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Source: Business-improvement.eu
Lean: Value adding organization
Production at Sara LeeLean Sara Lee:   Value Stream Mapping as compass for process improvement
Maximum value stream, within existing boundaries
By Dr Jaap van Ede, business-journalist, founder business-improvement.eu
The first version of this article was published in the Dutch specialist journal Fluids Processing (sept '08)

Several years ago, Sara Lee International decided to implement Lean manufacturing, company-wide. To see the results, we visited Douwe Egberts Coffee Treatment & Supply in Joure, in the north of the Netherlands. Products nowadays literally flow through this factory, since stagnation would mean loss. During their journey, maximum value is added to the products.

To achieve this, Douwe Egberts started to map the current value stream. After that, there was room to daydream about an ideal new factory, with waste of time nor materials. Finally, starting from the current situation and taking into account existing boundaries, a maximum attainable value stream was defined. Since then, everybody, everyday strives to realize that situation. This means that also waste of talent came to an end!

The family business Douwe Egberts (DE) was founded in 1753 by Egbert Douwes, who reversed his name in the brandname. Thirty years ago, the company was acquired by Sara Lee International. ‘At that moment, we were also producing hand-rolling and pipe-tobacco’, says Rienk van der Vaart1, while we walk across the factory site. ‘Later, that part of the plant was sold to Imperial Tobacco. Look, that fence separates us from them.’

In Joure, Sara Lee DE now only produces tea and instant coffee. Of the latter product, there are three variants: a spray dried powder, a freeze dried powder, and an evaporated coffee extract, which is used in coffee machines. 'It is very concentrated stuff, a minute amount is already enough for a cup of coffee!’

Production site of Douwe Egberts (Sara Lee) in Joure
Production site of Douwe Egberts CT&S in Joure, The Netherlands

Change agents
After a short walk, we arrive in the "improvement office" of Tjark van Heuvel. Like Van der Vaart, he is change agent within Sara Lee International. ‘In each factory, there are several people that hold that position. We are fulltime busy with the improvement of processes’, Van Heuvel explains. ‘In some ways, our role is comparable with the activities of a Six Sigma Black Belt. However, besides the hard analytical stuff, we also address softer issues: How to achieve a goal, together with your people.’

‘I am change agent in Utrecht, also in the Netherlands, and Tjark has the same job here in Joure’, adds Van der Vaart. ‘We are local agents, but there are corporate change agents as well. Those people take care of the exchange of best practices between factories.’

This network of change agents is relatively new. Three years ago Van Heuvel still was manager engineering, and Van der Vaart was not working within Sara Lee at that time.

Lean cycle in five steps
To produce what the customer wants, as efficient as possible, and to deliver the products at the right time at the right place. That is the goal of each company!  Lean manufacturing thereto creates a smooth production stream (flow principle), driven by demand (pull principle)

Womack & Jones distinguish the following five steps in the lean improvement cycle:
  1. Identify – per product or product family – what the customer values.

  2. Use value stream mapping (VSM) to indicate which processes add value and which don’t. Eliminate eight types of loss: overproduction, inventory, manufacturing faults, manufacturing disruptions, waiting times, transport, unnecessary movement, which includes searching for things in the workplace, and last but not least: unexploited talent.

  3. Ensure that products and materials start to flow smoothly through the company. Stoppages lead to stockpiling and thus to waste.

  4. Make the production demand-driven. Producing an item that no one has ordered is also a form of waste.

  5. Constantly strive for perfection, always return to step 1!

> See also: An introduction to Lean

Brenda C Barnes
The application of Lean techniques within Sara Lee started in 2001, in the meat factories in the US. In 2004, Brenda C. Barnes became Chief Operations Officer and later CEO. At that moment, lean and continuous improvement were added as a leading element to the mission of the company. In addition, a company-wide rollout was planned.

There was a desire to develop one common lean-language, and Sara Lee had already good experiences with McKinsey in the US. Therefore, it was decided to involve this consultancy firm worldwide. ‘Three years ago, the lean roll-out wave reached Joure’, says Van Heuvel.

Lean Thinking is certainly not the only instrument for improvement, but Lean is used by Sara Lee as leading method and umbrella, see also the box lean cycle in five steps. Value Stream Mapping (VSM) is applied to identify which steps on the route from raw materials to end products add value, and which don’t.  

‘VSM points us the way’, explains Van Heuvel. ‘The value stream maps are used to detect which things can be improved. To realize those improvements we use a mix of many existing methods, which were often already invented decades ago. One example is the Kaizen-cycle. First, you determine what your customer wants. Next, you measure to what extent those expectations are met, and finally you look for the root cause of problems. That cycle is repeated over and over again.’

