The majority of one-family detached houses in Sweden have timber frames and are nowadays manufactured in permanent factories (approximately 74% between 1990 and 2002). By comparison, about 69% (down from 90% 20 years ago) of all housing starts in the US are stick built on site. From a market point of view, this indicates that an industrialised and process-oriented production approach could have potential for the whole housing industry. This is supported by an extensive governmental evaluation of the Swedish construction industry (SOU, 2000), indicating that it is possible to reduce production costs in housing construction through industrialisation, customer orientation, and a more efficient construction process. Logistics and supply chain management (SCM) are demonstrated (Agapiou et al., 1998; Naim and Barlow, 2003) as disciplines with the potential to increase efficiency in the construction process. In the large enterprise manufacturing industry, the supply chain concept has been one model for improvements in efficiency. Holistic production philosophies such as lean production, and comprehensive planning methods such as enterprise resource planning (ERP), which are supported by information technology (IT) based software systems, are used to manage parts of or the entire supply chain (Crowley, 1998; Tarn et al., 2002; Al-Mashari et al., 2003). The potential for improvements in the housing industry as well as the use of concepts such as SCM, lean production, and IT supported ERP, as applied to small and medium-sized enterprises (SMEs), motivate the research presented in this paper. The possibility of cross industry learning is discussed and analysed in two perspectives: from the manufacturing to the housing industry and from large enterprises to SMEs. The conclusions and outlines for future research are, together with an extensive literature review, based on the analysis of four consecutive case studies.
Theuseof ERP systems in themanufacturing
industry is widespread (
Al-Mashari, 2002
;
Mabert
et al., 2003
;
Olhager and Selldin, 2003
). The
benefits that can be gained from ERP use are
illustrated (
Al-Mashari et al., 2003
;
Kennerley and
Neely, 2001
;
Mabert et al., 2003
), along with ERP
disadvantages (
Motwani et al., 2002
;
Umbleet al.,
2003
). It is also shown that the implementation
phasecan bea major obstacle(
Motwani et al.,
2002
;
Umbleet al., 2003
), but that it can also
produce re-engineered and improved enterprises
(
Akkermans et al., 2003
;
Al-Mashari, 2002
;
Umble
et al., 2001
). After implementation, proper use of
ERP systems can further increase the competitive-
ness of an organisation (
Al-Mashari et al., 2003
;
Willis and Willis-Brown, 2002
;
Poston and Grabs-
ki, 2001
). In industrialised timber frame housing in
Sweden, ERP use is not widespread (
Bergstro
̈
m
and Stehn, 2003
). The reasons vary, but generally
IT systems are not considered compatible with the
needs of the industry (
Bergstro
̈
m and Stehn, 2003
).
This paper, however, shows that ERP and the
needs of an industrialised housing company can
match and identifies the prerequisites for this
match. First, there must be external and internal
driving forces for the necessary change process to
start. In this case, the main theme has been
balancing customisation and an efficient produc-
tion system. Second, the change process must aim
for a production system and business processes
that are functional in two aspects: meeting the
external and internal needs and facilitating ERP
system implementation. Third, within an organisa-
tion, there must be an awareness that the ERP
system can contribute in meeting external and
internal needs; simply implementing a software
system will most likely not increase efficiency.
Fourth, the day-to-day work must not be hindered
during an ERP implementation and ERP use. For
an SME this can be facilitated through careful pre-
implementation that allows a stepwise and flexible
implementation, i.e. that the ERP implementation
is secondary to day-to-day work as well as the
initial change process implementation.
The industrial trend is to integrate supply chain
capabilities and ERP systems, where the driversfor the on-going development of IT systems are
cross enterprise integration and supply chain
efficiency (
Tarn et al., 2002
). For industrialised
housing there is still a long way to go, but the
full utilisation of ERP benefits and the possibility
to achieve supply chain efficiency can be a long-
range goal to successfully integrate customers,
manufacturing, and suppliers. Productivity gains
in themanufacturing industry can partly bedue
to technological innovations, but significant con-
tributions comefrom theorganisation and man-
agement of production (
Crowley, 1998
). For
industrialised housing to attain its goal, the
business processes must be properly re-engineered
and the production processes must be functional,
i.e. apply an appropriate production philosophy
before the implementation of an ERP system and
find the balance between project and process
orientation.
In
Fig. 2
, some salient features regarding
industrialised housing are indicated. The pattern
that derives from the external driving force
(customisation), and the internal driving forces
(the need of efficient internal processes, visualised
by main product and production method) can
explain the need for industrialisation plus the need
for IT based support. The case company has
continuously moved towards the edge in the spider
diagram. To handlecustomisation and a complex
product, thecasecompany shifted to volume
element production, which has great potential
advantages regarding efficiency, quality, work
environment, etc. However, as shown in the case
studies, a high degree of customer choices in-
creases the complexity due to increased informa-
tion and material flow. Simply shifting from stick
building on theconstruction siteto stick building
in a factory can provide certain benefits, but to
utilisethefull industrial potential thebusiness
process must be industrialised, initially enterprise
wide, in the entire supply chain. Hence, an
advanced customisation approach, a complex
product, along with a production method lead
to needing appropriate and efficient business
processes (
real
industrialised processes) and IT
based support (ERP system). It should be
noted that there is no contradiction in being
efficient and producing, for example, one-familyhouses, but the drivers for industrialisation,
starting with customisation, are stronger when
producing complex products using complex pro-
duction methods.
More research is needed to increase ERP
knowledge in industrialised housing. ERP imple-
mentation follow-ups, within industrialised
housing, would provide useful insights regarding
the utilisation of ERP benefits. More empirical
findings and theory building regarding SME
and ERP in themanufacturing industry are
needed for a deepened analysis. More research
about customisation and production efficiency
in industrialised housing, covering broad aspects
in theentiresupply chain, is a major task that
can contribute to more generalised construction
process improvements in the whole housing
industry.
