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- Herausgeber: John Wiley & Sons
- Kategorie: Fachliteratur
- Sprache: Englisch
Make your farm better, smarter, and more productive The Lean method is revolutionising farming globally with its proven approach for reducing waste, improving productivity and sustaining profits.In The Lean Dairy Farm, dairy farmer and Lean consultant Jana Hocken explains why this approach is essential to every dairy farm and how to apply these tools, practices and principles to your dairy operation. The Lean Dairy Farm helps reduce the common problems and stressors faced by farmers every day: long work hours, high staff turnovers, repeat problems, breakdowns, wastage, safety and high costs. Using her own family's dairy farm as a case study, Jana provides insight into how the Lean approach applies to farming, introduces practical tools to help you improve efficiency and reduce waste, and shows you how to create a farm culture that supports Lean thinking. Even if Lean is entirely new to you, this book offers a simple blueprint for applying its principles and practices to improve your farm. * Quickly make use of basic Lean concepts on your farm * Identify and eliminate waste in farm processes * Organise your farm effectively to improve productivity * Standardise your processes to do everything right the first time * Develop an engaged, high performing team If you want a more efficient, profitable and robust dairy farm, The Lean Dairy Farm is for you.
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Seitenzahl: 380
Veröffentlichungsjahr: 2019
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‘Succeeding in business is about managing risk, controlling all the factors that are controllable and constantly improving your competitive advantage. At Open Country Dairy we live by this mantra and Lean Management is integral to everything we do. I cannot commend this book enough to all farmers and business people that strive to improve and grow successful enterprises. An outstanding contribution to NZ farming.'
— Laurie Margrain, Chairman, Open Country Dairy Ltd
‘Within GDF we aim to inspire leading farmers. From a personal experience, I am convinced that the Lean approach is very helpful to improve management. So if you want to improve as a dairy farmer, read this book full of practical tools and experiences.'
— Ad van Velde, President, Global Dairy Farmers,CEO, DairyNext, Owner, Hunsingo Dairy
First published in 2019 by John Wiley & Sons Australia, Ltd42 McDougall St, Milton Qld 4064
Office also in Melbourne
© John Wiley & Sons Australia, Ltd 2019
The moral rights of the author have been asserted
All rights reserved. Except as permitted under the Australian Copyright Act 1968 (for example, a fair dealing for the purposes of study, research, criticism or review), no part of this book may be reproduced, stored in a retrieval system, communicated or transmitted in any form or by any means without prior written permission. All inquiries should be made to the publisher at the address above.
Cover design by Wiley
Cover image (upper): © Photos by R A Kearton / Getty Images
Cover image (lower): Javier Vargas
Disclaimer
The material in this publication is of the nature of general comment only, and does not represent professional advice. It is not intended to provide specific guidance for particular circumstances and it should not be relied on as the basis for any decision to take action or not take action on any matter which it covers. Readers should obtain professional advice where appropriate, before making any such decision. To the maximum extent permitted by law, the author and publisher disclaim all responsibility and liability to any person, arising directly or indirectly from any person taking or not taking action based on the information in this publication.
