Food manufacturers are waking up to the fact that lean can refer to more than the amount of rind on your pre-packed bacon rashers.
They are starting to see the benefits already enjoyed by their counterparts in the automotive sector who are employing the principles of lean manufacturing. But can principles employed in discrete manufacturing be applied to the process sector?
No, say many: food, for example, is a capital-intensive industry using plant designed for specific purposes, so the kind of techniques used to manufacture individual components cannot be transferred.
Yes, counter the experts who argue that the basic principles can be transferred to this sector by simply tweaking the detail – and to great effect.
‘Food manufacture is a sophisticated and highly capital-intensive process,’ says Martin Dufficy of management consultant Bourton. ‘But there is growing interest in the transfer of lean manufacturing techniques, particularly ‘quick-changeover’ and others that minimise downtime.’
Techniques such as Total Productive Maintenance are being used more frequently by food manufacturers as a means of increasing productivity, reducing process variability and ‘fine-tuning’ to maximise product predictability. The terminology may vary but the principles remain the same.
Lean manufacturing came to the UK in the 1980s with the Japanese investors in the car industry. Its basic aims – of achieving what the customer wants with minimum waste – have been employed by organisations around the world.
Key characteristics of the approach include just-in-time delivery, the reduction of inventory and stock, and giving greater responsibility to the workforce to suggest and implement efficiency improvements – all within an overall philosophy of continuous improvement, or kaizen.
Such measures are only now starting to make inroads into the process sector, including food manufacture.
The food sector is capital-intensive, with expensive and complex dedicated equipment lines. The traditional way of ensuring that this equipment was running ‘efficiently’ was to produce large batches of single products quickly. This required a readily available stock of ingredients to keep the system going, often seven days a week. Long and complex changeover routines militated against frequent changes in – or modifications to – product run.
However, this approach is under pressure due to new trends. Some have been initiated by the supermarket chains, some consumer-driven,while others are driven by the aspirations manufacturers.
‘The traditional approach is for food manufacturers to produce what is easy and not what customers necessarily want,’ says Bob McLellan, a consultant at the Kaizen Institute. ‘For example, you might see the output of a large production run stored for three weeks before a customer is ready to accept it. Today, companies need the flexibility to produce smaller quantities more regularly; basically, to manage the business in a way that is focused on customer needs.’
Managers are learning fast; analysing the true cost of holding inventory, and slowly shedding the cultural tendency to take the long view and plan ahead instead of responding to demand. But they have also had to start thinking about replenishing the pool of product being consumed, rather than concentrating on production schedules and artificial output targets. This is particularly challenging for food producers, where demand can vary dramatically — think of the demand for ice cream in a heatwave.
Slimming to survive
As a result, interest in lean manufacturing is being shown by manufacturers from the high-volume, branded product end of the market (eg Kellogg’s cornflakes) where issues of quality and cost performance are paramount, to the other end where own-brand products for retailers such as supermarkets or Marks & Spencer are produced.
Here, lean principles are applied to improve flexibility for shorter runs, faster changeovers between products, variations in packaging and coping with seasonal demands.
The main drivers of this change have probably been the big supermarket chains, demanding more frequent supplies of an expanding range of products. In this environment, big batch production is no longer the most efficient response. Some firms, particularly those making perishable products like yoghurt and sandwiches, are leading the adoption of lean techniques.
The number of food products is increasing, up an estimated 50% on five years ago, not counting new product variants or packaging combinations. At the same time, there is the growth and increased sophistication of the own-brand sector, and the desire of branded manufacturers to be seen to add value to their product to stay ahead of ‘me too’ imitators. The pressures are immense.
‘We are creating a monster, and manufacturers, especially in the own-brand sector, are having to recover their margins on a wider range of products,’ explains Dufficy. ‘They have to employ lean techniques just to stand still – they have little choice but to embrace the concept.’
As in the automotive sector, there is more to this than just cutting costs. Quality counts. ‘But cost and quality issues are not mutually exclusive,’ says McLellan, ‘You can maintain good quality and value and still reduce your production costs.’
But are food manufacturers not ‘trapped’ by their expensive, high-capacity equipment, which can cost millions of pounds to replace? McLellan believes this is a self-fulfilling prophecy and that, left to their own devices, equipment manufacturers will continue to make bigger, faster machines. Only by demanding smaller, more flexible equipment will producers begin to change this.
Short term, though, there are management tools that can bring about dramatic change by addressing problems within the process, without capital investment.Changeover times are an obvious target. Operations in the automotive industry that traditionally took hours can today be achieved in minutes – a feat that should be equalled in the food sector. This single improvement can have a big impact, because the slowest changeover time is often the limiting factor in a process of linked machines.
Even faster food
‘It’s a people issue, too,’ says Dufficy. ‘With more sophisticated plant, you employ fewer, more highly-skilled people who should have ‘input’ when it comes to suggesting better practices.’
Suppliers need to change too, with smaller, more frequent deliveries.
Nevertheless, simple improvements to existing methods can result in a 20% improvement in productivity over six to 12 months, say the experts. These can include waste reduction, increased plant utilisation and output, as well as quality improvements.
One example cited by Dufficy is a leading food packaging manufacturer, which improved its business performance through waste reduction and saw annual savings in excess of £750,000 by the end of the project.
The Kaizen Institute’s McLellan quotes overall equipment effectiveness (OEE) figures, which measure factors such as reliability, change-time and defects. The institute found that many manufacturers achieve an OEE of just 30% – 40%. But big productivity improvements, from 40% – 60%, can be achieved within 12 months, with little or no capital investment.
‘It allows you to rethink the manufacturing process. It’s not about what the system can do – it’s about asking what the customer wants,’ says McLellan. Without wholesale re-equipping, he believes OEE levels of 85% are achievable by companies employing best practice.
And if this process is taken to the next stage – radical new initiatives – then benefits can rise exponentially.
It’s a high-risk strategy, involving multi-disciplinary project teams to handle the introduction of new products, and, ultimately, self-managing teams to handle everything from scheduling to the review of performance measures. ‘It is not a foregone conclusion that everyone will want to follow through to this third stage,’ says Dufficy.
‘Radical ideas can backfire.’
Obviously, not every technique will be appropriate for every company. But few can now afford to ignore the principles of ‘lean’, if they still want to bring home the bacon.