Benefitting from modularization within the building sector


Foto: Mimi Potter / fotolia.com
The topic of modularization within production and products itself, is a concept getting constantly more well-known especially within the automotive industry. Herein, by modularizing the business structure, substantial benefits appear within the perspectives costs, time, flexibility and last but not least quality. But by standardizing inwards and simultaneously individualizing outwards, enormous positive effects can also be realized within the prefab housing sector.

The global urbanization as demand driver for sustainable and high quality living space solutions

The global population is constantly growing. Rising economies have to handle a radical and ongoing urbanization in places all over the world. As matter of this development, governments from many nations are in need of sustainable as well as cost effective living space solutions in urban areas. While conventional construction concepts with concrete as a major building material are quite dull in terms of providing a time and cost effective concept, modern prefab housing concepts are offering a promising solution to that problem.

In order to be able to provide cost effective and simultaneously high quality and luxurious living space concepts, a prefab housing producing company is currently modularizing its complete production as well as product structure under the assistance of TCW Management Consulting Munich.

Modularization of the product as well as the production structure in order to lift unused potentials

Just as in the automotive industry, the housing sector’s customers are quite individual when it comes to deciding about what their new living space is ought to look like. As a result of this, the individuality of the product structure becomes quite complex, reducing the producer’s possibilities to profit from lessons learned within the value creation process.

Nevertheless, to stay competitive, the concept of modularization becomes relevant for industries besides the automotive industry. For example, the modularization of the product gives the customers various detailed restrictions, which allow the producer to benefit from positive side effects. By reducing the customer’s range of innovative and individual design requests, they are able to use effects of synergy and respective economies of scale effects in the production process. In the prefab housing sector the most general restriction for the customer, the rule that measures of the outer walls always need to be a fixed multiplier in terms of length, was introduced. By those means, waste and non-value creating manual steps in the production process can be eliminated and therefore reduce costs massively. The whole product structure follows the topic of individualization to the outside while standardizing the element structure to the inside. The interface between the various modules is therefore standardized, which results in a reduction of different materials and with that in a more secure installation process. This in fact results in a substantial optimized quality dimension of the product.

Next to standardizing the wall elements as a substantial part of a modular prefab house, various benefits can also be lifted by prefabricating standardized complex room elements, such as a complete bathroom or a kitchen element. This radically reduces mistakes while actually building up the prefab house and massively raising efficiency in terms of time perspective. Besides the product modularization, the prefab housing producer also modularizes the production process itself. Together with TCW Management Consulting, the various production process elements are analyzed and categorized to define standardized interfaces and modules. In analogy to the automotive industry, various positive effects appear.

Most crucial benefits through modularization within the prefab housing production process appear in the six dimensions shown in Figure 1. Especially the planning costs - which are mainly driven by experienced employees - can be reduced dramatically by means of modularization. Also, benefits in terms of reduced material costs caused by the effects from economies of scale and scope appeared within the various production.

Benefits through modularization in the prefab housing industry

In cooperation with the TCW Management Consulting team, the modular prefab housing concept allows to optimize all relevant dimensions of economical and sustainable success. Due to the growing short term demand for adequate housing solutions, the dimension of time especially is one major aspect for a unique selling proposition of prefab housing solutions (see Figure 2).

Next to a cost reduction of more than 70 percent, the time dimension can be optimized by more than 55 percent. As a result of the massive lessons learned effect caused by the modularization, a drastic optimization in terms of quality can also be realized.