Engineer to Order mass and extended production systems

improvement in the Construction industry based on GRAI

Methodology: an empirical study

Ander Errasti and Javier Santos

Tecnun University of Navarra, Spain
Raul Poler
CIGIP-UPV, Spain

ABSTRACT
The aim of the following research is to investigate the adoption of some good practices in the Construction
Sector, based on developed practices in other sectors,that could be helpful to gain competitive advantage. These
practices (GRAI Methodology to improve the operational performance of the supply chain) are already known and
have been studied by researchers, however the development of these techniques in the field of Construction has not
been so deep.
The proposed research method is based on Action Research, in which the researchers are involved in the changing
process. This method has been chosen because it is a theory extension or refinement.
In the last three years the researchers have been involved in using an experimental model for the diagnosis, strategy
formulation and deploy of these practices to improve the performance of one top firms related to Construction sector.
The conclusion is that the benefits of integrating and improving the planning and control system of the extended
enterprise aided by GRAI methodology, as well as Action Research utility for this type of Research are completely
demonstrated.

1 Introduction
1.1 Paper introduction
This paper starts with the origins of the research, goes on with Literature Review about Construction Sector
Supply Chains, Mass Customization principles in project based production systems and supplier integration. Then, it
shows up the Research Questions and expose the method how the researcher has conducted the Research Objectives.

This paper also presents the company which have taken part into the Action Research, and the main
characteristics of the projects carried out. Finally the main conclusions and future research questions are exposed.

1.1 Origins of the research

The possibility of transferring good practices from Manufacturing to the construction industry has been
identified in the literature (Ngowi, 2000)(Anumba et al, 2002), in particular Ngowi (2000) has suggested that:
‘‘Supply Chain Management and time compression techniques which require close interfunctional cooperation have
been successfully implemented in the Manufacturing Industry and there is a possibility that they can be used to
integrate the various disciplines of the construction at project level’’. Moreover, it has been argued that the
implementation of these principles might usefully be extended beyond the boundaries of organisations to include their
suppliers (Gunasekaran, 2000) (Towill, 1998). Indeed, an increasingly large number of publications are concerned
with inter-firm projects (Soderlund, 2004).

Even if there have been some practices developed by main subcontractors ( Errasti et al, 2006) (Errasti et al,
2008) there are few evidences (Errasti et al, 2007) of development of these principles to Engineer to Order mass and
extended production systems in the Construction Sector.

2 Literature review
2.1 Construction Sector Supply Chains
In the construction industry, design consultants will produce a product specification, costing and bill of
quantities based on a client’s brief. Thereafter, the project will be passed to a contractor who will take responsibility
for the overall construction of the facility. The contractor will typically subcontract packets of work to Subcontractors
with specialist skills and expertise (Fig. 1).

Design identifies
client´s requirements
Client
Initial design &
documentation

Buiding contract Design concept used

Design team
for detailed design

Detailed design &

documentation
Contractor
Design for construction
Sub-contracts

Main Subcontractors Materials

/Subcontractors Suppliers

Outsourced Materials
Activity Suppliers
Suppliers

Fig. 1. Agents involved in design and construction projects and their relationships adapted from Thomas (2002).

These subcontractors are subject to tremendous pressures in terms of quality, service and cost (Chan et al,
1999). In the construction industry the environment in which construction projects are delivered is often adversarial
and contractual in nature; each member of the project team accepting consequential penalties for failure to deliver
(Haque, 2003), i.e. to meet contractual obligations which are frequently defined in terms of the above competitive
priorities.

