A) Complete Folder - Cutting Costs Adding Value in Dairy

Welcome

Since deregulation in 1994, the British dairy industry has gone

through a period of rapid structural change. The number of dairy

farmers continues to fall and the ownership of processing facilities is

consolidating.

We want this industry to be strong, able to compete on world markets

and to face a new era brought about by CAP reform and trade

liberalisation.

�We must use de-coupling as a catalyst to drivea culture change in the way that dairy farmersthink about their businesses and the way that theindustry views itself. The initiative by the FoodChain Centre will help that process bydemonstrating the potential benefits that can bederived when dairy farmers, processors andretailers work together.�

TTiimm BBeennnneetttt,, PPrreessiiddeenntt,, NNFFUUCutting Costs - AddingValue in Dairy

June2005

Food Chain Centre at IGD Grange Lane Letchmore Heath Watford Herts WD25 8GD

Tel: 01923 857141 Fax: 01923 852531 Email: [email protected] www.foodchaincentre.com 2

�In the past, our industry has been criticised fortaking a fragmented approach to the challengesit faces. That has changed with the creation ofDairy UK. Dairy UK fully supports this initiativeand has been providing help and advice to theFood Chain Centre from the outset.�

JJiimm BBeegggg,, CChhiieeff EExxeeccuuttiivvee,, DDaaiirryy UUKK

�Government has made it quite clear that theindustry has to resolve its own problems. Theywill not nanny the farming community any longer.Thus there is a real need to foster a new spirit ofco-operation amongst dairy farmers and a newattitude to work with the dairy processors andsupermarkets�.

TTiimm BBrriiggssttoocckkee,, CChhaaiirrmmaann,, RRAABBDDFF

To compete better, the industry will need to be adept at introducing

new products and branding and niche marketing will have their parts

to play.



This Folder focuses on cost-competitiveness. It contains a mix of

material on business improvement and raising profitability

throughout the dairy chain.

The secret is to ‘think lean’ and eliminate waste in the supply chain.

Lean Thinking is a simple philosophy which states that supply chains

should dedicate themselves to satisfying consumers in the most

efficient way possible.

Lean Thinking is not an instant cure and requires hard work and

dedication. It is not revolutionary and is mainly common sense. But

is consistently delivers results.

The Food Chain Centre and the Red Meat Industry Forum (RMIF)

have proved the benefits in red meat where there is a potential for

cost savings of up to 10%.

From the initial chains that we have examined the potential for

significant cost savings in the dairy supply chain through greater

teamwork is already apparent. As a general rule, the more steps in

the chain, the more scope there is for savings.

Initial opportunities for cost-saving improvement that we have seen

include:

! Better feed management can reduce milk production costs forsome farmers;

! Order amplification for some products shows 10 times greatervariability than end consumer demand;

! Less than 4% of activity in some dairy chains is spent on valueadding operations (the rest is spent on non value adding time likesitting in a truck);

! Industry wide analysis has shown that food distribution lorriesspend only 28% of their time on the road and 20% of vehicle milesare empty;

! Retailers lose about 1.5% of their revenue through ‘shrinkage’ thatis theft and damage.



Assuming that these figures prove to be typical, we want to see the

British industry make big inroads into unnecessary cost and put it to

better use improving competitiveness and profitability.

Inside this Folder you will find an explanation of ‘Lean Thinking’, a

list of cost-saving opportunities, ‘best practice’ guidelines and case

studies that show how the theory works in practice.

Over the next 2 years we will build up the evidence by adding further

case studies to the Folder.

Acknowledgement

�In the past there have been clear inequalitieswithin the dairy supply chain which need to beresolved if the industry is to be sustainable andcompetitive in more liberalised marekts. Thismakes the whole of the supply chain mappingwork essential.�

KKeevviinn BBeellllaammyy,, CChhiieeff EExxeeccuuttiivvee,, MMDDCC

We thank the MDC for their assistance in funding this Folder.

Cutting Costs - AddingValue in Dairy

June2005

"Farming and food businesses, like any others,have to be efficient. It means being ruthless incutting out unnecessary cost. Efficient operationis key to the success of any business."

EExxttrraacctt ffrroomm,, FFaarrmmiinngg && FFoooodd - AA SSuussttaaiinnaabblleeFFuuttuurree ((SSiirr DDoonnaalldd CCuurrrryy))

Fresher, Simpler, CloserAn Introduction to Lean Thinking in Dairy

Almost everyone would agree that efficiency is vital for profitability

and this is already a high priority for the food and farming industry.

The dairy sector has been striving to cut costs for many years so what

is the Food Chain Centre doing to help the sector that is new and

different?


June2005



"Lean thinking has been applied in manydifferent industries, helping to lower costs andimprove profits. The three words, 'fresher,simpler, closer', capture the idea of lean thinkingin the food chain."

PPrrooffeessssoorr DDaann JJoonneess,, FFoouunnddiinngg DDiirreeccttoorr ooff tthheeLLeeaann EEnntteerrpprriissee RReesseeaarrcchh CCeennttrree aanndd DDiirreeccttoorr oofftthhee LLeeaann EEnntteerrpprriissee AAccaaddeemmyy

Lean Thinking

Our approach is to test out the ideas and practice behind 'lean

thinking'.

Lean thinking provides a way to do more and more with less and less

- less human effort, less equipment, less time, and less space - while

coming closer and closer to providing consumers with exactly what

they want. In other words, we are focusing on stripping out the

waste from supply chains and focusing on the value.

The approach has been around for some time and is based on

practices first developed in the Japanese motor industry. However,

some of these ideas were borrowed and adapted from food retailing

and so the cycle of ideas continues to turn.

Lean thinking has become widespread in UK manufacturing and

according to a survey by McKinsey it is what sets apart the best

performing manufacturers.



Many companies that have embraced lean thinking have delivered

some dramatic improvements over a three year period including the

following:

! 90% reduction in defects

! 90% reduction in response time to customer orders

! 75% reduction in inventory

! 50% reduction in space

! 50% reduction in variable costs

Most recently the approach has been piloted among companies in the

red meat sector with similar results. That work has shown it is

possible to save at least 10% of the retail value through reductions in

cost and improvements in quality and service.

The Lean Enterprise Research Centre at Cardiff Business School is

world renowned in the application of lean thinking and their work

demonstrates that businesses can definitely use lean thinking to

improve profitability.

But lean thinking is not a quick fix or a "miracle cure". Instead, it

promotes continuous improvement in which businesses constantly

strive for better performance. As with any major initiative, it can only

work with the full support of senior management.

Application to the Dairy sector

Lean thinking may benefit manufacturing and has also been

successfully applied to other sectors including construction,

healthcare and raw materials. But can it help the dairy industry?

The dairy industry provides a wide range of consumer products.



Whole milk

separation cream

Skimmed milk standardisation

churning butter

butter milk

Whey, whole milk, Skim & buttermilk concentrate

whey evaporationevaporation

fermentation

Whey, whole milk, Skim & buttermilk powders

drying

liquid

yogurt

cheese

fermentation

The Food Chain Centre has developed a pilot programme with the

Lean Enterprise Research Centre that will involve examining eight

different dairy chains in detail, from farm to shop or restaurant. The

programme aims to identify where waste lies within the chains and

how the chains can work together to reduce this waste and improve

competitiveness

The programme covers a broad mix of chains including:

! Fresh milk, cheese and desserts

! Retail and catering

! Large and smaller scale companies

! Un-processed and processed products



The dairy sector has some unique features that challenge the lean

approach. These include:

! The natural seasonal variation in milk production which results in

supply and demand imbalance.

! Some products which require a lengthy maturation cycle

! Considerable consolidation in the sector.

! A history of confrontation between different parts of the chain.

! The environmental factor - in that farming also maintains the

countryside and thereby serves a second industry, the tourist or

leisure sector.

But lean thinking is highly adaptable and we are optimistic that our

pilot projects will prove of value to dairy businesses right along the

chain.

Lean Projects

The Cardiff team are not typical consultants and they are not experts

in the dairy sector. But they are expert facilitators; they guide teams

drawn from businesses and help them see the chain in a new light.

Each project starts from a recognisable product that consumers

purchase, for example, fresh milk or cheese. Generally, more than one

business is involved in getting the product to market. We put a team

together drawn from each business and with support from a Cardiff

facilitator draw a 'process map' of the current state of affairs, making

sure to capture what is actually happening ('warts and all') and not

what is supposed to happen.

The chart captures two flows: orders travelling back from consumers

and the product travelling forwards from the raw materials, i.e. from

the farm.

These charts can be very detailed and complicated. Here is a

simplified example, for a cheese processing plant also showing its

links with suppliers and customers.



Supermarket

CheeseStore

SupermarketRDC

DairyFarm

SupermktStore

Ordering

Computer

SupermktHQ

Planning

TransportCompany

MRP

DairyProduct�nControl

Dairy CoHQ

DairyOrder

Process�g

FarmersCoop

Farmplanning

Epos

3 hrs

8 hrs 12 hrs

10 min

10 weeks

5 hrs

12 hours

3 hr

36 hours

Dairy Industry Whole Chain Value Stream MapProduct : Cheese

TIMETotal Time wks11.5

In-plant Time hour56

InventoryTime week11

ValueCreating

Time5 hrs

TransportTime hour16Defects= 1 % Defects = 5% Defects = 2% Defects = 0.5%

Defects = 0.5%

The chart captures some key information:

! Flow of physical goods (in black)

! Flow of information (in red)

! Defect / loss rate

! Value adding time (5 hours to make, cut and pack cheese)

! Total elapsed time (between the delivery of milk and despatch of

the first cheese products)

The Cardiff facilitators then help each project team to investigate

issues, including these:

! Do products flow through the chain as quickly as possible

(allowing time for maturation) or are there unnecessary hold-ups?

! Do some activities add more cost than value? In which case what

can be done about it? In particular, are there activities that add

absolutely no value to the consumer that can just be eliminated?

! Have people learned to live with errors, treating them as inevitable

or are they constantly striving to eliminate them?

! Are the right quality tests in the right place in the chain and are

they working effectively?

! Are the right performance measures in place? How timely are

these measures - do they allow problems to be identified and

solved immediately or do they lag too far behind?



! When problems are identified, are they traced back to their source

and dealt with or do the same faults keep re-occurring?

! Is the right information shared along the chain? Is it accurate and

passed on quickly? How good are the sales forecasts? Do they

help suppliers plan their operations efficiently in advance?

! Are there any ordering and stock holding policies that impose

heavy costs on suppliers? For example, is a smooth pattern of

customer demand converted into a very lumpy pattern of orders?

The team then draws a second flowchart of how they would like the

chain to be in future, a more efficient chain without so much waste or

'leaking of money'. Finally, they draw up an action plan of how to

work in partnership to get there.

Improvement Opportunities

A huge variety of actions can arise from these projects but here are

some common examples drawn from previous work:

! Re-designing the layout of part of a factory or farm.

! Creating a team of engineers and operators to focus on reducing

faults at a particularly troublesome machine or process.

! Extra training to help staff become more versatile.

! Forums for customers and suppliers to work jointly on

improvement projects.

! Agreeing to exchange information that is currently treated as

secret.

! Collecting new performance measures and sharing these more

widely.

! Making better use of information technology.

! Working in partnership, to improve the accuracy of forecasts.

It is impossible to reach perfection in a single bound and so the follow

up to any project with Cardiff is a 'Continuous Improvement Plan'

aiming to revisit the issues and keep improving supply chain

performance.



Our Principles

The approach we are adopting to apply lean thinking in the dairy

sector is underpinned by a number of principles.

1. Think of the dairy process from milk production to consumer

purchase as a Value Chain

Most people are familiar with the term "Food Chain" - the series of

steps from 'farm to fork'. But the Food Chain is also sometimes

described as a Value Chain and this term is used to focus on the

financial equation.

As a product moves along the chain, it incurs cost but also rises in

value. If more value is added than cost, then the product is profitable

to supply. It follows that sustainable profits are achieved both by

maximising value and minimising cost.

All of the stages are inter-dependent (from calving to rearing through

milking to processing, transport, storage and retailing) and our

approach is to examine the whole chain as an opportunity for

improvement and not just the separate parts.

Management effort is traditionally focused down to a single

department or perhaps to a whole business that may produce many

different products. By taking a different view, that of a complete

chain for a particular product, many new improvement opportunities

may arise.

2. Put Consumers First

Value is determined by the consumer. Shoppers are the ones who

make the final decision on value when they select products from the

shelves.

Our second principle therefore is to put consumer needs to the

forefront of our thinking. We need to know what consumers see as

value, to understand what activities in the chain contribute in

delivering this value.



