Essay: Lean thinking

CHAPTER 1: INTRODUCTION
1.1. GENERAL INTRODUCTION
Lean thinking was initially developed as a manufacturing method found on the shop floors of Japanese manufacturer Toyota Motor Corporation. . Development of the method over a period of more than 50 years and its continuous implementation led Toyota to become the most successful motor manufacturing company in the world. Toyota strives for high quality cars and focuses on the health of its employees by tenacious devotion to continuous improvement in all the facets of the company.
John Krafcik, researcher at the International Motor Vehicle Program (IMVP) initially coined the term ‘lean production’. IMVP was initiated at Massachusetts Institute of Technology in 1985. The IMVP performed an enormous benchmarking study. They gathered data from automobile manufacturers all over the globe in order to grasp the variations in productivity and quality. After five years of research the findings of the study were published in the renowned book ‘The Machine that Changed the World’ (Womack et al. , 1990). Womack, J.P., Jones, D.T. and Roos, D. (1990), The Machine that Changed the World, Maxwell Macmillan International, New York, NY.
Here the results of the study are presented together with the origins of lean manufacturing. The word ‘lean’ was originally suggested here because in the study the best assembly plants, the Japanese (Womack et al., 1990, p. 13):
Uses less of everything compared with mass production – half the human efforts in the factory, half the manufacturing space, half the investments in tools, half the engineering hours to develop a new product in half the time. Also it requires keeping far less than half the needed inventory on site, results in many fewer defects, and produces a greater and ever growing variety of products.
The Japanese automobile manufacturers were so far ahead of the Western manufacturers because of a continuous quest for quality improvements since 1950 until 1980. In contrast to the Japanese firms, which realized a huge quality evolution, the Western companies did not worry about all the quality issues in these three decades. Later on the West realized they lagged behind and started studying what was happening in Japan. (Dahlgaard & Dahlgaard-Park, 2006)
Womack and Jones (Womack & Jones, 1996) Womack, J.P. and Jones, D.T. (1996), Lean Thinking – Banish Waste and Create Wealth in your Corporation, Simon & Schuster, London. specified the following five principles for achieving lean enterprises and minimizing waste. (Table 1) Further on several comments on the five principles will be presented.
Firstly, before lean was introduced to the industrialized world, the craft production approach was the main production strategy; later on this was replaced by the mass production approach. These five principles are the same as these, which were the fundamental standards of craft production. Lean is a production philosophy, which tries to link the principles of craftsmanship with mass production. Craft production focuses on the customers’ needs. Without a specific order from a client, no production would commence. All work forces were committed to satisfy the customers’ demands. The employees were proud of producing with a high quality standard, which characterized the craftsmanship. Everybody understood the consequences of waste and strived towards efficiency. These positive elements of craftsmanship were lost during the transition to mass production. Where enormous invisible wastes emerged again. (Dahlgaard & Dahlgaard-Park, 2006)
The goal is to create a learning organization that aims to be more efficient and appreciates the contributions of its employees. ‘Lean can be said as adding value by eliminating waste being responsive to change, focusing on quality and enhancing the effectiveness of the work force.’ (Sharma, 2014)
Lean has moved from purely manufacturing plants to operations of all kinds. The principles are implemented in companies, everywhere and in every sector. Such as airline maintenance, healthcare, oil production, non-profit, IT industry, publishing, insurance, and government (Corbett, 2007).
One of the sectors that lag behind is the agriculture. Considering the novel character of lean in agriculture, it seemed interesting to explore the readiness factors in order to see if farmers are ready to implement and invest in such quality improvement methods. Further we want to see how familiar they are with the concepts of lean and if there is an interest from within the sector in implementing lean practices. The goal is to develop a Readiness Index. This way, farmers can do a self-assessment before starting the lean journey and save a lot of effort, money and time if they are not ready yet.
1.2. RESEARCH JUSTIFICATION (kan verschoven worden naar 2.)
1.2.1. LEAN RESULTS IN AGRICULTURE
3 papers over lean in service
1 papers over lean in agro simons en taylor
Lean management has been studied for decades. Lean in agriculture has just made its introduction in the world of research. Therefore the content available on lean agriculture is very limited. We will start by listing the positive and negative points of applying lean in agriculture. Due to the immaturity of academic papers regarding lean agriculture we will also look at the transferability of lean, by looking at how lean has been converted from the manufacturing industry to services, healthcare and so on.