List of Tables
Chapter 3
Table 3.1:
Chapter 5
Table 5.1:
Table 5.2:
Chapter 7
Table 7.1:
List of Illustrations
Chapter 1
Figure 1.1
the locus of control
Figure 1.2
the possible mindset
Chapter 2
Figure 2.1:
simplifying the concept of Lean
Figure 2.2:
how Toyota transformed by using Lean thinking
Figure 2.3
the evolution of Lean
Figure 2.4:
Jana's Lean Farm
Figure 2.5
some of the many industry sectors that use Lean
Figure 2.6
the cost plus principle
Figure 2.7
the cost reduction principle (Toyota/Lean approach)
Figure 2.8:
comparing improvement rates
Figure 2.9
standardise, improve, then innovate
Figure 2.10
the 3 Cs of a successful business
Chapter 3
Figure 3.1:
converting inputs into the right outputs effectively and efficiently
Figure 3.2:
the key processes in dairy farming
Figure 3.3:
the typical dairy season cycle
Figure 3.4:
the benefits of Lean and continuous improvement on a farm
Chapter 4
Figure 4.1:
the three components of work on a farm
Figure 4.2:
our current and future state for the end-to-end process of milking
Figure 4.3:
traditional vs Lean improvement approach
Figure 4.4:
identifying waste
Figure 4.5:
the 3 Ms of waste
Figure 4.6:
the 8 wastes (DOWNTIME)
Figure 4.7:
driving back and forth unnecessarily wastes time
Figure 4.8:
value-added vs non–value added words
Figure 4.9:
steps to eliminate waste
Figure 4.10:
some of the benefits of eliminating waste
Chapter 5
Figure 5.1:
the 5S steps
Figure 5.2:
one of our workshops before 5S. Does yours look like this?
Figure 5.3:
sorting items into four piles
Figure 5.4:
sorting a pump room on our farm
Figure 5.5:
finding expired products worth more than $2000 during 5S on our farm
Figure 5.6:
make sure you 5S your hard drive regularly
Figure 5.7:
a white car factory
Figure 5.8:
a red tag (left) and a red tag on gauge wiring (right)
Figure 5.9:
how to arrange items clearly and visually
Figure 5.10:
the key points of Setting in Order
Figure 5.11:
this is how Set in Order looks on our farm
Figure 5.12:
how to make shadow boards like ours
Figure 5.13:
5S standardisation documents on our farm
Figure 5.14:
a worksheet for a 5S/visual management audit
Figure 5.15:
a 5S poster
Chapter 6
Figure 6.1:
impact of visual management
Figure 6.2:
the traditional farmer vs the Lean farmer
Figure 6.3:
safety signs
Figure 6.4:
red paint on mastitis cows and cow ear tags
Figure 6.5:
visualisation of farm paddocks
Figure 6.6:
a farm visual management audit sheet
Figure 6.7:
our team visual management board for the Grassmere shed
Figure 6.8:
companies such as VizLink in New Zealand make professional customised visual wh...
Figure 6.9:
making your own visual whiteboard
Figure 6.10:
example of our quality graphs, which are printed and displayed on the visual ma...
Figure 6.11:
a Grassmere Team Meeting agenda
Chapter 7
Figure 7.1:
our ‘Keypoint Lesson' standard document for mating
Figure 7.2:
Grassmere Shed role standard work week
Figure 7.3:
one of our standard work documents for cleaning the plant after milking
Figure 7.4:
Grassmere standard process for calving data entry
Figure 7.5:
quality check flow diagram
Figure 7.6:
the PDCA model
Figure 7.7:
videoing our feedout process
Figure 7.8:
workload before and after balancing
Figure 7.9:
standardised Work chart for checking paddocks
Figure 7.10:
a tiered audit system
Figure 7.11:
an example of a standard work audit sheet
Chapter 8
Figure 8.1:
an end-to-end farm process
Figure 8.2:
the 5 stages of VSM
Figure 8.3:
key VSM symbols
Figure 8.4:
an example of an action plan
Chapter 9
Figure 9.1:
problems grow bigger over time
Figure 9.2:
types of problems
Figure 9.3:
our approaches to problem solving
Figure 9.4:
attributes of a good problem solver
Figure 9.5:
four key Lean problem-solving tools
Figure 9.6:
filling out our ‘problem and countermeasure' sheet
Figure 9.7:
a worked example
Figure 9.8:
a fishbone diagram template
Chapter 10
Figure 10.1:
traditional vs Lean approach to quality
Figure 10.2:
poor quality becomes more costly if passed on
Figure 10.3:
traditional vs Lean approach to managing quality problems
Chapter 11
Figure 11.1:
TPM building blocks
Figure 11.2:
a worked example of a maintenance record sheet
Figure 11.3:
understand and probe your equipment before buying it
Figure 11.4:
example of a preventative maintenance schedule
Figure 11.5:
example of a daily/weekly maintenance check worksheet
Figure 11.6:
five key elements of autonomous maintenance
Figure 11.7:
example of a Kamishibai card that gets slotted into the Kamishibai board
Figure 11.8:
three elements of OEE
Chapter 12
Figure 12.1:
batch processing in a herringbone shed vs rotary shed
Figure 12.2:
spaghetti flow on a farm
Figure 12.3:
examples of creating flow for grazing — imagine how easy this would make your w...