Value can be determined by putting yourself in the position of the

consumer and asking whether you would pay less for the product or

be less satisfied with it if a given step were left out?

Consumers see value in various product attributes. Each consumer

has a personal view of value. For example, some people will pay

more for extra-matured or organic cheese. This creates different

market segments.

3. Work in Partnership

All businesses can benefit if they co-operate in the joint management

of the value chain.

Many improvements can only be made if managers take a fresh look

at the whole chain, work in partnership across traditional boundaries

and commit to sharing the benefits.

Sharing of benefits is vital so that everyone wins (including

consumers), creating enthusiasm for the next round of improvements.

Trust is vital to this process. It can only be built gradually but can be

betrayed and destroyed in an instant.

4. Systematically Identify and Reduce Every Form of Waste

Lean thinking helps to track down the many ways that money is

currently wasted in the chain and points the way towards solutions.

A separate section in this pack itemises a long list of wastes in dairy

chains.

We define waste as any activity that adds costs without value. The

lean approach zooms in on wasteful activities and considers how to

reduce or eliminate the waste, preferably without any major

expenditure.

This is a continuous task, prioritising improvements and working

towards the hypothetical ideal of a completely efficient chain without

any form of waste.



Conclusion

There is nothing revolutionary or fiendishly clever about lean

thinking. It's really just the application of common sense. So why

can it be so powerful in practice? Because most people have to focus

on the day to day operations and rarely have the chance to take a step

back, re-assess the whole chain, apply some simple analysis, ask some

probing questions and consider 'is there a better way to run all of

this?'

When people follow this approach it is encouraging just how much

scope they normally find for improvement, even in the best run

businesses.

"We don't believe in saving cost by cuttingcorners, reducing quality, damaging theenvironment or exploiting any members of thechain. There are better ways to find savingsthrough the reduction of waste."

JJoonn WWoooollvveenn,, FFoooodd CChhaaiinn CCeennttrree DDiirreeccttoorr

So finally, a reminder as to why we call this approach 'Fresher,

Simpler, Closer'.

! Fresher because an efficient chain is fast-moving so that products

reach the shelf in peak condition.

! Simpler because an efficient chain is streamlined without any

unnecessary activities.

! Closer because an efficient chain in many cases reduces the

distance product is transported.

A fresher, simpler, closer dairy chain provides a better service for

consumers and can deliver higher profits for everyone concerned.

Where to Find Savingsin the Dairy Chain

Even the most streamlined dairy chains involve a large number of

activities in order to convert fresh milk into a range of dairy products

delivered to consumers. With such complexity involved, inevitably

the chain is not 100% efficient.

Inefficiency or waste is part of any supply chain. For example, about

a quarter of the UK's water supply is lost through leakage somewhere

in the system. For dairy, the leakage is financial and drains the

sector's profitability.

We use the term 'waste' in its broadest sense. We define it as the

excess use of any resource beyond that strictly necessary to create and

deliver products demanded by consumers. It applies to excess

materials, machines, land and labour.

Total wastage in dairy supply chains is extremely difficult to measure

because it stems from many different issues and spreads throughout

the diverse industry.

However, in our work on red meat we have found waste through the

chain equivalent to at least 10% of selling price.

Given that 'every problem also represents an opportunity', we view

this as encouraging. It demonstrates the scope to reduce costs and

raise profits if we can find new ways to eliminate waste, in particular

by working better together.

By combining observations drawn from Cardiff Business School's

initial projects, with the comments of various industry experts, we

have compiled an initial list of the 'top ten' supply chain

improvement opportunities for dairy.


June2005



Ten Improvement Opportunities for Dairy

1. Balance product supply to end usage rates

2. Improve product quality

3. Streamline administration

4. Better management of forecasts

5. Reduce handling and movement

6. Improve layout of facilities

7. Optimise the use of equipment and inputs

8. Reduce the number of physical faults

9. Improve staff productivity

10.Reduce product wastage

These opportunities apply to the range of products produced by the

dairy chain as a whole.

Of course these issues are not new to the industry. Many solutions

have been tried and applied and many improvements have already

been made.

Nonetheless, significant waste still exists and new solutions are

needed to maintain progress. We contend that 'lean thinking' can

bring new momentum to these issues through the following

principles:

! Treat dairy as a Value Chain

! Take a 'consumer first' attitude at all points in the chain

! Work in partnership, sharing information and pooling expertise

! Systematically identify and eliminate the root causes of waste

! Establish 'whole chain' KPI's to monitor performance

The top ten list is in a rough priority order for the dairy industry and

chain as a whole, although this is only an estimate and certainly

varies from business to business.



Where is Waste Commonly found in the Chain?

Here we consider in more detail, where waste occurs in the chain or

to express this more positively, the opportunities to improve. These

are grouped under our ten areas of opportunity and then divided by

farm, processor, distribution and retailer.

Of course, chains may also involve other participants including

agents, auctioneers, traders, wholesalers, caterers and small retailers.

We will include comments on these at a later stage, although some of

the points listed here under other sectors will already be relevant.

This purpose of this section is to highlight problems/opportunities

rather than offer solutions. Elsewhere in the pack we provide case

studies that show how some of these problems can be tackled. This

will be a growing collection and new updates for the Folder will be

available at regular intervals.

In producing this Improvement Opportunities list we do not mean to

accuse the industry of incompetence or complacency. The modern

dairy chain is professional and sophisticated. It exhibits many

leading edge practices from which other sectors could learn. And it is

working hard to make further improvements.

Rather, the list reflects the sheer difficulty of efficiently converting a

naturally variable raw material (milk) via a complicated production

process into a whole series of end products with a limited shelf life

amidst fluctuating consumer demand.

Some of the issues listed are company specific and can be dealt with

internally. Others are generic industry issues, best dealt with

collectively for example through industry bodies. But many are inter

company or supply chain issues that can only be addressed through

cooperation between supply chain partners.

Actions at one stage of the chain can inadvertently create waste for

others. Interfaces are also the source of much waste. That is why we

believe that a greater spirit of teamwork between parties in the chain

is now essential for the next phase of improvement.



In producing this section, we have estimated the extent of waste

where possible but this is not easy. It varies greatly from business to

business. Some of the problems are not accurately measured. In

some cases, for some businesses, they may not occur at all.

You will probably be familiar with most of these issues and how they

affect your own sector. However, you may be less familiar with their

impact on others in the chain and we hope that this brief analysis

gives you a broader understanding.



Dairy Farms Livestock farmers must cope with three drivers of supply variability: those caused by 1. geography (e.g.climate, soil), 2. biology (e.g. genetics and disease) and 3. stock management (e.g. natural calving cycles,production system, housing conditions, feed and husbandry). It is therefore a complex problem tomanage.

The production cycle provides an extra difficulty. There can be a delay between making a change (e.g. tothe feed regime) and seeing the results in milk output.

Each production system poses a different challenge. It is more difficult to deliver standard products fromthe more extensive systems in which animals have greater choice in exercise and food. However, theseregimes offer other benefits beyond standardisation.

Nonetheless all dairy farms, whatever their production system and location, have some scope to level outmilk supply.

Processor Dairy processors, like most factories, run most smoothly and efficiently when their inputs (milk) areconsistent and as level as possible.

Processors prefer all milk in each delivered batch to be as close as possible to the target specification butin practice, there is often variation.

Variability can also be the root cause of mistrust between farmers and processors because it prompts theneed for an authentication system to determine price. If this is not perceived as accurate andindependent, it can be a regular source of dispute.

Retailer Retailers can help to reduce demand variability in the chain by looking to smooth spikes in order profiles.It is also important for the retailer to pass on the true demand rate upstream through the chain ratherthan demands that have been modified.

1. Balance product supply to end usage

Balancing the volume of supply across the whole of the supply chain

to the end demand rate can provide significant cost reduction

opportunities. An understanding of the true rate of end-user demand

is essential, not just an understanding of the demand for the next link

in the chain. Where operations across the chain are not aligned to this

true demand, considerable costs are introduced in terms of high

inventory levels, excess transportation, excess capacity, high levels of

wastage or production of products that are inappropriate in terms of

end-consumer demand patterns.

For example, the seasonal flush of milk can cause problems and lead

to lower end values through the production of skimmed milk powder.



2. Improve product quality

Quality is subjective and depends ultimately on consumerperceptions. Different consumers express different preferences andthese also vary on different occasions. The result is a series ofdifferentiated markets for dairy, for example, skimmed, semi-skimmed and whole milk.

Each market has its own requirements. Success therefore, is not justabout reaching the highest quality standard possible but also aboutachieving the target standard every time.

Quality and safety inspection is necessary at various stages of thedairy chain. Inspection costs occur both for legal (food safety) andcommercial (quality control) reasons and have increased in recentyears.

An example of rejection is sub standard packaging.

Various types of quality problem can exist:

! Where milk does not achieve its hygiene quality.

! Where the fat and/or protein content of milk is below the ideallevels for the end product, for example cheese.

! Where a problem arises that effects quality after grading, i.e.during processing, distribution or retailing.

! Where a problem is not detected and results in a dissatisfiedconsumer and potentially a complaint.

The sooner an issue is detected and resolved the lower the cost. If aquality problem is undetected and the faulty product continuesthrough the chain, then the cost begins to multiply. According to AVFeigenbaum, in his seminal book for quality professionals 'TotalQuality Control', as a rule of thumb, for each stage in the chain that aquality problem remains undetected, the cost of the fault increasesten-fold!



Dairy Farms Producing milk to the specification required by the market is a constant challenge.

Many farmers do not receive the feedback they need from their processor/retailer to improveperformance.

Sickness in animals is a regular problem, for example mastitis. Treating sick animals is expensive and 'fallenstock' is an increasing cost burden to farmers.

Processor Processors inspect carefully for quality throughout their plant. For products that fall outside of the regularcustomer's specification, other, usually lower price markets need to be found.

Quality depends on the 'raw material' supplied by the farmer but is also affected by the practices withinthe processor. Problems in any of these areas can cause quality faults. Product quality should also focuson providing appropriate packaging and labelling without faults.

If major faults are missed and only picked up by the retailer or consumer, then the processor is normallyforced to bear the costs of handling the complaint.

Distribution Dairy products need to be chilled throughout the chain and if there are any major temperature controlfaults, all of the product involved must be discarded.

Temperature control is a particular challenge for home deliveries.

Retailer Shoppers make a quality check of products in-store. Unappetising products may be left unsold and mustbe disposed of.

If below-par products do reach the home they are likely to cause dissatisfaction. Disappointed consumersmay shop elsewhere next time or buy less of the product in future.

3. Streamline administration

No business can operate without paperwork and yet administration

adds little or no value to the product in the consumer's eyes. So of

course the less time needed to complete administrative tasks the

better.

One of the great challenges for any supply chain is to eliminate all

administrative mistakes. These are often the root cause of physical

errors. Problems particularly arise around boundaries, between

departments and especially between companies where there is so

much scope for miscommunication and misunderstanding. Examples

include order, invoice, delivery note, technical information and

weighing errors.

The more times that information is handled and manipulated by

different people, the more likely are errors - the 'Chinese whisper'

effect. A classic example of this is known as 'demand amplification'.

This occurs when small changes in consumer demand are

progressively amplified or exaggerated as orders are passed from one

company to the next along a supply chain.

Raising quality and improving quality control can therefore increase

sales value and volume and reduce rejection and rework costs.



One good test of administrative systems is the amount of inventory in

the chain. If communication is poor and errors are common, then

companies hold high levels of stock to keep as a buffer against

problems.

Streamlining and error-proofing administration can therefore

substantially reduce costs.

Dairy Farms Livestock farmers wrestle with a great deal of administration and the information demands upon them arerarely joined up. For no fault of their own therefore, farmers waste time duplicating paperwork. Anymistakes in completing official forms can be devastating to their cash flow.

The wrong planning and marketing decisions can make a big difference to farm income.

Processor Similar to farmers, processors have an increasing administrative burden e.g. to meet hygiene requirements.

Good planning is essential to the efficient running of a processor. If the supply of milk is available,equipment is running smoothly, the full complement of staff is on site and the customer order list is fixed,then planning is reasonably simple. However, whenever a problem occurs in any of these areas, planningbecomes a major challenge.

In particular, last minute changes to orders from the customer can be very costly. Processors may need tokeep spare people on standby, to cope with late changes.

Distribution Even where dairy products have a short life, inventory can accumulate between the processor and retailer.In our observation, 3 days worth of stock is not unusual and for longer life products, stocks can be greaterthan 10 days.