Subcontractors are therefore, obligated to create value if they want to survive in a competitive environment,
which is increasingly global in its scope, and dependent on the performance of the supply network. Value in this
context is defined as ‘‘the amount buyers are willing to pay, for what a firm is able to provide them” (Porter, 1980).
Thus, some authors (Porter, 1985) have argued that value analysis should not be restricted to the value added by the
company itself, but should also consider the extended enterprise, i.e. include suppliers, Design teams, contractors,
subcontractors, contractors and other stakeholders. Consequently, the value chain concept (Porter, 1985) must be
extended beyond the value system of the focal company concerned and encompass all the agents in the supply
network that contribute to the value proposition. In this regard, the development of a supply chain strategy that
provides a holistic perspective of the value chain is critically important as it will ensure that the strategies of the
different agents are aligned with the overall objectives of the project and the value opposition of the supply network.

Thus, where appropriate, subcontractors must develop manufacturing strategies that take account of the
position of the manufacturing facility in the value chain (Thomas et al, 2002). Contractors and subcontractors work
within a project based system and the trend in subcontractors’ project management is toward closer organisational
integration (Schemerhorn, 1993). The opportunities for repetition are usually limited, in other words, it is a ‘‘low
volume – high variety” environment (Slack, 1993) in which the workforce, equipment and materials must be taken to
the site where the finished product is to be assembled. Consequentially, construction projects are frequently
characterised by a great deal of operational uncertainty (Kolveit, 2004). They can take many weeks or months, to
complete and involve the assembly of large numbers of components and subsystems that are made off-site. This
process fragmentation is partly because construction projects usually require contributions from suppliers with
specialist skills that span a broad range of construction and manufacturing disciplines. The result is that the design
and execution of a project is normally separated economically, organizationally and geographically.

2.2 Mass Customization principles: beyond low volume project based production system
paradigm

Encapsulated in this concept of value is the notion that organisations must compete on a range of competitive
dimensions. Haque´s (2003) states that the reasons to start up with a improvement programme in a subcontractor are
improve product quality, reduce time to market, reduce product cost and improve human resource efficiency. One of
these is ‘time to market’, which is increasingly being seen as an important source of competitive advantage
(Mahmoud-Jouini et al, 2004). However, the rise of lead time as a critical competitive priority is not limited to the
construction industry. Another important differentiator on how customers valued the products is customization.
Creating unique products is only possible if the customer can influence the properties, meaning that the product to
some extend is engineered to order. In this context, some parts of the logistics activities are performed as the
customer is waiting but also, that some preceding activities may have to performed on speculation due to the fact that
the production lead time is longer that the required delivery time ( Rudberg & Wilkner, 2004). A concept frequently
used to capture this aspect of operations strategy is the customer order decoupling point (CODP), that decouples
operations in two parts ( Hoekstra and Romme, 1992). Upstream of the CODP the activities are performed to forecast
and downstream they are performed to customer order. Tipically four CODPs are defined Engineer to Order, Make to
Order, Assemble to Order and Make to Stock (Olhager, 2003). In the Construction Sector as a project based
production system usually the Engineer to Order production system is used. That means that the order or project will
be built to order, The Build to Order concept captures the idea that value-adding activities- manufacturing, even
assembly- are triggered by orders, rather than forecasts. By performing value-adding activities to order, a company
would avoid incurring the risks of forecasting uncertain events (Salvador et al, 2006). Some Build to Order
production systems integrating the above mentioned value proposition, have to customize the product, thus an
engineering Design Stage should be integrated before manufacturing. Rudberg (2004) introduce the engineering
dimension to the CODP. Once the product is designed could be interpreted as if the product design is already “in
stock” or “Virtual stock” ready to be manufactured and assembled when needed.

These production systems called Engineer to Order (EOPS) are usually project based production systems,
where the element of repetition is usually limited, in other words “low volume – high variety” (Slack et al, 2004).

Nevertheless the Mass Customization could allow increasing the production volume. In this case we could
have “high volume-high variety” project based production systems. Thus, the Mass Customization concept
implementation could aid companies to both short lead times and providing customer value in terms of unique
products in a high volume production system.

