VALUE INTEGRATION - tightening the collaboration of supplier, manufacturer, distributor, retailer, and other allies to provide exciting and differentiating new forms of value to the end user - can take many shapes. Here is one, in a product area that most of us can relate to as consumers: a new home.

The story actually starts far up the value chain, out of sight from the consumer, with a Japanese maker and importer of forest products in search of ways to grow in a mature, technologically competitive industry. Decades of tradition had conditioned management to viewing its business as one of churning out commodity materials for finishing by home builders, who would then sell standard and custom-designed homes to end consumers.

UNHAPPY CUSTOMERS
In practice, the workings of this value chain were cumbersome, if one took the ultimate consumer's point of view. The future homeowners first met with their designer or architect to design and spec-out their new home. The builder, typically a small business owner, then laboriously broke the design into a myriad of product and component orders to various manufacturers and pre-assemblers. Some time later - but typically not at the right time - the filled orders trickled in to the builder's lot. Invariably one order or another encountered a lengthy delay, setting the aggregate fulfillment process back weeks behind schedule. What was optimistically slated for two or three weeks became an eight-week or longer procurement process for key components. To make up for lost time, the builder (whose own work schedule was now out of whack) juggled construction schedules. Still, when all was said and done, elapsed time from consumer sign-off had stretched to eight months or more. The homeowners were now impatient, disenchanted. Their new home looked tarnished before they had even moved in.

Then the forest products company found a way to preserve the sparkle. As the only partner with a big stake in and comprehensive understanding of the chain, it needed to be the one to push for dramatic improvement. Taking the end user's view, management first identified engineering superfast delivery as its core opportunity. Research suggested that there was huge inefficiency in the system. Take it out and all component preassembly could be compressed to thirty days. Add back time for build-out, and homeowners could get a "custom made" home in under two months, their enthusiasm still intact.

TANGIBLE VALUE
Actually the home was "semi-custom." Looking up the value chain from last-step home assembly, the producer found that a small number of unusual custom home specifications led to most delays. Find a way to rule out special designs, then massively link thousands of individual construction projects together as a unified, up-to-the-second system, and just-in-time delivery was suddenly possible.

Computerization was essential for three reasons. One was related to customer-friendly personalized design, the second related to behind-the-scenes production and inventorying. But the third reason was truly key: the computer linked both these opposite sides of the business to each other.

Computer-aided design allowed homeowners to piece together their dream home using visual images programmed into the equipment. By choosing, moving, expanding, and shrinking, they built their home right on screen. The combinations seemed endless, and the do-it-yourself joy of creation proved hard to resist.

In reality, however, the computer had not offered homeowners the choice of any uncommon items. Consumers wanting curved glass for their windows, for example, would have to shop elsewhere. Instead of total creative freedom, consumers were being given its illusion, the feel of complete control - coupled to what was in fact more than enough practical choice for the vast majority of people.

Behind the scenes, the carefully limited selection eliminated all the complexity from the system. A mere hundreds of design permutations (not thousands) effectively meant a fixed number of predesigned components. These could be quickly built from a manageable range of inventory. Once the customer signed off and a button was pushed, the computer instantly decomposed the design and relayed size, type, color, and quantity orders to the right providers. Raw materials and pre-finished goods inventories could be globally monitored and kept in balance at all times across the system.

Everyone benefited. Homeowners got a virtually custom-designed home, faster than they could obtain most prefabricated homes, and at a markedly lower price. Value-chain partners obtained a startling rise in efficiency, leading to wider margins and expanded market share as news of the heightened value spread.