Today's supply chain is increasingly information driven and large volumes of data flow automaticallyparticularly between retailers and their suppliers. However, as with any information system, data accuracyis critical and 100% accuracy is extremely difficult to achieve. Data errors can result in physical problemssuch as the wrong quantity of the wrong products arriving in the wrong place at the wrong time.

If products are over-ordered, they cause a stockpile and may need to be heavily discounted to clear thestock.

Retailer A critical challenge at shop level is to keep exactly the right quantity in stock. Too little stock results ingaps on shelf and disappointed customers. Too much creates a surplus that must be marked down inprice or even discarded.

Problems of shortage or surplus can arise from inaccurate sales forecasts or from problems at any stage ofthe supply chain.

Special promotions (e.g. 'buy one - get one free') are the most difficult to forecast accurately. Competitorpromotions also have a major effect on sales.

One source of error is scanning at the till. If a product has an incorrect barcode or is not scanned correctlythen the retailer's stock records become inaccurate and the wrong product is re-ordered.



4. Improve the Management of Forecasts in the Chain

Planning in dairy chains must inevitably be based on forecasts of

requirements.

This is because there are long lead times in the breeding and rearing

of dairy cattle and in the production of some dairy products

particularly cheese with its long maturation cycles.

Evidence suggests that in many chains a multiplicity of forecasts are

produced by different companies and departments along the chain.

These forecasts are rarely consistent with each other and quite often

are a poor predictor of the demand that eventually occurs.

Creating many forecasts is in itself a waste and can lead to further

administrative waste as staff try to reconcile conflicting predictions.

It can also mean that sometimes forecasts are ignored because of the

inconsistency.

Ideally each value chain should have one forecast of demand that is

agreed by and used by all partners in the chain as a basis for

planning.

Farmer Farmers need long term forecasts of milk requirements from the processors in order to plan herd sizes andmake capital investment decisions.

Farmers need to provide regular forecasts of expected milk availability both in the short and long term inorder to assist dairies in their capacity and resource planning.

Processor As processors are the producer of the finished product it is important for them to work in closeconjunction with the retailer to develop the one key demand forecast for the chain based on endconsumer demand.

More consistent forecasting will permit better resource planning and inventory management in production.

However processors should strive towards a lean 'Pull' system in which they only make what the customeractually demands on a just in time basis. Movement to a 'make to order' system and away from a 'maketo stock' system will permit processors to become steadily less dependant on forecasts which in practiceare inevitably inaccurate.

Retailer Forecasting can be particularly difficult for dairy products which are affected by the weather for sales.Forecasts are often changed at short notice, causing a problem for suppliers who may need to providelarge quantities at very short notice.

Special promotions (e.g. 'buy one - get one free') are the most difficult to forecast accurately. Competitorpromotions also have a major effect on sales.



5. Reduce handling and movement

Each time the product is handled or moved, it adds cost but does not

always add value. It can also impair quality. One of the most

difficult challenges of supply chain management in any industry is to

minimise handling and movement and this is particularly true for

milk in which production (farming) is so widely dispersed.

Reducing handling and movement can save costs both directly

(through cheaper distribution) and indirectly (by reducing quality

problems).

Dairy Farms The efficiency of milk collection has been an issue from the time of the Milk Marketing Board. In todaysenvironment competing milk processors or farmers cooperatives typically organise their own milkcollection.

We believe that each organisation needs regularly to review the efficiency of its milk collection operations.The use of modern computerised vehicle routing and scheduling systems offers the potential to reduce theoperating costs of tanker fleets or reduce the number of vehicles required and the times they pass on thesame lane.

There may also be opportunities for rival companies to consider cooperation in milk collection without lossof competitive advantage

Processor Dairy processing plants operate as a flow line in which product is immediately passed from one workstation to the next minimising handling and movement. However, later in the process there are variousways in which flow can be disrupted including:

! Packing lines interrupted by equipment breakdowns, low running speeds or defective sealing

! Complex conveyor layouts in retail packing and labelling areas that result in extra handling

! Make-to-stock policies where products are multiple handled into and out of storage points

Extra distribution cost arises if the processing and retail packing plants are split over more than one site,particularly if they are far apart.

Distribution Distribution accounts for 12-15% of total costs in most food chains. Total mileage throughout a completechain such as dairy can be considerable.

On a micro scale - within each warehouse, products may be handled several times as they are unloaded,repackaged, put on to and taken off storage racks and loaded on to vehicles.

Increasingly, transit packaging is needed between each point of the chain beyond the processor.

For transporting products to shops, products are typically packed in cases and then loaded on to pallets.These might be shrink-wrapped for protection. All of these materials and activities add cost.

Retailer In store handling is labour intensive and there can be several steps between unloading a delivery vehicleand placing products on shelf. Tesco calculated that the last 50 yards from delivery vehicle to shelfaccounted for 48% of its distribution costs and this is probably typical of most retailers. Cost addingactivities can include:

! Checking the paperwork

! Removing shrink wrap

! Taking to a back room store

! Moving to shelf

! Unloading the case

! Returning or disposing of the case



6. Improve layout

Even when staff and equipment are working constantly they may not

be entirely productive. Less than ideal layouts can cause people,

products and vehicles to waste time moving unnecessarily. Inefficient

layout is a constant time-stealer that can add up to a great amount of

wasted effort during the course of a year. Without anyone fully

realising it, inefficiencies can become regarded as the norm.

Changing the layout can improve both staff and equipment

productivity and thereby reduce costs and increase capacity.

Dairy Farms Road networks, historical inheritances, tenancy agreements or impositions from planning authorities canadversely affect farm layout.

At the micro level the layout of farm yard and milking facilities can add unnecessary time and cost to dailymilking and feeding routines

Processor Factories that have evolved over many years often have layout problems because new elements have been'bolted on' wherever space is available.

Conveyors can be a source of waste. They can occupy a great deal of space and when they break down, alarge proportion of the plant can be disrupted. They can also slow or unbalance the pace of theproduction process

Distribution As with a factory, warehouses and distribution networks can grow in an ad hoc way. The wrong layoutreduces productivity in the warehouse as staff and forklift trucks make longer journeys than necessary.

Retailer An unhelpful store layout can increase the average shopping time for customers. The same applies toeach individual counter. A poor layout can create the following problems for shoppers:

! Taking a long time to find products.

! Not finding the products at all (and so the shop loses a sale).

! Taking a long time to select products because the display does not help to make comparisons.

7. Optimise the use of equipment and inputs

Over-investment in capital is another potential source of waste. It can

also be inefficient to over utilise an asset, when not required. For

example, inventory might expand to fill the space available in a

warehouse.

For farmers, under-use of inputs can cause poor volume yields and

reduced milk quality, whereas over-use results in excessive costs that

are not justified by higher outputs.

Optimising the use of land, equipment and inputs therefore makes a

big difference to the business bottom line.



Dairy Farms Over-investment can include owning equipment that is used only rarely instead of sub-contracting orjoining a machinery pool.

Under-investment can include postponing the renewal of equipment but paying for this through lowproductivity and high repair bills.

For dairy farmers, the over or under use of inputs might include:

! Animal health products

! Fertiliser for pasture

! Feed specification and rations to optimise output and quality per herd

Processor Machines in a factory can become idle for various reasons:

! No orders to work on (lack of sales).

! No milk or packaging available to work on (supply problem).

! Machine broken down or running too slowly.

! No qualified staff available to operate the equipment.

! Equipment taken down for routine maintenance.

! Bottleneck elsewhere in the plant.

Most processing plants have bottlenecks that constrain output. Seasonality and weekly cycles can result indifferent bottlenecks arising at different times.

Distribution Distribution assets can be under-utilised owing to:

! Vehicles not fully loaded.

! Delays in loading vehicles.

! Long journey times because of delays or bad route planning.

! Delays at the destination.

! Problems in unloading, e.g. because of incorrect paperwork.

! Empty vehicle on the return journey.

! Vehicles sitting idle.

! Poor fuel consumption.

There are many root causes behind these problems, for example:

! Pack sizes vary and do not always fit neatly into a crate for transportation.

! Traffic problems are unpredictable and cause delays.

! Vehicles are assigned delivery slots at the retailer's warehouse. If they miss that slot, it can be a longwait before they can be attended to and unloaded.

Retailer Prime retail space is expensive and so empty shelves are a waste of this asset.



8. Reduce the number of physical faults

Physical faults are another source of waste, especially if they are

regular and systematic.

Reducing physical faults is therefore another substantial opportunity

to cut costs.

Dairy Farms On livestock farms physical faults might include:

! Breakdown of machinery.

! Feed ration errors.

! Ineffective breeding.

Processor Machine faults are a problem for any manufacturing process. In a food plant, machines operate at a highspeed and come under heavy mechanical stress triggering problems.

Other physical faults can include:

! Incorrect quantities or wrong products delivered to next link in the chain

! Damaged packaging or labels

Distribution A common warehousing problem is the placing or collection of products from the wrong place. This iscalled a 'mis-pick' and causes delivery of the wrong products to stores.

Errors may also occur with stock rotation. This occurs if products with short shelf life are left in stock.

Retailer Similar problems to the warehouse can arise in a shop's backroom storage. Stock rotation is a particularproblem in store because many shoppers pick from the back of shelf to take the freshest availableproduct.

Other potential faults in store include:

! Displaying products incorrectly, e.g. in the wrong shelf position.

! Failing to notice that a shelf is empty and so missing the opportunity to restock from the backroomstore.



Dairy Farms Most farms now operate with very few people and are concerned more with over rather than under-working of staff. Nevertheless most parlours need people who are either expensive or difficult to recruitparticularly because the hours involved are both long and anti-social.

Seasonality of workload can result in peaks and troughs. If the right balance is not achieved of fullyemployed/temporary/contract labour then farms can either overspend or under-perform.

Processor Dairy processing plants operate like many other factories as a production line. Starting with fresh milk atone end and finishing with a series of packed products at the other, there is a series of cleaning, packingand inspection stages. The plant aims to keep a steady flow with every stage working at the same speed.

To achieve this there must be a 'pace setting' process on the line to ensure a constant cycle time.Furthermore, the line should be balanced, in which the task of every operator takes the length of the cycletime. If the line is out of balance then everyone is reduced to the pace of the slowest operator.

Staff recruitment and retention is a particular challenge for the sector and a shortage of staff can constrainoutput.

Particular problems arise if staff are not multi-skilled. So for example, if one operator is absent then thesubstitute may be less effective.

A major cost for processors can be the need to keep spare capacity (both equipment and people) to copewith very short notice requests from customers.

Distribution Staff scheduling is an important part of running an efficient warehouse and vehicle fleet. Ineffectivescheduling results in low staff productivity.

Retailer Staff scheduling is one of the store manager's main tasks. It is a constant challenge to deploy staff toprevent queues at the checkouts.

However, this must be balanced by the need to keep the shelves full and if staff are not available for thistask, sales are lost.

9. Improve staff productivity

People are a critical and expensive resource in any chain and it is a

constant challenge to keep them fully productive.

Raising staff productivity reduces costs and can increase output.



10. Reduce product wastage and damage

Some products are never sold because they are lost, damaged or

stolen. Retailers and manufacturers refer to this as "shrinkage". There

is also a percentage of milk which is never turned into saleable

products due to wastage during milking, transportation or processing

stages.

Reducing damage and wastage has a very direct impact on the

bottom line.

Dairy Farms There is a whole host of relatively minor problems at farm level ranging from criminal activity through tostorm damage and casualty livestock.

There is evidence to suggest that milk is being lost in transit through residues in storage tanks, vehiclesand pumps.

Processor Wastage at the processing plant can be seen in the following forms:-

! Spillage particularly on to the floor

! Residues left in pipes, tanks

! Residues left from changeover procedures, line clean downs

! Rejects from production processes that cannot be reclaimed into non-premium product

An ECR Europe study found that stock loss for all food & grocery manufacturers averaged 0.6%

Distribution Every time a product is handled, there is an opportunity for damage, especially to the packaging. AnAmerican study by GMA found that 0.6% of all products supplied by manufacturers were rejected asdamaged by retailers.

Theft is also a problem in warehouses.

Retailer The ECR Europe study found that stock loss for retailers averaged 1.75% for all products. Of this, 37%was caused by shoplifting, 24% by staff theft, 12% by supplier fraud and 24% by process failures.

A further proportion of products is damaged in-store, either by staff or by customers. The GMA Americanstudy found that an average of 1% of all products on-shelf is un-saleable.



Improvement Checklist

On the next page we offer you two pro-formas to help your business

to assess opportunities across the ten improvement areas. We suggest

it be used as follows:

1. In the Waste Checklist, identify major costs to your business

stemming from each of the ten issues. You may need to collect

some new measurements to do this accurately.

