Category Archives: Quality Audit

Lean Audits drive action – but is it the right action?

This blog is the second in a series written by Jeremy Praud, Head of UK & Europe at Lauras International.

TPM-SixSigma-LeanIn my last blog I mentioned that Marks & Spencer’s, who pioneered the Quality Audits, have introduced a Lean Audit into their Plan A.

So lets look at whether ‘Lean’ will deliver in the food industry what is clearly hoped of it by the retailers. The objective of course is to lower manufacturing costs – so of the three main approaches to continuous improvement, is Lean the right one, and is it what is needed in FMCG?

Lets consider the other two approaches – TPM and Six Sigma
If we look at the relatively low asset cost required in FMCG manufacture, the spend required to achieve exceptionally reliable equipment – the fundamental reason for a TPM approach – rarely gives a value return. This means that reliability of 96% is generally quite acceptable, except for a few notable exceptions, and the requirement to spend big on predictive maintenance just isn’t there as it is in other industries.

Meanwhile, Six Sigma is fundamentally about eliminating variation – 6 standard deviations from the mean and all that (actually 4.5, but that’s another story). For FMCG, with low unit cost (and permissible variation of around 1 sigma due to the average weight legislation) again the high-end techniques of Six Sigma have limited value return.

This means that a Lean Approach is in the driving seat
However, Lean did not originate in FMCG – it comes from automotive, with an entirely different asset base and set of base assumptions. This means that whilst many areas of Lean can deliver real value for FMCG, we must be careful in its application. What is taken for granted in automotive is not always true in FMCG – thus the success of the Lean Audits in reducing cost within FMCG will ultimately come down to how well adapted they are for the FMCG sector.

Taking one example (and there are many more); Constraint Theory as outlined in Eli Goldratt’s “The Goal” is of huge applicable benefit within FMCG, but classic Lean either ignores it completely, or allows the contraction of ‘Unnecessary WIP’ to merely ‘WIP’ to drive exactly the wrong actions.

Having experienced the misfortune of this type of misapplication, one FMCG factory owner was heard to remark “I’d rather have taken a million pounds in cash out the bank and used it to fuel a bonfire in the car park – it would have been less painful than what happened”!

So – the future is sure to be Lean Audits – but the companies that succeed from using them will be the ones that are wise to prioritizing what delivers rapid bottom line benefit – and uses an approach to continuous improvement tailored specifically for FMCG.

Tune in next week for the next blog in this series, or hear more on this topic by registering for Food Manufacture’s Lean Audit webinar (11am, 26th April).

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The Benefit of Continuous Improvement Audits

Hear Jeremy discuss this subject with Mike Stones, Group Editor at Food Manufacture

Hear Jeremy discuss this subject with Mike Stones, Group Editor at Food Manufacture

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

With GCSE and A level exams looming, it is easy to think back to that time (perhaps more years ago than we’d like to admit), that we took exams ourselves.  I remember that as the deadline approached, the mind was able to focus on the task ahead, and get down to revision, and making sure I had done the necessary work.  There’s something about a test that drives action.

Those days may be behind us, but auditing (the analogue of exams in the workplace) are a hugely useful way of ensuring activity takes place rather than constantly being put off in favour of other priorities.

This is why historically Quality Audits have been so effective across the UK food industry.  Standards have been driven ever upwards, so much so its hard to believe what it was like 50 years ago…  In hoping to supply a retailer with their standard Bordeaux, one young entrepreneur took the de facto product for analysis to find out where it came from, and discovered it was simply not from Bordeaux. In fact, it wasn’t even wine – rather a mix of industrial alcohol, food colourings and glycerol!

Whilst last year’s horsemeat scandal reminds us of the need for constant vigilance, the wholescale abuses of the past simply aren’t viable any longer – and make no doubt about it, it’s external audit that has achieved that goal.

But what next as the margins to be gained from Quality Audits are ever diminishing?  

Manufacturers aren’t merely interested in good quality. Cost and on time delivery are just as important.  So an audit that is going to help manufacturers drive efficiency and reduce waste has the potential to give a competitive audit to both those companies, and ultimately any retailer sourcing from those companies.

No doubt that is why Marks & Spencer’s, who pioneered the Quality Audits, have introduced a Lean Audit into their Plan A.  With 300 companies being asked to achieve silver status by 2017, any company wanting to supply M&S in the future needs to be on their game. For everyone else, they can be sure that where M&S lead, the other retailers will follow, which means that Lean Audits in the food industry are going to be the shape of things to come.

In my next blog I’ll be looking at whether ‘Lean Audits’ are actually what is needed in FMCG.