What do pet food and dairy farming have in common?

Published 15 August 15

Slide1A key part of the DairyLeader programme is to expand the thinking around issues our industry faces by bringing input from outside the dairy sector to see what lessons others have learnt and what, if anything, can be adopted to our benefit.

Will Callin believes the answer to the question in the headline is they can both benefit from LEAN thinking. As the LEAN manager for Nestlé UK, he has seen first-hand how applying LEAN techniques to eliminate waste have succeeded in helping the company’s Purina pet food business become more customer-focused while reducing costs. And he sees no reason why that thinking couldn’t pay dividends for dairy farmers, too.

As part of last year’s sponsorship of the Farmers Weekly Dairy Farmer of the Year Award AHDB Dairy arranged for an open day event to be held at the winner’s farm. We are grateful to Robert Craig, Steve Brandon, their families and team for hosting the occasion and during the Dolphenby workshop Will described how changes in the way Purina’s supply chain was operating prompted a review of the processes to collate, pack and deliver orders.

“We changed our current distribution model to deliver to an increased number of smaller customers with reduced storage at retail outlets – some of whom no longer wanted multiple pallets delivered to their warehouses on a weekly basis, each with a different product line on board,” he explained. “Instead, they wanted mixed cases to each store each day containing all the Purina products they needed for the next 24 hours.

Slide2“This immediately created challenges for us. It meant more work and reduced efficiency for us, picking the different products and packing them together in that case – more movements around the warehouse, more checking, more congestion at pinch points like wrappers.”

Will said that the additional demands from customers meant 500 extra delivery destinations for the business, a change in standard lead time from three days to around 40% of orders being required the next day, and a requirement to increase cases of product handled per man hour from 73 to a staggering 235.

“The immediate reaction in these situations can be panic but, instead, we set up a four-day event at our distribution centre to examine the physical processes and information flow so we could look for ways to make these new requirements work.

“We spent those four days in cross-functional teams walking through these processes – not looking for solutions, but looking for waste. It’s very important not to pre-judge the answers so no one was allowed to come up with ideas until we had completed that exercise. Then we brainstormed improvement and came up with an action plan.”

Will said five processes showed clear areas of waste. One was the large number of inventory checks; another was time taken to scan products on the pallet. “We also found there was a big variation in how different people carried out the same process – some were far more efficient than others for no discernible reason. Travel time around the warehouse and congestion, especially when wrapping pallets, were the other two pinch points.”

There was a surprising answer to the problem of increased inventory checks, said Will, when the team realised the accuracy of the inventory records remained the same – relatively low – irrespective of the number of checks carried out. “It was a light bulb moment – we were carrying out more and more checking, but getting no benefit for it. So we scaled back our inventory checks to the bare minimum. It was counter-intuitive, but it worked!

“We decided to make ‘champions’ out of the staff members who were very good at their jobs so they could pass on ideas and learnings to colleagues. Because these ideas came from them, not us, we found people were happier to take them on board and we saw an immediate reduction in variability of performance.

“We then reorganised the warehouse to slash the travel time. For example, it made sense to locate small stocks of the most commonly required items next to each other. And we agreed that when there was congestion at the wrapper, pallets would be left there to be wrapped by the person using the machine.”

Slide3Will said the only improvement that required investment was scanners. “We realised the scanners we were using were truly out of date, so we bit the bullet and invested in new ones. But we found that since we had last looked at the cost, the price had come down significantly so the total investment was far less than expected and the job was speeded up enormously. The new scanners also reduced frustration!”

So what is the key to applying LEAN? According to Will, it all starts with an empowered, interested workforce. “Then we let our customers define what value is – after all, we want them to buy our product. And we think in processes. It doesn’t matter whether you are packaging dog food or trimming cows’ feet – there should be a process attached that allows you to look at where waste can be reduced or value included. After all, failure to add value can be viewed as waste or opportunity cost! 

“Finally, it’s about continuous improvement. Never think you’ve got there. There are always areas you can improve. We thought our processes were pretty efficient but, after this exercise, which was forced on us, we had reduced the time to pick a case by an average of 20%, our pick rate per man had increased by more than 40%, and our error rate remained low despite removing control measures.”

Has Nestlé ever pushed back against customer demands? Will said the company’s view was that it should accommodate customers where possible through making internal changes. “If we can do this, then we are keeping our customer happy at no additional cost. If, however, we look closely at the issue and can’t find a way of effecting the change without a cost, then we talk about it with our customer and find that we can usually come to an agreement about how that cost is borne.”

For more about applying LEAN in dairy farming, see /technical-information/business-management/lean-management

 

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