Choice and delivery in housebuilding:lessons from Japan for UK housebuilders

James Barlow1, Paul Childerhouse2, David Gann1, Se¤ verine Hong-Minh2,Moh Naim2 and Ritsuko Ozaki1

1Imperial College Management School, 53 Prince’s Gate, Exhibition Road,London SW7 2PG,UK

E-mail: j.g.barlow@ntlworld.com

2Logistics Systems Dynamics Group,Cardiff Business School,Cardiff University,Colum Drive,Cardiff CF10 3EU,UK

Using the example of Japan’s factory-based housing industry where firms supply customized homes which are pre-

assembled from standardized components or modular systems, it is argued that ‘mass customization’ can be supported by

several generic supply-chain models. The paper discusses these models and provides a case study of a Japanese housing

supplier. Conclusions are then drawn on the implications of these lessons for the UK’s speculative housebuilding industry.

Keywords: consumer choice, customer focus, housebuilding, mass customization, pre-assembly, standardization,

supply-chain management, Japan

Reprenant l’exemple de l’industrie japonaise du logement prefabrique qui fournit des logements personnalises

pre-assembles a partir de composants normalises ou de systemes modulaires, l’auteur pretend que la personnalisation en

serie des produits est possible grace a plusieurs modeles generiques de chaınes d’approvisionnement. Cet article decrit ces

modeles et presente une etude de cas d’un fournisseur japonais de logements. L’auteur tire des conclusions quant aux

implications de cette experience pour le secteur speculatif de la construction de logements au Royaume-Uni.

Mots-cles : choix du client, satisfaction du client, construction de logements, personnalisation massive, pre-assemblage,

normalisation, gestion des chaınes d’approvisionnement, Japon

IntroductionThe paper draws on work carried out for a 3-year research

project (see Appendix) on the application of ‘mass customiza-

tion’ to the UK housebuilding industry. Mass customization –

building products to meet customers’ individual orders rather

than for stock – has been a holy grail for the manufacturing

industry for many years. While progress has proved slow,

build-to-order techniques have advanced considerably in

some industries, even if the goal of full mass customization

may be some years distant (Agrawal et al., 2001).

The aim here is to situate research on the supply-chain man-

agement aspects of mass customization within a housebuild-

ing context. Our focus is on Japan’s factory-based housing

industry, where firms supply customized homes which are

pre-assembled from standardized components or modular

systems. These firms supply the non-speculative, individually

commissioned homes market. In any given year this accounts

for over one-third of all new dwellings built in Japan and

three-quarters of all detached houses (see below). Since the

1970s, this sector has undergone extensive innovation, both

at the customer interface and in its supply chain and produc-

tion processes. Together, these facilitate the delivery of high

levels of customer choice over housing design and specifica-

tion. This paper discusses the industry’s supply-chain man-

agement processes; other research has addressed the tools

used by Japanese housing suppliers to improve customer

focus and their use of new construction technologies

BUILDING RESEARCH & INFORMATION (2003) 31(2), 134–145

Building Research & Information ISSN 0961-3218 print ⁄ISSN 1466-4321 online # 2003 Taylor & Francis Ltdhttp: ⁄ ⁄www.tandf.co.uk ⁄journals

DOI: 10.1080 ⁄0961321031000083931

(Bottom et al., 1996; Gann, 1996; Adams et al., 1998;

Barlow and Ozaki, 2001).

By investigating the Japanese customized homes industry, we

wish to show that there is no single form of ‘mass customiza-

tion’ – this can be supported by several generic supply-chain

models. This is especially relevant to housebuilding because

of the wide range of customer requirements and market seg-

ments, necessitating different solutions for delivering pro-

ducts. The lessons are of interest in the UK where there is a

need to improve the performance of the housebuilding indus-

try. In recent years, private and social housebuilders have

been urged by government – via the Housing Forum and

other initiatives – to be more innovative in their use of build-

ing technologies, housing designs and supply-chain manage-

ment processes. There has also been concern among

private-sector housebuilders that new competitive strategies

will be needed in the emerging market environment, where

real housebuilding costs are rising, there are growing land

availability constraints and there is a lack of trained building

labour (Barlow, 1999; Roy and Cochrane, 1999; Housing

Forum, 2002).

