By: Fayssal Al-KilaniMSc Engineering Management

Lean Thinking in the food Supply Chains“THERE ARE SO MANY PEOPLE WHO CAN FIGURE COSTS, AND SO FEW WHO CAN MEASURE VALUES”

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Outline Lean Thinking Definition

Introduction

Food Sector Brief

Review of Literature

Lean Tools and Techniques

Lean Action Plan for Perfection

Case Study UK Tea Industry

Conclusion

References

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What is lean thinking?A fundamental business logic, based on the approach developed by Toyota (in the 1990s)

It is focused on eliminating waste from business processes and thereby enhancing value to the

customer

It aims to optimize the whole value stream for a product or service; not optimizing the

activities of individual organizations, departments or assets

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Lean Thinking

seiri, seiton, seio, seiketsu,

and shitsuke

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Introduction In the time of recession, most of the big companies in all sectors and sub-sectors of the market, were facing

troubles with overrun costs and losses in their projects despite high quality products. Thus, the new

generations’ management started to think of adopting new ways to deliver their product considering the

following lean technique:

Cost reduction

High quality products

Waste elimination

Improving customer’s satisfaction (Quality)

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Food Sector Brief Waste is not new for the food sector. 1.3 Billion Metric Tons are wasted per year approximately 179 KGs/Person

Aim

Eliminating the waste by systematic way of thinking

Combat Hunger

Raise Income

Improve food security

Raise economic development

Protect the environment

Majority of the companies are small and medium enterprises (SME)

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Review of LiteratureThere is consensus that lean techniques can eliminate waste and reduce risk to manufacturing and services sectors including construction, aerospace, services, tourism, hospitals and public administration.

Impact on the way company do business:

Strategic Level: Define Values.

Operational Level: Tools to eliminate waste.

The remainder will be the action plan of the implementation of lean thinking to food industry.

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Lean Tools and Techniques (Womack and Jones (1996)

Overproduction

Waiting

Transport

Inappropriate processing

Unnecessary inventory

Unnecessary motion and defects

Value• Ultimate Customer end

Value Identification

• Identify valuable activities that are creating waste• Adding theses activities into the steps

Elimination of waste

• Process re-engineering• Continuous flow

Pull System

• Customers' triggers the production• Similar to Make-To-Order

Step into perfection

• Complete elimination of waste• All activities create valueSt

eps f

rom

val

ue to

per

fecti

on

Why

Lea

n?

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Lean Tools and Techniques contd…

The are numerous lean tools available for companies includes the single minute exchange of dies (SMED) and value steam mapping.

PiecemealUnsystematic application of a single lean tool Reduce waste without obstruction

Lean ThinkingSet of principalsBusiness philosophy (Tsasis and Bruce-Barret, 2008)Lean action planSystematic applicationSustainable resultsReduce wasteHigh value for customers

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Lean Action Plan to Perfection

Wang and Chen proposed in their article published September, 2009, that after an organization makes a commitment to implement lean, the journey to lean includes three major activities:

Lean Training

Value Stream Mapping

Lean Assessment

Pointing out that knowledge and experience are the key element to identify the lean tool to apply i.e. lean assessment is considered as a learning process that helps companies to evaluate and identify:

What went wrong

Learn from their mistakes

Expand their knowledge via lean training

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Lean Action Plan to Perfection contd…

Womack and Jones published an article in 2003, that stipulate a broader perspective of lean transformation mainly as follows

1. Finding a lean change agent

2. Get the knowledge

3. Find a lever by seizing a crisis or creating one

4. Forget grand strategy for the moment

5. Map your value streams

6. Begin as soon as possible with an important and visible activity - Confidence

7. Demand immediate results

8. As soon as you have momentum, expand your scope

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Failures to deliver lean results

Womack and Jones proposed action plan was mainly focused to manufacturing projects, it is not

universal lean tools. Only 5% of lean projects delivered within the expected results in 2011

(according to Manufacturer Magazine).

Researches for Lean failures is classified into three categories:

oLeadership

oBusiness Culture and people issues

oAction Plan Customization

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Leadership Cudney and Elrod highlighted in their article published in 2011, that there are 6 factors are the core lead to contribute to lean failures:

Short Term Commitment

Lack of focus on a specific issue

Poor Planning

Poor Employee involvement

Ineffective training method

Poor understanding from top managers

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Leadership contd… On the other hand, Kubiak (2011) was reviewing the lean Six Sigma initiative and supporting processes of a large multinational organizations, the outcome was that this failure is due to Organization’s leadership desired fast results.