Figure 12.4:
spaghetti vs flow in a herringbone shed
Figure 12.5:
our current calf flow at various locations — spaghetti style
Figure 12.6:
our desired future flow — straight line, one location
Figure 12.7:
farm information flow or communication is often like ‘spaghetti'
Chapter 13
Figure 13.1:
planning helps you move from your current to your future state effectively
Figure 13.2:
the PDCA cycle
Figure 13.3:
the traditional vs Lean approach to planning
Figure 13.4:
example of a five-year strategic plan
Figure 13.5:
example of an annual detailed master schedule
Figure 13.6:
Grassmere's five-year strategy
Figure 13.7:
our season plan is part of the visual boards in each shed
Figure 13.8:
an example of our current continuous improvement action plan
Chapter 14
Figure 14.1:
the two pillars of the Toyota Way
Chapter 15
Figure 15.1:
we communicate directly into filters instead of around them
Chapter 16
Figure 16.1:
a Lean leader's role is to support their team
Figure 16.2:
how traditional vs Lean leaders spend their time
Figure 16.3:
Lean tools will help you to empower your team
Figure 16.4:
the two types of ‘coaching'
Figure 16.5:
improving the performance of your people
Guide
Cover
Table of Contents
Introduction
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e1
Acknowledgements
I would like to thank the whole team at Grassmere Dairy for their contribution, patience and support in completing this book (one of whom took the photo on the cover).
Thank you to Lucy, Chris and the team at Wiley for turning this book into a reality. My editor Sandra: you worked your magic to make sure it all came together and made sense. Thank you.
And finally a big thanks to my whole family for all their love and support during this project. Especially to my mum and my sister Anna for being my driving force, always pushing me on and asking, ‘Why aren't you working on the book?': thank you. I would probably still be thinking about it without you. To my darling little girls Annabelle and Gabrielle, thank you for being so patient while Mummy was busy writing. I love you. And of course my husband Mat, for being a fantastic partner, advocate and case study, and enabling me to do this.
Introduction
If you are a dairy farmer who wants to significantly reduce your work hours, have more time to spend focusing on the business, cut costs in tight times and have a more efficient, profitable and sustainable farm, then this is the book for you. Well done for getting a copy — you are now beginning a journey towards transforming your dairy farm and business into a Lean Farm: making it a better, smarter, more productive farm using new thinking and ways of working.
After developing and rolling out the first comprehensive LeanFarm training program designed specifically for dairy farmers to more than 100 farmers across New Zealand in 2017, it was clear to me that there was a need for Lean in farming. My husband Mat and I realised how valuable these simple tools and principles were to any size of farming operation — from husband-and-wife teams to larger corporate farms.
In response to this demand I collated the training program into this book so that all farmers across New Zealand and the world can learn how Lean can significantly improve their dairy farm.
How did this book come about?
In 2013 Mat returned to his 1000-head family dairy farm in New Zealand. Dairy farming was a new industry for me and it struck me immediately that it lacked Lean thinking. The industry was far behind industries that used Lean management, and I knew our dairy farm would benefit significantly from applying Lean practices. As a result, we started implementing Lean principles on our own family farm.
Our two ‘city' dogs love their new farm life in New Zealand
My degree in engineering led me to start my career at Toyota in Australia before spending a few years working with Toyota Motor Europe learning the insides of the Toyota Production System (TPS). In 2009, I moved into consulting and began teaching companies about the TPS, more widely known as ‘Lean'. I have since worked with dozens of companies globally to implement Lean methodologies successfully.
