Red Meat to be Lean

The red meat industry collectively – farmers, processors, manufacturers their customers in retail and foodservice are incurring unnecessary production costs.Red meat processors must apply the lean manufacturing techniques used by their competitors and other industries which have be proven effective worldwide if they are to prosper in the fierce 21^st century market.

Although lean originated in car manufacturing,  it has been applied extensively in the food industry, initially by retail market leaders, Tesco who first adopt the approach in the late 1990s. Lean is widely regarded as one reason why Tesco has excelled in its supply chain operations. In 2002-2006, the UK Food Chain Centre (FCC) completed a pilot program applying “lean thinking” across the whole red meat chain.

UK Red Meat Industry Forum(RMIF) general manager Dr Martin Grantley-Smith said, “Of the crucial issues for the red meat industry, competitiveness remains highly relevant.  We have first class product, we’re very good at design, but we have to get into the mindset of taking cost out without harming quality.”

During the problem identification phase,  FCC have identified 7 ways that wasteful activities impact in red meat supply chains.

1. Producer Operations: at least 5% of animals incorrectly graded
2. Demand Management: no coordinated effort between end-user, processor and farmer to connect the planning of animal production to future market demands. 
3. Customer Value: misalignment between consumer requirement and product specification due to   changing consumer needs and enhanced technical capability.
4. Opportunistic Trading: the predominance of a “market trading approach”  focuses on short time   price. 
5. Processor Efficiency: Overall Equipment Effectiveness (OEE) performance varied between 26% and 40%, compared to world-class performance of 85%.
6. On-Shelf Availability: Retail store waste ranged from 3% to 7.5%, with an estimated average of   5.25%.
7. Carcase Balance: carcase balance problems are estimated to cost up to 3% of sales.

Solutions using the lean manufacturing techniques:

1.        Develop a dedicated chain. Create of a consistent source of supply and a set of suppliers that work together over the long term to plan production to meet customer needs and demand patterns.
2.        Develop Horizontal Co-operation Farmer-Supplier Associations. Select a specific group of farms as dedicated suppliers for a specific retailer. These farms would specialize in growing the “ideal animal” as specified by that retailer. Production would be scheduled in relation to the retailer’s demand. Farms would be selected so as to minimize transport distances and procedures would be monitored and feedback of animal quality will be returned to improve farm performance.
3.        Develop Vertical Co-operation Demand Management. Link the supply of animals to the demand for meat products. The dedicated farms could supply 85% or 90% of the retailers’ requirements, with the remainder being sourced from the open market to meet the variability in end-user demand.
4.       Improve operational performance. Pursue the systematic elimination of waste and introduce “flow systems” both within and between companies would lead to year on year cost reductions and permit the chain to become progressively more competitive in terms of cost, quality and service.

The pilot program showed in 2006 that up to 500 million British Pounds in cost be cut from the red meat supply chain by boosting efficiency and adopting lean manufacturing techniques. This is another successful example of lean manufacturing and quality management.

Questions:

How could lean manufacturing fully integrate with “Big Data” in food industry, to be more specific, red meat industry? How could we utilize the big data to connect farmers, processors, manufacturers, retailers and customers and be sensitive and accurate to the fluctuating market?  How to meet a customized customer’s demand by using lean manufacturing techniques to keep the cost as low as possible and to meet the requirement as fully as possible?



Reference:
1.  Applying Lean Thinking to Red Meat Industry. retrieved from http://www.ifr.ac.uk/waste/Reports/Red%20Meat%20Ind-Applying%20Lean%20Thinking.pdf
2. Application of lean paradigm in red meat processing. Retrieved from http://www.emeraldinsight.com/journals.htm?articleid=1463921
3. Red Meat Chain Must Become Lean. Retrieved from http://www.foodmanufacture.co.uk/Business-News/Red-meat-chain-must-become-lean
4.Lean Food Production, Retrieved from http://aut.researchgateway.ac.nz/bitstream/handle/10292/3861/NZIFST09.pdf?sequence=5