This technology can solve multiple problems plaguing your modular business. It can do so in small steps, and for less cost than you think.
Through an upcoming series of columns I hope to demystify artificial intelligence, or AI, for the offsite industry. In this first installment, my goal is to outline practical, cost-effective ways offsite businesses can take advantage of this tool.
Artificial intelligence can be misused, or it can be leveraged to make millions of dollars; you’re more likely to get good results if you have a basic understanding of the technology. Despite AI being in the news every day, many people don’t really know what it is, how it works and how they can benefit from it.
In simple terms, imagine a giant supercomputer that has access to vast amounts of data, that’s capable of using that data to create formulas, reports, calculations, suggestions, content, video, audio, and much more. This supercomputer is the AI platform, and it can do things humans can’t do, or that would require a team of humans and a lot of time, energy and resources.
A company facing a roadblock, or challenge, can put data parameters and specifications into this platform and get back results. Those results might be in the form of actionable data, or they could be in the form of business processes, such as how to add a customer service workflow for your warranty staff.
There are many possibilities, but the starting point is always that the company has a problem to solve. They may need help comparing options: which floor plan is more energy efficient? They may want to improve a specific task: how do we route vehicles more efficiently? They may want to save time: how do we change processes to build modules more quickly? They may want to make employees more efficient: how do we help our salespeople know who to call first and who is most likely to buy? It is all about operational gain.
Take Lennar Homes, for example. Lennar is not an offsite or modular builder, but they have some of the same problems. They want to know where to get the best prices for specific items and trades in each of the thousands of communities where they build. That’s hard to figure out with people and software. So, they used AI to figure it out and were able to save $2M to $8M per community. (A link to a YouTube video about that effort is included with this article on OffsiteBuilder.com.)
AI can benefit almost every company of any size in any industry and offsite is no different, except for workflow and other specific details. Of course, a growing number of businesses want to know how they can take advantage of this technology, but many are intimidated by it. Fortunately, there are consulting companies (including BuilderChain, where I work) that can help.
Businesses new to AI don’t know what they don’t know, and they need someone to turn to, like me, who is happy to answer questions without any sales push. They soon realize that they need not fear AI. Once they know more about the technology, the fear of the unknown goes away.
The first thing they need to understand is the value AI provides. This value is easy to define; AI earns its keep by removing roadblocks, or business constraints, to provide the company operational gain, higher levels of efficiency, the ability to out-position competition and, in general, do things better, more quickly and more profitably.
Every company should be focused on the three most important elements of running the business:
- Increasing throughput
- Reducing costs
- Selling more
That is the secret sauce. Do those three things as well as you can.
In a modular plant (as in most businesses), a constraint is anything that impedes one of these three elements: that is, it reduces throughput, reduces demand for your product, or increases costs.
Constraints can come from anywhere, externally, or internally. They could be people, machines, tools, processes, false narrative mindsets, assumptions, or things out of your control entirely.
Anything that slows you down is a constraint. Here are just a few examples: permits, inspections, your salesperson, you (the owner), plumbing parts, supplier shortages, your framing process, a customer’s decisions, local ordinances, closing attorneys, even a broken printer. Some are hard to fix, while others are easy and fast.
Leveraging the power of AI to remove or minimize these and other constraints is not about buying software or putting data into a big mainframe calculation tool. It’s about creating a query and feeding parameters, specifications and other data into the platform, which will then analyze the data, compare it against models, and return results.
How do you decide which problem to start with? The answer is that you need to really analyze a “day in the life” of the company to understand its real capacity and its constraints. The good news is, AI can do the analysis for you, and return results.
Here’s a simple example. Let’s say you have enough haulers to deliver 12 modules per day, but your production capacity maximum is 10. Your constraint is production. You could run your whole process through an AI platform, and it could show you how to produce 12 modules per day without hiring extra staff by changing parts or suppliers, or by shifting labor, or by changing how you schedule the work.
It is all about analyzing the data to return back answers that no person or team or software is going to be able to come up with, at any cost. Taking action based on those answers should have the effect of increasing throughput, generating more demand for your products, or reducing costs.
You don’t need deep pockets to get these results. In fact, there are cost-effective pricing models (such as paying per second of compute time) that can be used to remove constraints in businesses of any size.
A company should only move forward with an AI-driven project if there is great ROI, but investment and ROI are relative. If the solution costs $10M to save you $80M, or if the solution costs $18K to save you $58K, who would not want to move forward?
Keep in mind also that ROI is not always a dollar amount. It could be a better quality of life for you and your employees, the positioning of the company for selling it, or the ability to reduce staff without reducing output.
The above is just a broad overview. In future columns, I will offer insights into the types of AI available, as well as more detail about how to create queries and interpret results. I may talk about specific use cases such as unmanned AI enabled construction trailers, wearable telemetry pendants for employees, and other things. I’ll show you how to use the technology to avoid specific problems like modular unit dimensions that vary from the plans. This information should help you build a roadmap for your new journey to operational efficiency.
Erik Cofield is VP, Strategy at BuilderChain (www.builderchain.io). He has helped construction companies for nearly 30 years. He is a senior-level business strategist, has provided management consulting services to builders of all sizes and types, and has three books available at Amazon. He may be contacted at [email protected]