The next section discusses the way generic models for

managing supply chains can deliver differing levels of

customer choice and suggests that there is no single

model of mass customization. These models will then be

applied to housebuilding using a case study of mass

customization in a Japanese housing supplier. Finally, con-

clusions are drawn on the implications of these lessons for

UK housebuilding.

Operational supply-chain models foro¡ering degrees of choiceHistorically, and from an economic point of view, one of the

main driving forces behind the use of standardization and

pre-assembly has been the desire to achieve economies of

scale in production. More recently, firms have sought to

benefit from economies of scope by developing processes that

facilitate the production of a variety of models using the same

machinery and material inputs. Here, a range of products is

produced on the same line when previously different produc-

tion lines would have been required (Schonberger, 1986;

Chandler, 1990). In manufacturing industries, standardiza-

tion has been a prerequisite for achieving these benefits,

facilitating the following:

� Complete and consistent interchangeability of parts

� Simplicity of attaching one part to another

� Same gauging systems used through the entire manufac-

turing process, which is driven by savings on assembly

costs

� Predictability of products and processes

Pre-assembly relates to the specialized division of work in

production processes allowing firms to allocate work

packages for subassemblies and components to other depart-

ments or to other firms in the supply chain. This has often

been of benefit in providing clearer lines of responsibility and

better control over quality and costs. Nevertheless, it has

resulted in changes in the location of value-added in

supply chains and this has affected firms’ markets and their

competitiveness.1

In many industries, a combination of standardization and

pre-assembly has resulted in an ability to exploit technical

possibilities to develop and deploy new capital equipment

aimed at improving productivity and quality. It also offers

opportunities for tighter managerial control and better coor-

dination of processes. Such changes in production have nor-

mally been accompanied by reorganization within the

production system, leading to new approaches to supply-

chain management. This is most evident in the automobile

sector where new relationships have been developed between

suppliers and assemblers.

The most recent attempts to improve quality and meet the

individual needs of different customers have been driven by

consumer-oriented approaches in which quality and value for

money drive the requirements to reorganize production.

Firms wishing to compete in markets in which customer

choice is prioritized – rather than a traditional production-

oriented focus – need to think systemically about the organi-

zation of the total process. This involves questioning where

and at what level within the production system standardiza-

tion and/or pre-assembly is likely to be most beneficial, and

to whom. Moreover, it also exposes the classic trade-off con-

sideration in operations management: the dichotomy between

maintaining efficient processes and offering a high degree of

choice to customers. The various strategies available to select

the appropriate process for given market needs are well

known in manufacturing. Their applicability in the housing

sector is less well understood.

Our approach draws on work that focuses on the location of

the strategic inventory ‘decoupling point’ in the supply chain

(Hill, 2000). The decoupling point separates the part of the

supply chain oriented towards customer orders from that part

based on planning (Hoekstra and Romme, 1992). This results

in a spectrum of supply-chain configurations (Figure 1).

Using the terminology of Fisher (1997), at one end of the spec-

trum there is the functional product approach involving ‘ship

to stock’ and ‘make to stock’ strategies. Under these variants, a

standard product with a relatively long and predictable life

cycle and assured demand is produced, stocked and picked off

the shelf by the consumer. There are minimal lead times

between production and purchase. The supply chain is there-

fore very efficient. The problem with this strategy is that there

is still some risk of stock obsolescence of finished goods and by

its very nature it offers limited choice. This is equivalent to

speculative housebuilding, where houses are constructed

before an identified purchaser makes an order.

Choice and delivery in housebuilding: lessons from Japan

135

At the other extreme, there are the ‘buy to order’ and ‘make

to order’ supply chains (Fisher, 1997). These variants involve

purchasers expressing their requirements and products being

produced accordingly. There is no risk of stock obsolescence,

as the product is configured to customer requirements from

the start of value-adding operations undertaken on the raw

materials. Thus, the supply chain is flexible and offers an

extremely high degree of choice. The major disadvantage is

the potentially protracted lead time before the consumer is

in receipt of the finished goods and the high costs compared

with the ‘ship to stock’ or ‘make to stock’ approaches.