Many might ask how Lean can apply to a dairy farm when it's completely different from making cars. Actually, dairy farming is essentially a primary industry production process. It converts inputs such as grass through cows into the output of milk, the end product that is shipped to the customer. Lean helps convert business inputs such as people, machines and materials, through value-adding processes, into the right outputs as effectively and efficiently as possible.
Lean thinking can significantly improve many of the problems that dairy farmers face every day. Long work hours, high staff turnover, repeat problems, breakdowns, wastage, safety and high costs are all factors that cause unnecessary stress for farmers. Learning how to see waste, work more efficiently, create engaged teams, be more productive and solve problems effectively will save time and cost, improve business performance and create a better farm.
With its origins in Toyota in the 1940s, Lean management has been used for a long time, initially in manufacturing industries, and over the past twenty or so years it has spread to just about every other industry sector — from defence, to healthcare, to finance. Today, Lean is a prevalent and proven management approach used by thousands of businesses globally, from start-ups to large corporates. It aims to create and deliver products or services that the customer values as effectively and efficiently as possible by eliminating all waste and striving for perfection through continuous improvement.
Our team (from left): Richard, Hannah, Mat, Anthony, Samii, Rob, Joey and Jaya
How will this book help you?
The Lean Dairy Farm details the key areas on a farm where Lean will make a substantial impact. It aims to provide farmers with the practical skills they need to apply Lean tools and thinking to their business to achieve sustainable and tangible results. Lean is an expansive topic. In this book I bring together and focus on the most relevant and valuable Lean tools and practices and explain them simply and with real farm stories. I will guide you through a step-by-step approach for implementing the key Lean tools you need to truly transform your farm.
Throughout the book I have also included examples of templates from our farm that you can use. All of these templates and more can be purchased in editable formats online at www.leanfarm.nz to save you time recreating your own.
Our own farm is also on this Lean journey. In this book, we use our farm as a case study and share with you not only our stories, but also real farm examples and activities to help you implement the tools in an easy, sustainable way and, importantly, bring your team along with you to get real, tangible results. Is our farm Lean yet? Is it perfect? Absolutely not! But we have started the journey and are continuously improving, while creating the right culture.
This book is broken into three key parts:
Part I introduces Lean and why it applies to farming.
Part II introduces 10 practical Lean tools that will help your farm eliminate waste and become more efficient.
Part III focuses on how to create the right culture on the farm to embrace Lean thinking and an ongoing improvement mindset.
The 10 Lean tools I introduce in part II are:
the 8 wastes
— ‘see' and eliminate the waste in your business
5S workplace organisation
— save time and reduce waste by organising your business efficiently and effectively
visual management
— create a visual business that achieves results
standard work
— optimise processes to save time and make work easier and more efficient
value stream mapping
— understand how things are
really
done on a farm and start to eliminate waste
practical problem solving
— create a team of excellent problem solvers who can solve problems for good
built-in quality
— create a culture on the farm where everyone does things ‘right first time'
total productive maintenance
— stop constant firefighting and unplanned breakdowns
creating flow
— streamline your business process flow and improve productivity
visual planning
— achieve business goals and targets effectively through improved planning.
Come and join me on the journey to making your farm a better business.
Myself, Mat and our daughters, Annabelle and Gabrielle, among our cows
PART IThe concept of ‘Lean'
I have dedicated the first part of this book to giving farmers a little bit of a background and insight into Lean management so that you have a better understanding of what it is and where it's come from. For many of you this may be the first time you have heard of ‘Lean' and I want to make sure you don't think it's some kind of exercise program! Also, it's important for you to understand the methodology, how it was developed and where it has come from so that when you are talking to people or your team about Lean you can confidently explain what it actually means and give it some context. It also gives you some confidence that this is a real, proven methodology that's used by thousands of businesses globally (including farms across Europe and the United States) and isn't something I've invented. I have also used this section to give you a brief insight into why Lean applies to dairy farming and why it can have such a big impact on your farm.
