Lean manufacturing in the food industry

The overall aim of Lean manufacturing is to help people in the food industry to make improvements in performance. For things to improve, a recognition and under – standing of improvement is required. This will ensure that the right improvement is chosen for the right reasons, obviously without sacrificing quality or safety!

Lean manufacturing is a series of techniques that, if applied correctly, will improve the performance of a factory, a department or even a single production line or machine. The techniques of Lean manufacturing are logical and as the techniques are applied, it can be thought of as a journey towards a more efficient future. Lean manufacturing cannot be purchased and installed in a factory. The techniques are based on the way in which the work is carried out, and involves changing behaviours and attitudes of the personnel so a deep understanding of motivation and culture is essential in the application of Lean Thinking.

Questions

• What behaviours and attitudes are you aware of in yourself and those around you that could affect your ability to introduce changes in your section/area? (e.g. think about people’s reactions in the past when new things have been introduced)
• Have there been examples where you felt the change was not needed?
• Have people reacted against change because it was not their idea?
• What was the last change you introduced?
• How did people react to that?
• Why do you think they reacted in that way?

Lean techniques can be applied to all areas of a business and can give the business a great advantage against its competitors. Because Lean techniques cannot simply be purchased, they are difficult to copy. If you decide to buy a new more efficient machine or launch a new profitable product, your competitors will be able to do the same within a surprisingly short space of time. This is particularly the case in the food industry, where ‘copycat’ products can be launched within weeks of your new product hitting the shelves. Businesses are always looking to increase profitability and Lean manufacturing can deliver extra profit in a way that your competitors cannot easily copy, because they are not working in your factory with your people in your way. Lean manu – facturing techniques are often based on ‘No cost or low cost improvement’, so the use of the techniques can be applied by any company, no matter what the current situation with the finances. Indeed, Lean manufacturing has been used to transform factories and to rescue businesses that have been in decline for many years.

If carried out correctly, Lean manufacturing is an example of what is called a sustainable competitive advantage and will allow your factory to out-perform your competitors for a long period of time. But more than that, Lean manufacturing can keep you ahead of the competition. The cornerstone of Lean manu – facturing is the development of continuous improvement systems. The factory is constantly striving to perform at a higher level. Even if it is at the top of the tree, the people in the factory are still looking to be better and better. This hunger to improve is a difficult thing to maintain in a factory and Lean manufacturing has techniques that ensure that this happens. The better performance delivered by Lean manufacturing techniques can be used by your business to do several things.

Extra output

Extra product can be made, because per – formance has improved and this releases extra production capacity. An increase in the volume of business can have a very positive effect on profitability, especially if the fixed costs can be maintained at their previous level. The extra product made will improve the profit margin. Of course, the extra capacity needs to be sold and not just used to increase stock levels in the business.

The other way of utilising extra capacity in a business is use it as an opportunity to launch new products or get into new markets and broaden the sales base of the company. Finally, the extra capacity can be used to rationalise the production systems and to restructure.

For example, older less efficient machinery could be taken out of use if other machines have increased capacity through the application of Lean techniques. Shifts could be rationalised to reduce fixed costs, so weekend working could be stopped, allowing the costs associated with opening the factory up to be reduced or eliminated.

Lower costs

The improved performance will result in lower costs for the business and this could be retained and invested in your business or passed on to your customers in order to gain extra sales volume because your prices are now lower. Passing on the ‘cost advantage’ to a retailer will hopefully allow them to gain more sales. The increased volume of production that results will mean that your business will be buying more materials and your ability to get reduced prices is enhanced. The extra volume will also allow you to dilute the fixed costs of the business. It is a circle of advantage that can be started with quite modest improvements in performance from the application of a few Lean manu facturing techniques. Ultimately, in the food manu – facturing industry, some of the factors by which the company is judged by others have to be guaranteed. Product safety is a given in the food manufacturing industry.

Your company has to produce safe food or it will not be in business. Quality and service level has to be very high for the entire time. Occasional lapses may just be tolerable but consistent issues with quality and service levels will hurt the business deeply, as sales decline and the retailers look elsewhere for their supplies. That leaves us with cost as one of the few areas where companies can compete. The rest of the factors are just a given.