2.3 Supplier integration in the Construction Industry

In the construction industry, no project can be undertaken by a single organisation without some degree of
outsourcing, even Design and Build Method (Anumba et al, 2000). A single company can rarely claim to possess the
entire technical expertise, resource base, or investment capital required to fully accomplish it. “Main subcontractors
and suppliers should be introduced into this phase so that downstream activities of the construction process can be
addressed” (Gunasekaran, 1999).

Suppliers are usually devoted to manufacture and some components or subsystems that should be then
supplied and assembled in the manufacturing or assembly sites. Some subcontractors could have expertise in some
components or subsystems. Therefore, they are required to supply these components and subsystems or variations of
them in more than one project.

The design and detailing of components are usually planned to overlap with the manufacturing period. This
creates multiple and parallet processes. Parallel operations are at the same time interdependent and can therefore be
expected to interrupt and disturb the manufacturing and assembly processes.

Main subcontractors Manufacturers respond to these challenges by working more closely with their suppliers
and customers and by building extended enterprise across the value chain. That means linking in terms of
coordination in the design, development and costing independent manufacturing enterprises (Jagdev et al, 1998). The
extended enterprise concept is also in tune with the concept of core-competences (Prahalad, 1990). The firm must
concentrate on Core-Competences and try to outsource non Core-business activities gaining a more flexible business
design.

There must be a close relationship with the suppliers of the activities outsourced trying to integrate them. For
Collaborative relations, commitment between manufacturers and suppliers based on an effective exchange of
information could have better performance in both partners (Jagdev et al, 1998)(Neng et al, 1995)(Childe, 1998) (Yu
et al, 2001).

Even if many enterprises are sacrificing cost effectiveness and customer satisfaction because they are unable
to work effectively across the firms, not all the trading relationships should be collaborative (Spekman, 1998). Buyers
are far more sceptical about the benefits afforded through such close integration, because they are aware of
dependency on a smaller number of suppliers.

In the construction industry the advantages of closer collaboration could be that:

- Cost and quality savings on the project may be found during the design of the process (Thomas, 2002).

- Project execution could be more efficient if the operational coordination avoids misunderstandings in the
manufacturing process

- Project execution could be more efficient if manufacturability of the project and ease of assembly were
taken into account (Anumba, 2000).

It would appear therefore that provided appropriate working relationships can be developed amongst the
parties involved, may have a particularly valuable contribution to make to the value creation capabilities of the
construction supply chain. Moreover, there is a growing body of evidence that suggests that these linkages have not
been entirely satisfactory and that performance for both parties could have been better (Childe, 1998) whilst others
have attributed some of the causes of poor performance: quality failures, increased costs, and delays in the project
delivery process, to misunderstandings and a lack of communication among the participants (Boddy, 2000)

Some authors (Caron et al, 1995) add that the lack of supply chain and logistics related management in a
project environment have a significant influence on the manufacturing systems.

Clearly, to exploit the advantages and control the risks, collaborative partnerships in which organisations
agree to work in a more cooperative manner are needed. This means Companies must re-design their business
operational processes to facilitate improvements in the exchange of information, the development of closer
cooperative relationships and ultimately, mutually beneficial project collaboration.

2.4 GRAI Methodology

 As a result, the internal functions such as engineering, purchasing, manufacturing, and external suppliers have
to coordinate the decision points and the action points to ensure the smooth functioning of the manufacturing system.

Enterprise Modelling is an important instrument to structure this complexity. Enterprise Models help us to
reengineer business processes related to a single company or to a supply chain. Concerning decision models, one of
the outstanding architectures is the GRAI Integrated Methodology. GIM (Doumeingts, 1984) aims to give support to
users and designers of industrial systems, from the user requirements definition to the design phase after the analysis
phase (Doumeingts et al, 1992).