2. Prioritise by selecting your five most expensive problems.

Transfer these to the Priority Problem List.

3. For each of the priority problems, identify the root cause. Make

sure you trace the problem back to its true root, perhaps by using

the 'several whys' technique. This is where you repeatedly ask

why a problem occurs, to remove each 'layer of the onion' until

you reach the heart of the matter. In many cases you will find that

the root cause lies outside of your own business.

4. You will be left with a list of top priority issues that should

become the focus of your improvement strategy.

You can tackle this exercise at varying levels of detail, from a quick

and simple assessment to a very thorough survey.

The exercise is just the first stage of improvement - identifying your

priority problems. Of course you will then need to move on and

develop solutions.

Elsewhere in the pack we provide guidelines and case studies to

suggest possible solutions. This will be a growing collection as we

develop our ideas, test our recommendations and identify further

examples of best practice.



Waste Checklist

Waste in Your Business

Balance product supplywith end user demand

Product Quality

Administration

Improve forecastmanagement

Handling and Movement

Layout

Land, Equipment andInputs

Physical Faults

Staff

Wastage and Damage



Priority Problem List

Problem Cost Root Cause

1

2

3

4

5

"If you don't measure the process you cannotimprove it"

MMaassaaaakkii IImmaaii,, PPrreessiiddeenntt,, KKaaiizzeenn IInnssttiittuuttee

Are You Measuring Up?

Choosing what to measure is one of the most important decisions that

any business takes. Getting the right measures in place is an essential

part of driving improvement and increasing profits. Equally, sharing

performance measurements is vital to promote improvement

throughout a chain.

In this section we provide some general principles of measurement,

recommend new measures for the dairy industry and explain why

measuring in partnership is critical to success.

Principles of Performance Measurement

Business performance measurement has become a well studied

subject by academics as they seek to understand which practices work

and which ones do not. Some general principles about measurement

have emerged and we discuss these here.

If you are certain that you already understand them, then jump to the

next section on measures for dairy.

Most of the principles are fairly obvious and yet challenging to

implement. Many organisations have problems in this regard and it

takes strict discipline to get it regularly right.

Best Practice in Performance Measurement

1. Make sure your measures fit your business objectives

2. Choose a Vital Few measures

3. Make the data as current as possible

4. Use Exception Reporting

5. Make the measures visible

6. Act quickly on what the measures say


June2005



1. Make sure your measures fit your business objectives

"Examples abound of organisations that haveintroduced performance measures that quitesimply drive entirely the wrong behaviours."

NNeeeellyy,, AAddaammss aanndd KKeennnneerrlleeyy,, TThhee PPeerrffoorrmmaanncceePPrriissmm

Each major objective of the business should have a measure attached

to it. But according to measurement experts, many people fall in to

the trap of measuring what's easy to collect rather than what's most

important.

"A major cause of companies getting intotrouble is the tendency to accept simplisticnotions in evaluating performance � the generaltendency is to evaluate manufacturing primarilyon the basis of cost and efficiency. There aremany more criteria to judge performance. "

WW.. SSkkiinnnneerr,, TThhee DDeecclliinnee,, FFaallll aanndd RReenneewwaall ooffMMaannuuffaaccttuurriinngg

One variation of this trap is to focus on financial results to the

exclusion of all other aspects. Finances are critically important of

course, but they only measure historical results and show the impact

of decisions that were made some time ago.

All parts of the chain should adopt a 'balanced scorecard' type of

approach considering their customers, operations and people as the

main driving forces behind business performance. Businesses should

collect forward-looking measures based on these perspectives.



2. Choose a Vital Few measures

"We had so many damn numbers in so manydamn folders, that no one was looking at them.But no one would admit it. Everyone just bluffedtheir way through meetings, pretending to befamiliar with every detail."

RRiiccaarrddoo SSeemmlleerr,, CCEEOO ooff SSeemmccoo

With performance measures, there's a tendency to keep adding more

until you create an avalanche of figures. Critical information is then

swamped by irrelevant data.

Some measures take a great deal of resource to produce but are never

applied to any useful purpose and only exist because 'they've always

been collected'. So it is a good idea to have an occasional cull of

outdated measures.

However, in business, there are many things that genuinely deserve

to be measured. So it is also important to prioritise, raising a 'Vital

Few' measures to prominence above the others. These are the

measures on which the future of the company critically depends.

One candidate as a vital measure for any business is safety both for

the product and for staff. Studies show that a good safety record is

usually an indicator of a successful business. Dairy has high

standards in product safety due to stringent HACCP (Hazard

Analysis Critical Control Point) procedures. Operator safety is a

separate challenge and is not just about serious accidents. It is also

important to measure near misses and minor accidents.

3. Make the data as current as possible

Information is degradable. Every delay between recording data and

presenting it as a performance measure reduces its value. It puts a

longer distance between any problem and the possibility of remedial

action.

Ideally, measures should be in 'real time', i.e. recording events as they

happen.



4. Use Exception Reporting

The main principle of Exception Reporting is to set minimum and

maximum acceptable limits for each measure. When performance

falls outside of those limits, it should activate a 'red flag', in other

words trigger management attention.

The vital few measures are usually monitored in detail. Exception

reports are particularly valuable for the less vital measures that can

become critical if there is a major problem. They ensure that

problems are raised to attention whilst preventing managers getting

bogged down in detail.

5. Make the measures visible

Sometimes, important measures are buried away in the desk of a

senior manager or kept only in 'cyberspace' on a computer system.

But the more people that see a measure and the more often they see it,

the more likely they are to act upon it.

If a measure is displayed prominently and employees see it regularly,

it reinforces the measure's importance. Again, the vital few measures

should always stand out from the rest.

Although different people prefer to see figures presented in different

ways, most people respond best to graphics, such as charts. Simple

techniques, such as colouring a graph in red when the numbers are

falling, help to clarify what is actually happening to the measure.

6. Act quickly on what the measures say

This is the most obvious rule of all and yet one of the most difficult to

apply. Whenever there's a red flag, signalling an unacceptable

performance, it should generate an immediate response.

You may wish to test your own business against each of these

principles. Measurement systems are difficult to get exactly right, so

it is likely you will find some weaknesses if you probe deeply

enough.



Measures for the Dairy Chain

The choice of 'vital few measures' depends on circumstances but if we

apply lean thinking to the dairy chain then some strong candidates

emerge.

We believe that the following areas are or should be major priorities

for the dairy chain. If so, then they each should be measured.

! Consumer Satisfaction

! On Shelf Availability

! Milk and Product Quality

! Demand Amplification

! Equipment Effectiveness

Earlier we mentioned safety and this is another priority measure.

These are our general recommendations for the dairy industry.

However, each business should determine its own set of vital few

measures to help control and improve quality, cost and service.

Below we look at each of our recommendations in turn.

1. Consumer Satisfaction

Consumers want excellent products at reasonable prices. Every time

they make a purchase in store, they cast an 'economic vote'. If they

are satisfied, they buy more.

So the 'acid test' measure of consumer satisfaction is sales and

particularly repeat sales.

Everyone in the chain has a shared interest in satisfying consumers

and generating sales. It is a vital measure that is widely recognised,

shared and acted upon.



The opposite side of the coin is dissatisfaction. Retailers normally

measure this by the number of complaints, e.g. as a percentage of

total sales. When the number exceeds a particular limit, this triggers

an exception report and they then share the issue with suppliers.

Ideally, the root cause of the problem is then investigated and

rectified.

However, most dissatisfied customers do not complain and formal

complaints are only the tip of the iceberg. Detailed consumer

research is needed to gain a more in-depth picture.

Satisfaction is a moving target and what satisfies consumers today,

may not do so tomorrow. Again, various consumer research

techniques can be used to forecast consumer needs in the future.

2. On Shelf Availability

When products are unavailable in store the result is a loss of sales,

which hurts everyone in the chain. Even worse, some consumers will

substitute for another product instead and this could change their

long-term consumption pattern.

Recent research by IGD on the average out of stock rate for all

products in supermarkets showed that on shelf availability for dairy

products fell into the range 95% - 97%. In other words dairy products

are not available to shoppers for a proportion of shopping trips.

Faced with non-availability, according to IGD research in the UK, 37%

of shoppers go elsewhere to another store, 35% substitute and buy a

different product, whilst 28% of shoppers delay or forfeit the

purchase.

To improve this area, the first priority is an accurate estimate of

availability on shelf.

Availability % = Number of Hours Product is Available on Shelf per Week x 100

Total Store Opening Hours in Week



Unfortunately, this could only be recorded completely accurately by

maintaining a constant watch on every shelf. At some future stage,

electronic tags may make this possible but for the time being, a

method of estimation is needed.

There are two alternative approaches. The first is a 'mystery shopper'

survey, in which researchers armed with a shopping list, record the

products that they cannot find in store. Surveys are taken regularly to

establish the % of occasions on which each product was unavailable.

They should be taken at varying times of day and week to achieve a

representative mix.

The second approach is to study the checkout sales (EPoS) data. If a

popular product remains unsold over a longish period, it suggests it

was unavailable. Statistical analysis can therefore be used to estimate

availability. This method can be applied every day at every store but

is only accurate for fast selling products.

So the first stage is measuring the scale of the problem. The next is to

understand the root causes which could be anywhere in the chain.

On an occasional basis, researchers can follow an audit trail for

sample products. Working backwards from an empty shelf they can

explore the reasons, beginning in-store and if necessary, following the

trail back to the distribution centre and supplier.

However, it is impractical to do this constantly and so control points

are needed to measure service at each link in the chain.

Normally a supplier and customer (e.g. retailer) each develop their

own measure of service and commonly these differ substantially.

Generally, customers apply a stricter definition of on-time delivery

and suppliers sometimes kid themselves that they have satisfied

customers when they don't.

The toughest standard for measuring service is Quality On Time In

Full or QOTIF.

QOTIF% = Number of perfect deliveries (on schedule, complete, no quality faults) x 100

Total number of deliveries



A regular monitor of service through the chain reveals the weak

points. Again, exceptional service problems should be traced to their

root cause, e.g. a forecasting, quality control or handling problem.

This should be used to focus improvement activity.

One method of improving service and availability is to hold more

stock but this ties up cash in working capital and can result in unsold

products that pass their 'sell-by' date.

So measures of availability should be balanced with stockholding and

waste from discarded products plus price marking down for short life

reasons.

Waste % = (Units Disposed + Units Reduced) x 100

Total Units Sold

(Units Reduced = No. units discounted x discount %)

Availability/Waste Ratio = Availability %

Waste %

The ideal is 100% availability and 0% disposals/markdowns but this

requires perfection in forecasting and supply.

3. Milk and Product Quality

A general way of measuring the success rate in meeting specification

is Right First Time. This is simply:

Right First Time = Quantity of non-defective premium units

Total quantity of units supplied



The alternative is to measure Not Right First Time.

Not Right First Time = Quantity of defective units

Total quantity of units supplied

In the case of milk quality, a target specification is normally set by the

processor.

The two key elements of milk quality are fat and protein levels the

requirements for which vary for different end products; a further

element is cleanliness.

The target specification can be defined as a composite of three

elements.

The quality of milk is normally measured at the point of collection for

each individual farm. The results against each element can be

combined to give a % conformance to the overall target specification.

This figure would track the success rate in achieving both the farmer's

target specification (which may sometimes be below the processor's

ideal) and the processor's target specification per milk collection and

ideally per animal.

To understand the overall input quality of milk, the processor can

produce an aggregated measure for the total input batch by week to

assess the overall achievement to the target specification. This

aggregated weekly measure can show whether suppliers were

improving their performance through time.

However, this measure should be just the starting point. The success

rate can be increased by tracking milk quality against breeding stock,

feed regime and other farming variables. This approach has been

used by many livestock producers to improve consistency and

financial returns. It requires good feedback of information, record

keeping and traceability. Improving the success rate is also most

likely when it is strongly incentivised through a significant price

differential.



In the case of product quality, a 'defect unit' is any part of a

production batch which has to be reworked, has not met its target

grade or wasted. This measure should be used as an end to end

measure of the right first time capability of the processing plant.

4. Demand Amplification

Demand amplification occurs when small changes in consumer

demand are progressively amplified or exaggerated as orders are

passed from one company to the next along a supply chain. There is

evidence that this effect is present in dairy chains and is a cause of

uncertainty, cost and waste.

