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212REAL-TIME SUPPLY CHAIN MANAGEMENTUSING VIRTUAL DESIGN AND CONSTRUCTIONAND LEANSangwoo Cho1 and Martin Fischer2ABSTRACTSupply chain management in construction has evolved in response to variousinnovative tools. Field observations and focus-group interviews with supply chainmembers, however, indicate a need to design an integration methodology of thesetools to improve communication, reliability, visibility, and automation in theconstruction supply chain management. Thus the authors have developed andimplemented the integration methodology of Virtual Design and Construction, lean,and real-time data capturing tools. With this integration, improvement in alignmentbetween demand and supply, reduction in distortion of demand information, andsavings in time and efforts have been achieved in a field trial for the supply chainmanagement of the doors, frames, and hardware scope of work on a constructionproject, translating into a change in the behaviour of the construction supply chainmanagement: supply chain members enable real-time, web-based, two-waycommunication, 4D color-coded visualizations and automatic status reports of asupply chain, and model-based Last Planner , resulting in creating instant,consistent, visual coordination and communication between field crews and offsitepersonnel and bringing a high level of accountability to themselves and each aspect ofthe supply chain management.KEY WORDSSupply chain management, Virtual design and construction, Lean, Real-time datacapturing tool.INTRODUCTIONAccording to a series of interviews with general contractors, Door, Frame, andHardware (DFH) installation accounts for approximately 2% of construction costs butoften causes 30% of construction issues due to highly fragmented supply chains thathave multiple supply chain members, phases, disciplines, and materials. Thus thisresearch paper claims that improving the supply chain of DFH will eventually be akey success factor in improving supply chains on building project. In an ―actionresearch‖ environment where the first author has participated in three projects and twofocus-group interviews, three motivating cases below have been documented andanalyzed to support this claim. Research hypotheses will follow in the next section.12PhD Candidate, Department of Civil and Environment Engineering and Center for IntegratedFacility Engineering (CIFE, cife.stanford.edu), Stanford University, Stanford, CA 94305-4020,USA, Phone 1 650/723-4945, [email protected], Department of Civil and Environmental Engineering, and Director of the Center forIntegrated Facility Engineering (CIFE, cife.stanford.edu), Stanford University, Stanford, CA94305-4020, USA, Phone 1 650/723-4945, [email protected] IGLC-18, July 2010, Technion, Haifa, Israel

Real-Time Supply Chain Management Using Virtual Design and Construction and Lean213MOTIVATING CASE #1: FRAGMENTED, PUSH-DRIVEN COMMUNICATION IN SCMA DFH project manager in a construction project in Santa Cruz, CA, commented:―Closer communication between suppliers, job teams, and DFH project managers isthe best prevention of future problems with supply chain effectiveness.‖ In currentpractice of the supply chain management (SCM), the communication amongstakeholders is fragmented. And the communication is even push-driven fromupstream to downstream actors along with material flow (Figure 1) This fragmented,push-driven communication in the SCM results in higher possibility of misalignmentbetween demand and supply (Figure 2) because supplier‘s control on production anddelivery is not based on updated work plans from the field which best reflect currentprogress of installation. This misalignment, in turn, creates an unexpected increase ininventory or work-in-process, potentially translating into overruns of cost and time(Arbulu and Ballard 2004) such as additional costs because of the additional storagespace and the additional manpower required for maintaining the inventory and space.Figure 1: Fragmented, Push-Driven Communication along with Material Flow fromSupplier to Field Team and to Office Project ManagerFigure 2: Pattern Analysis of a DFH Project Showing that Misalignment betweenSupply (i.e., Date of Delivery/Receiving) and Demand (i.e., Date of Installation)Increases Inventory and Work-In-ProcessSupply Chain Management

214 Sangwoo Cho1 and Martin FischerMOTIVATING CASE #2: LOW RELIABILITY IN SCMAccording to the study on the current SCM in Figure 1, project managerscommunicate with suppliers with 6-week look-ahead schedules for placing orders tosupport construction operations. The look-ahead schedules consist of weekly workplans. Figure 3, however, shows that updating process on the work plans has a lowreliability because it is based on manual-takeoff information of quantities completedcaptured in the field using a measuring tape or even simply visual inspection.Superintendents or project managers are unlikely to go to site to check whether or notthese quantities have been really completed. Low reliability of the work plans resultsin distortion of demand information in the ordering process and then creates thebullwhip effect (Lee et al. 2004) which, across a supply chain, inserts additionalcontingencies in amount of materials ordered. This distortion of demand informationis one of the main root causes of misalignment between demand and supply inconstruction.Figure 3: Low Reliability in Updating Process of Work Plans which are Tools ofCommunication with Suppliers in SCMMOTIVATING CASE #3: LOW VISIBILITY IN SCMMany tasks in the construction SCM are manual- and paper-based. Thus the authorsobserved that there is an issue in communicating variability of demand with suppliers.Hand-marked 2D plans cannot be shared easily and quickly and paper reports ofquantities completed are not shared with suppliers. Figure 4 shows that projectmanagers need to manually enter the status from field into their spreadsheet and thenupdated weekly work plans based upon this spreadsheet. These additional worksaugment decision latency and eventually batch sizes of materials to be ordered,leading to distortion of demand information (Chen and Lee, 2009; Lee et al., 2004)Proceedings IGLC-18, July 2010, Technion, Haifa, Israel