The basic principles of the GIM approach are to support the Analysis/Design stage, which is divided into two
parts:

1. The Building of the Conceptual Model of the Current System (Analysis stage) and its conversion into the
Conceptual Model of the Future System (Design stage).
2. The second part provides technology-oriented specifications: this allows to translate the Conceptual Model
of the Future System into three categories of specifications:
a. Information technology ( hardware and software specifications)
b. Manufacturing technology ( tools and equipment specifications)
c. Organisation (physical system and management structure)

At conceptual level, the GRAI Model is made up of three systems: the physical System, the Decision System
and the Information System (Figure 2).

INFORMATION DECISION
SYSTEM SYSTEM

Period-driven
subsystem

Event-driven
subsystem

PHYSICAL
SYSTEM
NT ALS
S
NE RI
PO TE

TS
M MA

C
DU
CO W

O
RA

PR

Figure 2: The GRAI Model

The Decision System is divided into levels of decision-making. Thus, GRAI Method proposes a hierarchical
structure to define the Decisions Systems in the company. The GRAI Method original formalism to represent the
decision centres containing the decision processes is the GRAI grid. With the objective of incorporate the simulation
to the models of decision systems, DGRAI Model was developed (Poler et al., 2002). DGRAI allows the decision
processes from a finite capacity point of view to simulate (Poler and Lario, 2001) due to the incorporation of the
human resources as activities’ executioners and it also highlights the problems related to the decision coordination
from a dynamic point of view.

3 Research questions and objectives

 Even if some authors argue that few companies are actually engaged in such extensive supply chain
integration (Fawcett et al, 2002), the authors of this paper state that GIM approach could be useful to accomplish an
integration reengineering project in order to improve overall supply chain performance. The improvement of an
Engineer to Order mass and extended production systems requires an updated approach to planning and control
operational system including design process and evaluating the coordination needs in the extended supply chain that
allows order promising to secure reliable delivers with shorter lead times. GRAI grid and DGRAI Model would also
allow the simulation of the decision systems in order to validate the TO BE model. These tools have already been
applied successfully while integrating Make to Stock production systems (Errasti et al, 2006) and partially in
Engineer to Order Production systems ( Errasti et al, 2007). More over, the need of coordination and synchronization
has not been studied in depth in case studies of “high volume-high variety” EOPS.

Thus, this paper explores the method in which the redesign of internal and external integrated processes
should be carried out; aided by GRAI grid and DGRAI Model, in order to improve the overall performance of the
supply chain in EOPS in mass and extended supply chain environment.

This research has also conducted a case study answering the difficulties mentioned above.

4 Research Methodology

The research methodology behind the work presented in this paper, consists of a theory-building phase, a
theory testing phase and a synthesis phase:

Theory-building: started with an extensive literature review to identify the issues/factors to be considered in
the implementation of the GIM approach in a supply chain.

Theory Testing: the theory-testing phase of the research was designed around action research principles.
Action Research can be seen as a variation of case research (Yin, 1994), in which the action researcher is not an
independent observer (Westbrook, 1995)(Rowley, 2004) (Zuber Skerritt, 2002)(Vignalli, 2003)..

Conclusions/Synthesis: in the synthesis phase the conclusions of the case studies and the findings are shown,
which increase the understanding of the reengineering process and the techniques based on Enterprise Decisions
Systems Analysis and Design Models to integrate the supply chain.

5 Theory building: issues/factors to be considered while implementing the GRAI

Method to a supply chain

Given the implications of redesigning a supply chain decision system, the decision to do so and how, should
be considered a strategic issue for the firm. Thus, the concepts identified in the literature were set around the steps
that are typically needed in a strategy development process. Authors like Acur (2000), state that for a dynamic
strategy development process four stages (inputs, analysis, strategy formulation, strategy implementation and strategy
review) are needed and that management and analytical tools can be used for this purpose.