Dairy sales fluctuate for seasonal and other reasons but orders,

shipments and stock tend to vary to a much greater extent. This can

be explained by:

! Inaccurate forecasts of demand

! Delays in transferring information or not sharing it at all

! Adding extra to a forecast or order to 'be on the safe side'

! The need to fill lorries for efficient distribution

! Production rules in processing that specify minimum batch sizes

irrespective of demand

Demand Amplification can be monitored by plotting retail sales and

orders to suppliers on the same chart. This gives an immediate visual

impression.

Demand amplification can be a major cause of waste in a supply

chain and often results in excessive inventories, inefficient production

scheduling, difficulties in resource planning and 'fire-fighting' as

managers attempt to cope with wide swings in demand. Cooperation

between value chain partners in managing demand creates a real

opportunity to eradicate many of these problems and thereby reduce

waste and cost for all companies in the chain.



020406080

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Week No.

Sales Orders

5. Equipment Effectiveness

Overall Equipment Effectiveness (OEE) is a measure to test the total

performance of a machine or process. It assesses how effectively a

single machine is used but increasingly also to measure a complete

factory.

Machines rarely run at 100% efficiency owing to a series of problems

associated with availability, performance and quality. For example:

! Availability - time lost through machine breakdowns, changeovers

or lack of staff.

! Performance - time lost through slow running speeds, e.g. because

of problematic raw materials.

! Quality - time lost through producing defective products or on

rework.

OEE uses the key measures of availability, performance and quality in

a formula to arrive at an overall percentage efficiency figure for the

operation.

OEE = %Availability x %Performance x %Quality

! Machine Availability = actual machine running time/planned

running time.

! Performance = actual output achieved when machine was

running/ideal output that could have been achieved in the same

time.



! Quality = number of perfect items / total items made.

OEE is used widely in manufacturing but in our experience less so in

processing plants. We believe it can readily be applied to the dairy

sector and provide an excellent overarching measure for machine

performance.

More recently a similar measure entitled Overall Vehicle Effectiveness

has been developed for the haulage sector.

OVE = %Route Efficiency x %Time Efficiency x %Vehicle Utilisation x

%Quality

! Route Efficiency = minimum/actual route cost.

! Time Efficiency = shortest possible/actual delivery time.

! Vehicle Utilisation = actual/full vehicle load.

! Quality = good products (with no faults) delivered/total products

delivered.

Measuring in Partnership

Most of the measures that we have recommended require data

collected from various parts of the chain. No single player in the

chain could see all of these measures unless they traded information

with others.

To generate long term improvement, rather than daily fire-fighting of

problems, it is essential to link the effect of problems back to their

cause.

In many cases, measures taken at one part of the chain reveal issues

that lie in a different part. For example, the cause of a shopper

complaint about eating quality might be a problem in the animal feed.

Or the reason why a cheese processing plant has a higher than usual

inventory could be a series of inaccurate demand forecasts from the

retailer.



So the main benefits of lean thinking, of collecting the vital few

performance measures, of establishing and confronting the causes of

waste and driving substantial savings can only be achieved by

partnership. And this requires a true collaborative spirit based on

trust, information and benefit sharing.

The partnership in measurement concept is a hugely powerful

element of Lean Thinking. This one idea of jointly developing and

sharing measures for the whole chain can trigger a huge number of

profitable improvements.

So in summary, we recommend that you:

! Define, collect and share measures across the whole chain.

! Prioritise a vital few whole chain measures.

! Set minimum and maximum limits for each measure.

! Continually monitor.

! Act immediately when a value goes outside the limits and trace

the problem back to its root cause.

! At the point of root cause, introduce actions to stop the problems

recurring.

How to Tackle theProblem of DemandAmplification

What is Demand Amplification?

In a lean supply chain, product flows along the chain according to the

pace of consumer demand. A good analogy is household water. This

is always available on demand by simply turning a tap and the mains

water system then automatically replenishes the water tank.

Of course the same effect is more difficult to achieve in the food chain

but in the ideal system, the rate at which shoppers buy dairy products

would be matched by the rate at which processors supply the retailer

and farmers send their milk for processing.

One of the impediments to this flow is the imbalance between supply

and demand that is caused by seasonal fluctuations in the availability

of milk.

A second issue is Demand Amplification. This regularly occurs in all

supply chains and eats in to the profits of many other industries and

so the solutions are well known.

In cases of Demand Amplification, the further in the chain back from

the consumer, the less the pattern of orders resembles the pattern of

consumer demand. In particular, the public might consume the

product at a fairly even rate but orders for a primary producer might

be a series of unpredictable peaks and troughs.

In this section, we explain how Demand Amplification arises, why it's

important and what can be done to reduce its effect and make

savings.


June2005



How does it arise?

Demand amplification can be illustrated by a simple example.

Take a supply chain comprising a shop, depot and factory. Between

each there is a 2 day delay between ordering and receiving a product,

although a delivery is made every day.

Factory 2 days Depot 2 days Shop

Stock = 10 Stock = 10 Stock = 10

Ten products are normally sold per day. The shop, depot and factory

each maintain a stock of 10 items and the shop places a new order for

10 items each day. Everything is in equilibrium but what happens if

consumer sales suddenly rise to 11 items?

At the shop, the stock would fall to 9 items. The shop now expects to

sell 11 items per day and there is a 2 day gap between order and

delivery. So the shop would need to order 3 extra items (13 in total).

1 extra to bring its stock back up to 10 items and 2 to cater for higher

sales for the next 2 days.

So the depot would receive an order for 13 items, reducing its stock to

7. It would now need to replenish its stock but must also anticipate

future orders from the shop. In the absence of any other information,

it might forecast that the shop will now order 13 items per day so

given the two day order time lag it would order 10+3+3+3 = 19

products.

You can see how a small change in consumer demand has become

amplified. The factory in turn might amplify this further, placing an

order of 10+9+9+9 = 37 on its own suppliers.

An increase from just 10 to 11 items sold at the shop could become

an increase from 10 to 37 items placed on the factory's suppliers!



This overreaction to a change in sales is common in real life.

Other factors add to the distortion including:

! automatic inventory and ordering systems with faulty algorithms

! human error

! bulk buying at a bargain price or stockpiling in anticipation of a

rising price

! end of year business targets, e.g. to reduce inventories

! faulty products or missed deliveries

! the need to round orders up or down to make full pallet and

vehicle loads

When the Cardiff team investigate Demand Amplification they begin

by mapping consumer sales on a graph. They find there are some

fluctuations for seasonal reasons, but usually demand is very stable.

The exception is when the retailer runs a special promotion.

Cardiff then move along the supply chain, plotting and comparing

both orders and production on the same graph. Just as the theory of

Demand Amplification predicts, they usually find that the further

removed from the consumer, the more erratic is the pattern.

The chart is compiled by averaging studies conducted by Cardiff.

The green line shows retail sales, the purple bars stock in the retailer's

warehouse and the red line deliveries by the supplier. It is clear from

the graph that deliveries fluctuate much more than sales.

0

50

100

150

200

250

39 41 43 45 47 49 51 53 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38

Week No.

Total RDC Stock EPOS Supplier Shipment



Why is Demand Amplification Important?

Demand amplification adds cost to the chain in several ways:

! During the (artificial) peaks it requires more overtime.

! During the troughs, resources and people may lie idle.

! Any over production arising from an excess of milk production

may have to be turned into skimmed milk powder for storage or

sold in other ways that are not as lucrative for the farmer.

! Extra inventory is held to protect against the variability in

demand.

! More administration is needed to manage the problems.

! There is more likelihood of gaps on shelf or price mark-downs for

short life reasons than in a smoothly flowing system.

How to Reduce Demand Amplification

1. Speed the Chain

In our example to illustrate Demand Amplification we included a

two-day lead-time between placing an order and receiving the

products. It was this delay that prompted much of the amplification.

Suppose instead there was just a one-day lag at each stage. In the

same example of a rise in sales from 10 items to 11:

! the order from shop to depot would have been 12 (instead of 13)

! from depot to factory 14 (instead of 19)

! from factory to its suppliers 18 (instead of 37)

So speeding the chain and compressing order response times are key

to resolving Demand Amplification. Remember the aim is to create a

flow, rather than a stutter of products.

Speeding the chain is a central objective of lean thinking. There are

various ways to achieve this but the underlying principle is to

identify and eliminate non-value-adding activities and delays.



2. Share Information

Again referring back to our original example, the amplification arose

largely because companies misinterpreted their customers' actions.

The store made an adjustment to its stock position but the depot

interpreted this as a potential ongoing demand for 13 items. The

same problem arose between the depot and the factory, magnifying

the over-reaction.

Sharing information between the participants, including the latest

sales and current stock positions would have avoided the

misunderstanding. The factory would have seen that consumer sales

had increased only slightly and recognised that the depot and store

were also rebuilding stocks with their latest orders. They could have

forecast that orders would soon settle back to a regular pattern of 11

items and thereby avoided over-reaction.

Developments in technology, such as radio frequency tags and high

speed internet access now make it easier to keep an accurate and up

to date record of stock in the system.

So sharing key information and discussing the reasons behind any

unusual orders is the second key to eliminating Order Amplification.

3. Reduce the Number of Stock Points

In our example chain, every stage maintained an inventory of 10

items. When the rate of sales changed, each player readjusted its

stock by placing an extra-large order. This masked the true rate of

consumer demand and created a wave of amplification.

When companies adjust their stock levels it often sends misleading

signals and this can partly be solved by better communication (as in

point 2). The next stage is to get to the root of the problem and

reduce the number of stock holding points.

Inventory is held for various reasons, but one key purpose is to keep

a safety stock to cope with a sudden surge in demand or disruption in

supply. The more reliable is the chain and the better companies are

able to forecast sales, the less is the need to hold safety stock.



When companies in the chain have little trust in each other and share

little information, everyone maintains a high safety stock. But if the

chain is managed as one complete system, with trust and visibility,

then not only can the amount of stock be reduced but also the number

of stocking points.

4. Improve Sales Forecasting

Referring again to the example, if the increase in consumer demand

had been anticipated, then a larger order could have been made in

advance without any need to adjust stock levels. So accurate sales

forecasting is another protection against Demand Amplification.

Our evidence suggests there is plenty of scope to improve the

accuracy of sales forecasts for dairy products.

Retailers know best about their own customers, suppliers know best

about their own products. So forecasts can usually be improved by

pooling the expertise of retailer and supplier.

5. Improve Reliability

Although our example didn't illustrate this point, human and systems

errors can also distort orders, send confusing signals and create

amplification.

Eliminating errors requires good control procedures, for example:

! Consistent order cut-off times, and no late amendments.

! Computer systems that flag up suspicious data entries to be

checked and validated.

! Minimal intervention with computer generated orders.

! Monitoring and enforcing vehicle delivery slots.

! Developing and implementing Standard Operating Procedures for

handling stock.



6. Measure and Monitor

A basic principle of improvement is that 'only what gets measured,

gets improved'. If Demand Amplification is a problem, then it should

be measured and monitored.

If the gap between retail sales and supplier orders falls outside of a

target range, it should trigger an exception report. This should alert

managers and prompt an investigation. If a problem is found, it

should lead to a corrective action.

It is through simple disciplines like this that problems are brought

under control.

7. Manage Demand

Although forecasting sales is important, companies need not be

completely passive about demand. Sales can be influenced by

various techniques such as advertising, merchandising and

promotions and these can be used to even out demand or link it more

closely to peaks in supply.

For example, ice cream has successfully been promoted as an all year

round product.

�We have always had goodrelations with our producers inDairy Crest Direct but thisproject has thrown up the ideaof developing a more formalsupplier association of thetype that is common in theautomotive industry.

We will work closely with the farmers to jointlyfocus on improving product quality to meet ourmilk specification and to share best practicesamongst the group. A real bonus has been thatSomerfield have offered to play a part in theAssociation which will be a great help in linkingdevelopments in milk production to thecustomer's requirements.�

AArrtthhuurr RReeeevveess,, MMiillkk PPuurrcchhaassiinngg DDiirreeccttoorr,, DDaaiirryyCCrreesstt

Strengthening Relationsin the Dairy Chain A Case Study with Somerfield - Dairy Crest -

Dairy Crest Direct Farmers Group

The dairy industry has often hit the headlines for the wrong reasons.

Too frequently the story has been one of confrontation. Despite the

recent history of antagonism however, many people have been

working to build better relationships.

The Food Chain Centre became involved with one such initiative. We

worked with a complete dairy chain consisting of Somerfield, Dairy

Crest and their farmer organisation, Dairy Crest Direct. Together,

they have been striving to improve their mutual understanding and

to capture the benefits from collaboration.

