Managing Growth for Australian Manufacturers - A
Transcription
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. qmisolutions.com.au 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 qmisolutions.com.au 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. QMI SOLUTIONS 33 McKechnie Drive PO Box 4012 Eight Mile Plains QLD 4113 T +61 7 3364 0700 F +61 7 3364 0786 Blog | Twitter Facebook | LinkedIn 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 qmisolutions.com.au QMI SOLUTIONS 33 McKechnie Drive PO Box 4012 Eight Mile Plains QLD 4113 T +61 7 3364 0700 F +61 7 3364 0786 Blog | Twitter Facebook | LinkedIn 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”. qmisolutions.com.au Proudly supported by: QMI SOLUTIONS 33 McKechnie Drive PO Box 4012 Eight Mile Plains QLD 4113 T +61 7 3364 0700 F +61 7 3364 0786 Blog | Twitter Facebook | LinkedIn