Essentially, this is equivalent to the self-build housebuilding,

where the final customer is responsible for the entire develop-

ment process from land acquisition to completion.

A compromise is ‘assemble to stock’, which attempts to trade-

off stock obsolescence risk with lead-time requirements.

Assemble to stock strategies have been shown to be particu-

larly effective in the electronics industry (Hoekstra and

Romme, 1992; Lee and Billington, 1992; Davies, 1993;

Feitzinger and Lee, 1997; Naylor et al., 1999), where product

life cycles are continuously decreasing, there is an ever

increasing requirement for customized products and competi-

tion is driving down prices (Berry and Towill, 1993). The

strategy in this case is to postpone or configure the customi-

zation of the product as late as possible. The aim is to deliver

standardized or functional subassemblies to the decoupling

point and to configure the final product as and when the

customer order is received.

Such an approach has been used since the 1920s (Gattorna

and Walters, 1996), and a notable modern case is that of

Benetton clothing (Pagh and Cooper, 1998). The ‘assemble

to stock’ strategy is a critical enabler of mass customization,

which can be defined as ‘the cost-efficient mass production of

goods and services in lot sizes of one’ (Pine, 1993). The pro-

cess of customizing products is engineered into a routine and

the supply chain is engaged in producing standardized pro-

ducts or systems that can be assembled in different configura-

tions as late as possible.

The positioning and magnitude of the stock of subassemblies

and components needs careful design, considering product

cost, product complexity and product demand at each stage

of the supply chain (Jones and Riley, 1987). The strategic

stock should be kept at a minimum reasonable level to mini-

mize stock and obsolescence costs while maximizing service

levels (Grunwald and Fortuin, 1992). This offers the best pro-

spects for a mass customized housebuilding model because it

allows developers to balance efficient production processes

with higher levels of choice. The opportunity for making use

of the decoupling point in housing supply chains has been

postulated by Naim and Barlow (2002).

It is also important to consider the role of design in the produc-

tion process, as the true make-to-order supply chain needs to

incorporate ‘one-off’ specials. Thus, Figure 2 shows a number

of supply-chain strategies developed by Lampel and Mintzberg

(1996; cf. van Hoek, 1998). There is a direct correlation with the

models of supply-chain strategies shown in Figure 1. At one

extreme there is the pure standardized supply chain (equivalent

to the ship to stock strategy) and at the other there is the pure

customization supply chain, equivalent to the make to order

scenario. The characteristics are shown in Figure 2.

Figure 1 Supply chain strategies and the decoupling point (Hoekstra and Romme,1992)

Barlow et al.

136

This brief discussion has outlined the spectrum of design and

logistics strategies between pure standardization and pure cus-

tomization, with varying models of mass customization lying

in between. We will now discuss how certain Japanese housing

suppliers have adopted these forms of mass customization.

Japanese market for new homesJapan’s new housing market is the second largest in the

world – over 1.1 million dwellings were built in 2001 (for

details of the Japanese new homes market and planning and

building regulations, see Barlow and Ozaki, 2001). At about

13 new units per 1000 people per year, the rate of new build

is over 12 times that of the UK. The Japanese preference for

new homes has dampened demand for second-hand housing

– new housebuilding represents around 80% of total annual

domestic property transactions compared with well under

10% in the UK. The high rate of housebuilding is partly the

result of a ‘scrap and build’ culture where homes have histori-

cally been replaced on average every 26 years, although the

expected durability is now rising.

Another important feature of Japan’s housing system is the

role played by individual households in the development of

new housing. About half of all new completions are houses

and over 90% of these are detached houses (Management

and Coordination Agency, 1996). Three-quarters of newly

built detached houses are commissioned by individuals and

built on their own plot of land. These houses are usually cus-

tomized to a greater or lesser degree and are the focus of this

paper. The remaining 25% of new houses – and the bulk of

the market for new apartments – are built speculatively for

sale, with housebuilders purchasing development land and

building homes without an identified purchaser or any custo-

mization choices. Well over 400 000 customized new houses

are therefore built annually in Japan, almost four times

the size of the entire UK new homes market. In contrast, the

UK’s self-build homes market – the closest equivalent to the

Japanese customized homes market – represents under 10%

of all completions or currently around 15 000 houses per

annum (Barlow et al., 2001). The bulk of the UK’s new

homes market – about 80% of all housing completions in

1999 – is speculatively built, with little or no customization.