We at FCC helped in this by applying a technique known as Value

Chain Analysis. This approach has delivered quick benefits for all

participants but even more importantly has led to substantial changes

in the way these businesses will work together in future.


CaseStudy

June2005



The benefits from this project have included the:

! Establishment of a Supplier Association between farmers and the

cheese plant to improve both efficiency and quality.

! Development of a single sales forecast for the whole chain

managed by Dairy Crest and shared with Somerfield and Dairy

Crest Direct.

! Initiation of a joint packaging project - to review case size, format,

presentation and labelling.

! Introduction of new efficiencies at the cheese packaging plant to

improve product handling and reduce stock.

A less tangible, but important extra benefit, is that the farmers

involved now have a deeper awareness of what happens to their milk

after it leaves the farm. Equally, the retailers have a more complete

appreciation of milk production. Better understanding, we believe, is

a building block for greater trust in the chain.

�We set off on this project expecting it toidentify improvement opportunities. It has, andwe will work to implement these - not just withSomerfield, but with all our customers.

However it has done more than that. It hasgiven our direct milk producers a chance to seethe complexities of an entire supply chain andthat lots happens to their milk after it has beencollected. It has also let one of our customerssee the amount of work that goes into producingproducts for their stores.

Hopefully the project itself and the publication ofthis report will make a contribution to improvingtrust in the dairy industry.�

AArrtthhuurr RReeeevveess



Identifying a Value Chain

All dairy supply chains are complex, with multiple sources of milk

supply, multiple points of manufacture, multiple product and

multiple channels of distribution. In fact it is often better to think of a

supply network rather than a supply chain.

Attempting to analyse all of the potential routes through the supply

network would be unmanageable. Our approach instead is to cut a

slice through and follow a typical product through the chain. This

reveals a number of issues that are usually common for the whole

network.

In the case of this project, a Somerfield own-label, mature cheddar

product was the focus given that this is a high selling product. The

diagram shows the parts of the businesses that were involved.

DavidstowCreamery

HaverfordwestCreamery

HartingtonCreamery

AspitriaCreamery

CheeseMaturation Store

Nuneaton

NuneatonNDC

MaelorPacking Plant

FromePacking Plant

Farmersx1400

Dairy CrestDairies

Dairy CrestCheese

Warehouses

Dairy CrestPackingPlants

Dairy CrestNational

DistributionCentre

SomerfieldRegional

DistributionCentres

SomerfieldStoresx 500

RepresentativeStore

SherburnRDC

Lea GreenRDC

HuntworthRDC

TewkesburyRDC

CardinalRDC

PitreavieRDC

2 Representativefarms

Selecting the Target ProductDairy Crest produce c1000 sku�s50 SKU�s supplied to Somerfield.A Top selling Mature Cheddar

was selected as focus for analysis

Somerfield - Dairy Crest Cheese Supply Chain Network

The work itself was conducted by senior executives from the three

businesses involved supported by facilitators from Cardiff Business

School.



Identifying Whole Chain Improvement Opportunities

The project aims were to:

! Understand the 'Current State' of the whole supply chain from

farm to consumer

! Identify key Wastes, problems and opportunities across the chain

and within individual plants

! Develop a Future Vision of how the cheese supply chain could

operate more effectively

! Develop an Action Plan to move towards that vision.

Seeing the Complete Value Chain

Dairy Crest DirectFarmers

Re-load tanks

DavidstowPlant

NuneatonMaelor

Nuneaton Bridgwater RDC

Somerfield stores(average)

In store system

StoreStock

Management

Store EPOSdata

Somerfield HQ

OrdersConsolidation

Nuneaton

CustomerServices

Daily order -SKU/Depot/

Qty

Deliveryorders

DC HQ

SalesTeam/

Account

Dairy Crest DirectFarmers

Re-load tanks

DavidstowPlant

NuneatonMaelor

Nuneaton Bridgwater RDC

Somerfield stores(average)

In store system

StoreStock

Management

Store EPOSdata

Somerfield HQ

OrdersConsolidation

Nuneaton

CustomerServices

Daily order -SKU/Depot/

Qty

Deliveryorders

DC HQ

SalesTeam/

AccountManager

Dairy Crest HQ

CheesePlanning

MonthlyProduction plans

Davidstow

Planner/Stockoffice

Dairy Crest HQ

MilkPurchasing

Team

Davidstow

TransportManager

Actualdaily

deliveryfigures

Dailycollectionplanning

Weekly order for delivery toMaelor

Call-off

Dairy Crest

Dairy Crest orThird party Daily

Shortages/Allocation

instructions

Weekly pre-orders for

bulk cheese

AnnualBuying plan

Milk AvailabilityForecast

Annualprediction

of milkproduction


instructions

Daily milkintake

Call-off

Weekly milkshortages

Shortages

Maelor

PlanningTeam

Production plan

DC HQ

Invoicing andSales

NuneatonFGI

Expediteshortages

Changesto existingforecast -

exceptions HQ

SomerfieldBuyer

Meetings

Maelor

Cheeseordering

Stock plan

On linestock info

Order planfor bulkcheese

Dailydelivery

schedule

Manager

Dairy Crest HQ

CheesePlanning

MonthlyProduction plans

Davidstow

Planner/Stockoffice

Dairy Crest HQ

MilkPurchasing

Team

Davidstow

TransportManager

Actualdaily

deliveryfigures

Dailycollectionplanning

Weekly order for delivery toMaelor

Call-off

Dairy Crest

Dairy Crest orThird party Daily


instructions

Weekly pre-orders for

bulk cheese

AnnualBuying plan

Milk AvailabilityForecast

Annualprediction

of milkproduction


instructions

Daily milkintake

Call-off

Weekly milkshortages

Shortages

Maelor

PlanningTeam

Production plan

DC HQ

Invoicing andSales

NuneatonFGI

Expediteshortages

Changesto existingforecast -

exceptions HQ

SomerfieldBuyer

Meetings

Maelor

Cheeseordering

Stock plan

On linestock info

Order planfor bulkcheese

Dailydelivery

schedule

Emergencycall-off

Dailyoptimisation

of loads

ServiceMonitor

Despatch anddelivery

confirmations

Nuneaton

TransportPlanning

TransportPlan

Nuneaton

InventoryMonitoringStock and

deliverymonitoring

Nuneaton

WMS

Picking/loadinstructions

HuntworthWMS

CategorySupervisor

Stockadjustments/

orderinterventions

Orderadjustment

Stock/orderinterventions

SupplierOrders

x Days

x Hrs

x Months

x Hrs

x Days

x Hrs

x Days

x Hrs

x hrs

x hr

x Days

WeeklyDemand KgX

Max weeklydemand KgX

Min weeklydemand KgX

Steps

Total Steps176

Emergencycall-off

Dailyoptimisation

of loads

ServiceMonitor

Despatch anddelivery

confirmations

Nuneaton

TransportPlanning

TransportPlan

Nuneaton

InventoryMonitoringStock and

deliverymonitoring

Nuneaton

WMS

Picking/loadinstructions

HuntworthWMS

CategorySupervisor

Stockadjustments/

orderinterventions

Orderadjustment

Stock/orderinterventions

SupplierOrders

x Days

x Hrs

x Months

x Hrs

x Days

x Hrs

x Days

x Hrs

x hrs

x hr

x Days

WeeklyDemand KgX

Max weeklydemand KgX

Min weeklydemand KgX

Steps

Total Steps176

VA Steps13

Totals

Total Leadtime(ex. Maturation) DaysX

Leadtime frommaturation DaysX

Total VA time HrsX

Total distancetravelled MilesX

Total in-plantdistance mX

Total Demand

Std Deviation SDX

x Day VA % %X

**

*

**

*

*

*

*

*

*

Gradinginformation

DC HQ

ForecastingTeam

Stockavailability *

Monthlyreview

12-18 monthforecast

Weekly/dailyforecasts

Weeklyforecast

Weekly/dailyforecasts

Storeorders

Picking/Loadinstructions

x Hrsx hrs

Somerfield : Dairy Crest : Dairy Crest Farmers Direct Whole Chain Current State Map

The map shows the physical flow, the information flow and the time

taken for the product to move from milk production to consumer

purchase of cheese. On one sheet of paper the map summarises the

key features and performance of the complete chain.



On the working map data boxes were inserted below each facility to

record some key measures for each of the plants along the chain such

as:

! Lead time through the facility;

! Value adding time as a % of total time spent in the facility;

! Inventory holding in terms of Raw Material, Work in Progress and

Finished Product;

! Efficiency of operations as measured by Overall Equipment

Effectiveness;

! % right first time product quality;

! % wastage (both milk and cheese);

! % error free deliveries.

(These data have been omitted on the map shown here to preserve

confidentiality.)

In addition to these Key Performance Indicators (KPI's) for each plant,

a series of KPI's were also collected to measure the performance of the

chain as a whole.

Complete Chain KPI Current State

Lead-time from maturation to consumer Data witheld for confidentiality

Value adding % time

Total number of steps

Days of inventory (excluding maturation)

Demand amplification index

In-store availability

On time delivery performance

Right first time product quality %

Total % wastage

Product travel distance



�The development of the Value Chain KPI's isthe first time we have had a set of measures thatallows us to summarise the efficiency of acomplete supply chain from farm through to theconsumer point of purchase.�

GGeerraalldd SSuuttttoonn,, HHeeaadd ooff SSuuppppllyy CChhaaiinn,, SSoommeerrffiieellddSSttoorreess LLttdd

Problems and Opportunities

As with any project of this nature, problems were uncovered with the

existing chain. Or to state this more positively, opportunities for

improvement were revealed. The following gives a flavour of what

was found.

! Supply chain forecasting

Maturation requirements inevitably mean long lead times in cheese

production and so good sales forecasting is vital. The mapping

revealed that many different people within the chain were making

forecasts and these were often inconsistent. This is a common

problem that the Cardiff Business School facilitators had seen in many

supply chains and in many industries.

The team agreed it would be better to compile a common forecast by

sharing information from the retailer about sales trends, the processor

about stock levels & production capacity and the farmers in terms of

milk availability.

Dairy Crest was already in the process of updating its forecasting

systems and has now re-specified it to work in this new collaborative

way.

! Information flow and demand amplification

The team found that there was already plenty of information

exchanged in this chain, largely by computer. They drew up an

'information flow map' which was quite complex. One of the issues

revealed was the number of manual corrections made to the

automated data. This was a big time-stealer and suggested that more

work was needed to correct data errors at source.



A significant amount of 'demand amplification' was also found in the

chain. This occurs when a small change in store sales triggers a much

bigger reaction in order patterns and production schedules further up

the chain.

The problem had a major impact on production at the Dairy Crest cut

and pack plant where weekly production rates had ten times greater

variability than end consumer demand. This was despite a fairly

stable consumer demand pattern only varying by 11% around the

average.

Demand Amplification

From Consumer Demand at Epos to Cheese Packing

Weeks

Kilo

Epos Sales Somerfield Orders to Dairy Crest Delivered by DC Cheese Cutting & Packing

Variation + / - around the mean

11% 21% 22% 115%

1 52

Again, demand amplification is a classic problem found in many

supply chains. It can be improved by a better dialogue between

buyer and seller and also by making production facilities as flexible

and responsive as possible.

! Inventory in the Chain

With any cheese product, and particularly with mature varieties, the

need to hold stocks is inevitable. However the danger is that the

processor amasses too much stock of the wrong product and is later

forced to discount price.

The team's analysis revealed that excess levels of post-maturation

stock were kept in the chain. This meant that unnecessary cost was

tied up in capital, storage and handling charges.



By jointly reviewing policies for ordering, inventory holding and

production, opportunities to reduce stock holding were identified for

both Dairy Crest and Somerfield.

! Product handling and transport

Various opportunities were identified to reduce product handling and

movement within plants by reviewing plant layout and materials

handling techniques. Each movement adds cost and increases the

likelihood of damage, so the smaller the number of movements the

better.

Possibilities were also identified to improve the efficiency of milk

collection and inter-plant transport movements of semi-finished and

finished products.

Developing a Vision for the Future

The team held a one-day workshop to develop a shared view of their

ideal chain of the future and to produce an action plan.

The 'lean thinking' philosophy of Cardiff Business School stresses the

importance of everyone in the chain focusing on consumer value.

This ensures that any recommendations contribute towards a better

service to consumers whether through efficiency, reliability or quality.

The team agreed a series of improvement objectives and categorised

these according to their impact on Quality, Cost (efficiency) and

Delivery (reliability).