Chapter 1Before we get started …
The Lean Dairy Farm focuses on improvements that any farmer can make on their farm. However, to implement any type of improvement you will need to first be open to change, and to accept that your farm isn't perfect and there are opportunities to improve. Further, you must acknowledge that while there are some things that affect your farm that you can't control, there are many opportunities and improvements that are within your control and solely dependent on your decisions and management. In this chapter I will discuss two concepts to help you transition your thinking so that Lean can be applied successfully on your farm: ‘external vs internal locus of control' and ‘the “possible” mindset'.
External vs internal locus of control
Profit and success are based on a lot of factors. To truly make your farm a Lean Farm will mean thinking differently (see figure 1.1, overleaf), whether you are the farm owner, manager, assistant or anyone else working in the industry. First, it's important to note that Lean is not going to solve all your problems. It can't change many factors that are inherent in farming — what I call the ‘external factors'. These include:
weather
global dairy prices
interest rates
politics
taxes
policies/regulations.
Figure 1.1 the locus of control
Based on a model by Julian Rotter
What Lean can help with is the things you can control on your farm. These are the ‘internal factors' and include:
your work environment
what you do and how you do it
your quality
your waste
your efficiency.
Therefore, to gain real value from this book and be able to implement Lean thinking effectively, we need to shift our mindset. We need to stop focusing and complaining about the external factors that we can't control. We need to stop believing that everything is outside of our control and blaming these external factors for our inefficiencies or telling ourselves things like ‘we can't do anything', ‘our hands are tied because milk prices are down' and so on. Instead we need to start accepting responsibility and taking control of the internal factors in our farm business.
This is what Lean and the concept of kaizen (we talk about this in chapter 2) are based on: continuously improving the things that are in our scope of control.
Toyota is a perfect example: they have many external factors that affect their business and are beyond their control, such as strong competition, fluctuating currencies, political situations, steel prices and so on. Yet they are still the world's most profitable car manufacturer because they use Lean principles and focus on the internal factors that they control and can continuously improve on.
The ‘possible' mindset
The second concept that farmers need to open up to is something I call the ‘possible' mindset (see figure 1.2).
Figure 1.2 the possible mindset
Basically, we need to shift our thinking from ‘not possible' mode to ‘possible' mode. Instead of believing that it's not possible to do something, we need to start asking ourselves how we can make it possible: how can we do this?
It is believed that Henry Ford once said that if he had asked customers what they wanted, they would have said faster horses. Instead he invented the Model T Ford and the mass production assembly line, revolutionising society by providing the average American a car they could afford.
A team effort
Anyone know who these lads are?
Source: © Marco Iacobucci EPP / Shutterstock
What's so good about them? …
Did I hear you say that they are the best team in the world? Really?
WE CAN'T CONTROL HOW THE OTHER TEAMPLAYS — ONLY HOW WE PLAY.
So why are they so good? What sets them apart from every other team? They don't have different technology or special props. On the field they have the same rules, same weather, same number of players, same time. So what do they do differently to be the best? Well, there are probably three key things that set them apart:
culture
— they have a very strong culture within the team, based on teamwork and respect
drive
— from an early age, almost every Kiwi kid wants to grow up to be an All Black. Therefore, the fortunate few who get there are so privileged to be part of the team that they have a huge motivation and ambition to do whatever it takes to stay on the team
process
— this is the real key. This isn't just a bunch of random guys doing random things on the field that happen to make them win. No. They have a very clear plan of attack and a well-thought-out process that drives the right results. You'll often hear these players talk about the ‘process' — about pulling themselves back to the process and concentrating on the task at hand. They are masters of process and continuously improving that process in small steps to make them better and better each time.
