Take it from Toyota – lean and green can cut costs

By David Burrows

- Last updated on GMT

The first step is to identify different kinds of existing waste in the food production process, before classifying them and assessing how to eliminate them. ©iStock/TeamOktopus
The first step is to identify different kinds of existing waste in the food production process, before classifying them and assessing how to eliminate them. ©iStock/TeamOktopus

Related tags: Food supply chain, Food

Food processors could drive down costs by following the model designed by car manufacturer Toyota in the 1950s, according to a leading supply chain expert.

A typical food product is handled an average of 33 times before it’s even touched by a consumer in a supermarket, but many of the steps are not adding any value from a consumer’s perspective, explained Dr Manoj Dora from Brunel University London in the UK.

“We could really reduce the cost of food by applying lean [tools],”​ he said. “There are two ways – producing more food (with the same resources), or producing the same amount but with less use of resources. That means reduced cost of production, improved quality and delivery.”

Dr Dora believes that “lean tools”​ can help simplify the production process in the food supply chain, eliminate waste and improve productivity.

“It is empirically proven that proper implementation of lean principles in manufacturing and the service sector could reduce defects up to 90%, inventory up to 75%, use of space up to 50%, (and) variable costs up to 50%, while at the same time increasing productivity up to 15 %, improving on-time delivery up to 90 % and (raising) overall employee satisfaction.”

And there’s an additional benefit: “When you use fewer resources, so you use less energy, less water,”​ thus making the process greener.

The Toyota way

The concept is not a new one, as Dr Dora explained in a recent interview for the European Union’s science magazine, Horizon​.

Originally it was known as the Toyota Production System, introduced when the company was struggling with resource constraints after World War II but still wanting to compete with the big automobile giants in the US, like Ford, Chrysler and GM.

Whilst Ford went for mass production, procuring all the materials involved, filling warehouses and waiting for people to buy the vehicles, Toyota did “thecomplete opposite. They only made the car when there was a demand. They only procured the raw materials once they knew how much they would make.”

The approach has been replicated in other sectors, like banking and insurance, but its application in agriculture and food could be trickier. There are the vagaries of the weather to think of, for a start.

Previous research has already shown that in food processing it’s possible to “substantially reduce the cost of production”​ by applying simple lean techniques in small and medium-sized firms, Dr Dora explained. He and his team are currently working on multiple case studies in the food sector.

The first step is to identify different kinds of existing waste in the food production process, before classifying them and assessing how to eliminate them. Europe wastes 88 million tonnes of food every year – almost a fifth (19%) arises during processing – so there should be plenty of opportunities to apply lean thinking.

The next step is to adjust for the “contingency factors”​ and “food safety factors”​, including many of the challenges unique to the food sector.

“You can keep the cars for several years so that’s not a problem but you cannot keep milk for several days,”​ he noted. “We are now working on how do we deal with all those contingency factors and get the maximum benefit of lean from the agricultural sector.”

Dr Dora, together with Professor Xavier Gellynck from Ghent University, Belgium, hopes to extend this lean thinking right across the food supply chain, capturing opportunities in production, processing and retail. “The idea of lean is to bring them together and minimise the loss in the whole chain, not just in their own processes,” ​he added.

 

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