Traditionally, Japanese housing was supplied by small,

locally based builders using craft skills to build wooden

post-and-beam homes. Mass production of housing, using

prefabricated concrete systems, was developed in 1945 to

overcome the housing shortfall and lack of resources in a

context of rapid urbanization. Although consumers still

generally aspired to traditional wooden houses, a number

of prefabricated housebuilders, focusing on detached houses

Figure 2 Customization versus standardization

Choice and delivery in housebuilding: lessons from Japan

137

and low-rise apartment buildings, emerged during the early

1960s. By the end of the decade, a rise in housing demand,

increasing wages and a shortage of timber meant that mass-

produced prefabricated houses had become more attractive.

Show centres, where groups of housing suppliers lease sites

for show homes, developed from 1966. These allowed hous-

ing suppliers to demonstrate to customers that factory-made

housing could be attractive. The desirability of this type of

housing increased in the 1970s when rising disposable

incomes meant that purchasers began to become more con-

cerned about housing quality, which could be better assured

under factory production conditions. Furthermore, to com-

pensate for a reduction in overall housing demand, prefabri-

cated housing suppliers began to offer higher levels of

customer choice. Misawa Home’s ‘O model’ received much

attention when it was introduced in 1976, stimulating its

competitors to raise the levels of customization in their own

products. This helped to break down remaining consumer

perceptions that industrialization meant standardization

(Iwashita, 1990).

Today, the industry supplying the individual new homes mar-

ket can be segmented into two categories:

� Smaller, locally based housing suppliers using a combina-

tion of pre-cut timber and traditional craft skills to build

post-and-beam timber-frame housing. This still accounts

for about 80% of the overall market and is largely con-

centrated in smaller towns and rural areas. More than

90% of these firms supply fewer than 10 dwellings

annually (Iwashita, 2001)

� Larger regional or national suppliers using factory-based

systems and supplying the major urban market. This can

be further segmented into industrialized timber, steel or

concrete based suppliers

Some of these factory-based suppliers are extremely large

compared with housebuilders in most countries. The largest,

Sekisui House, supplies over 60 000 houses and flats

annually, and Misawa Homes over 30 000. In contrast, the

largest UK housebuilder built around 11 000 dwellings in

2000 and the largest in the USA built about 25 000.

Despite the size of some of the factory-based housing suppli-

ers, the extremely large number of small-scale local suppliers

ensures that Japanese housebuilding has remained fragmented.

The largest 18 companies accounted for only 19% of the

total market in 2000 compared with 55% in the UK, where

there has been extensive concentration since the late 1980s.

Japanese housing suppliers’ businessstrategies: levels of customer choice inthe individual homesmarketThe business models adopted by housebuilding industries

reflect the structural conditions – market dynamics, regu-

latory framework, cultures – within which they operate.

Private housebuilders in different countries adopt different

profit-seeking strategies, with consequent implications for

innovation and productivity (Barlow and King, 1992). In

Japan, the attachment of Japanese households to the family

plot of land is strong (Fukutake, 1989; Hendry, 1995), with

the result that the availability of large development sites is

severely constrained. Housing development involves indivi-

dual households recycling their plots back onto the market

once their house has outlived its usefulness. Japanese housing

suppliers in the individual homes sector therefore do not profit

from trading in the land market, unlike speculative developers.

Housing suppliers building individual homes concentrate their

competitive strategies on their production processes – supply-

chain management, and construction technologies and

processes – and on customer service and choice. The emphasis

on the latter was reinforced during the 1990s when a reduction

in overall housing demand meant that housing suppliers

shifted their attention to product differentiation.