These are simple principles that we can take back to our farm by:
creating an excellent culture within our farm business
making people want to be part of our farm
being masters of process and continuous improvement.
Mat puts our people and our cows before anything else
Hopefully you have switched your mindset to ‘I am taking control of my destiny' and ‘Everything is possible'. Now that you're mentally prepared for the Lean method, it's time to learn more about the concept of Lean and why it's so important to incorporate Lean into your farm.
Chapter 2What is ‘Lean'?
Lean is sometimes portrayed as complicated and very technical. When I listen to ‘Lean experts' who haven't worked at Toyota but teach or write about Lean, I often feel they over-complicate things. Yes, Lean is a system, it is a philosophy, but it is based on some very simple notions that all businesses try to strive for in one way or another: produce products with a high-quality, low-cost, quick lead time, that satisfy customers and make a profit for the business. It is in the ‘how' you do this that Lean helps your business: it is the system you use to achieve this goal, and this system is based on continuous improvement (an important concept that we discuss in this chapter) by eliminating all waste from your processes to help you be as efficient and effective as possible. In this chapter I will explain Lean in simple terms because it doesn't need to be complicated.
What exactly do we mean by ‘Lean'?
There are a million and one different definitions of ‘Lean' floating around these days. Here is what I have come up with:
Lean is a best practice holistic management philosophy for any business that puts the customer at the heart and helps a business to achieve its strategy, purpose and vision as efficiently and effectively as possible, while being profitable. The aim is to provide customers with the products or services they want, when they want them and to the highest quality and lowest cost. This is achieved through systematically identifying and eliminating all waste, building continuous improvement into the DNA of the business and relentlessly pursuing perfection.
Regardless of which definition you use, what is important to understand is that Lean should be a business strategy, not a one-off activity! Lean is a holistic culture, philosophy, mindset and way of life for a business. Lean is a culture that focuses on:
continuous improvement
open-minded thinking
challenging the norm
the flow of value
the relentless elimination of all waste
a pursuit of perfection.
It gets us to think hard about what we do and how we do it and makes us ask ourselves ‘Why?'
Lean is not about being ‘mean' or trying to speed up processes, and it most certainly doesn't aim to increase productivity or efficiency at the expense of quality, safety, animal wellbeing, employee satisfaction, customer satisfaction or any other important factor. Lean focuses on process, and performance of the process. It strives for simplicity and common sense.
Furthermore, the biggest challenge when trying to become a Lean business is not the technical things. It is related to people. This is because it is easier to teach people technical stuff such as how to milk cows, put up fences or maintain a tractor; trying to change people's attitude and behaviour is much harder.
Figure 2.1 illustrates Lean in a nutshell (and this book is about making Lean simple).
Figure 2.1: simplifying the concept of Lean
One of the most important things I learned during my days at Toyota is ‘doing the right thing will get the right result'.
I have modified this a bit to
‘DOING THE RIGHT THING, THE RIGHT WAY, WILLGET THE RIGHT RESULT'.
In other words, if you focus on the right things in your farm business, and everyone in your team does the right thing the right way every time (this means doing something right the first time (not taking shortcuts) and ensuring 100 per cent good quality), then you and your farm business will inherently get the right result.
Lean Farm team activity
With your team, discuss the following:
— Has anyone heard of the term ‘Lean'?
— Who has had previous experience with Lean (perhaps in other jobs)?
— Ask each person in your team to google the term ‘Lean manufacturing', write down one sentence about what they discover and present their result to the team.
— With your team, watch the light-hearted video about Lean called ‘Lean gone Lego' on YouTube.
— How can Lean thinking help your farm and team?
The history of Lean
Lean manufacturing is most certainly not new; it has been around for decades and is still gaining interest and being applied to different industries. This shows how powerful and successful Lean thinking is — if it weren't, it would have been just another fad that quickly lost momentum. It most certainly isn't something I have just made up! I want to share some of the background to Lean so that you can be assured that it is a very proven, beneficial methodology that has a long, successful history in a wide variety of industries.
