a vertically integrated pre engineered metal building manufacturing company Butler Manufacturing in order to help streamline its order processes Specifically the study discusses illustrates the application of value stream mapping tools to reduce cycle time for the Butler order process While value stream mapping tools have been used before in construction cases this paper presents an analysis for a different context that of a Butler order as well as a different industry sector In addition to the value stream analysis the paper discusses specific supply chain metrics that are used in this case study to analyze order data that cover Butler s in house supply chain from order taking to shipment The overall aim of this research is to assist Butler in determining to what extent vertical integration is appropriate for them in order to entrench itself in the pre engineered metal building market KEY WORDS Vertical integration value stream mapping supply chain management lean production pre engineered metal building systems Butler Manufacturing change orders 1 Ph D Student P E Civil and Envir Engrg Department 215 McLaughlin Hall Univ of California Berkeley CA 94720 1712 TEL FAX 925 465 4655 nadia 2 Professor Civil and Envir Engrg Department 215 A McLaughlin Hall Univ of California Berkeley CA 94720 1712 510 643 8678 FAX 510 643 8919 tommelein ce berkeley edu 3 Corporate Alliance Team Operations Manager Butler Manufacturing Company 700 Karnes Blvd 64108 P O Box 419917 Kansas City MO 64141 0917 816 968 3914 FAX 816 968 4385 jcboyers 2004 Akel Tommelein and Boyers All rights reserved Proceedings 12th Annual Conference of the International Group for Lean Construction IGLC 12 Copenhagen August 2004 2 INTRODUCTION This research investigates lean supply chain practices at Butler Butler engineers designs manufactures and erects pre engineered metal buildings and components both domestically and internationally The Butler supply chain comprises supply in house reaching from one functional division e g design into another e g fabrication It also reaches outside of the organization upstream to third party vendors and downstream to independent contractors The company s vertically integrated nature creates a unique opportunity with regards to improved supply chain practices in the otherwise fragmented AEC industry For instance Butler is able to fabricate all primary and secondary structural steel components of a 100 000 ft2 building in a 13 day time window after release of detail drawings Butler offers a variety of pre engineered metal buildings ranging from more standardized modularized designs to 100 custom designs At one Butler fabrication facility for instance the standardized modularized designs make up about 2 3 of the total number of orders Standardization and modularization create unique opportunities for efficient supply chain practices The researchers jointly with their Butler sponsor therefore decided to study these most standardized products which Butler calls the A cell buildings particularly since A cell buildings comprise 60 of Butler s orders A cell buildings are based on a kind of parametric design that allows for customization while also considering efficiency and cost effectiveness of fabrication While Butler s product takes advantage of Butler s in house design and fabrication capabilities information and materials do not flow as smoothly as they could across internal organizational boundaries As a result the product lead time from order taking to materials delivery on site is larger than it could be when considerations for continuous flow are taken into account The purpose of this case study is therefore to explore the benefits of applying lean production and supply chain management practices to Butler The study focuses on Butler s supply chain practices with regards to the design and fabrication of its A cell buildings in order to investigate the possibilities of achieving closer alignment between Butler s design manufacturing arm and its construction arm This entails identifying internal hand offs and buffers and then creating flow and implementing other lean practices in Butler and its subsidiaries Alignment may be achieved by implementing lean production principles not only within but also across organizational boundaries BUTLER BACKGROUND Butler performs the design of its pre engineered metal buildings in house because the required structural engineering knowledge in cold formed steel design is neither widely taught nor readily available In fact Butler has engineering design offices in each of its six U S manufacturing facilities