Better yields

The better controls in the factory will result in better yields and less waste and this too would result in higher profit margins for the business. There will be less waste because the machines do not break down as much as they used to. There will be less giveaway because the operatives now know what an impact that has on the business, they know it is monitored and they are motivated to get it right first time. Better yields because the goods reception area is now better organised and there is time to inspect all deliveries before they are accepted. Less waste from the storage areas in the factory because they are tidier and only contain what needs to be there. Finally, you get paid for your work because it arrives on time and in full at your customer, and you do not have to deal with whole consignments being rejected because they arrived late or there was a quality fault in the first box they opened at the depot.

In order for improvements to be made to yield, data will need to be available. That data can only be achieved by the use of correctly calibrated instruments and detailed and targeted data collection systems. It is surprising the number of food companies who have an issue with yield from their process but do not have the ability to measure it routinely. It is a real chore to weigh every batch, but that is what must be done if yield issues are to be recognised, let alone solved.

Improved systems

Better systems in the factory mean that changes can be made more quickly and this will make your factory quicker to react to demands from your customers; this, in turn, will increase the reputation of your factory and ultimately bring more business your way. For their important and high volume food items, retailers have a duel supply system where the product is sourced from at least two different companies. One way that factories can help a business gain extra volume is to be able to deliver at very short notice when the competitor factory has a problem. Quicker response cannot be at the expense of higher stocks or under-utilised capacity; those items would cost too much while you wait for an opportunity to use them. Quicker response should only come from having flexible systems that can be switched on, but cost nothing when not required.

For example, your company is asked to increase output tomorrow because there has been a flood at one of your competitors’ factories. Rather than have stocks of materials and packaging waiting for this opportunity, you should have responsive suppliers who are flexible and can meet your need to increase output. Rather than have spare machines waiting to be used, you should have flexible working arrangements with your staff that allow you to extend the length of the working day, compress the hygiene window and make the extra product that way. Rather than have a limited storage and transport capacity, you should have arrangements to move the product quickly so that space is no longer a limiting factor. All of these techniques need to be thought through and planned in advance so that when the phone call comes in from you worried customer, your business can say: “No problem – leave it with us.”

The final aspect of better systems is that your business needs to be flexible both ways, not just able to increase output at short notice but also to be able to reduce output quickly without losing control of costs. It only takes a patch of bad weather for the major retailers to reduce their orders. Unless you have systems that allow you to reduce your costs in parallel, your factory could be running at a loss for several days. A few lost days can take weeks or even months to recover in a business that works at such low profit margins.

Better working environment

Finally, the use of Lean manufacturing techniques will make your factory a better place to work. Workers will be more in control of the process of meeting very high performance and delivery demands and are able to do so consistently. Everything will be more organised and less frustrating, it will be easier to get things done and it will be a tidier and safer place in which to work.

Result!

If you think that Lean manufacturing techniques may help your business to be more successful, then how do you get started?

If you want to improve something – first you have to measure it

This means that making improvements in a factory is a process of changing things to make them better and then knowing if the change has been a success. The only way of knowing for certain that an improvement has been made is to measure before and after and compare the two numbers.

If you want to alter a machine to reduce the quantity of waste, measure the amount of waste, make the adjustment to the machine and then measure the amount of waste again to see if there is a significant improvement.

Yes!

Well done, you have made an improvement.

No!

Oh well, it was worth a try. What else could we do to reduce the waste?

There is no way you can be sure that an improvement has been made without taking an initial measurement. This first measurement will also provide a record of the journey, so that in a week or a month, the improvement in waste can be checked again to make sure that the improvement has not been lost.

From the example of waste described here, it is simple to see that measurement needs to be applied to all things that need to be improved.

Assuming you already take many measurements in your factory, some may be for legal reasons such as the average weight of the packs that you have made. Some measurements will be to make sure the payroll is correct or to control yield such as counting the quantity of product you have made so that your customer is satisfied.

Measurement is required throughout a factory; the trick of Lean manufacturing is to make sure that the effort, and cost that goes into measuring, is well spent. Measurement needs to be well targeted to provide information on performance, and for that information to be widely known and used in the business. These Key Performance Indicators are vital to the day to day management of a busy and dynamic manufacturing environment.

A factory that has implemented Lean manufacturing techniques looks at the cost and value of everything in the business. If the cost is larger than the value or benefit that the company gets out of it, then a change is needed to improve the situation.

About the author

Mike Dudbridge is a Principal Lecturer in food manufacturing at the National Centre for Food Manufacturing, University of Lincoln, UK. The Handbook of Lean Manufacturing in the Food Industry is available from Wiley – Blackwell.