Unlike the UK, Japanese factory-based housing suppliers

offer their customers high levels of choice over design, speci-

fication levels and construction technology. This applies to

the entire range of house types and market segments and not

simply those at the upper end of the market. Typically, a

Japanese housing supplier will offer up to 300 standard

designs in terms of elevations and floor plans. These can be

customized by adjusting certain design details and offering

choice over the internal fit-out and levels of specification.

In contrast, medium or larger British housebuilders might

typically offer a core portfolio of 30 standard floor plans,

with little or no opportunity for adaptation (Nicol and

Hooper, 1999; Hooper and Nicol, 2000).

Japanese housing suppliers also offer a large range of internal

fit-out options from which the purchaser can customize their

home. Firms maintain supply agreements with manufacturers

of white goods and bathroom, lighting and storage products.

These provide the standard range from which customers can

choose. If customers are not satisfied with the standard range,

they can choose from other manufacturers on payment of a

price premium.

There are, however, restrictions on the choices offered to cus-

tomers. Apart from the constraints imposed by the size and

shape of the plot, customer needs and income, and building

and planning regulations, housing suppliers try to limit the

level of choice in order to achieve economies of scale in con-

struction processes. Housing suppliers are adept at managing

customers’ choices by making suggestions and holding

approved predefined lists of fixtures and fittings.

Furthermore, the type of construction technology used affects

the ability to offer choice. A number of different approaches

are therefore used to deliver customized housing, with

Japanese suppliers adopting various supply-chain models.

Figure 3 shows the relationships between elements of the sup-

ply chain for different housing suppliers and the levels of cus-

tomer choice offered. These firms were selected because they

represent three contrasting approaches to the delivery of

factory-produced housing, allowing us to highlight the impli-

cations of supply-chain management approaches and techno-

logies for customer choice.

Barlow et al.

138

Toyota HomeToyota Home produces a range of final assembled modules

(individual rooms), which are then allocated to specific custo-

mers via a franchised dealer network. Customers may be

located anywhere in Japan, hence the need to postpone distri-

bution to the site as late as possible. The company produces

about 2800 homes per year. Even this model provides custo-

mers with greater choice than can normally be found in UK

speculative housebuilding, which is essentially ‘pure standar-

dization’ under the categories described in Figure 2 – houses

are designed and built without any significant input from the

customer. This model is based around the Toyota car produc-

tion and distribution system, where relatively limited custo-

mization occurs during the manufacturing process (in

marked contrast to Mercedes, for example) and assembled

cars are then distributed to franchised dealers.

Sekisui HeimSekisui Heim, supplying about 20 000 homes per year, has

adopted a ‘customized standardization’ approach where

houses are assembled to order in factories – as with Toyota

– to create modules based around individual rooms. This

model is more in line with classic perceptions of mass

customization and has similarities with other industries such

as manufacturing personal computers. This example is

discussed in more detail below.

Sekisui HouseSekisui House, another company in the Sekisui group, uses a

‘tailored customization’ approach with houses made to order.

In contrast to Sekisui Heim, Sekisui House uses standardized

components and subassemblies which are configured on-site

according to customer requirements. This allows a wider

range of choice over designs and specifications to be offered

to customers, making the approach equivalent to self-build

where individuals generally commission homes which are

then largely built to order from components delivered to the

site (Barlow et al., 2001).

Providing high levels of customer service, choice over design

and specifications, while at the same time delivering homes on

time and to a high quality, is resource-intensive. Japanese

housing suppliers have invested extensively in methods of

enticing the customer, including show villages and com-

pany-specific customer centres. Customization inevitably

means that housing suppliers spend time at the ‘front end’

of the customer relationship, and this necessitates large sales

and design teams (Barlow and Ozaki, 2001).

To highlight the implications of delivering choice using one

form of mass customization, ‘customized standardization’,

we now focus on Sekisui Heim and in particular its opera-

tional activities. Sekisui Heim’s approach represents a com-

promise between the limited customization provided by

Toyota Home and the extensive customer choice offered by

Sekisui House. Sekisui Heim’s modular construction

approach is also of interest to the UK because there have been

moves in this direction by some housing developers (e.g.

Sunley Homes and Peabody).