Linking Improvement Objectives to Consumer Value

Cost

Less inventory

More efficient and responsive manufacturing

More efficient milk production/collection

Less transport &/or more efficient transport and handling

Less waste

Smarter shared accurate information management

Efficient assortment management

Quality

Product consistently produced to specification

Maximise shelf life for consumer

Better in-store presentation

Better packaging and labelling

DeliveryIncreased on-shelf availability

Greater flexibility to respond to demand changes

A future state map for the chain was drawn up and agreed. This

focused on what could be achieved within a 12 month timescale.

The team agreed the most vital few cross-chain projects and also

identified a number of smaller in-plant projects.

They then developed a set of performance measures or KPIs in order

to track progress. These were viewed at three levels:

! Operational KPI's summarise whether the supply chain is working

smoothly and effectively.

! Consumer 'Moments of Truth' measure aspects of

consumer/shopper satisfaction.

! Commercial Targets measure total business performance.



Shared Supply Chain KPIs

Commercial TargetsMarket share

Product profitability

Consumer Moments ofTruth

On-shelf availability

Customer complaints

Operational KPIs

Total lead-time (from maturation to consumer)

Days of inventory

Demand amplification

Right first time premium product

Total % wastage

% of error free deliveries

On-time in full delivery performance

No. of SKUs (i.e. product range)

�The development of a set of 'Whole Chain Keyperformance Measures' has been a very usefulexercise not only for assessing this chain but alsofor thinking about how we measure the supplyefficiency of other product groups.�

MMiikkee RRuutttteerr,, SSuuppppllyy CChhaaiinn OOppeerraattiioonnss DDiirreeccttoorr,,SSoommeerrffiieelldd SSttoorreess LLttdd

Action Plan

The projects were broken down into a series of action points with

owners and timescales. The agreed KPIs were linked to these projects

and targets were set. As a final check and balance, the actions were

matched against the supply chain objectives.



Improvement InitiativeJoint packaging

project

One forecast forwhole chain and

demandsmoothing

DavidstowSupplier

Association

Daily levelproduction

system

KPI Measures

Days of inventory

Demandamplification

Demandamplification. Days of inventory.On-shelfavailability

Milk Quality tospecificationRight first timepremium productDelivery toforecastLevelled supply

Lead-time to endconsumerDays of inventoryScheduleadherance

Cos

tO

bje

ctiv

es

Less Inventory Y Y

More responsive cost effectivemanufacturing

Y

More efficient milk production/collection

Y

Less transport &/or MoreEfficient Transport/ handling

Y

Reduce the cost of productwaste

Y

Smarter shared accurateinformation management

Y

Efficient assortment management Y

Qua

lity

Ob

ject

ives

Product consistently produced tospecification

Y

Maximise shelf life for consumer Y Y

Better in-sstore presentation Y

Better packaging and labelling Y

Del

iver

yO

jbec

tive

s

On-sshelf availabilityY

Flexibility and speed to respondto demand changes Y

Y = the Improvement Initiative contributes to the objective



Methodology

Value Chain Analysis is carried out jointly by a team drawn from the

various companies along the supply chain. In this way all team

members get a view of the complete process and can then develop a

collective vision.

From the outset, the three companies recognised the strategic

potential of the project and so committed senior executives as team

members.

SomerfieldMike Rutter Supply Chain Operations DirectorGerald Sutton Head of Supply Chain Development

Dairy Crest

Arthur Reeves Milk Purchasing DirectorMark Youds Operations Director - CheeseAndrew Watson Distribution Director - FoodsMike Parsons Sales Operations Director - Foods

Dairy CrestFarmersDirect

Richard Stanbury Director

CardiffBusinessSchool

David Taylor Co Director Food Process Innovation UnitKate Bailey Researcher Food Process Innovation Unit

VCA is an intensive exercise and so in order to complete the project in

a manageable time frame and to make best use of expensive

management resource we have developed a ten day methodology.

Event Objectives

Day 1 Introduction to Lean Thinking and project methodology

Days 2-66

Detailed mapping of the all facilities in the chain including anumber of farms, the cheese plant, maturation store, retailpacking plant, Dairy Crest and Somerfield distribution centresand a retail store.

Day 7 Develop the current state map of the whole chain Agree both internal and external improvement opportunities inthe chain

Day 8 Brainstorm customer value deliverables from the supply chain.Agree key KPIs for the whole chain. Brainstorm future state and improvement action plans

Day 9 Agree action plans and timescales with company executives.Agree basis for benefit share across the chain

Day 10Presentation of findings and action plans to future projectteams



Lean Thinking

The first day of the project takes the form of a training session to

introduce the team to 'Lean Thinking' which provides the theoretical

basis behind value chain analysis.

Lean concepts were developed by Toyota the Japanese automotive

manufacturer although in recent years many of the lean approaches

have been applied to great effect in other industries.

Two key concepts are:

! a focus on exactly what provides value to consumers

! eliminating non-value adding activities (or in other words waste)

in the chain

�The team spent some time discussing what isvalue in cheese products from the point of viewof the end consumer. As a farmer this was thefirst time I have been involved in such adiscussion with both the dairy and the retailer. Itwas particularly useful to think what contributionthe farmer at the top end of the chain can maketo providing customer value and how thefarmer's contribution can be communicated tothe consumer.�

RRiicchhaarrdd SSttaannbbuurryy,, DDiirreeccttoorr,, DDaaiirryy CCrreesstt FFaarrmmeerrssDDiirreecctt

There are five guiding principles of Lean Thinking:

! Define value in terms of the end customer and identify the steps to

deliver this through the supply chain.

! Identify and eliminate any wasteful activities that do not directly

add value to the customer.

! Make those remaining activities flow as smoothly as possible.

! Use the customer demand rate to pull products through the value

chain.

! Pursue perfection by constantly striving to eliminate waste and

increase overall value to the end customer.



With these principles in mind, the team then embarked on the task of

mapping out the current chain.

Current State Map

Future State Map

Lean Improvement Tools help to achieve the vision

Action Plan

Lean Principles to Guide the development of the vision

A key requirement is for the team to observe first hand what actually

goes on. Effective mapping cannot be done in the office, because what

happens in reality is often quite different to what has been planned or

what managers think should be happening.

As the team walked the chain a technique known as Process Activity

Mapping was used systematically to record all the steps through

which the product passed on its journey from raw milk to the sale of

a consumer pack of cheese.

Each step in the process was classified as either 'Value Adding' - in

which the product was being transformed from its raw material state

into a form that consumers wish to purchase or 'Non-Value-Adding'

which includes activities such as transport, storage, delay or

inspection. All of the latter should ideally be eliminated or at least

minimised since they add cost but no value.

Of course in the case of cheese, there is a need for storage for

maturation purposes - which is regarded as adding value.



At the same time as mapping the physical product flow the team also

recorded all the information flows.

�Although at first it seemed very time consumingto walk the whole chain and see all theindividually stages the product goes through, itproved worthwhile as it gave us invaluableinsights into the processes which were necessaryto identify not only minor operationalimprovements but also the need for somestrategic changes.�

MMiikkee PPaarrssoonnss,, SSaalleess OOppeerraattiioonnss DDiirreeccttoorr - FFooooddss,,DDaaiirryy CCrreesstt

�It was really useful that all team members sawthe whole supply chain process and not just thepart in their own company because it meant thatwe could all see how elements of our ownsystems impacted on the efficiency in other partsof the chain.�

AAnnddrreeww WWaattssoonn,, DDiissttrriibbuuttiioonn DDiirreeccttoorr - FFooooddss,,DDaaiirryy CCrreesstt

For each facility along the chain, the team spent a day mapping the

physical and information flows. At the end of each day, the team was

able to draw up a current state map of the facility to summarise its

findings. From this summary, a session was held to identify the initial

issues and possible improvement opportunities.

Examples of some of the suggestions from these immediate feedback

sessions are as follows:

Examples of Improvement Opportunities

Improvement Opportunity

FarmImprove milk quality (protein and fat content) Reduce milk 'seepage' between milking and dairy

Cheeseplant

Improve efficiency of end of line boxing & handlingprocesses Reduce product wastage

Retail cut +pack plant

Reduce stock Reduce space and product handling

Retail Store Standardise back room operationsStreamline order processing systems



Conclusions

�This project has neatly demonstrated theobvious benefits of end to end thinking whenlooking at value chains. It uncovered the clearand less clear opportunities available and has leftall parties with a realistic challenge of reallymaking a difference.�

GGeerraalldd SSuuttttoonn

�The project uncovered a number ofopportunities to improve efficiencies, and takeoverlap out of the chain. The challenge is to nowconvert potential savings into actual savings.Some low cost ideas need acting on quickly,while others may be incorporated into futurestrategic planning.

The project highlighted the complexity of thesupply chain, I believe this would be an eyeopener for any milk producer; it also revealed amanagement technique capable of benefitingmany businesses.�

RRiicchhaarrdd SSttaannbbuurryy



�Taking part in the Cheese Value Chain work hasbeen a truly 'eye opening' experience. Thefindings clearly highlight a number of excellentopportunities for all parties to drive additionalvalue into all parts of the chain. The realchallenge is how we translate those findings rightacross our supply chain and capture theconsiderable scaleable benefits.�

MMiikkee RRuutttteerr

�The Board of Dairy Crest Direct recognised thatthis project would give an opportunity forfarmers to gain a much greater understanding ofthe whole supply chain, and give the potential tobring real benefits back to members in the longterm through working more closely with ourcustomers.�

RRiicchhaarrdd SSttaannbbuurryy

�At first we were unsure as to whether focusingon one product and one route through thesupply chain would be truly representative, butwe realise that many of the issues andopportunities identified by the analysis arecommon to many of our other value streams notonly in other cheese products but also in otherdairy products.�

GGeerraalldd SSuuttttoonn



�Clearly it is in everyone's interest to have asefficient and effective a supply chain as possible.I thought the study would identify opportunitiesfor improvement. There was also anotheropportunity - to improve relationships in thedairy industry.

When we started this project there had been afocus on a lack of trust within the dairy supplychain. Dairy Crest wants to prove that this is notthe case.

Engaging in this project was one of a number ofthings we have done and continue to do toregain trust.�

AArrtthhuurr RReeeevveess

The Food Chain Centre acknowledges the help of David Taylor and

Kate Bailey from Cardiff Business School in preparing this case study.

Building a New MilkBrandA Case Study with Spar and Milk Link

Milk was once considered a basic commodity. The problem with

commodities is that competition always centres on price.

Recently though, people have found new ways to differentiate milk

by varying the formulation and building new brands. The

importance of this is enormous to the dairy industry. With so many

dairy farmers struggling to cover their costs at the basic milk price,

the need for more premium products is urgent.

The Food Chain Centre has used the technique known as Value Chain

Analysis to help a fresh milk chain in Cornwall to explore new ways

to differentiate. It has delivered immediate improvements in service,

pointed the way to a more streamlined and efficient supply chain,

identified new opportunities to add value and created a much

stronger sense of partnership.

Our work involved a 'farm to checkout' dairy chain consisting of a

Spar store at Helston, Newlands Dairy in Pensliva, their suppliers

Milk Link represented by Andrew Kempthorne, a dairy farmer from

North Cornwall and Gregories Distribution based at Lostwithiel.

'The project brought everyone involved fromfarm to the retailer to talk honestly and openlyabout what actually goes on'

DDaavvee HHeeaaddoonn,, NNeewwllaannddss DDaaiirryy

The focus of the work was Newlands branded fresh milk sold in 1

litre cartons. This is one of the best sellers for both Spar and

Newlands.


CaseStudy

June2005



Headline benefits from this project included:

! Steps to strengthen the local branding. A cross-company project isunderway to pick up on ideas raised by the project and see howbest to strengthen differentiation of Newlands milk.

! A new ordering system between SPAR and Newlands to raiseefficiency and speed of response.

! A series of new on-farm performance measures linked to a quality,service and cost improvement program.

! Steps to raise milk processing efficiency at Newlands, includingstandardising product labels across the range and better transportefficiency within the Milk Link collection process.

! A Continuous Improvement Forum to ensure that momentumfrom the project extends into the future.

Identifying Consumer Value

Ideally everyone within a supply chain should have the same view ofwhat consumers want based on good research and dialogue. Moretypically though, different parts of the chain have differing opinionsof what consumers value and this can lead to conflicting behaviourand poor overall value.

Whilst consumer value, by definition, has to come from theconsumers themselves, the methods of capturing this such assatisfaction surveys and focus groups can be time-consuming withoften confusing results. The volume of data and science behind theanalysis can also be daunting for a single dairy farmer.

In this work we involved all parties in the supply chain and applied atried and tested process that helps identify the relationship betweenthe attributes of a product or service and the aspects of consumervalue (known as the Kano model).

