How lean is your dairy management?

Published 26 August 14

kaizen

‘Kaizen’ (改善), a philosophy pioneered by the Japanese after the Second World War, revolutionised the workplace through the simple concept of continuous improvements, achieved through empowering everyone to take responsibility for eliminating waste and providing value to customers.

While it’s now a common principle in manufacturing operations, can it hold lessons for dairy farming too?

Kaizen – Japanese for ‘good change’ – was first implemented by several Japanese businesses after the Second World War when American business and quality management lecturers visited the country to help rebuild its economy.

Since then, Kaizen has evolved into more widely-known ‘lean management’ principles, which focus all business management actions on creating value for customers and eliminating activities which do not create value – as defined by the customer. Healthcare, government, banking and of course the automotive industry, have all benefited from this approach, generating considerable returns in terms of increased customer value and reduced costs.

However, lean implementation plans across organisations, whether in the private or public sector, are not always successful; the most common reason lies not with the workforce itself but with a lack of the right kind of leadership to take the workforce through the culture change that will sustain workforce-led continuous improvements.

rachael
DairyCo’s Rachael Chamberlayne says lean concepts are already established within parts of the dairy industry with many processors such as Muller Wiseman and Arla already using lean management in their production systems. Further along the supply chain, Tesco is also a known proponent. But she also believes dairy farmers can benefit.

“The first step is to identify how value is created in the business, then minimising or eliminating any activity that doesn’t add value, while sustaining a focus on continuously achieving clearly identified targets,” she explains.

She points to a definition of value and waste of value from J P Womack and D T Jones, 2003, Lean Thinking, which states: “Value can only be defined by the ultimate customer. And it is only meaningful when expressed in term of a specific product (a good or service, and often both at once) which meets the customer’s needs at a specific price at a specific time. Waste is any human activity which absorbs resources but creates no value.”

Successful farm businesses already set production and profit targets so they can continue to thrive. However, it is altogether less common for them to continuously challenge every area of production activity, year on year.

Ms Chamberlayne explains: “Because of the impacts of unpredictable weather on production, variability in the biological processes involved in milk production and the relatively low level of control farmers have over input and output prices, managers might accept underperformance against planned targets as a fact of life.

“But continuous performance monitoring actually helps anticipate changes, so allowing managers to make decisions that will mitigate at least some of the impact of external shocks.”

An initial project (funded by Livestock North West) saw Dr Kay Carson of Streamline Farm Management and Reaseheath College working at Clive Hall in Winsford, Cheshire, running for three years from April 2010, which delivered cost reductions of 5% and an increase in net margin from 6ppl to 9ppl between the 2011/12 and 2012/13 financial years.

Kay CarsonFollowing this, a DairyCo funded study with Dr Carson and Reaseheath College looked at how lean management principles could increase profits across more dairy farming businesses.

A larger pilot study between April 2011 and December 2013 involved six dairy farms: three spring block-calving systems, one autumn, and two year-round. This showed that the lean management framework was effective at delivering unit cost savings – primarily through more effective use of inputs as waste was squeezed out of the system.

Dr Carson says: “The focus on operational management, that is the physical management of dairy processes which is central to the lean philosophy, prevented mistakes being made. This in turn prevented escalating costs, such as those associated with breakdowns in animal health.

“Similarly, the focus on management systems to support operational management, such as the set of tasks and communications around them, ensured that agreed actions were carried out and resulted in the planned outcomes. When they didn’t, early action could be taken to discover the root cause of the divergence and address it in a systematic and timely manner.”

Dr Carson adds that this is no more complex than the standard ‘Plan, Do, Check and Act’ cycle (pictured in Figure 1). “But the key point is that this way of working is sustained within a production cycle – and then over successive production cycles.”

Pdca(Figure 1: Plan Do Check Act cycle)

 

So what does a lean dairy farm look like? Dr Carson explains there are eight characteristics that can be found in a lean operation:

  1. A lean dairy farm sets an annual financial budget driven by a comprehensive and realistic production plan. Both top level financial and production targets are set on a monthly basis. These plans are familiar to the entire dairy production team and monthly performance against targets is discussed every month.

  2. The production plan is developed under the leadership of the manager responsible for production outcomes but it also involves the entire production team. On larger farms, individuals responsible for clearly-identified processes, such as milking, fertility or forage management, would be expected to contribute to the production planning and budget-setting process for their area. Key performance indicators (KPIs) for production management are set at this stage on a daily, weekly, monthly and annual basis as appropriate. These KPIs ‘belong’ to the production team.

  3. The entire production team has been trained in the use of value stream maps (see example in Figure 2) and is encouraged to map each process to find improvements and plan their implementation. These maps are clearly visible where the staff congregate for breaks and are working documents to aid planning and decision making; they are not production blueprints. Staff are always encouraged to contribute to discussions and grow their skills in decision making.


    Value map(Figure 2: an example of a value stream)

  4. Value stream maps identify the flow of value through dairy processes; process maps help define each process and summarise performance data. Additionally, standard operating procedures – or protocols – are agreed with the production team to define best practice for each process in light of current technical knowledge. A staff training schedule needs to be developed to ensure that process performance is less likely to be impaired by human error. Copies of these protocols need to be succinct, clear, accessible and visible to the workforce at all times.