The authors of this paper have accepted this approach; nevertheless this research simplifies this process and
adapts it to the business units´ operational strategy (Platts, 1990) considering the following factors:

The methodology/guide takes into account the position of the Business unit in the Value Chain (Browne,
1995) and sets the stages which should help value creation (Porter, 1980). A diagnosis or input stage is used to
analyse the factors (Gunn, 1987). In this stage GRAI Grid (Doumeingts, 1992) and DGRAI (Poler et al, 2002)
analytical tools support the analysis of the Current System and the Future System. The diagnosis contributes to
choosing the content of the strategy (Gunn, 1987) and defining or formulating the strategy (Platts, 1990). The
diagnosis also contributes to monitoring the advantages/disadvantages of the future decision system related to
Information technology (hardware and software specifications), manufacturing technology (tools and equipment
specifications) and organisation (physical system and management structure).

After that, a deployment stage of the formulated strategy is set (Feurer, 1990).The deployment is a project-
oriented task (Marucheck et al, 1990), where a process of monitoring and reviewing to facilitate the alignment of the
organisation to the strategy is set (Kaplan et al, 2001). The full framework is illustrated in Figure 3.

Change drivers: Value Creation ( Porter, 1980)

Scope: The Business Unit ( Kaplan et al, 2001) considering
the position in the Value Chain (Browne, 1995)
Purpose: Better performance through
process reengineering (Hammer et al, 1993)

Dynamic strategy management process (Acur, 2000)

Operational
Diagnosis Strategy Strategy Deployment
(Gunn, 1987) Formulation (Feurer, 1995)
(Platts,1990)
-Project oriented task
GRAI Method (Marucheck et al,1990)
(Doumeingts,1992)
Monitoring/Reviewing
(Kaplan et al, 2001)
-Analysis of Current/Future decision system
through GRAI Grid (Doumeingts, 1992) and
DGRAI ( Poler et al, 2002) -Balanced scorecard system
- Future System specifications (Marucheck et al,1990)

Figure 3: Schematic representation of the methodology/guide and factors to be considered

6 Theory testing: empirical study

Supply Chain Presentation and methodology/guide adapted for the case studies

The Main Subcontractor, which led the supply chain improvement, belongs to a Spanish industrial group devoted to
design, manufacturing and assembly of lifts and escalators. In order to ease the comprehension of the case study, the
main characteristics of the external supply chain (distributors´ and suppliers´ network) and the internal supply chain
(materials warehouses and manufacturing plants) are described (Figure 4) in this section:

External Supply Chain Internal Supply Chain External Supply Chain

Manufacturing Distributors
Main Subcontractor
Suppliers Assemblers

Plant Warehouse Warehouse Plant Construction Site

Engineer to Order Replenishment

Planning and Inventory system

Figure 4: Internal and external supply chain considered in the case study
 External distributors´ Supply Chain: the modules and subsystems of the lifts are delivered by distributors to
the construction site where they are assembled.

Internal Supply Chain: The production of the Main Subcontractor is planned when the design team has
finished the engineering stage of each customized lift or escalator. Thus, the manufacturing plants work as EOPS.
The manufacturing plants processes are based on mass customization concepts, which try to exploit the advantages of
mass production with the customization of the product for each customer. For this purpose the product and the
process have high modularity and commonality that allows a high customization, combining different parts or
modules in the final part of the process (assembly).

External suppliers´ Supply Chain: The suppliers are classified taking account of logistic volume or weight per
supply unit, number of references, supplier distance and value per supply unit, as J.I.T. volume suppliers, J.I.T.
module suppliers, traditional Make to Order suppliers and traditional Make to Stock suppliers (Figure 5).