We focused on three factors each with varying contributions to overallconsumer satisfaction.

! Basic factor - these are factors which are the product's 'must have'.If these features are not there, then the consumer will bedissatisfied. If these features are present, then they will only evercontribute to a 'neutral' state of satisfaction for the consumer, forexample milk being safe to drink



! Performance factor - these factors could be termed 'more is better'.

They are normally quite easily identified by a consumer. If they

are at the wrong end of the scale they cause dissatisfaction but if

improved could cause pleasure, for example longer shelf life on

fresh products

! Delight factor - these are factors that the consumer wouldn't

normally expect but when present can delight. It can be quite

difficult to identify these because consumers don't expect them

and so don't usually articulate them. They can generate strong

initial competitive advantage although in time they can become an

expected and Basic factor, for example an easy-pour container.

The diagram below shows the team's view of which attributes

contribute to consumer satisfaction. The team highlighted two

possible delight factors; the local Cornish brand plus an

environmental angle as the product travels relatively few miles

compared to other competitors' products.

Further market research will be required to confirm whether these

factors really have strong appeal and can be exploited.

Standard taste and odour

No leaks

At least 2 -3 days shelf life

Speed of in -store transaction

Availability -right size + spec

> 3 days shelf life

Ease of identification

Low food miles

Local product

Neutral

Delight

Dissatisfaction

Feature Absent Feature fulfilled

Delighters

Basic

Performance factors

Correctly chilled



�Local products boost business and nourish thecommunity. I'm very proud to be selling a locallyproduced product and it is important that wecapitalise more on this local aspect.�

CChhrriiss SShhaarrrriinnttoonn,, SSPPAARR HHeellssttoonn

�All of us within the farming community need tobecome more market orientated. This was agood exercise to get to know what will makeconsumers want to buy our products.�

AAnnddrreeww KKeemmpptthhoorrnnee,, DDaaiirryy FFaarrmmeerr

Creating a Common Purpose

Creating a common purpose along the supply chain is important to

delivering consumer value. Our team developed a set of objectives

which defined what the supply chain has to excel at in order to

provide value.

SUPPLY CHAIN OBJECTIVES

! Correct quality (product and packaging) every time with no

variation

! Shortest lead time

! Cost effective production

! Cost effective transport

! Cost effective farming

! React quickly to changes in demand - flexible production and

transport

! Effective ordering systems across the whole chain

! Good store housekeeping

To allow the team to monitor how well the whole chain is performing

against these objectives, the team developed a set of common, shared

key performance indicators.

They felt that the ultimate commercial goal for this chain is to grow

market share. They also felt that to achieve this, they needed to track

two key measures of consumer satisfaction: on-shelf availability and

customer complaints.



For convenience store chains, the most frequent basket item

purchased is fresh milk and therefore achieving close to 100% on-shelf

availability for fresh milk could be a substantial competitive

advantage in the current market. The team wanted to take on the

challenge to see how they could achieve nigh on 100% on-shelf

availability against the current performance of 97%.

Commercial Measures Market Share

Customer 'Moments of Truth'On-shelf availability

Customer Complaints (ppm)

Operational Measures

Supply Chain Lead-time

Right first time quality

On-time in full delivery performance

Overall Equipment Efficiency

Average ppl farm costs

Farm Quality Indicator

Transport Efficiency

In-store housekeeping score

Milk return/reclaim %

Mapping the Supply Chain

To identify where waste and improvement opportunities existed in

the supply chain, the team followed a set methodology which

involved walking the chain and systematically mapping the physical

flows and information flows for the semi-skimmed milk product.

Issues and possible opportunities were captured at every stage of the

process.

From the mapping, the team were able to develop a current state map

of their supply chain which can be seen below.



4 4 0 + c u s to m e rs(s m a l l )

6 0 - 7 0 c u s to m e rs( l a rg e r )

B o d u lg a teF a rm

O th e r fa rm s

N e w la n d sD a i r y

S p a rH e ls to n S to re

M i l k L in k D e p o t(L o s tw i th ie l )

4 lo a d s p e r d a y

A v e ra g e L o a d = 1 4 .5 /1 5k lit re s

1 lo rry p e r d a y

C h i l l e ds u p e rv i s o r

N e w la n d s

T e le -s a le s

N e w la n d s

P ro d u c tio nC o n tro l

M i l k L i n kD is tr ib u ti o n

H Q(P ly m o u th )

L o s tw i th ie l

M i l k A l lo c a ti o nT ra n s p o r ts u p e rv i s o r

R o u tec h a n g e s

D a ily c u s to m e rd e liv e ry s c h e d u le s

C h a n g e s inv o lu m e

2 d a yfo re c a s t

V o lu m e s / n e x td a y d e liv e rie s

1 c a ll d a ily -0 9 . 3 0 -1 0 .0 0

S to c k inc h ille r

C o n f irm e do rd e rs

P ro d u c t io n s h e e tfo r f o llo w in g d a y

2 d a yfo re c a s t

N e w la n d s

A d m in /T ra n s p o r t

L o a d s h e e t s

F o re c a s ts a n do rd e rs

C h a n g e s too rd e r

N e x t d a y �sd e liv e r ie s

N e w la n d s

S a le s - R A Ds y s te m

C u s t o m e ro rd e rs

2 8 h rs

3 h rs

2 7 h rs

3 h rs

3 1 h rs

1 1 (1 )

3

D is t a n c e m ile s5 6

4 3 (9 )

1

1 2 (1 )

T o ta ls

T o ta l L e a d t im e H rs9 2

(m i l k in g + s to ra g e )

T o t a l V A t im e M in s1 4 9A v e ra g ed is t a n c e m ile s3 0

V A % %2 . 7

S te p s

T o t a l n o o f s te p s = 7 0

V a lu e a d d in g s te p s = 1 1

T o t a l d is ta n c et ra v e lle d M ile s8 6

I n -p la n td is t a n c e m5 3 0

The map identified the following issues:

! Total lead-time from farm to retail shelf was 92 hours, involving 70

different process steps. The product travels on average 86 miles

from farm to the SPAR store.

! Of the 92 hours, only 149 minutes were classed as adding value to

the product. Value adding time is the time spent on activities

which transform the product that the consumer is willing to pay

for. Note that the big difference between total time and value

adding time is typical to most chains and shows the scope for

improvement.

! 72% of Milk Link collected milk within Cornwall is re-loaded for

transport to other processing facilities outside of the county.

! On shelf availability for the product across South Cornwall SPAR

stores was 97%. This is around the industry average for dairy

category products. On-time delivery performance within the

chain was around 92%.

! There was a 10% amplification effect from the actual demand in

the SPAR store to orders placed on Newlands. Amplification

occurs when a small change in consumer sales results in a big

change in orders or production quantities. 10% is quite a small

figure compared with some products (such as cheese) but shows

there is scope for improvement.



"This exercise gave a great insight into thewhole chain which can only help to improve ouroperations"

PPhhiill WWiilllliiaammss,, GGrreeggoorriieess DDiissttrriibbuuttiioonn

Improvement Projects

Using the common definition of consumer value and the key issues

and opportunities identified, the team drew up a vision of the future

state. From here a number of key improvement projects were

identified.

Farms Gregories Milk Link Newlands SPAR

Minimum performanceagainst specifiedcriteria

IncreasedVehiclesize

Higher % of milk tostay in South West

Automatic collectionof real-time orders

Web-based/ IT systemto collect orders

Farms run as business Faster, efficientmilk collection

Greater return toMembers in PPL

Strong brand for localmilk

Logical, standardisedorder processes

Higher average PPL at farms

Set milk roundcollections forNewlands' farms

Focus on farmimprovement-more allocatedresource

Process more milk through dairy

Merchandising units

Less farms - highervolumes per farm

Overall quality/performance measurefor farms

KPIs driving businessimprovement activities

Retail readypackaging

Ring fence Newlands suppliers

Larger volumecustomersFocus onmanufacturedproducts

Efficient operations -use of automation

More efficienttransport

Examples of the improvement projects that have been included in the

Action Plan are shown below.

Integrated Ordering Systems

The project found that the ordering systems within SPAR stores can

be generally manual and ad hoc which can cause order amplification

in relation to actual product sales. At Newlands, they only receive

customer orders for 12% of their SPAR customers, captured though a

daily tele-sales process. This is a very manual and time consuming

process for Newlands.



For the remaining SPAR customers, milk is produced to forecast and a

daily van-sales service is operated. While this is a very flexible

approach to customer service, the team identified the process can lead

to over production and transport of excess milk. So there was no

guarantee that the milk sold is a true reflection of actual customer

demand.

To address this, the team have targeted the development of a simple

integrated cross-company ordering process both internally within

SPAR stores and linked to Newlands. The project will be initially

trialled across a small number of SPAR stores, with the

implementation of a standardised simple, logical ordering process to

ensure that orders generated are linked to actual end consumer

demand with minimal amplification.

The project will also investigate the implementation of an IT/web

based system to allow the SPAR stores to communicate daily their

actual sales and orders to Newlands, which could then be used to

directly drive production and transport operations.

Farm Improvement Programmes

The project identified an opportunity to help drive an increase in the

average overall farm performance against the key criteria set by Milk

Link of fat, protein, cleanliness, seasonal profile and flexibility.

Although these criteria are already used monthly to determine

payments, the team found that there is no regular month by month

analysis of farm performance against these criteria.

To address this, the team proposed a set of key farm performance

measures and a composite 'farm quality indicator' in conjunction with

the farmers, to help highlight where improvement opportunities lie.

In addition to these measures, the team proposed extra resource

allocated to on-farm improvement by Milk Link.

Continuous Improvement Forum

The project team committed to forming a supply chain continuous

improvement forum, both to oversee the projects already described

but also continually to identify and drive future projects that will take

the supply chain on to the next level of performance. This forum is

also an excellent way to continue to foster collaboration across the

chain.



The forum will therefore be cross company, principally made up of

the project team members, and will meet on a regular basis to share

progress against the projects and to capture the next improvement

opportunities.

To help understand how well the supply chain is performing, the

team will use the forum to set targets for common supply chain KPIs

and implement a traffic light system to track performance :-

! Green is on track

! Yellow is 5-10% under performance

! Red is > 5-10% under performance

To help communicate this performance, the team intend to implement

a communication tool, possibly web based, that can be used by

everyone in the chain to check the current performance.

Our Team

The project was facilitated by Cardiff University and the team was

made up of the following participants:

Andrew Kempthorne Dairy Farmer, North Cornwall

Gary Elkington Milk Link, Plymouth

Phil Williams Gregories Distribution, Lostwithiel

Dave Headon Newlands Dairy, Pensilva

Chris Sharrinton SPAR store, Helston



The work was completed over 5 months encompassing the 6 events

shown below.

Date Event Objectives

2nd Nov 2004 Introductory Meeting Team building. Introduce team to project methodology and concepts of'Lean thinking'

2nd Dec 2004 Mapping at Newlands Dairyand Farm

Detailed mapping of physical and information flows at NewlandsKey farm processes, mapping of milking operation. Key issues andopportunities

16th Dec 2004 Mapping at SPAR store andGregories Depot

Detailed mapping of flows at SPAR Helston. Mapping of milk collection operations

9th Jan 2005 Mapping at Milk LinkOperations

Overview of Milk Link operations and management of farm relations

31st Mar 2005 Current State Workshop Develop and agree current state map of whole supply chainIdentify key issues and opportunitiesIdentify Consumer value and develop joint KPIs for the whole chain

14th Apr 2005 Future State Workshop Develop future state map for the chainIdentify vital few improvement projects

Conclusions

�The project was a useful exercise to understandwhat part Milk Link operations play within thislocal supply chain and will ultimately help us todeliver better value to both the end consumerand also to our farmer members.�

GGaarryy EEllkkiinnggttoonn,, MMiillkk LLiinnkk

�Initially, I wasn't sure whether this project wouldbe of any benefit to Newlands. However, theproject has been an excellent investment of timeand has helped us understand where we canfocus improvement activities internally. It has alsoopened our eyes as to how we can developcollaborative programs with both our suppliersand our customers to make the whole supplychain more competitive.�

DDaavvee HHeeaaddoonn



�Before this project, I hadn't appreciated whatneeds to happen in order to get the milk to theconsumer. This was an excellent opportunity togain a better insight into what happens and how,as a farmer, I can manage my business tocontribute to this.�

AAnnddrreeww KKeemmpptthhoorrnnee

The Food Chain Centre acknowledges the help of Kate Bailey and

Keivan Zokei from Cardiff Business School in preparing this case

study.

Documents

A) Complete Folder - Cutting Costs Adding Value in Dairy