How did Japanese manufacturing become a leader?
Japan went from bankruptcy to being one of the richest countries in the world. How? They started planting the seeds of what is now known as Lean:
Japanese management realised the power of employee involvement.
They made a commitment to continuous improvement.
They defined the flow of value and ensured everyone focused on eliminating waste bit by bit.
In the 1940s, Toyota was only producing around 100 000 cars annually and was at a critical point financially during a difficult postwar period in Japan. Meanwhile, General Motors was a giant and successful automotive manufacturer producing in excess of 3.6 million vehicles annually. By 2015, roles had reversed: Toyota had increased its production a hundred-fold to more than 10 million annually to become the world's number-one automotive company, while GM increased its production over the same period to around 9.8 million vehicles (threefold) but went into bankruptcy and had to be bailed out by the US government. Interesting, isn't it? How did this happen? Toyota transformed by using Lean thinking (see figure 2.2).
Figure 2.2: how Toyota transformed by using Lean thinking
A historical timeline of Lean
Lean has developed over a period of more than 100 years. Figure 2.3 depicts a rough timeline of how Lean evolved.
Figure 2.3 the evolution of Lean
Lean thinking has some of its roots in what's known as ‘scientific management', which was a theory of management established in the late nineteenth century by Frederick Taylor to analyse workflows and improve productivity using concepts such as standardisation. Henry Ford further refined the concepts from the scientific management era with his mass-production standardised assembly lines. Japanese engineer Taiichi Ohno visited the United States to learn about what Henry Ford was doing and how supermarkets created flow of product ‘Just In Time' by restocking their shelves based on customer demand. Based on his research, Taiichi Ohno developed the Toyota Production System (TPS), which became one of the world's best management philosophies for eliminating waste and creating a profitable, high-quality, flexible business.
In the late 1980s, authors James P Womack, Daniel Jones and Daniel Roos studied the three largest automotive producers — Toyota, General Motors and Ford — and their differences. They spent time in Japan to understand the approach Toyota and other Japanese companies were using and they published a book about their research called The Machine that Changed the World in 1990. This book essentially introduced the term ‘Lean' to the world by describing the TPS as ‘Lean production'.
Today, Lean is a management approach used by almost every industry sector and any type or size of business globally. It is a proven method for eliminating waste and creating successful, profitable, efficient businesses.
A holistic approach
Lean is more than just a one-off improvement: it is a holistic approach to your business. To be a truly Lean business, you need to apply Lean thinking across all elements of your business. It needs to become just ‘the way we do things around here' and part of the DNA of your business. Almost every business these days is made up of three key components — process, people and technology — and is underpinned by purpose. Lean must be applied to each one of these three components to be effectively integrated into the business.
Mat checking the condition of the cows to ensure they are healthy (high-quality)
Source: Grant Matthew
Figure 2.4 is my vision of a Lean Farm based on the TPS house. A business must make a profit to exist. In a Lean world this is done by improving productivity. To improve productivity, Lean methodology and tools are applied to people, process and technology. This is supported by a Lean culture that is based on continuous improvement and respect.
Figure 2.4: Jana's Lean Farm
Ultimately, it is the culture of a business that will drive the right Lean thinking and principles to achieve the desired outcomes.
FIX THE PROCESS FIRST; THEN ADD TECHNOLOGY!
I will also mention here something about technology. Technology is great and farming has had significant progress and transformation over the past century due to evolving technology. However, we must never assume that technology is going to solve all our problems. If you have poor processes, or no processes, in place and you invest a lot of money in technology thinking it is going to solve all your problems, you might be disappointed. It is always important to create a standard, reliable foundation before slapping some technology on top of it. Otherwise you might find that you have put a great piece of technology on top of bad processes and systems and you don't see the full benefit of your investment. Successful Lean companies such as Toyota always look at their processes first and refine and improve them. Once they know they have good, reliable, repeatable processes, they consider adding some new technology to further improve them. They don't just put in technology for the sake of it. They know it's important to fix the process first, then add technology.