  5. All staff are responsible for monitoring and recording performance data for the processes they operate and can report on current performance to the appropriate level of management.

  6. All staff are aware of the need to ensure that the farm is kept to a high standard of order and compliant with statutory and contractual obligations and all are responsible to make it happen. This not only increases labour efficiency, as no time is wasted – for example, in finding or mending tools, materials or protocols – but it also raises staff awareness of the importance of health and safety legislation, animal welfare and environmental responsibility. The same rules apply to all staff no matter how senior or junior in the business.

  7. The dairy manager is responsible for ensuring staff adhere to protocols and review process performance with the agreed regularity; he or she should encourage staff to seek to improve performance on a continuous basis. He/she does this by ‘walking the farm’ and observing staff. It is very important that the manager’s standard checks are known to the production team – the dairy manager is not policing the workforce but is another pair of eyes, supporting the team in achieving their planned KPIs.

  8. Senior management facilitates structured continuous improvement activities – ‘kaizen’ – which are short term and accessible to the staff. When outside support is required he/she ensures that the right support is provided.

This process of change is sometimes referred as the ‘road to lean’ – the point at which the entire workforce engages with lean management, because that becomes the culture of the business and they are happy to be part of it. However, the DairyCo dairy lean pilot programme showed that to fully install these eight characteristics took a minimum of three years. Figure 3 summarises the approach:

Lean 2 
(Figure 3: Lean roadmap. With thanks to Terry Ashworth, Muller Wisemans Dairies)

Unfortunately, success was not guaranteed in all cases during the pilot study. Dr Carson says the greatest success factor was the willingness of the business owners, managers and their staff to go through a process of cultural change led by the farm’s senior management. 

“Improvements in efficiency in each process can be made from traditional management, for example, instructing a member of staff to push up feed to minimise waste. But this will only move the improvements so far and when the management is relaxed, the improvements can disappear,” she explains.

“To be truly effective, lean management needs to be about the whole farming team (family, paid labour and external support) adopting and working towards improvements and a common goal all the time.

“Key elements of this are communication and accountability so there is a shared understanding of what is to be achieved and how and why individuals’ roles are critical to reaching operational goals and therefore delivering business efficiency.”

Basically, she says, you need to invest in your people in the same way you invest in your cows. “Staff just ‘doing’ their job is no longer enough. They need to understand and that’s why leadership is crucial.

This was evident in the pilots. While most farms saw some improvement in net margin, some found it difficult to embed the principles and tools for this very reason.

“The common barrier was found to be this change from a ‘telling’ management system to a team-developed implementation plan and leadership,” Dr Carson explains. “Once buy-in was created and performance reviews were not seen as a policing tool but a way of empowering decision-making and anticipating events, farm teams made signification strides forward in reducing waste and improving efficiency.”

The experience of the pilot projects has led to the development of a training course for dairy consultants at Reaseheath College to enable them to support farmers in changing how they manage their teams. This, explains Dr Carson, is the best way to get a change in culture – training and coaching the person at the top so that the leadership style trickles down.

As for the size of farm best suited for lean management, it is easier to embed lean on farms where there is a team structure however Dr Carson points out that single operator farms are actually very rare. “Everybody needs to go away from the farm some time, meaning relief staff is relied upon. Whatever their business size, there are a number dairy advisers with lean management training who can support farmers in ‘leaning’ their operations.”

You can hear from one of these business advisors, Oliver Hall who will be speaking at DairyCo’s DairyLeaders Forum. 

For more information on the common tools used in DairyCo’s Dairy Lean programme, such as those described in this article, please Download the Lean management tool factsheet.

For more information on the trained Dairy Lean consultants, please click here.

Some reading:

Womack, J.P., Jones, D.T., (2003), “Lean Thinking”, Simon and Schuster
Liker, J. K., (2004), The Toyota Way, McGraw Hill
George, M.L., et al., (2005), The Lean Six Sigma Pocket ToolBook, McGraw-Hill
Mann, D. (2010) Creating a Lean Culture: Tools to Sustain Lean Conversions, Productivity Press

kiichiro

The Toyota Production System (TPS) traces back its roots not to cars but to Sakichi Toyoda's automatic loom, which not only automated work that used to be performed manually but was also able to make its own judgments.

Waste can manifest itself in many ways and the automatic loom succeeded in improving both productivity and work efficiency by eliminating defective products and any associated wasteful practices. From this point, the TPS evolved through many years of trial and error to improve efficiency.

Kiichiro Toyoda (pictured and sourced from wikipedia), the founder (and second president) of Toyota Motor Corporation, took a quantum step forward when he set out to realise his belief that ‘the ideal conditions for making things are created when machines, facilities and people work together to add value without generating any waste’. He conceived methodologies and techniques for eliminating waste between operations, between both lines and processes. The result was the Just-in-Time method.

By practicing the philosophies of ‘Daily Improvements’ and ‘Good Thinking, Good Products’, the TPS has evolved into a world-renowned production system. Furthermore, all Toyota production divisions are making improvements to the TPS day and night to ensure its continued evolution.