Sarkar (2011), reported that failure of Lean Six Sigma for production is due to the following:

Not having a mindshare of leadership

Not working of the right business priorities

Not having a larger roadmap in place

Not being a methodology agnostic

Not having the right number of change agents

Not being able to coach the TOP MANAGEMENT (Agrees with Kubiak)

Not focusing on values necessary for creating continuous improvement culture

Not having the right organizational culture

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Leadership (McManus 2008) cond…

Leaders

Unlearn Relearn

Radical Change

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Business culture and people issues

Companies trying the implementation of the lean management for the past two decades; despite that, failure was reoccurring. The studies was focused in large scale companies in China; Chen and Meng listed the following reasons in 2010:

Companies failed to recognize the strategic importance of lean thinking and focused too much on lean tools

Companies were eager for quick results and abandoned the lean process with the first failure

Companies attempted to imitate and copy success practices without adopting them to their own business

culture

Knowledge of lean tools was superficial without analytical skills to pinpoint problems

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Lean action plan customizationImportant for the social and technical specifies of the adopting organization

Operational issues can limit the implementation

Leadership is a strong factor of limiting the customization

Business culture can as well is a barrier

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Application of Lean Thinking to the Tea Industry in the UK

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The UK tea IndustryDrunk by approximately 9 per 10 Britons

Retails value sales: 655 Million Pounds in 2011

High growth up to 22% in the past 5 years

Present in every British home

Distribution: Through supermarkets

Brand Leaders: Unilever, Tetley, Twining and Typhoo (90% of the Western trades are dealing with these multinational companies)

Very High demand

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Methodology (AlphaTea Company)

Case-based action research Finding of the right company that requires performance improvement

The research design Planning; Taking actions; Observing processes and outcomes and collecting data's on all levers; Reflective learning

Validity, reliability and sources of evidence Finding the problems and their root cause based on the available data and people feedback

The case company AlphaTea (UK Based) Small to Medium sized (less than 250 employees) Operating in 5 different countries 30% annual growth Variety of products High inventory◦ Factory in India

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Findings Lean implementation took place in 3 stages:

1. Preparing for Lean

2. Diagnosis and Judgments

3. Lean Operations and Control

Action Taken prior to the lean implementation:

1. Decision to go to lean

2. Forecasting customer demand

3. Visit the factory

4. Seek management support

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Preparing for Lean Partial application of Womack and Jones Technique:

1. Finding a change agent1. Recruitment2. Maintain good quality

2. Get the practical knowledge1. Meetings with tea buyers2. Control the buffer

3. Find a lever – visit to the factory to seize a crisis

1. Lack of collaboration between company and suppliers

2. Poor forecasting

4. Suspend grand strategy

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A - PlanFind a

change agent

Get the knowledge Find a lever Forget grant

strategy

B - Diagnosis

Management Support

Expert Knowledge

Operational Easiness

C – Operate

and Control

Re-Define Value

Map Value Steams

Detect Waste Ideal State

Develop Pull

Strategy

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Interim/Temporary Lean diagnosis

Initially the lean project faced difficulties and unsuccessful results. However, AlphaTea conducted interim lean diagnosis to identify the problems; the following are the results:

Lack of Top Management SupportNo direct involvement

Lack of expert knowledgeUneducation of lean tools and techniquesNot following the right lean process

Operational easinessPrice changesNo control over wasteNo crisis to change the company’s spirit

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Lean Implementation and control

Lessons learned from previous attempts of lean implementation; AlphaTea decided to follow the following strategy:

Re-define valueDemand forecastingSatisfy the customersSales and operation work in parallel

Map value steamsBreaking down the process into small detailsEnlighten management of the process

Detect waste across the value stream

Transportation cost and time (From India to UK) – 40 days delivery

Control the lean operationIdeal state of productionFixed scheduleFixed sequence variable volume (FSVV) – Each

product wait for its turn to start

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Small Firms Plantation

Pruning

CultivationHarvestingWeedingPruning

Transportation (India)Warehouse

Storing - Sorting - QC

AuctionQC – Fresh

leaves selection

Transportation in IndiaTea Manufacturing

Inventory Management QC Fresh leaves Selection Manufacturing Process:1. Withering2. Rolling3. Fermentation4. Drying5. Sorting/Grading