A study in the red meat industry in the UK showed us an augmentation of the profitability through the whole value chain. By implementing lean practices, particularly standard operations and takt-time, the potential increase of profitability is significant. The cost savings for the farmers are 3,4% at their selling price (Zokaei & Simons, 2006).
A case study of the benefits of the implementation of lean thinking in farms in the United Kingdom used the Five Principles of Lean, VSM and the Seven Wastes theory. Results obtained from the Value Stream Maps indicate that there is a possibility for lean improvements concentrated on dynamic markets outlets and more efficient utilisation and allocation of fixed cost resources, such as skill, land, machinery, labour and buildings to add value. This implies changes to the whole farming system. Study experts also pinpointed that variable inputs such as sprays, feeding and fertilizers are essential to realize the highest quality and yield potential of land and genetics. This is accomplished through cost/benefit risk assessment, accurate budgeting and proficient application methods.
They detected some more specific examples for cattle breeding. The allocation of too much grassland to the herd showed there is excess capacity. This entails the potential for the arable company to cultivate up to 30% more of grassland. This will provide a better allocation of resources and augment gross margins per hectare. Further it is possible to finish bulls 1-2 months faster at 13-14 months to the same slaughter weight, by commencing full meal diet earlier after weaning. Thus reducing meal demands by 9 tons. Another option to be more efficient is rotational grazing in three blocks to achieve extra grassland utilisation.
Next they also found specific examples for arable firms. Notwithstanding that grain is an end-user ready product at farm level, farmers didn’t have a lot of knowledge concerning marketing. Short-term grain storage reduced the autonomy of farmers to make independent marketing choices. Therefore end-user sale options should be explored. Farmers should regularly seek consumer market intelligence regarding beer, biscuit porridge and so on and keep this information updated. Hence with good timing they can get higher prices for grain. Another example is doing quality assessments of grain before movement off farm and for every load off farm, linked to the field where it was grown. Finally an efficient purchase policy for pesticides based on cost and quality can reduce costs. This ensures correct crop coverage, reduces scorch and increases yield value adding potential. Summarized they find an increase in competitiveness by the reduction of waste and the improvement of the food quality (Colgan, Adam, & Topolansky, 2013).
Nevertheless, there also arise difficulties in applying lean to farming. Measuring the financial value that is being added by lean implementation is a big problem. Next farmers must be well aware of the five principles of lean to successfully succeed in applying lean. Besides the farmers, employees also need to be trained. They need to know the principles of lean. This can ensure lower breakdowns and higher quality of products.
(Simons & Taylor, 2007) Focus in their paper on the value chain involving the red meat industry. They saw potential of improved vertical collaboration in the food chain. To accomplish better vertical cooperation, an agri-food specific methodology was developed, Food Value Chain Analysis (FVCA). This is a consumer value and supply chain analysis method based on tool and techniques from the lean paradigm.
By applying the case study approach a Current State Map was developed. This provided performance key characteristics of the whole chain.
The supply time was 185h. This is the time from the pig leaving the farm until the finished product is available in on the retail shelf. From these 185h only 1.4h was value adding time, time during which the product is processed to the form required by the consumer.
There was found a loss/defect rate across the whole chain of 20%. This contains losses at the farm such as mortality, losses in processing and rejects.
It was found that only 50-60% of the usable meat entered the retail chain. They examined the possibility to augment the utilization of the whole pig. A target of 75% was set, the goal being to decrease waste and improve traceability, food safety and quality.
Further they made a selection of potential initiatives and so developed a Future State Map. An important primary step was to ensure that all staff members were aware of waste elimination and lean thinking.(same as above?) Next was defining customer value. Often the chain members, including the farmers, didn’t have a consistent or clear view of the issues that are crucial to the customer.
One of the key projects was the development of an integrated regional system of pig production. Here groups of farmers were specifically dedicated to breeding pigs for the retailer. This was all linked to specific abattoirs, feed mills and processing plants.
Regarding the whole supply chain, they identified potential logistic benefits. They found two key implementation issues. Firstly there is inter-company alignment of sub-systems. They want to create an environment that is conducive to the implementation of lean-based improvements to all the sub systems. Secondly chain organisational stability through time.
(Bowen & Youngdahl, 2009) presented three cases of successful lean implementation in services. Three exemplary examples of the transferability of lean from manufacturing to services are Taco Bell, Southwest Airlines and Shouldice Hostpital. The lean principles they transferred to these companies are listed in Table X. Taco Bell changed its production strategy drastically and implemented these lean practices. Results can be seen in the trade-offs between operations and efficiency with low cost and flexibility. They focussed on customer and quality and optimalised the human resource management.