Real-Time Supply Chain Management Using Virtual Design and Construction and Lean215Figure 4: Hand-Marked Plans and Paper Log-Based Work Plans which are notSharable Creates Negative Impacts on Communicating Where and How MuchMaterial Is NeededRESEARCH HYPOTHESESThe motivating cases indicate that current SCM in construction needs tools toimprove communication, reliability, visibility, and automation. There have beenpractical researches and system tools to improve these factors one by one.Arbulu and Ballard (2004) point out that the web-based Last Planner canincrease workflow reliability and reduce demand variability. And this web-based LastPlanner can be used for communication among supply chain members.Fischer (2003) and Koo and Fischer (2000) highlight benefits of Virtual Designand Construction (VDC) in achieving improvement of reliability and visibilitythrough accurate model-based quantity takeoffs and through 3D/4D virtual models.Lee et al. (2004) indicate that better communication tools for exchange ofinventory status information and ordering process can help reduce distortion ofdemand information and in turn improve alignment between demand and supply.Many previous researches regarding use of RFID/Barcode in construction suggestthat these real-time data capturing tools can improve visibility through ID-basedprogress checking and automation through automatic data input/output/sharing(Mueller and Tinnefeld 2007, Lee and Ozer 2007).Recently there have been researchers (Sorensen et al. 2009, Chin et al. 2008)testing a joint solution of VDC and RFID for progress management where twofactors, visibility and automation, have been improved.Despite these tools partially being used in the construction industry, there is still asubstantial need to have an integrated solution of these tools (i.e., VDC, lean, andreal-time data capturing tools) to jointly improve the four factors (i.e.,communication, reliability, visibility, and automation). With this improvement, theauthors formulate a hypothesis that the proposed integrated system can achieve in theconstruction SCM (Figure 5):1. Improvement in alignment between demand and supplya. Days of inventory turnaround on siteb. Days of work-in-process on sitec. Rate of just-in-time deliveryd. Days of job delay due to non-availability of needed elementsSupply Chain Management

216 Sangwoo Cho1 and Martin Fischer2. Reduction in distortion of demand informationa. Latency of decision making and information sharing3. Savings in time and efforta. Time savings in recording, documenting, communicating, andreportingb. The number of manual, unreliable steps replaced with automatic,reliable stepsFigure 5: The Proposed Integrated System of VDC, lean, and Real-Time DataCapturing ToolsSYSTEM DEVELOPMENTWith a great deal of help from end-users (i.e., field foremen, suppliers, and projectmanagers) and software developers, the integrated system has been developed andtuned-up through simulations in a controlled environment (Figure 6). Each status ofmaterials in a supply chain is scanned, 4D color-coded, quantified, and then reported.Then both time logs from real-time data capturing tools and quantities completedfrom VDC models are combined to create as-built progress of a supply chain which isto be compared to as-planned work plans in the web-based Last Planner to calculatePPC (Percentage of Plan Completion) and accordingly update daily/weekly workplans.Proceedings IGLC-18, July 2010, Technion, Haifa, Israel

Real-Time Supply Chain Management Using Virtual Design and Construction and Lean217Figure 6: Overview Diagram of the Integrated System from Real-Time DataCapturing Tools to VDC and then to Last Planner Through swimlane mapping and time study on both current and integrated SCMsystems, time-consuming, unreliable steps could be deleted or replaced withautomatic, reliable steps. Among them, two major steps are introduced in Figure 7.Figure 7: Swimlane Map and Time Study on Current and Integrated SCM SystemsSYSTEM IMPLEMENTATIONOne pilot project was selected for testing the integrated SCM system. Projectdescriptions are as follows:Project: University of California in Santa Cruz - Porter College B (six-story,102,751SF)Supply chain: Manufactured – Shipped – Received – Installed – Punch listThe number of materials in the supply chain: 234 doors, 234 frames, and 2203hardware (Contract 800,000)Supply Chain Management