Sekisui Heim’s production systemSekisui Heim was established in 1972 and is now one of the

five largest producers of factory-made houses. The company’s

approach is to differentiate itself in terms of completion time

and cost. Its focus ranges from the middle of the market

upwards, although it is now concentrating on more expensive

homes. Sekisui Heim’s sales costs, excluding land and site

Figure 3 Supply chain models for three di¡erent Japanese housebuilders (Gann,1995)

Choice and delivery in housebuilding: lessons from Japan

139

preparation, are about 16% higher than conventional post-

and-beam ‘traditional’ housing, but 18% below those of

other modular housing suppliers. In mid-2000, average costs

(per m2) were about ¥143 000 or £611 (at purchasing power

parity).

Under Sekisui Heim’s modular approach, around 80% of a

typical house’s 5000 components are prefabricated off-site in

one of eight regional factories. The largest has a capacity of

800 homes per month. Houses are constructed from a number

of standard modules, of which there are four basic units,

each with two widths. Module dimensions range from

2.940� 1.352 to 5.640� 2.464 m. These eight units can be

combined in any configuration and subdivided into smaller

rooms by installing partitions at fixed 900 mm intervals. The

average house is 140 m2 and contains around 14 modules.

Modules comprise a steel box structure with timber in-fill

panels. Module formats include a mix of open plan, kitchens,

bathrooms and hallways. Entrance porches and balconies are

prefabricated and installed on site. Roof units are comprised

of a series of prefabricated sections built from trusses and pre-

fabricated beams and fitted with waterproof sheeting as pro-

tection. Customers are offered a choice of three roof types:

flat, sloping and sloping with rooms built-in. Three types of

external cladding are offered: compound panels, aluminium

plate and gypsum boards, and a proprietary compound panel

system.

Modules are produced via a flow-line process in which sup-

pliers feed housing elements and units to the line. These

include structural elements (e.g. steel columns, beams and

joists), internal and external timber wall panels, external

cladding and internal fit-out systems (such as kitchen and

bathroom units). Electrical services and external cladding are

integrated during the assembly process.

The largest Sekisui Heim factory contains six production

lines, each tailored to six basic types of house design

(Figure 4). A customer’s modules are produced on a single

line in lots of one. Each line comprises a ‘U’-shaped produc-

tion line, with input gateways for each component or subas-

sembly. These are individually addressed with customer

details, exact due dates and quantity requirements. Each pro-

cess within the assembly routine has its own quality assurance

inspection regime and a final factory inspection is carried out

before applying the protective sheeting for shipping.

Figure 5 shows the total process from obtaining customer

requirements to handover. The production process begins

when a purchaser’s needs are defined and a preliminary

design of the house is developed (Figure 5, #1). This is an

interactive and recursive activity which can involve a number

of sessions. Potential designs are visualized for the purchaser

via an options catalogue and the preliminary design is pro-

duced pictorially. Use of design catalogues ensures that pur-

chasers can make appropriate selections dependent on their

Figure 4 Simple representation of production line 1 of Sekisui Heim

Barlow et al.

140

plot size and orientation, housing footprint requirements, and

financial constraints. Once the design is finalized, the compo-

nent data and interior design requirements are passed to a

part’s selection system for parts and production control

(#2). Customer requirements and a due date are contained

in a single design document, which is fed into a computer-

aided design (CAD) system by technicians and a bill-of-

materials created. At the same time, the construction division

is informed of the agreed handover date so it can arrange

manpower and other resource requirements for final assem-

bly on-site (#4).

The data from all the various purchasers is aggregated over-

night and production plans and supplier orders are batched

weekly (#5). As the modules are made of standard dimensions,

there is considerable commonality between various purcha-

sers’ modules despite each customer receiving a ‘unique’ pro-

duct. This enables the decoupling point of standardized

components to be maintained at the factory–supplier interface

(#6) so that components can be picked responsively (‘call off’).

The modules are delivered to site, synchronized with the con-

struction division’s resource allocation (#7).

Design work can be spread over anything from a few days

to many months, depending on the customer. There is gener-

ally a 60–90-day cycle time from signing the contract to

completion, including demolition of the present house and

site preparation, manufacture of the modules, delivery to site,

and assembly of the new home. The latter takes 1–3 days and

site finishing can take another 30 days. Supplier lead times

are typically 2–3 weeks (i.e. #5 and #6).

