FMCG Lean Audits: choose from the Toolkit with caution

This blog is the third in a series written by Jeremy Praud, Head of UK & Europe.

In my first two blogs in this series, we looked at the benefits of CI audits, and why Lean Audits could drive improvement in FMCG. 

But not all of  the ‘Lean Toolkit’ is appropriate for FMCGs, and can in fact drive the wrong actions…
The purpose of any continuous improvement function is ultimately to provide a lower manufactured cost per unit.  Whilst all of ‘Lean’ can be said to achieve this, we can see that when applying the principles to FMCG, some assumptions from the car industry don’t translate across so well into fast moving consumer goods (see last blog), and other things taken for granted are of critical importance.

So lets look at what to focus on to drive rapid, sustainable improvement.

The standard tools in the M&S Lean audit are:

  • Workplace Organisation (5S)
  • Problem Solving (5 Whys and FMEA/Fish Bone Diagrams)
  • Value Stream Mapping and
  • Standard Work.

It also briefly touches on Kanban, quick changeovers, and TPM (total productive maintenance).

5S – Low Priority for FMCGs
Classic Lean tends to prioritise workplace organisation (5S).  However, unlike other industries, FMCG already has quality and hygiene standards embedded, which means that the early wins available from workplace organisation elsewhere simply aren’t available within most FMCG factories.  There are of course benefits to be had, but it is a much harder task to translate these to the bottom line,.

As such it is much more prudent to move 5S down the priority of implementation.  It looks good, and does have a moral boosting effect, but better to do this once you have cash in the bank from other tools to have offset the rather significant time investment required.

5 Whys and FMEA/Fish Bone Diagrams – FMCGs can do better
In Classic Lean, the problem solving methodologies promoted are generally 5 Why’s and FMEA / fish bone diagrams.  However, Six Sigma promotes  technically advanced statistical analysis methods that are more useful.

The advantage that FMCG has over other industries is that the processes and machinery simply aren’t that difficult. But this also means that most of the easy wins have already been achieved through experiential problem solving.  As such, FMCG is particularly well suited to the use of problem solving methodologies using Control Factors, or Driver Trees – that drive the simple application of logic and basic science.

Targeted VSM – high priority
Value Stream Mapping as a tool from first principles is best used in extremely targeted ways.  There are specific outcomes that can lead to quick bottom line benefit – changes to the planning process, distribution, warehousing, and stock holding for example – so having a firm view from the outset on the expected outcome and potential realisable benefit is a key step to ensuring maximum rate of return.

For instance, admin processing costs are not generally that high, and significant activity is normally required for even a small benefit.  It is of course a very good thing to do, but understand that other activity is going to deliver much greater benefit earlier for you.

Within FMCG, we can see that the value stream is essentially the order fulfilment process – and as such has traditionally been called the S&OP process.  The first draft of the M&S Lean Audit is quite light on detail in this area, so it ensuring you are using a bespoke S&OP audit process as well, most likely based on the work of Oliver Wight, would be a good way to accelerate the value return.

Quick Changeovers – Highest Priority for FMCGs
Depending on the SKU profile, and work already done, quick changeovers can be of very significant value, and can be moved much further up your priority list, ahead of 5S.

In my next blog, I’ll be looking at what’s missing from this Lean Audit that would add tremendous value to FMCGs – and the tools that really won’t add benefit!

Stay tuned.

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