Other common methods are 5S, to create well-organized work places, Visual Management, to realize fast feedback, and SMED, to reduce change-over times. ‘In addition, we measure the Overall Equipment Effectiveness (OEE), to trace hidden machine capacity. We also regularly apply Six Sigma, to reduce variation in production processes. Variation is an important source of waste, especially here in Joure.’

Tjark van Heuvel: “Lean is an open concept'
Tjark van Heuvel (on the right): “Lean is an open concept.  To reduce waste we also apply other tools, like Kaizen and Six Sigma”

Waste of talent
Lean defines seven types of waste, such as waiting times and stocks. ‘In addition, there is an eight category, namely waste of talent’, says Van Heuvel. ‘Toyota doesn’t mention this, because it is so logical. Knowledge about the root causes of waste often is plenty available on the shop floor. Therefore it is very important to involve the operators in lean thinking.’

This perfectly fits with the wish of CEO Brenda Barnes, to transform Sara Lee to a more bottom-up driven organization.  Van Heuvel however gives another reason why Lean is so handy as compass and leading method. ‘Ways to improve vary between factories. Lean however is universally applicable, because it focuses on the elimination of non-value adding activities. Such waste can be found everywhere.’

New change managers are educated on-the-job. Preceding the roll-out of Lean in their own factory, they work beside an experienced change manager in another factory. ‘I was trained that way in the Grimbergen-plant in Belgium, where they produce the Senseo coffee pads.’ 

In the beginning of 2006 Van Heuvel returned to Joure, ready to start his change management job there. ‘First, I formed a core-team. This is a multi-disciplinary team, with for example a maintenance manager, a production group leader, a logistic manager and a quality manager. In the beginning, someone of McKinsey was also participating.’
Van Heuvel took two days to explain the basic principles of lean to his team. ‘After that we immediately started to make a Value Stream Map for the production of liquid coffee concentrate. We worked upstream, following the production river from final product to raw materials.’

After approximately two weeks, the existing value stream was mapped, and the biggest wastes identified. ‘It is important not to get bogged down in details. Intermediary stocks were however included in our analysis. In addition, every waste was reduced to financial numbers. Those financial data are useful later, to compare potential improvements with the needed investments.’
Every kind of waste on the VSM was given its own color. ‘For example: stocks are blue, transport is orange and process disruptions are red.’

Dream factory
It seems logical that the next step would be thinking up an improved value stream. However, it is better to wait with that, stresses Van Heuvel:  ‘When you define your improvement goals immediately, there is a risk that you will optimize clumsy processes. Remember that the people in your multidisciplinary team are also responsible in part for the indentified sources of waste. Therefore, they will be inclined to explain why there is no other way to do those things, saying things like “we have to go back and forth with that fork-lift truck”.

Mc Kinsey advised to develop an ideal state Value Stream first, this is a blueprint of a dream factory. ‘We now call this a mind-set event. Every middle manager is allowed to philosophize freely about the ideal situation. Starting point is: When we were allowed to built a complete new factory, what would we do?’
The advantage of this approach is that assumptions in the past, that lead to the current working methods, are no longer taken for granted.

‘Let me give an example. In the past we were short in production capacity, but after a new factory was built in the US, this was no longer the case. The coffee filters were however still filled to the brim, although that reduces the efficiency of the extraction process.’  

There were more of such procedures which were logical at a certain moment in time, but not anymore. The mind-set event gave short shrift with them. ‘During the startup, the new factory in the US had no experience with packaging materials. Therefore, these were send to us, and inspected here. Our VSM showed that a lot of time was wasted while entering the data into our Enterprise Resource Planning system, SAP. Without thinking up an ideal VSM first, this problem would probably have been solved with an investment in extra ICT. Now it turned out that it is much more logical to send the packaging materials directly to the US.’

Packaging line, Sara Lee
Packaging line. Too much variation and disturbances during production resulted in much more stock of end products then necessary.

Future value stream
The ideal VSM does not take into account the limitations of the existing situation. ‘This is done during the third step. At that stage, you try to realize as much as possible from the things in the perfect picture. During this process comparative assessments are common like: When I move these silo’s, our fork-lift trucks have do drive less meters, but will the pros of that be enough to justify the investments.’

The final result is a future VSM, which delivers a maximum value stream, taking into account the existing (financial) barriers. This final picture then becomes the guideline for the improvement program.
Van der Vaart: ‘One of the biggest wastes in Joure turned out to be the relatively high stock of end product. In such a case you start looking for the root cause first. Independent of the type of waste this usually is one of three things: (1) pure waste, in this case that would simply be to much safety stock, (2) not enough production flexibility, or (3) to much variation and disturbances in the production process.’