DiscussionThere have been a number of generic models proposed by

various authors for the application of mass customization

in manufacturing industry. We have highlighted some of the

key contributions and identified five models of product design

and delivery. Of these, three may be classified as forms of

mass customization appropriate to housebuilding.

These models of mass customization are the norm for the

Japanese market for individual new houses, but as we have

argued, there are different ways of delivering customer

choice. We have outlined how three Japanese housing suppli-

ers have each adopted different strategies. The approach clo-

sest to the classic notion of mass customization, adopting an

assemble-to-order strategy, is that of Sekisui Heim.

Figure 6 develops the generic model of Figure 2 to make it

more applicable within a housebuilding context. The areas

in dark shading represent those parts of the supply chain that

Figure 5 Sekisui Heim production process

Choice and delivery in housebuilding: lessons from Japan

141

are configured to specific customer requirements. Those areas

without shading represent elements of the supply chain where

customers are unable to express choice. Thus, in the Sekisui

Heim case, customers specify a house configuration based

on the assembly of modular units. These units are assembled

from standard components and subassemblies. In contrast,

Sekisui House’s model involves customers selecting from a

wide range of components, which are then directly delivered

to the site for on-site assembly. This model of tailored custo-

mization produces greater choice, but costs more and takes a

longer lead time to deliver. Toyota Home has adopted a seg-

mented standardization model that entails customers select-

ing from a range of pre-assembled modular units which are

distributed and configured for on-site assembly. Their pro-

ducts are relatively low cost and are delivered in a shorter

timescale. The pure standardization and the pure customiza-

tion models broadly relate to the UK speculative and self-

build sectors, respectively.

The above discussion is summarized in Figure 7, which shows

a five by five matrix designed to match the various supply-

chain strategies and customer requirements more effectively.

There is clearly a trade-off between levels of customization,

lead time and cost. The position on the horizontal axis relates

to the degree of customization required. The vertical axes

represent the lead time and cost requirements of the

customer. Regions A and B represent those areas in the model

where it is not feasible to position a supply-chain strategy.

An important generic outcome of Figures 6 and 7 is that they

address the often neglected issue of undertaking mass custo-

mization research in non-manufacturing environments (van

Hoek, 1998). While Figure 7 is a well-known synthesis of the

trade-offs often considered in manufacturing enterprises, it

has not been applied in the UK housing sector. It is also the

first time that particular Japanese housing companies have

been categorized in this way. This approach may offer oppor-

tunities for UK and other housing developers wishing to

match more closely their operational supply-chain infrastruc-

ture to specific customer requirements.

ConclusionsThis paper has explored the way Japan’s factory-based

housing industry has adopted build-to-order techniques –

standardization, prefabrication and appropriate supply-chain

management – to deliver high levels of customization in hous-

ing design and specification. In doing this, it has been demon-

strated that mass customization can be supported by several

generic supply-chain models. These allow specific customer

needs and market segments to be more effectively met with-

out the costs associated with full customization.

Figure 6 Generic supply chain strategies applied to the housebuilding industry

Barlow et al.

142

These findings hold particular lessons for housebuilding

because of the breadth of customer requirements that need

to be satisfied. For many years, the UK speculative house-

building industry has been content to adopt a classic

approach to meeting customer requirements that focuses

on market segmentation. Here, customers are divided into

homogeneous groups and products developed to meet the

needs of each target group (Gronroos, 1990; Schneider

and Bowen, 1993). In housebuilding, firms have tried to

avoid customization by pre-empting purchaser choice,

ensuring they have as wide a range of house types as pos-

sible. In the 1990s, this led to a trend towards the use of

a rising portfolio of standard house types (Nicol and

Hooper, 1999).

Since the report Rethinking Construction (Egan, 1998), there

have been moves among some firms to rationalize their sup-

ply chains. This has been accompanied in some cases by

increased interest in product customization as an alternative

strategy. This research suggests that attempting to service

diverse customer requirements for housing via a single supply-

chain strategy is unlikely to satisfy rising consumer exp-

ectations. Firms need to be clear about the trade-off

considerations that must be made between levels of customi-

zation, customer lead time and cost. By considering these

trade-offs, UK housebuilders could develop new business

models and associated supply-chain strategies.

