Managing Growth for Australian Manufacturers - A

Managing Growth for
Australian Manufacturers
- A Tough Nut to Crack
Rapid growth is what most business owners
dream of, but when Matthew Durack,
Managing director at Stahmann Farms saw
run away success, he encountered a few
unexpected growing pains. As sales had
grown, so too had the company’s cost base,
and manufacturing was not being done in
an efficient way. “Our systems, processes
and thinking hadn’t caught-up with the
growth”, observed Matthew. “We thought
that there might be a better way to do
things – so we spoke to a few smart people
about it”. Matthew Durack approached
QMI Solutions, and partners Efficiency
Works, for expert advice on improving his
manufacturing processes. This collaboration
has already helped Stahmann Farms to
realise cost savings of about $100,000, and
has set the company on a journey that will
turn its current manufacturing operations on
their head.
The Company
Stahmann Farms, began in 1969 when
American emigrant Deane Stahmann began
planting pecan nut trees (pronounced
p’cahn in southern USA) near
Mooree in New South Wales.
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From these humble beginnings Stahmann
Farms has become the largest pecan
grower in the southern hemisphere.
In 1982 the company established a
processing plant at Toowoomba in South
East Queensland, supplying the finest
quality processed nut kernel to Australia
and the world. Deane Stahmann has since
left the business, but the company remains
100% Australian owned.
Today the Toowoomba facility processes
not only pecan nuts, but macadamia nuts,
walnuts and other tree nuts. The major
processing step is to crack the nut and
extract the kernel, while maintaining world
class quality and safety standards. As well
as processing its own produce, Stahmann
Farms runs a full merchant processing
facility for other growers in the area.
Stahmann Farms has also developed a retail
business that adds value by roasting, salting
and packaging nut kernels. This business
unit supplies large Australian supermarket
chains and exports worldwide.
The Opportunity
In recent years Stahmann farms has seen
dramatic growth and change. The company
began processing macadamia nuts 15 years
ago on a contract basis. Today macadamia
nuts bring in approximately $10 million per
year for the business. Stahmann’s retail
operations have grown too. Revenue from
value adding has tripled in the last four
years.
With this growth in sales, came growth in
costs. Stahmann Farms had not updated
its manufacturing processes, and was no
longer operating with the efficiency it
needed to compete in a global marketplace.
Stahmann Farms General Manager Matthew
Durack saw significant opportunities to
bridge this gap and drive efficiency in the
operation, and approached QMI Solutions
for expert assistance.
QMI Assistance
QMI Solutions, along with third party
consultancy Efficiency Works, began
working with Stahmann Farms in 2013.
The brief – to help Stahmann Farms
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update systems and processes from those
of a small business to a larger and more
professional company. This in turn would
reduce Stahmann’s cost base, and position
the company for continued success in
competitive export markets.
QMI Solutions consultants began by
applying a manufacturing industry
benchmark to Stahmann Farms’ operations.
The benchmark compared the company
with world class manufacturers, uncovering
strengths, weaknesses, and areas for
improvement.
In a strategic session, QMI reviewed the
results of the benchmark with Stahmann
Farms management. Together they
developed a short-term and long-term
strategy for improvement. To begin
with, Stahmann would use the principles
of lean manufacturing to eliminate
waste from its operation. This included
reviewing the factory layout, developing
new systems for problem solving and
implementing ‘5S’ methodology. ‘5S’ is a
Japanese system in which each ‘S’ refers
to an activity to improve handling of tools
and materials; sorting, setting in order,
shining, standardising and sustaining the
improvements.
Over the long term, Stahmann would review
its ‘big picture’ manufacturing strategy,
and use tools like scenario planning to
reconsider the fundamental model of
manufacturing.
Over the long term,
Stahmann would review
its ‘big picture’
manufacturing strategy,
and use tools like scenario
planning to reconsider the
fundamental model
of manufacturing.
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The Outcome
Problem Solving
Stahmann Farms continues to implement
lean manufacturing principles, but already
it has realised cost savings of around
$100,000, and reduced the floor space
needed in its factory by 30%. Initial quick
wins were achieved by adjusting the layout
of the factory to improve process flow and
eliminate waste. 5S methodology was used
to reorganise the workplace for efficiency
and effectiveness. Additionally, visual
performance measurements (VPM) are
now on display in the processing facility to
highlight areas of strong performance, and
areas for future improvement.
According to Managing Director Matthew
Durack, one of the major outcomes from
QMI’s involvement has been the company’s
new approach to problem solving.
“The lean process has given people
the tools to solve problems in a more
structured and meaningful way” states
Durack. Lean Manufacturing empowers staff
to identify and solve problems themselves.
The process requires staff to think about a
given problem, go away and measure it, and
use metrics to put the problem and solution
into dollar terms.
“The process is a really good way
of training staff to take the business
personally and get involved” states
Durack. “Now they’re chasing real issues,
and they’re doing the homework on the
issues. It’s turned people into professional
managers”.
“The lean process has
given people the
tools to solve problems
in a more structured
and meaningful way”
Matthew Durack
Managing Director
Stahmann Farms
Value Stream Map
Stahmann Farms is now on the verge of
implementing its long term manufacturing
strategy, leading to dramatic changes in
the way the business operates. To develop
this strategy, QMI Solutions worked with
Stahmann Farms to develop a ‘value stream
map’. In its most basic form, a value stream
map is a visual representation of the flows
of information and materials required to
bring a product or service to a customer.
This tool helped Stahmann to examine the
way raw materials flow through the storage
and processing facility.
Previously the business ran a ‘crack on
demand’ model, processing nuts as and
when they were required by customers.
“Looking at the value stream map, we
realised that all the stops and starts were
slowing the operation down” said Matthew
Durack. The business will now run a ‘push
system’ for manufacturing, processing all
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33 McKechnie Drive
PO Box 4012
Eight Mile Plains QLD 4113
T +61 7 3364 0700
F +61 7 3364 0786
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nuts immediately after harvest. Produce
destined for commodity markets is
immediately sold and converted to cash.
Products bound for contract markets are
maintained fresh in cold storage until
needed.
Processing nuts immediately at Stahmann
Farms will remove a great deal of waste
material, and greatly reduce the storage
space required. It will also halve the number
of forklift movements required, as nothing
will be put into storage before processing.
Over the long term this will reduce
inventory by approximately 50%, speed up
processing, and improve cash flow in the
business.
The Journey of
Continuous
Improvement
Reflecting on the company’s journey so far,
Managing Director Matthew Durack stated
that “When you’ve been in business for a
while, you build up a lot of processes that
you think are important. When you ask
‘why are we doing that?’, too often the
answer is ‘that’s how we’ve always done
it’”. Stahmann farms has used external
advisors, QMI Solutions and Efficiency
Works, to take a step back and examine
manufacturing process and strategy’.
The results already speak for themselves,
with $100,000 in cost savings and a 30%
reduction in the floor space needed in
the factory. Over time Stahmann will
fundamentally change their manufacturing
model, and cement the company’s future
as a vibrant and globally competitive
manufacturing business. “The important
thing” says Matthew, “is that you need to
keep ‘sharpening the saw’, and constantly
improve on the way you do things”.
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33 McKechnie Drive
PO Box 4012
Eight Mile Plains QLD 4113
T +61 7 3364 0700
F +61 7 3364 0786
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