SUPPLIER J.I.T. VOLUME J.I.T. MODULE TRADITIONAL TRADITIONAL

CLASIFICATION SUPPLIER SUPPLIER MAKE TO MAKE TO
ORDER STOCK
FACTORS
SUPPLIER SUPPLIER
LOGISTIC VOLUME
OR WEIGHT PER
SUPPLIED UNIT

NUMBER OF
SUPPLIED
REFERENCES

DISTANCE TO THE
O.E.M. LOCATION

VALUE PER
SUPPLIED UNIT

Figure 5: Suppliers´ classifications taking into account some logistics factors

The company of the industrial group tried to gain a sustainable competitive advantage. For this purpose, the
research group aided them to apply the methodology/guide to the companies or Business Units (Figure 6). In the
diagnosis stage the GRAI grid and DGRAI tools to analysis the Current System and design the Future System were
used. The Operational Strategy defined was to improve customer service (reduce delivery date and increase order
fulfilment) and improve the total cost of the chain through a redesign of the production and inventory planning
system of the Main Subcontractor and suppliers´ network. The implementation of the future system was monitored
with key performance indicators of Customer Service (Delivery date, Order fulfilment) and Cost (Stock).

Change Drivers: Service quality and cost competitive factors

Scope: Main Subcontractor manufacturing plants and suppliers
Purpose: Better performance through process reengineering

Dynamic strategy management process:

managementprocess

Operational Strategy:
Diagnosis Quality service improvement StrategyDeployment
Total cost reduction
- Future Operational planning
System implementation
GRAIMethod
MonitoringReviewing
- Analysis of Current/Future
Operational Planning System -Key performance indicators:
and suppliers/customers integration Product delivery date
Through GRAI Grid and DGRAI Customer Order Fulfilment
- Future System specifications Stock Turnover
Logistic and production total lead time

Figure 6: Schematic representation of the methodology/guide adapted to the Case Studies

 Supply Chain Current system analysis (As IS) and Future System design (To BE)

To analyze the production and inventory/material planning current system of the internal supply chain and the
suppliers´ network (As IS), the decision system was monitored using GRAI Grid. The GRAI Grid showed the main
characteristics (decision levels, decision centres, planning periods, planning frequency, decision alternatives,
information,).

The production and inventory/material planning is concerned with balancing supply and demand. It tries to
keep the material flow and the value added activity in manufacturing going on without interruptions. In the case
study, the production and material planning system worked as make to order once the engineering stage was done. It
was a every two days based fix order point system called “D+20:2”, because the O.E.M. manufacturing plants supply
to the distributors the orders received in the day “D”, 20 days later. Thus, the planning period was of two days and the
planning horizon of twenty days. When monitoring the GRAI Grid a policy constraint was detected. The whole flow
of materials was limited by the master production scheduling (MPS) decision level. In this decision level, the
planning period and planning horizon of the master production scheduling had a great impact on the system lead time
and consequently on the delivery date and on stocks needed to go on without interruptions.

Thus, the analysis and design stage of the future system was set around the alternatives of reducing the
planning period and the planning horizon of the MPS. In particular, “D+13; 2” planning system, with a planning
period of two days and a planning horizon of thirteen days, was analysed. The other alternative was “D+13:1”, with a
planning period of one day and a planning horizon of thirteen days. These replenishment systems could be expected
to perform better, because the period and planning horizon were reduced. In theory, the new system could work with
less work in process, because it supposed a quicker response of the manufacturing plants to the construction site.

Nevertheless, in order to analyze the feasibility of the future system, the information technology,
manufacturing technology and organisations of the internal and external suppliers/customers´ network critical factors
and other efficient supply systems ( cross docking, milk run,...) were monitored (Figure 7)

D+20:2 vs D 13:2 INTERNAL SUPPLY CHAIN EXTERNAL SUPPLY CHAIN

D+20:2 vs D13:1
INFORMATION •Production order generation in •Suppliers order reception
TECHNOLOGY Main Subcontractor
• Purchasing order generation and
submission to suppliers

MANUFACTURING •Lot or Batch size in the production •Lot or Batch size in the suppliers´
TECHNOLOGY system production system
•Bottlenecks efficiency
•Work in process

ORGANISATION •Plant Manufacturing Pull System •Parts stored in suppliers´ finished