Whether UK housebuilders will move towards increased

customization is, however, unclear. Perhaps the foremost

inhibitors in a market dominated by speculative production

are the land-oriented development process and the lack of

competition from alternative supply sources. The dominant

competitive strategy of the UK’s speculative housebuilding

industry has been driven by the ability to benefit from prof-

its accruing from land development. Housing sales’ prices

are derived from what the market will bear, based on the

cost of production and land, together with expected profits.

In contrast, producers in other competitive consumer goods

industries are forced to innovate to reduce production costs

below sales prices in order to achieve profitability and also

to develop new products to differentiate themselves in the

market.

Even if interest in mass customization becomes more wide-

spread, it should not be seen as a panacea for the perfor-

mance problems within housebuilding. Mass customization

will not resolve basic issues such as construction quality or

delivery time, both of which have to be acceptable to the

customer before more customization choices are offered.

Figure 7 Supply chain strategy identi¢cation matrix

Choice and delivery in housebuilding: lessons from Japan

143

AcknowledgementsThe project was supported by the Engineering and Physical

Science Research Council and the Department for the

Environment, Transport and the Regions (LINK-MCNS

Programme). The Japanese work also benefited from funding

from the Department of Trade and Industry, which supported

a technical mission led by one of the authors and accompanied

by representatives from five UK private housebuilders.

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AppendixResearch methodThe research was conducted as part of a major project on

the implications of mass customization for UK housebuild-

ing. The project brought together nine industrial partners

representing different sectors of the housebuilding supply

chain. Partners comprised a regional housing association,

the largest social housing contractor and a top ten specula-

tive housebuilder, along with members of their supply chain.

These included a major plumbing manufacturer, a heating

and ventilation systems’ provider, a major roofing system

provider, and the largest architectural practice specializing

in housing.

Part of the research involved detailed analysis of Japanese

mass customized housebuilding, focusing on the approach

to managing the customer interface, production technologies

and supply-chain management. This work was carried out

during four visits to Japan in 2000.

The relevant data sources for the formulation of the concepts

and the development of the models presented in this paper are

outlined in Table 1.

Interviews in Japanese housebuilding companies and organi-

zations were carried out with personnel at an appropriate

level, generally managerial or directorial. Interviews lasted

between 1 and 3 hours, with an interpreter present in

many instances. In addition, one of the research team

was a Japanese national. The interviews were supplemented

by documentary material, including company reports,

sales literature, technical manuals and other company

documentation.

Japanese companies and organizations visitedABC Housing Senri Housing Park (December 2000).

Housing Loans Corporation (February 2000).

Mitsui Home (February and December 2000).

Misawa Home (December 2000).

Sekisui Chemical/Sekisui Heim (February, July and December

2000).

Sekisui House Comprehensive Housing R&D Institute

(February and December 2000).

Sekisui Industrial/Sekisui House (December 2000).

Sumitomo Forestry (July and December 2000).

Taisei Prefab Construction (December 2000).

Toto (February 2000).

Urban Development Corporation (February 2000).

Endnote1See Gibb (2001) and Gann (2000) for discussions on stan-dardization and pre-assembly in the construction context.

Table 1 Relevant data sources used in this paper

Data method Data source Primary inputs Primary outputs

Archival Literature review Mass customization Conceptual modelsPostponement/late con¢gurationSupply chainsLean and agile production

Empirical Taskforces Secondment of researchers topartner companies in the UK

Tested conceptual models in a UKcontext

Discussions with partnercompanies and ¢ve additionalUK speculative housebuilders toassess implications

Missions Japanese housebuilders Japanese case studyUS housebuilders (California) Tested conceptual models

Opinion Interviews Discussions with industrialpartners

Understanding of housebuildingprocesses

Interviews with Japanesecompanies and organizations(see below)

Analytical Not applicable

Choice and delivery in housebuilding: lessons from Japan

145