WarehousePacking

Transportation in India

Transportation

UK WarehouseInventory Management

Consolidation/Re-packing

Transportation (UK)

• Overseas Transportation• Insurance• Port Handling

Multiple Retailers Hotels Restaurants Export

Tea Value Stream and Process Activities

India

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Operation/Production Philosophy (Ideal State)AlphaTea Produces 3 types of Tea:A = Black Tea (Demand 2000 Units/M)B = Green Tea (Demand 600 Units/M)C= White Tea (Demand 800 Units/M)

10 Different Packaging Formats&

1 Tea Packing Machine

Takt Time = 2.8 mins/unitWorking Hrs = 8 Hrs1 Operator / type (total 3)Sequence A, B, C

Daily Target(20 days cont demand/month)A: 2000/20 = 100 UnitsB: 600/20 = 30 UnitsC: 800/20 = 40 UnitsTotal = 170 Units/Day2.8 mins/unit X 170 units/day = 480 mins = 8 hours shift

Operators Needed: 3 from 8:00 AM to 5:00 PMA X 1 unit to be produced every 4.8 minutes (480 mins/day / 100 Units)B X 1 unit to be produced every 16 minutes (480 mins/day / 30 Units)C X 1 unit to be produced every 12 minutes (480 mins/day / 40 Units)

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Quality ManagementQuality issues often happened with newly introduced suppliers. Issues could be anything from,

but not limited to, un-aesthetic overwrapping of the tea cartons, transpiration of the flavoring

oils into the tea bag paper thus affecting the presentation of the product, foreign elements found

in the tea, defective heat sealing of the catering pouches, high levels of pesticides.

Quality must always maintained and considered. Continuous and sustainable improvement rates

must be highly noted.

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ConclusionThe tea industry is a customer-centric business, which can improve customer satisfaction by removing waste and defects from the products and services offered to customers.

oThis study examined the adoption and implementation of lean tools in food supply chains.

oThis study developed a lean action plan by adopting the Womack and Jones (2005 ) action plan based on action research findings.o Using reflective learningo Increases the organizational lean knowledge o Helps companies avoid failures

oDevelop and test a lean action plan

oApplying lean thinking in the food sector

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ConclusionThe tea industry is a customer-centric business, which can improve customer satisfaction by removing waste and defects from the products and services offered to customers.

This study examined the adoption and implementation of lean tools in food supply chains.

This study developed a lean action plan by adopting the Womack and Jones (2005 ) action plan based on action research findings.

Using reflective learning, the interim lean diagnosis is a learning experience that increases the organizational lean knowledge and helps companies avoid failures due to lack of top management support, lean knowledge or operational easiness.

The research contribution of this lean study is threefold. Firstly, it developed and tested a lean action plan adapted to the capacity of small and medium companies. Secondly, it applied lean thinking in the food sector, extending the research scope into an area characterized with low productivity, low value added and high value waste across the food supply chain.

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ReferencesVlachos, I. P. (2011) Lean Thinking in the European Hotel Industry, 4th Euromed conference of the Euromed academy of business, Agios Nikolaos - Crete, Greece, October 19-22, 2011 2.

Vlachos, I. P., (2004a) E-business in European Food and Beverages Industry: Current Applications & Future Trends, International Conference On Information Systems & Innovative Technologies In Agriculture, Food And Environment (HAICTA), Thessaloniki Greece, 18-20 March.

Vlachos, I. P. (2004b) Critical Success Factors of Business to Business (B2B) E-commerce Solutions to Supply Chain Management, In: Supply Chain and Finance Ed(s), P.M.Pardalos, A.Migdalas and G. Baourakis. World Scientific Publ Co Inc, pp. 162-174.

Womack, J., and D. Jones. 1996a. “Beyond Toyota: How to Root Out Waste and Pursue Perfection.” Harvard Business Review 74 (5): 4–16

Kubiak, T. M. 2011. “The Way to Fail.” Quality Progress 44 (12): 64–66.

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THANK YOU!