This blog post should start with an anecdote about how a meat processing plant used Lean Six Sigma to reduce the fat content of their ground beef to make it even leaner. But, instead it’s going to start with some food-related puns that nevertheless demonstrate the importance of continuous improvement.
As a business principle, companies have an insatiable appetite for profit, and those within the food industry are no different. Part of this entails a hunger to improve, but achieving and maintaining continuous improvement is a difficult thing to do. Fortunately, Lean manufacturing provides the necessary tools to ensure that continuous improvement is attainable, which provides a sustainable competitive advantage.
It’s not only bakeries that can see significant dough savings. Anyone involved in the food industry that has not seriously considered pursuing the implementation of lean principles within their processes should be licking their lips, relishing the potential opportunities for cost savings.
What is Lean?
The lean methodology was developed with the ultimate goal of reducing costs and increasing efficiency by identifying and eliminating activities in a given process (service or manufacturing) that fail to add value and yet consume resources. In the lean terminology, value is defined as ‘what the customer is willing to pay’. As a result, lean is heavily oriented not only to efficiency and cost reduction but also to creating value to ensure customer satisfaction.
On the other hand, Six Sigma is a system developed with the goal of controlling variation and making processes more consistent and reliable to ensure the quality of deliverables. The combination of Lean with Six Sigma results in a faster creation of value at the lowest possible cost.
Lean/Continuous Improvement within the Food Sector
The food industry is rife with inconsistent production processes that are tough to control when attempting to eliminate variation in final products. As such, food production companies should always be seeking ways to reduce process variation as well as the resulting defect rate from inconsistent processes.
Possibly more than any other industry, companies in the food industry are challenged with keeping up with recent and rapidly changing trends, such as gluten-free or organic products. At the same time, products need to be fresh as well as free from defects and contamination. But, because of high turnover rates associated with raw materials and their limited time of use, food manufacturing companies often need to deal with high amounts of waste. This has led the food industry to embrace lean manufacturing to not only cater to the needs of consumers but also to improve quality and efficiency while reducing waste throughout the manufacturing process. Increasing profits while improving customer satisfaction is a win-win.
Lean principles focus on key performance indicators (KPI), which in the food industry include the number of non-compliance events, downtime to operating time ratio, throughput, yield, and reject ratio.
Yield is one KPI that can be directly enhanced through the implementation of lean methodologies. Surprisingly, a significant number of food companies that experience issues with yield lack the ability to accurately or regularly measure it. The first step, then, is to develop methods to accurately calculate batch yields through data collection systems, which will help to not only identify yield issues but also solve them. Improved factory controls can result in enhanced yields and reduced waste, directly affecting profit margins.
The Just-In-Time (JIT) method of production has been shown to enhance efficiency by creating a pull system where products are produced in response to orders, resulting in reduced inventory while preventing overproduction, which are both forms of waste. For example, food manufacturing facilities could look at using holding tanks to store products until orders need to be filled, at which point products would be withdrawn and packaged according to that order.
The Value Stream Map (VSM) is another lean tool that can be utilized in the food manufacturing industry to help identify and eliminate production waste that leads to decreased productivity and elevated costs. By mapping out the relationships between all aspects of the process, food manufacturers can identify the steps during the process that generate the most non-value adding waste. After this, the VSM can then be used to develop strategies to overcome issues found in production, processing, storage, and distribution stages.
A significant source of food waste, contamination, has the potential to be eliminated through lean. Perishable food storage, cross-contamination, sanitation of equipment and preparation surfaces, food preparation, and packaging are all at risk of contamination. Lean tools such as the 5S system (sort, set in order, shine, standardize, and sustain) help eliminate food contamination by providing methods that can enhance organization and improve cleanliness:
- Sort: removes unnecessary items from the workplace, such as raw meats from areas used to store ready-to-eat foods;
- Set in Order: organizes the workplace to optimize efficiency, such as ensuring hand-washing stations are easy to access;
- Shine: cleans facilities and equipment, especially areas susceptible to grease, dirt, or bacteria;
- Standardize: improves procedures to run consistently and efficiently while reducing cross-contamination;
- Sustain: repeats each step to ensure the facility remains clean and organized.
In addition to this, setting up a statistical process control system (SPC) is of paramount importance to determine process capability and indicators such as Cp and Cpk or Pp and Ppk. This powerful tool will be extremely instrumental for determining further process improvements, the Sigma Score of your process, the defects to be expected and, as a consequence of this, the financial benefits that you can expect to achieve when improving that process. Undoubtedly, this type of improvement in your process will also deliver higher rates of customer satisfaction. During our consulting practice we have observed a wide range of examples of critical to quality (CTQ) variables within the food industry that need to be monitored through a process capability analysis. Some of the most common examples include reject rate, packaging, product variation, and shelf life. However, there are further statistical tools that have successfully delivered significant benefits to operations within the food industry, such as correlation analysis, regression, statistical predictions, or hypothesis testing.
Lean Six Sigma Training & Implementation
At AMSaxum we provide onsite corporate training on lean six sigma/continuous improvement methodologies and help our clients with the implementation of process improvement projects. There are Government grants available in Canada and the USA to cover the cost of corporate training.
Government Funding & Assistance Options
In addition to the tangible benefits possible through lean, the research and development efforts (labor, materials and subcontracts) required in the food sector could be eligible to be recovered through government funding, such as through the Scientific Research & Experimental Development (SR&ED) program in Canada.
For companies in North America, specifically, there could be applicable grants to aid in upfront costs such as capital investment and employee training. AMSaxum experts in government funding help with the application of these grants and with the preparation of SR&ED claims.
There are additional tools that can aid in improving overall efficiency, such as an RCCA labor tracking solution we offer, which is an application for collecting data or for tracking labor or KPI efficiency.
For more information on continuous improvement and Government funding within the food sector call AMSaxum at 905-315-6847 or contact us here.