218 Sangwoo Cho1 and Martin FischerPeriod of implementation: June 2009 – September 2009Through barcode scanning, current status of each material in the supply chain wascaptured (Figure 8) and transferred to the database of the VDC for publishing webbased 4D color-coded visualizations and detailed status reports based upon the modelbased quantities completed (Figure 9). The supply chain members (i.e., suppliers,field teams, project managers, and owner) had access to the project website to see thestatus reports and visualizations.Figure 8: Barcode Scanning and SCM Status Transferring from Field to VDCDatabaseFigure 9: 4D Color-Coded Visualization and Detailed Status Reports on the ProjectWebsiteThe model-based quantities completed and the time logs from the barcode scanningare transferred to the web-based Last Planner where PPC is calculated based on asplanned and as-built quantities and durations. This model-based, real-time PPCenables automatic micro-management on last planners‘ commitment by instantlydetecting mismatch between as-planned plans and as-built progress, leading toProceedings IGLC-18, July 2010, Technion, Haifa, Israel

Real-Time Supply Chain Management Using Virtual Design and Construction and Lean219continuous update of work plans for better alignment between demand and supply(Figure 10).Figure 10: Web-based, Model-based, Real-time Last Planner (Image courtesy DPRConstruction, Redwood City, CA)Through the implementation of the integrated SCM system on this pilot project,quantitative and qualitative results are obtained as follows:Better alignment between demand and supply and less distortion of demandinformation: Rather than saying ―We think we are 75% complete‖, the supplychain members could say ―We know we are exactly 75% complete and which75% is actually complete‖. Better visibility and web-based informationsharing increased reliability of the SCM, enabling better alignment betweendemand and supply and less distortion of demand information.Time savings: Through the time studies on the swimlane maps of the currentSCM system vs. the integrated SCM system, the authors documented that70% savings ( 28 hours saved) of time and efforts of the field foremen inrecording, documenting, communicating, and reporting were achieved (Figure11).Figure 11: Comparison of Total Process Durations with No System and with theIntegrated SystemSupply Chain Management

220 Sangwoo Cho1 and Martin FischerReduction in reorder rate: A rate of zero unnecessary reorder was achieved,mainly due to the improved visibility of the SCM. There was no unnecessarychange order, leading to less distortion of demand information. The typical2% DFH job cost related to unnecessary reorders did not exist in this project.Testimonials from end-users: After the implementation, the authors conductedand documented another round of interviews with end-users as shown below.CONCLUSIONS AND FUTURE RESEARCHThe integrated system of VDC, lean, and real-time data capturing tools is developedand implemented for 1) improvement in alignment between demand and supply, 2)reduction in distortion of demand information, and 3) savings in time and efforts inthe field, translating into a change in the behaviour of the construction SCM: dramaticreduction in decision latency from days to hours and even minutes with clear visibilityof the supply chains. In addition, this integrated system caused positive culturalimpacts to the supply chain members in the pilot project. They have been able tocreate instant, consistent, visual coordination and communication between field crewsand offsite personnel and bring a high level of accountability to themselves and eachaspect of the SCM.Next steps of the research plan are underway in order to develop a map of causesand effects in the construction SCM and study on interdependencies of the causes anddegrees of the effects. Through this mapping and study, the authors can identify thecauses and effects which negatively impact aspects of the construction SCM andfigure out how the proposed integrated system can be tuned up to minimize thenegative causes and effects.ACKNOWLEDGMENTSResearch is conducted and funded jointly by CIFE in Stanford University and DPRConstruction in Redwood City, CA, in support of Tekla Structures and Vela Systems.We are grateful for this support.REFERENCESArbulu, R. and Ballard, G. (2004). ―Lean Supply Systems in Construction.‖Proceedings of the 12th Annual Conference for International Group for LeanConstruction, IGLC 12, 3-5 August, Copenhagen, DenmarkProceedings IGLC-18, July 2010, Technion, Haifa, Israel

Real-Time Supply Chain Management Using Virtual Design and Construction and Lean221Chin, S., Yoon, S., and Cho, C. (2008). ―RFID 4D CAD for Progress Management ofStructural Steel Works in High-Rise Buildings.‖ Journal of Computing in CivilEngineering, 22(2) 74-89Fischer, M. (2003). ―The Benefit of Virtual Building Tools.‖ Civil Engineering, 73(8)60-67Koo, B. and Fischer, M. (2000). ―Feasibility Study of 4D CAD in CommercialConstruction.‖ Journal of Construction Engineering and Management, 126(4)251-260Lee, H., Padmandbhan, V., and Whang, S. (2004). ―Information Distortion in aSupply Chain: the Bullwhip Effect.‖ Management Science, 50(12) 1875-1886Lee, H. and Ozer, O. (2007). ―Unlocking the Value of RFID.‖ Production andOperations Management, 16(1) 40-64Mueller, S. and Tinnefeld, C. (2007). ―Using RFID to Improve Supply ChainManagement.‖ Enterprise Platform and Integration Concepts (available athttp://epic.hpi.uni-potsdam.de/).Sorensen, K., Christiansson, P., and Svidt, K. (2009). ―Prototype Development of AnICT System to Support Construction Management Based on Virtual Models andRFID.‖ Journal of Information Technology in Construction 14 263-288Supply Chain Management

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