Who uses Lean?
The short answer: everyone!
As I said earlier, this isn't something I have just made up and pulled out of my back pocket. Nor is it just some fad. Over the past 20 years in particular, almost all industries have introduced some level of Lean management. And many businesses, from global organisations to small businesses, are introducing Lean concepts today. This shows that while the methodology has been around for almost seventy years, it is proven, it works and it is absolutely still relevant today. There are numerous books out there about Lean for tech start-ups, large corporates and even small-scale market farmers.
The power of people involvement is a fundamental aspect of Lean philosophy
I have worked with all types and sizes of business and across most industry sectors, from mining, to rail, to healthcare, to banking. Lean is applicable to every one of them. Figure 2.5 demonstrates how Lean has spread to different industries over the past two decades.
Figure 2.5 some of the many industry sectors that use Lean
It's proven and it works!
Profit
The ultimate purpose of introducing Lean into your farm is to create a profitable business.
Why does your farm need to be profitable?
There will be many reasons why you want to make sure your farm is profitable: growth, stability, security, flexibility, investment in people, systems, infrastructure. The biggest reason, however, is that if your farm doesn't make money, you probably won't be in business very long. You need to be profitable to ensure a sustainable business that can operate in the long term. In other words, you need to make a profit in order to exist.
There are different ways you can increase your profits. Traditionally, people try to increase the prices of their product to increase their profit margin. Dairy farmers are similar — we hope like mad that milk prices go up so that our profit margin increases. Unfortunately, however, we are not in control of milk prices, so there is no guarantee that we will be profitable.
This approach is known as the ‘cost plus principle' and is illustrated in figure 2.6.
Figure 2.6 the cost plus principle
Lean uses the philosophy that you can't change factors outside of your control (these are the external factors, such as demand or milk prices), but you can control your internal factors, such as your internal farm costs. Therefore, to make a profit, you need to reduce your internal costs by improving your farm productivity. To improve productivity, you need to eliminate waste and continuously improve using Lean principles and thinking. This is known as the ‘cost reduction principle' (see Figure 2.7). It involves forgetting about the price of milk, which you can't change, and instead focusing on what you can do inside your business to reduce costs.
Figure 2.7 the cost reduction principle (Toyota/Lean approach)
Profit margins can be low for dairy farmers, particularly during tough times such as those we have seen recently. As farmers can't control price, cost reduction or milk production increase (without increasing costs) is our biggest opportunity to improve our profit margins. Understanding our costs, trying to cut out waste and improving our processes is essential for all farmers.
Recently I discovered a pertinent quote from a Toyota CEO that is applicable to dairy farmers — we should all think about cost in this way:
Cost reduction must be a fundamental part of our [business]. We must encourage all our members to have a cost conscious mind and … lead and stimulate … cost reduction … [it] is the single biggest weapon to improve our profitability … [and] our main defence against negative external factors.
Lean Farm team activity
With your team, discuss the following questions to give everyone an appreciation of profit and cost:
— Why does your farm have to be profitable?
— What happens to your profit when milk prices drop?
— How much control does your farm have over what milk price you get?
— How much control does your farm have over your internal costs?
— Why is it important to try to reduce your internal costs sustainably?
Rob laying water pipes at the new farm, Longmere
Continuous improvement
Lean is underpinned by a culture of continuous improvement. This is the fundamental philosophy in Lean businesses and forms part of the DNA of the business. Our farms should be continuously improving businesses. Why?
Competitiveness
Are our farms competitive in terms of cost, quality and responsiveness? Should we be?
Most of our milk is processed into whole milk powder, which is then traded on the global market. We therefore must participate in highly competitive world markets and absolutely need to be competitive. Unless we create a significantly appealing differentiator of our milk and can demand a premium for it or basically ask our price, we will continue competing with the rest of the world.
