Using Lean to Identify Waste & Improve the Performance of Your Primary Production Operation
Ask a farmer if they have any waste in their business and most will answer with an emphatic ‘no’, closely followed by something along the lines of, ‘I have a market for everything I produce’.
But what if we told you that your primary production systems and processes are riddled with waste and that it’s impacting your quality and profit? What if we told you that dramatically reducing this waste is within your control?
What is Waste?
Waste presents itself in various forms within farming operations. It can be hard to spot, but once you learn where and how to look, you’ll begin to see waste everywhere and recognise just how much it’s impacting on your agribusiness.
Some examples of waste commonly found in primary production system and processes include:
· Primary production tasks performed incorrectly or ineffectively e.g. planting, sprays, fertigation
· Using more production inputs than necessary e.g. land, water, labour
· Idle labour or machinery waiting for upstream activity, maintenance or instructions
· Underutilised or unproductive labour
· Excessive inventory of seed, chemicals, fuel, spare parts, plant and equipment
· Producing more raw material than the business has profitable sales for
· Producing more raw material than harvest, manufacturing, logistics, storage or sales functions can manage
· Producing raw material that does not meet preferred customers specifications
· Producing higher quality raw material than required to meet customer specifications
The Financial Impact of Waste in Agribusiness
In isolation, these wastes only have a modest impact on the financial performance of a given agricultural production system. However, the reality is, that most, if not all the wastes exist within each and every production system and occur to some extent at least every other day.
Cumulatively however, these wastes reduce yields and product quality, increase workforce fatigue, raise the cost of goods, working capital requirements, erode margins and can reduce an agribusiness’s ability to meet customer quality and volume expectations. The impact on an enterprise’s profitability is profound.
Taking Control - Manage What you Measure
The waste within your primary production systems and processes represents an opportunity. Unlike customer quality expectations, marketplace competition, rising input and labour costs, removing waste from your systems and processes is within your control.
So why has it never been looked at it this way before? Because the traditional financial statements businesses use to measure performance were never designed to measure specific systems and processes. Consequently, much of the waste that can be eradicated from an agribusiness remains hidden.
Conversely, Lean process metrics measure the performance of the underlying operational systems and processes that ultimately deliver an enterprise’s financial results.
With Lean, information is fed straight to the responsible team member in real time – delivering process metrics that provide your front line management with the insight they need to make informed operational changes or strategic corrective action.
Your Opportunity to Improve
PSVC Managing Director, Simon Drum, has over 25 years’ experience in Australian and international agribusiness. Based in Melbourne, Simon has built his unique expertise working for major Australian agribusinesses and large food producers in senior strategic, commercial and operational roles.
Simon has been applying Lean principles to a diverse range of primary production systems for more than a decade. His practical approach towards solving problems in agribusiness has seen him develop a range of insightful diagnostics that help clients identify the factors that will improve performance.
Try it for yourself! Complete our Primary Production System diagnostic and take the first step towards improving the profitability of your agribusiness.
For more information contact PSVC on 0407 567 250 or email: Simon@psvcadvisory.com.au
‘We engaged Simon Drum over an eighteen-month period for our multi-site berry operation. Simon looked at the strengths and weaknesses of our business and helped develop a strategic plan for us to implement. Simon drove the strategy by providing hands on and practical assistance which saw us transform our production systems resulting in a productivity increase of 30%. Working with Simon was money well spent!’
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