Their lean operations need empowered employees who strive to solve problems and have social skills that result in good customer service and teamwork. The company started with thorough training of staff and performance-based pay for managers.
A major difference between lean service and lean manufacturing is that the former takes place with the customer on site whereas the latter does not. Due to Taco Bell’s lean appeal to human resources management they were able to turn the contact with their clients in their advantage. This resulted in an increased customer service and quality.
It is important that the companies in the service industry firstly examine thoroughly what their customers want. Untested assumptions about the expectations of customers in terms of service quality have provided obstacles to adopting manufacturing principles to services.
Bowen and Youngdahl conclude that service companies can successfully implement a lean service model. By embracing lean principles developed in manufacturing such as: employee empowerment and value chain orientation.
Another company that had significant improvements and should be highlighted in this analysis is Jefferson Pilot Financial Insurance Company (Swank, 2003). Applying the principles of lean production, the insurance company improved its operation and increased revenues, reduced order processing time by 70%, labor costs by 26%, and error reduction  around 40%.
The improvements, reductions and gains are not only financial results when applying the principles of lean service, but also positive reflections on quality perveived by clients (Leite & Ernani, 2010)
Author Lean principles developed for service industry
Bowen & Youngdahl (1998) • Reduce the performance trade-offs
• Make the value-added processes flow and implement customer-driven system
• Eliminate losses in the value chain of activities, from development to delivery
• Increase customer focus and involvement in the development and delivery processes
• Empower employees and team
Swank (2003) • Reduce the performance trade-offs
• Make the value-added processes flow and implement customer-driven system
• Eliminate losses in the value chain of activities, from development to delivery
• Increase customer focus and involvement in the development and delivery processes
• Empower employees and team
• Segregate activities by complexity
• Publish / present performance results
SAMEN LEZEN EN PROBEREN SAMEN TE SCHRIJVEN, ANDERS OOK APART DOEN. MAAR ALS ZE OVER HETZELFDE GAAN, DAN MSS KEER BETER WA SAMEN PROBEREN SCHRIJVEN.
PLUS ANDERE PAPERS DIE IK AANGEDUID HEB IN DE TABEL VAN HIGOR VLUG EENS OVERLEZEN!!!!
Bowen
Swank
Higor
FINAL CONCLUSION KAN OOK ACHTERAAN DIT STUK
Andersson & Eklund researched what happens with the work environment when lean thinking was applied in the agricultural business. Through observations, questionnaires and interviews they found several positive effects. (K. Andersson & Eklund, 2012) The implementation of lean thinking resulted in a psychosocial work environment, which was more structured and less stressful. The results on the physical work environment weren’t conclusive, but there was a positive effect due to the decrease of transportations on the farm.
According to (Dyrendahl & Granath, 2011) some basic principles of lean still need to be adapted, in order to be applicable in an agro context. But by following the structure of the Balanced Scorecard, Lean proofs to be beneficial for agricultural firms. Their study shows that there is a potential to augment profitability with 5.6% by using lean.
During a two year pilot study, the Food Chain Center at Cardiff Business School showed how wasteful activities, which cost a lot of money and time, can be determined in the fresh produce industry. They also provide potential solutions that can be adopted to realise savings, by reducing waste and losses. They discovered that in excess of 95% of the time between harvesting and consumer purchase is inactive time. Where the product is either waiting or involved in steps that are non-value adding. (Centre, 2007)
(Voulgarakis, Folinas, Aidonis, & Triantafillou, 2013) claim that using VSM analysis is an effective tool to identify waste in the agro food supply chain.
A very important point to consider is that lean mustn’t be seen as yet another strategy, but as a philosophy (Bhasin & Burcher, 2006). Lean thinking must be viewed on long term and there is need of continuous improvement. NEEDS FURTHER RESEARCH, WA PAPERS ENZO ERBIJ NEMEN!! DUS PAPERS ZOEKEN IN CITEREN EN MEER UITLEG OVER GEVEN ☹ The company needs to become a learning organisation. Relentless reflection is a crucial element here.
1.2.2. ORGANISATIONAL READINESS
Many companies have attempted the successful implementation of lean management throughout the whole organization. Even though some enterprises have managed to reap substantial benefits, most of the organizations failed in this attempt. One of the reasons can be linked to the fact that only few enterprises attempt to asses the organizational readiness before implementing lean thinking (Gurumurthy, Mazumdar, & Muthusubramanian, 2013).
