Lean manufacturing practices have become widely used in global manufacturing. Manufacturers see lean manufacturing practices as a good way to refocus efforts away from wasteful, non-value adding activities and to place more emphasis on efficiency and productivity. Food manufacturers initially showed little interest in lean manufacturing methodologies, although this has begun to change with contemporary industry leaders using lean manufacturing to their competitive advantage.
Lean manufacturing (or lean production) essentially centers on reducing or eliminating waste from the production process. The lean philosophy is to focus resourcing on value-adding activity and to take the focus away from everything else. Because automakers were the first major proponents of this lean philosophy, sometimes it is thought to be inapplicable or unhelpful in the context of fast moving consumer goods such as food and beverages, but this is a misconception.
Can food manufacturers adopt lean manufacturing practices?
Food manufacturers are not all that different from Toyota or Apple. They create and sell a highly processed product that goes through multiple stages of production, creating a significant scope for waste (and for waste reduction). For example, there are a significant number of steps involved in transforming fruit and milk into yoghurt. Like any other manufacturing industry, food manufacturers can cut waste and optimize time and resource use.
Food manufacturers who adopt a lean manufacturing methodology focus on the elimination of costs and activities that do not add value for the consumer. Sometimes these are called muda (a Japanese term meaning futility). Muda can include poor handling processes, manufacturing downtime, or over-processing. The scope of waste is broad and eliminating it could involve a total or substantial redesign of the manufacturing process. For example, reconfiguring the layout of the factory floor or bringing canning staff onto rotating shifts to keep the canning line operating for 20 hours each day rather than 12 hours.
From an inventory perspective, lean manufacturing can involve carrying less stock or implementing more efficient inventory control processes. Safety stock, where a business holds reserves of stock to manage the risk of unexpected demand, presents a particular opportunity to reduce waste. While careful management of stock levels is essential in food businesses, holding large reserves of stock ties up capital that can be used elsewhere in the business and also incurs carrying costs relating to storage and expired ingredients. Many lean businesses practice what is known as Just-in-time-Inventory. With just in time inventory, stock is not ordered pre-emptively – instead, stock is ordered responsively through fast-moving distribution channels. Carrying costs are low, and obsolescence is at an absolute minimum.
Of course, the storeroom and cold store are not the only sources of inventory muda. The approach a business takes to inventory management can also be a source of waste. Reliance on manual processes does not add value; inventory management software enables businesses to perform some inventory management functions more quickly and to automate others.
Much like any other business, whether or not a food manufacturer can benefit from a lean manufacturing approach will depend on the status quo. If there is waste in the business, there will be scope for a lean approach to succeed.
Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.