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Lean Management

Lean management principles are the very foundation of Grasslands. Already well known to many in the manufacturing industry, we have been successful in implementing this concept on all our farms. We’re certainly seeing the benefits and are keen to share our knowledge.

So what is it? As William Demming (1900-1993), stated: “If you can’t describe what you are doing as a process, you don’t know what you are doing.”

In a nutshell, lean management is the continuous and consistent quest to make improvements. This applies to all processes and requires the active participation of all employees in an organisation. For a lean management farm to be successful, the entire team needs to be fully aware of the business’ defined targets, current performance and the wider plan. As a group, we have identified how value is created within the various operations and processes of the business. We then eliminate anything that does not contribute to that value, known as the waste, or in the Japanese term, ‘muda’.

The ultimate goal is to maximise profits in a sustainable manner. Lean management promotes sustainability as well as maximising efficiency in each process. Often these two concepts fit harmoniously with each other. The very nature of sustainability, the reduction in the use of resources, is fundamental to the concept of lean where waste is eliminated.

When adopting a lean management system, it is very important to be patient. It is by no means an easy fix. Gathering enough reliable data for the managers to identify efficiency gains takes an entire year. Most improvements can only be made in the second year. The first year is mainly an opportunity to train managers on operational efficiency management, data collection and analysis.

Why did we adopt lean management?

We primarily adopted the concept of lean management as a means to boost profitability. Dairy farming is a business which ultimately produces a commodity, milk. Often with commodities, input prices are generally unmanipulable and the sale prices are set by market forces. Therefore, to remain competitive, one of the obvious ways is to enhance the production process to generate more efficiencies. The lean management concept facilitates the necessary steps like data collection and analysis, allowing us to realise these efficiencies and thus profitability.

Data collection and analysis derived from lean principles is also enormously useful for our farms’ sustainability. With greater oversight of how all our resources are being used, we can more readily identify areas of surplus (which can be reduced or put to better use), as well as the points of overstretch. This information is then fed into plans, allowing us to improve our performance year on year and effectively report to our stakeholders.

Empowering the whole team to consider how they manage their resources, including their own time and skills, is a great confidence builder, especially when they ultimately see the effect on the farm’s profits. A motivated team is a more productive one and productivity is only further boosted by the reduction in waste.

Lean management has seen universal success across virtually every other industry. We saw no reason as to why dairy farming would be the exception. The system is clear, understandable and easy to communicate to other members of the team. Furthermore, the product produced is resilient and high quality.

What we have achieved

Having begun our lean management journey at Clive Hall Farm in 2010, as part of a 3 year research programme, Grasslands has made considerable progress on all Grasslands’ farms. Much of the initial work has been focused on re-organising our management processes. Our work needed to be far more collaborative, involving and empowering the team to assess their own work.

Our first area of implementation was to encourage the managers to take ownership of the budget and production plan for the financial period. This concept allows the managers to understand the clearly defined link between the production process and the finances. This is encouraged because the managers are ultimately the key decision makers on their particular farm, so have the biggest influence on improvements in profitability.

The building of our process map, which illustrates what we do, led to the development of our KPIs (Key Performance Indicators) and therefore the new data collection platform. This system gives us far greater oversight of the current performance of a farm and provides the information to accurately and easily measure the KPIs. To ensure that our monitoring remains constant and consistent, we review the KPIs on a regular basis. The teams take ownership of these KPIs and ensure that the necessary information is provided.

These initial implementations have taken a top down format, focusing on the managerial aspects of lean management. Our new and current focus is now taking a far more bottom up approach, incorporating enhancements from various levels of the team.

Our current focus

Everything that we are working on currently centres around the idea of empowering each and every employee to drive small incremental improvements within the business. We have made a concerted effort to greater involve all the unit staff in the decision making process. This includes the setting of KPI targets.

In doing so, every team member shares in the responsibility of cutting waste and concentrating on sustainability. For lean management to be a success, each person needs to be assessing their own ways of working and making improvements. For example, it is the person responsible for feeding the calves who is most likely to influence the growth rates. A manager could obviously provide instruction but ultimately it is the calf rearer who has control over that growth rate and as a result, the performance of that animal over its lifespan.

At Grasslands, we are also starting to get a bit more technical, drilling down further into the data to pull out useful information. Ratios are enormously helpful for identifying sections of the operation which consume a lot of resources e.g. the percentage of grass grazed against contracting costs and its effect on the cost of production. If the cows are grazing for more days, contracting costs for slurry spreading and silage making reduce. The benchmarking of this sort of information within the group has been successful at driving enthusiasm within the team to reduce costs even further.

Importantly, lean principles promote the concept of adopting other forms of measurements aside from profitability as these can often have a huge influence indirectly on the business. Measurable variables including the environment, health and safety, staff turnover and animal welfare are being integrated into the overall management of Grasslands’ farms to ensure long term success.

If you have any further questions regarding the lean management system and how we implement it please feel free to contact Andrew Fletcher at Grasslands:

The Grasslands solution ensured our farm remained well managed and profitable, giving us a better chance to succeed in today's competitive and volatile markets.
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