The readiness for change consists of generating an idea of a fully integrated lean organisation. Helping staff to understand how lean impacts the organisation and being rational concerning the timescales involved in implementing lean.
The levels of departmental working, sub-optimal management styles and distractions from other demands, such as performance reporting, prevented better implementations of lean management. Capacity and a mindset for change and improvement at a strategic level are required to realise the full benefits of Lean. (Radnor, Walley, Stephens, & Bucci, 2006)
A lean implementation framework, specifically designed for SME’s suggests that the implementation of Six Sigma takes place in five phases. Starting from assessing the readiness for Six Sigma implementation to sustaining the benefits from the implementation. (Kumar, Antony, & Tiwari, 2011) See figure:
NOG HERSCHRIJVEN OF VERPLAATSEN`
Before implementing lean techniques in the organization, farmers need to know if they are up to the task. Without knowing the requirements of implementing lean, the failure rate rises significantly (Ramakrishnan & Testani, 2012). A lean readiness assessment prior to the implementation can solve this problem.
So far there has been done little research into readiness assessments for the agricultural industry. The lack of measuring this readiness can lead to negative change. This can bring loss of time, money and energy. By measuring the readiness, the farmer can understand its current state and assess his willingness to change. He can resolve barriers, which prevent him from implementing the new techniques successfully. (Gurumurthy et al., 2013) and Kuwaiti.
We can conclude that not many papers are available that talk about the organizational readiness or preparedness of an agricultural organization for implementing lean thinking. We don’t know how high the level of readiness for change is in the agriculture. Further we need to guess the level of familiarity with the concept of lean that farmers have. There is little information about whether lean is well established among farmers or not.
All these factors, along with those mentioned above about lean results in agriculture (1.2.1.), explain why it is interesting to research the degree of existing knowledge of lean management with the farmers themselves and to map and identify the readiness of the farmers by means of a readiness index. Most studies are based on case studies. We will assess these objectives via a thorough literature study a questionnaire and a panel discussion.
CHAPTER 2: LITERATURE REVIEW
2.1. LEAN THINKING IN AGRICULTURE
As stated before, lean is increasingly implemented in other sectors than the manufacturing. Nevertheless the agricultural sector lags behind. The understanding of lean in this context is substandard. Given the significance of waste and losses in the agriculture, it is time to implement lean in order to eliminate these. There is a big difference between the production processes of a manufacturing company such as Toyota and an agricultural business. To grasp the possibilities of applying lean thinking in the agricultural sector we will start by setting out some specific characteristics of the agro-business.
2.1.1. THE AGRO-BUSINESS VS. MANUFACTURING
First of all let’s not forget that there are some fundamental similarities between both of the production processes. The need for determined management decisions regarding the allocation of inputs along with the goals of production are strongly similar between the two.
Adapting lean thinking to agriculture provides challenges due to the general differences between industrial production processes and the specific agricultural processes.
First of all let us define the meaning of the term agriculture: ‘Agriculture is the deliberate effort to modify a portion of earth’s surface through the cultivation of crops and the raising of livestock for sustenance or economic gain.’ Rubenstein, J.M. 2003. The Cultural Landscape: An Introduction to Human Geography. 7th ed. Upper Saddle River, NJ: Pearson Education, Inc. p. 496. Agriculture is more than just breading livestock, dairy farming or growing crops. Specialized horticulture, floriculture, fruit cultivation horse breeding and so on are also covered by agriculture.
For the majority of farmers their workplace and home are one and the same. Work and free time are both carried out on the farm. This cannot be said from manufacturing. This explains partly the familial character of the agro-business; it’s a real family business. The biggest part of the knowledge is passed from generation to generation. Therefore changing the habits on the work floor can be trickier here than in manufacturing.
Next the weather is an extremely important external factor that affects farming in much greater extent than it affects manufacturing processes. A manufacturing environment is completely controlled. It is possible to create the optimal circumstances to produce. The timing of sowing and harvesting is completely determined by the weather. Disastrous weather can mean a failed harvest. In an assembly facility, you can plan; in agriculture, every decision you make depends on external factors, on nature. (Anton Ulanov, 2014).
The process decisions are entirely seasonal driven, in contrast to manufacturing, where the decisions are driven by the seasonality of demand for its products.
The production schedules vary for everyone, also between the factories and the farms. The majority of processes on a farm can be delayed a few days, except for example milking and feeding off course. This can’t be said about a factory. The production schedule is determined in advance and it needs to be followed. As for the manufacturing industry, very short lead times also apply especially for the farmers in the horticulture.
