Lean production, an approach developed in Japan, aims to reduce waste. Waste is looked at in terms of time, money and quantity of resources used in production. Reducing these elements aims to increase productivity and efficiency. For example, reducing product defects will reduce costs through savings in the inputs used to make goods. It will also help reduce environmental impacts by using fewer materials and reduce the time wasted in dealing with poor quality products.
Lean production focuses on minimising resources used in the production process. Production should, therefore, aim to take place using the most efficient use of space, machinery, labour, materials and, crucially, be in the shortest time period. At Nestlé this lean approach is called Nestlé Continuous Excellence (NCE).
As lean production is paramount in Nestle’s constant mission of reducing waste in all manners, so is kaizen as a support of the idea of continuous improvement. Kaizen as a concept in Nestle makes sure that improvement is the responsibility of everyone involved. The improvement of efficiency becomes a constant process since kaizen implies that even the smallest improvements should be made as they can eventually lead to big savings. For example, Nestlé Waters uses various techniques to see where the current factory could be made more efficient, techniques such as Value Stream Mapping (VSM) that illustrates the flow of materials and information required to bring the finished product to the consumer. A process like this helps plant new bottling plants to ensure that their processes are as efficient as possible.
Just-in-time (JIT) is another Japanese lean production technique. It focuses on timings during the production process. Both storing and waiting for materials can increase costs. Waiting for materials will waste employees’ time and could also delay production. JIT involves ensuring materials arrive just as they are needed. Similarly for outputs, transport must arrive to take finished products away just-in-time, without any waiting or storage costs.
JIT focuses on continuous improvement but only works as part of an overall lean strategy. It can improve the efficiency of processes. It can lead to a better return on investment through improving productivity. JIT also allows for fewer materials to be held at any one point which can reduce working capital needs as less finance is needed for stock, leading to better financial performance. This can lead to better returns to stakeholders such as investors, as any finance invested is yielding a direct return.
Through JIT Nestlé Waters was able to make the most efficient use of storage and time at the new factory. Whilst the old site had to use limited storage and outsourced warehouse space off-site, the new factory eliminated these additional transport needs. At the old site stock had to be requested and then took time to arrive. Enough inputs had to be stored on-site to provide for production over the weekend, adding to storage costs and wasting space. Finished pallets of bottled water had to be held until trucks arrived to transport them. However, at the new site, transport and waiting times have been significantly reduced through raw materials being stored adjacent to the finished goods warehouse.
This greatly improved stock control. Shorter flows for raw material and the collection of waste from the production line also help make sure materials are in the right place at the right time, thus improving efficiency. JIT helps make big efficiency gains for Nestlé Waters. This requires excellent relationships with suppliers and distributors. Suppliers must deliver quality resources on time and distributors must ensure bottles are picked up immediately when they are ready. This aspect required a lot of planning but has delivered great benefits.
Benefits of lean production
Nestlé Waters uses lean production techniques to bring benefits other than gains to efficiency and quality. It also helps to create social and environmental benefits. Social benefits are those shared by the communities in which Nestlé operates. For example, the Water swallows site in Buxton was designed to include a butterfly planting scheme. Working with Derbyshire Wildlife Trust and the local Butterfly Conservation Group, Nestlé Waters planted wildflowers within the factory grounds to attract butterflies back to the area. As part of Nestlé Waters’ Creating Shared Value, it has worked with the local community on projects including its on-the-go recycling programme and Project WET. Project WET is an educational school initiative which helps teachers and children learn about the vital role water plays in our lives.
A further benefit is an employment, not just directed at the site, but as a result of building the new site. When building the new factory Nestlé Waters sourced the majority of its materials and labour from within a 50-mile radius of the site. This had a positive impact on the local economy whilst decreasing the amount of transport required for materials, reducing the site’s carbon footprint. The new factory has also increased the number of apprenticeships and graduate roles that Nestlé can offer. Whilst the old site used agency and temporary workers, the new site employs over 100 full-time staff, drawn from the local workforce.
Nestlé Waters’ focus on the environmental impacts of the new site goes well beyond those mentioned previously. There is a sustainable urban drainage system that manages the rainwater that runs off the site. An innovative heat recovery system has been designed to reduce waste and the impact on the environment. This system transfers heat from the bottling lines to the warehouse and offices, reducing the total energy output of the site further. Classic Derbyshire dry stone walls have reinstated field patterns and defined the boundaries of the site, ensuring it is in keeping with the surrounding areas using sustainable building practices.