A lean, mean dairy machine

A lean, mean dairy machine

  • Industry Type: Industrial Manufacturing, Food Processing, Dairy
  • Service Area: Advice
  • Date: 25 Jul 2011

Lean production is about applying principles, practices and tools to deliver optimal value for goods and services to the customer. Lean requires less human effort, space, capital and time than traditional mass production.

While Lean has its origins in the car industry, there are many opportunities to apply it within the food industry.  This adaptability stems from core principles of Lean relating to organisation of work, efficiency and elimination of waste.

These core principles include:

  • Specifying value by product family from the standpoint of end consumer.
  • Across the whole value stream, breaking down all steps into value adding steps versus those that only add  cost
  • Creating best flow through to the consumer by tightly sequencing the value adding steps, eliminating waste.
  • Producing as close as possible to the consumer’s pull rate
  • Identifying value streams and repeating the process in a continuous improvement cycle


The Australian dairy industry has seen years of deregulation and consolidation, without a great deal of large capital upgrades or expansions.  Larger organisations have acquired multiple plants and in the short and medium term require large expenditure.  Merely replacing, rebuilding or upgrading the existing processes will not result in long term benefits or world class performance.

Another key factor is that each plant being consolidated will use a wide variant of processes and equipment to produce the same end products.  Simply choosing to implement the most efficient process over the others will not deliver step change improvement.

Now is the time to implement Lean and move towards embedding it in the organisation culture.  Any new facilities or major upgrades should be designed Lean to ensure the greatest benefit potential.

Value Stream Mapping is a useful and powerful tool in Lean for identifying opportunities for significant process improvement.  It identifies the current state of getting a product or service to the end consumer—charting the product flow, information flow and timelines.  It identifies the elements preventing the processes from flowing at their optimum and highlights the ideal future state by minimising, changing or eliminating the non value adding steps.

The difference between the current state map and the future state map is the key reason why the implementation of Lean prior to any major capital expenditures is so critical.

Upgrading or building a new facility based on the current state map versus the future state map will affect:

  • Site layout—product flow and steps will be different and may affect the position and sizes of components including storage tanks, finished goods chillers, equipment layouts etc.  For example, a study of Lean projects conducted between 2003 and 2007 by the Food Chain Centre in the UK, found significant improvement potential in product flows and layouts to reduce unnecessary handling of product and movement of people.
  • Secondary commodity processes—applying Value Stream Mapping to the production of these secondary processes (e.g. UHT plant) will aid the selection, sizing and location of the most appropriate process.  Demand management changes to focus production around the consumer’s pull rate is shown to reduce demand amplification (i.e. while demand from the consumer is relatively stable from week to week, the demand signal further upstream is much more variable under standard demand management models).  This affects the frequency and size of the secondary process runs, which in turn will impact process decisions.  You can proceed with the major project with confidence, without adding in waste.
  • Production line sizing and selection—producing Lean forces the review of changeover times, holding volumes, batch sizes and production planning, which can all impact on equipment selection and sizing.  The UK dairy industry study showed that over 95% of the time from milking to consumer purchase, was spent waiting or in a non value adding step.

Value Stream Mapping will critically challenge your current processes and minimise the non-value adding components resulting in more efficient layouts going forward.


Just like many food industries, the dairy industry has the capacity for generating enormous amounts of data.  There is also a large amount of data relating to legislative requirements, including product traceability, quality and food safety.  While a lot of production data is collected, many organisations lose clarity over which measures are important, especially from a process performance perspective.

A powerful attribute of Lean is that the tools and metrics identify and provide clarity to a few vital measures for any process.  Measures are linked directly to achieving the Lean principles.

Overall Equipment Effectiveness (OEE) is a key metric used in Lean and provides a consistent and simple way to measure effectiveness and maintain continuous improvement.  OEE is not just about how fast or how good the process is, but takes into account a mix of availability, performance and quality.  For example, there is no use running the milk filler at an extra 20 bottles/min to improve performance, when the resultant quality impact is a significant increase in under fill rejects.

The Six Big Losses that the OEE metric seeks to reduce/eliminate also apply strongly to the dairy industry.

Breakdowns Availability Fill pump failure
Setups, adjustment and cleaning Availability CIP time and bottle size changeover
Small stops Performance Bottle jam on filler infeed
Reduced speed Performance Filler wear resulting in under nameplate speeds
Start-up rejects Quality Milk waste/rework
Production rejects Quality Occasional defect caps


While all dairy organisations will have production measures and improvement programs, Lean provides an avenue for simple, clear and direct measures—with specific targeted improvement plans.  Lean tools provide the framework.  Lean metrics provide the feedback and in conjunction with the Lean tools such as Value Stream Mapping, the organisation can strive toward operational excellence.


A major challenge of the dairy industry is the logistics of handling a short shelf life product which is produced daily from a wide region.  Lean offers improvement across the organisation and takes into account logistics as it looks at the end value to the consumer and all the steps in creating this end value—not just the production component.

Lean highlights issues such as demand amplification and the potential benefits of greater vertical cooperation and communication.  Value Stream Mapping of the whole chain provides details of key information elements that should be shared (without duplication) within the chain.  Over-production leads to waste and under-production can lead to failure to meet consumer demand, as large inventories are often not possible due to short shelf life constraints.

One of the key recommendations from the UK Lean Thinking Project was for a greater level of vertical cooperation and information flow.  If a cooperative approach can be achieved, immediate cost savings can be realised—with minimal expenditure.

Lean is a way of thinking and working. It requires top down strategic commitment and support from senior management and implementation across the organisation to achieve the full benefits.

Lean applied to the Australian dairy industry is extremely enticing both for the short and long term growth and sustainability of the industry.

When you are planning your next project and considering a Lean process, contact us for some advice.

About the author
Dennis Stark is a Senior Process Engineer at Wiley and can be contacted on 1300 385 988 or email connect@wiley.com.au.

Further Information
Wiki page on Lean production

Online resource site for Lean Production

On-line resource provides a list of lean manufacturing related terms and definitions.

This article was published in Food & Drink Business Magazine.

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