Subsequently there is a big gap between the required levels of specialization of the employees. Farm labourers must be flexible. They need to be able to work at various jobs. Therefore they need to possess multiple skills and a broad knowledge of the job. Whereas the flexibility of manufacturing processes is strongly reduced. This is caused by trade and craft unionisation and the need for highly specific skills.
Agriculture is a very capital-intensive business. On average the invested capital per worker in industry is lower than on a farm.
Further there is the difference in buyer and supplier dominance. Agricultural products are produced by a high number of relatively small production units; Most of the industrial output is made by vast enterprises consisting of various departments and factories. This leads to a position of having no effective influence on market quantities and prices. The opposite is true in manufacturing. Often an oligopoly is formed; here a few large companies dominate the entire market. Accordingly they can wield an influence on prices of goods they sell and resources they acquire. (Tewari, 2003)
Farmers produce what they planned in advance and don’t deviate from this. It is impossible to do. If you own 200 diary cows, you will receive milk from 200 cows. They sell their goods to big cooperatives at market price. The demand is not considered in their production strategy. Often they also are incentivized to produce as much as possible due to subsidies from the government. They produce as much as possible nevertheless the demand is decreasing. This is also due to the high fixed costs they have and the burden of big investments. This does not apply to horticulture. They need to actively seek their buyers and create an area of distribution. They take the demand for their goods into account in their production strategy. When the demand diminishes, the supply will decrease as well. So this shows more resemblances with the manufacturing industry.
Usually a farm can be described as a microenterprise, which has approximately 0 to 10 employees. An SME, with between 50 and 250 employees has a more hierarchal structure than the microenterprise. Additionally the latter knows more interactions among employees and employers. Also the boundaries between professional and private life could get diluted. In Belgium farms are mostly family-run businesses. There are often no extern employees. Only the family works in the company. This is different for the big horticultural/floricultural and fruit-farming firms. First of al there are a lot of seasonal employees. Further they show more resemblances to SME’s. Often they have more than 15 permanent employees, excluding the seasonal workforces.
Lastly agricultural firms produce highly perishable products. Manufacturing firms can stock their products for long periods, depending on the industry. Thanks to research and technical innovations fruit cultivators for example are able to stock their fruit the whole year in specialized refrigerators. This way they are able to sell the supply spread over the year.
INSERT TABLE????????? Zie p4 lean manufacturing to lean agriculture: it’s about time: manoj dora gelynck..
2.1.2. APPLICATION OF LEAN IN AGRICULTURE
A good way to achieve lean in your business is following a five-step roadmap (figure 3). (Kim, Spahlinger, Kin, & Billi, 2006). A case study of the benefits of the implementation of lean thinking in farms in the United Kingdom is a perfect example. They use the Five Principles of Lean, VSM and the Seven Wastes theory. As a result they find an increase in competitiveness by the reduction of waste and the improvement of the food quality. (Colgan et al., 2013) To be successful, the farmers need to be familiar with the lean techniques and the lean philosophy. This paper proves the positive effects lean can have on a farming business and still it isn’t widely used.
• The first step is to identify Customer Value that has already been discussed in the introduction. It is important that the mentality of the farmers changes from producing the maximum possible to producing what the customer really wants. What they value generally includes products that are of high quality, safe and appropriate.
• The second step consists of going to the workplace and register how the processes work at the moment itself. This way you can understand the problems, such as delay, inefficiency and waste. To make all the steps of the process visible, a Current State Value Stream Map is created (figure 4). This is an extremely powerful tool to systematically recognize and categorize waste. Based on the CS VSM, employees can identify al types of problems as stated above. Next they need to aim to reduce or eliminate this waste by improving steps in the process. According to the TPS there exist seven types of waste. Overproduction, waiting, transport, over processing, excess Inventory, unnecessary movement and defects. In addition to this list there is an eighth waste: unused employee potential. (Table 2)
• The third step is creating flow in the process. Every step should follow the preceding one without any interruption. The employees gain value here, they need to bring new ideas to smoothen the process. These concepts will be places on the Future State VSM. There are multiple restrictions in the flow. Paperwork gets delayed due to inaccurate information, machinery breakdowns force employees to wait, a packing line runs too slow and requires extra labour and a larger proportion of crops are rejected due to inconsistent harvesting techniques. These are all wastes that can be eliminated to smoothen the process and augment efficiency.