To much variation
‘Here, the third category turned out to be the root cause’, Van Heuvel adds. ‘There were to much machine-defects. I addition, the quality of the end product varied. In some cases a big batch even had to be rejected. That did not only bring along waste in the form of rework, but it also increased the needed amount of safety stock.’

An improvement program was started, to make the production more reliable within 1 to 1,5 years. The primary aim: A continuous stream of coffee-extracts leaving the factory, well attuned to customer demand, and with as few stock as possible.

There were several causes for the instability of the production, which were dealt with simultaneously, applying various improvement tools. ‘One of the problems was that there were to many equipment failures. Therefore, measurement of the Overall Equipment Effectiveness was started. That makes it possible to detect frequently occurring disturbances, for which countermeasures can be taken.’

‘Another problem was related to the organization structure’, Van der Vaart adds. ‘You should be on guard that a factory doesn’t start to look like a students house. To prevent that, clear agreements are needed, for example about the transfer procedure between shifts.’

The ‘cylinders’ which are used to produce coffee extracts
The ‘cylinders’ which are used to produce coffee extracts.

The extraction process is carried out in pressurized supersized coffeemakers, which are called cylinders.  There is a whole battery of those, so that the extraction process can go on more or less continuously. Coffee is supplied from above, via a silo.

The most remarkable thing was, that the talent of the operators was left unutilized. Those people used to be no more then machine-drivers!.  ‘Like I told earlier, our operators always filled the cylinders to the brim with coffee, to maximize capacity’, says Van Heuvel. ‘Only after a few days, they got feedback. For example like: the yield was low during your shift, did you know that? A typical answer was then: No, how should I? In addition, it was not registered what was done, for example by measuring the amount of coffee added. Therefore the cause of the low yield could not be retrieved.’

Three changes were made. First, it was decided to optimize the extraction process not only on capacity, but also on yield. ‘Now, an operator fills a cylinder with a fixed amount of dry material. This is a varying amount of coffee, since it is a natural product’, explains Van Heuvel.

Second, there is a fast feedback to the operator after the extraction process. ‘A sensor measures the amount of dry matter in the extract. That number, divided by the amount of dry matter in de coffee, is the yield.’

Third, the operator was given the ability to adjust the extraction process. ‘When the coffee is to weak or to strong, the operator can adapt the water flow rate. Of course, only within certain boundaries.’

Production meeting within Sara Lee
Operators indicate with green and red stickers, which things went well or not during their shift

During the extraction, a lot of process variables are recorded automatically. Those data are used to find the root causes of problems later. ‘Besides that, each operator must indicate with green and red stickers on a poster, what went well and what not during their shift. Of course our operators did ask: isn’t that waste of time? However, we think it is very important that they feel it in their gut when something goes wrong, by placing a red sticker.’

Production results are discussed the next morning, usually by a different team. This happens in an area around a coffee machine, hung with posters with red and green stickers. ‘Maybe I am proud the most about this room. Previously, there was only one technician who optimized the extraction process. Now everybody everyday helps to improve!’

Tjark van Heuvel
Tjark van Heuvel:   “To make sure that everyone arrives on time at our production meetings, we use this ribbon”

From flow to pull
Thanks to several counter measures which increased the process stability, a more or less constant flow of coffee-extract now leaves the factory. ‘However, creating flow is not the only aim of lean, in addition you want pull’, says Van der Vaart. ‘Your flow should follow market demand.’

‘Now we have stabilized our value stream, we can start working on that’, adds Van Heuvel. ‘By doing that, our initial goal comes in sight: reducing stock.’

To make the production demand driven, peaks and troughs in the demand should be flattened, to prevent unnecessary disruption of the production process. Within Toyota, this principle is called leveling.
'For each customer, we want to have an amount of stock that is sufficient for x-weeks of supply. Based on that goal, we make a production planning for odd and even weeks. On alternating weeks, we now produce exact the same amount of coffee extracts. Every three months, the planning is adapted when necessary. Besides that, we have reserved 10% of our capacity, to make it possible to cope with unforeseen fluctuations in demand.’

By now, stocks are down with 10%. ‘The fact that we postpone customer-specific labeling until shortly before delivering, contributes to that.’

Thanks to the more or less constant flow, the factory now is much quieter then before, when the production had to be adjusted all the time to prevent shortages. ‘Nevertheless we are now more demand driven, since our throughput time is reduced’, concludes Van Heuvel.

1) Today, Rienk van der Vaart works at energy company RWE.

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