•Parts and Raw materials stored in products warehouses
Main Subcontractor warehouses •Efficient supply system from suppliers
•Efficiency of the Planning System. (Milk Run with third party logistics)
Management time
•Efficiency of the Inventory System.
Management time

Figure 7: Critical information technology, manufacturing technology and organisation factors taking into
account when implementing the Future system
 When analyzing the efficiency to operate with the future planning and inventory/material system, DGRAI
tools allowed monitoring, if there were bottlenecks or capacity problems in the production planning and
inventory/material management teams and also the total quality of the future system. In order to compare the dynamic
behaviour of both systems, a simulation of one year was performed. The conclusions were:

- Both planning systems were correct from the point of view of supply coordination. The simulation did not
evidence synchronization problems between internal and external supply chain.

- Regarding the manpower consumption, “D+13:2” planning system used a every two days recalculation of
the Master Program (consequently the same period for programming and ordering), versus the “D+13:1” planning
system that used a daily recalculation. The simulation showed that the “D+13:1” uses a 40% more of hours of
decision makers than the “D+13:2”. Therefore D+13:1 was more expensive than D+13:2 from the point of view of
manpower cost.

- Concerning the impact of the human resource capacity in the decision system performance, an interesting
indicator is the quantity of decisions in the queue of decision makers over the time. Both planning systems had a
similar behaviour concerning the maximum number of decisions in queue, but the queue time was higher in
“D+13:1”, the average number of decisions in queue is a 50% higher in “D+13:1” than in “D+13:2”. In particular the
Planning Chief of the internal supply chain was overloaded all the time in “D+13:1”.

- With regard to the evolution of the Total Quality of Decision System (TQDS) indicator, “D+13:1” was a 4%
better in mean than “D+20:2”. But the most important was that “D+13:1” is a 15% better in minimum than “D+20:2”.
TQDS was calculated as the weighted mean of the quality of decisions at a given moment. The quality of a decision
depends on the quality of information used and the quality of the decision maker and decreases with time (until its re-
generation).

Results in terms of effectiveness

The Escalators and Lifts business units´ managers balanced the advantages/disadvantages shown by the
GRAI tools and decided to implement the new production and inventory/material planning system. The performance
of the future production and material/inventory planning system were set in quantitative planning parameters such as
days of stock reduction and customer service. Two years after the starting up of the reengineering process, due to the
new production and material/inventory planning system the outstanding changes were:

- 35% of delivery date reduction and 10 % increase of order fulfilment to the assembly site
- 30% of work in process reduction in Main Subcontractor
- 30% of stock reduction in J.I.T. module suppliers’ warehouses in Main Subcontractor
- 20% of stock increase in Make to order suppliers forced to work as assemble to order from a new
decoupling point
- 30% of stock reduction of Make to Stock suppliers parts in Main Subcontractor warehouses.

7 Conclusions

The main conclusions related to the aim of the paper are:

 • The multidisciplinary team involved in the reengineering project have found that GRAI grid
and DGRAI management tools are very useful for the Supply Chain improvement in EOPS
environment

• Related to the operational integration between suppliers and Main Subcontractor the profits
from stock reduction could be obtained in suppliers/customers warehouses or in Main
Subcontractor warehouse. Thus, a benefits/efforts analysis and negotiation is needed in both
cases.

The authors of this paper suggest that future research could be done in the following areas:

• The best contracting practices that allow better collaboration among subcontractors and
suppliers in a project based production system that covers a range of goods or services to be
provided and the type of agreements of suppliers¨capacity levels
• The impact of suppliers location when supplying complex modules in sequence and
synchronize production to meet short response times and the alternatives to decouple the
suppliers with longer transit periods
• Orders smoothing and levelling in Engineer to Order Production systems. Once the orders
are designed they could be “buffered” and try to satisfy different customer delivery date
needs ( export orders, regional orders, ..) while levelling the capacity of the manufacturing
plant.
• Extending the GRAI Method to other Engineer to Order production systems analysis

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