Lexicon of lean
It's been more than 20 years since the first disciples of 'lean' manufacturing began spreading the 'more from less' gospel, according to Toyota.
The five commandments were straightforward enough but somehow UK manufacturers food manufacturers in particular just didn't get it.
According to the temple chiefs at Wales' Lean Enterprise Research Centre, most of them are still busily engaged in doing things that contribute precisely nothing to the sum of human endeavour. 60% of manufacturing activities add no value at all for the customer.
In other words, it's a wasted effort or just plain waste if your business involves short shelf-life products. That kind of operational inefficiency is a cardinal sin if you're a lean follower; in a global economic downturn, it's a disaster, whatever your persuasion.
"We had one customer with a short shelf-life product who was behind the curve when demand was going down because they'd never experienced it before. They were caught out badly in 2008 during the first crisis," says Pieter Lietjen, boss of manufacturing execution system (MES) specialist Infor, which has seen a spike in demand for its inventory control systems from companies that now view the supply chain as their number one strategic investment.
Unfortunately, there are more of them outside the UK than in it.
Global analyst IDC Manufacturing Insights says 80% of American manufacturers are focused on reducing supply chain costs mainly through software investment in big data analytics, mobile and cloud computing. Closer to home, 44% of manufacturers in central and eastern Europe are looking to invest in cloud technology to improve operational performance, not least in supply chain planning.
UK reluctant to adopt MES
But persuading our own food industry to adopt a MES software package, let alone one driven by blue-sky thinking, is tough.
"They've got system fatigue over the years they've bought lots of things that ended up in the car park," admits Marco's Murray Hilborne, who has 27 years' experience in improving data management in chilled and ready meals.
"My real concern is that we will leave the sector and it won't be just Marco. 70% of what we do goes abroad now. The problems are the same the world over and we go wherever firms are more receptive."
But he hasn't given up on the domestic market just yet. Like many software solution providers, he's tapped into the zeitgeist to come up with an off-the-shelf solution that can be implemented in a quarter of the time at a quarter of the cost of a bespoke MES package.
"A full MES project takes a couple of years and between £150,000 to £200,000. The problem with embarking on a difficult project in food manufacturing is that, by and large, the industry does not have the luxury of project management teams it's difficult taking staff away from their core job, which is climbing the mountain every day and starting at the bottom again in the morning.
"They are keen for results but they do not want to spend the money, so we cherry-picked from 60,000 man hours of code to give them something that starts the process."
Based on a data exchange model, designed to plug into any legacy system, including Sage, it works by chopping hot data into chunks and sending it within minutes to where it's needed.
Instant visibility across the plant from goods in to despatch is key, says Hilborne.
"Historically, data collection can be as much as a week old. To my mind, that's a disaster. You need to be passing information on a moment- by-moment basis. If you have taken 1,000kg of product and cut it up, I need to know there's now only 800kg in stock and we have 48 hours to use the other 200kg or they will be binned."
A trial within the Samworth group saw £170,000 of stock saved from the wheelie bin in one year. Real-time data from one factory was emailed to key personnel, alerting them when the clock started ticking.
"Europe still leads the way in fresh and chilled food but not in doing it as effectively as it can," observes Hilborne. "There are countries with far less capability that are buying into the template."
Toyota of food
So how do we persuade UK firms to catch up?
"We only need the first Toyota in the food industry to appear then everybody else will come on board very quickly," says Dr Kaivan Zokaei, a lean manufacturing expert and consultant with SA Partners.
Like Lietjen, he sees inventory control as key to improving operational efficiency with the pressure to adopt and adapt lean tools coming from retailers.
Although it's not as collaborative as Zokaei might have wished, Morrisons' decision to demand price reductions of £500,000 from each of several hundred of its suppliers this summer might lead more financial directors to adopt the lexicon of lean.
And according to Zokaei's studies, they might be surprised to discover how little pain is involved in the gain.
"The inventory turn in the food industry is worsening year-on-year, while manufacturing generally is improving," he says. "In automotive it's no less than 32 times a year and in food it's not more than 12. Then there is the scandalous giveaway in a pack of food of 4% to 5% a lot of food going into the bin essentially. We are throwing away the value of the raw material we bought in that is a no brainer."
But by far the largest, quickest savings are in energy consumption.
"10 to 30% of the utility bill can be saved in 10 days' intervention," promises Zokaei. "The size of the prize is enormous. You can go to any small, medium or large food and drink manufacturer and there are lots of low-hanging fruits."
Jeremy Salisbury of motor supply and maintenance specialist Brammer agrees. He's the kind of nuts and bolts man who makes ops directors finding it hard to see the silver linings in IT clouds comfortable.
"Almost two-thirds of industrial electricity wastage is linked to motors," says Salisbury. "And if you look at the top 10 investments in delivering the fastest rate of return to improve energy efficiencies and reduce carbon dioxide then variable speed drives and high-efficiency motors are way up there with between three to 12 months' pay back.
"The beauty of energy efficiency is that it's measurable. Another great example is a production line that needs to move at a certain speed if there's something on it but, if there isn't, you could reduce your motor speed by 20% and save 50% on energy. It's a no brainer when you have hundreds or thousands of motors running flat out across a plant."
Brammer is partnering Siemens in offering a new installation and finance package to overcome the borrowing issues producers have hit with banks. "There's a huge prize and quick return, but they could not get the money. I've already signed up one customer and saved half a million pounds a year and reduced carbon emissions by 1Mt and there are more in the pipeline," says Salisbury.
It's no wonder the words 'lean and green' have taken on a messianic appeal for the Department for Environment, Food and Rural Affairs. It is funding a two-year study into how lean thinking in the food supply chain can improve operational efficiency and environmental performance.
Principal consultant on the project, David Parker of Oakdene Hollins, admits lean has contributed to, not reduced, the waste mountain in other sectors. "But environmental savings have been a positive side effect in the food industry," he says. "We're now looking at whether lean can make a company more economically viable from a macro perspective because many of the gains from lean measures are intangible."
And there's the rub.
"An MES system's biggest return is intangible," says Marco's Murray Hilborne. "It puts a policeman in place, so managers can walk away from the system and use their time elsewhere in the business where there is a problem. That has a value as well but it's hard to measure.
"The problem is that, in the UK, shareholders drive the decisions, so managers adopt the least- risk, highest-return solutions that make them look good and keep them in their jobs."
