FEATURE – The food industry is mired with problems all along the value chain. In this call to arms, the author explains why lean thinking is the only tool we have to transform it right now.
Words: Josh Howell, President and Executive Team Leader, Lean Enterprise Institute
I have worked in the food industry for most of my career. Even when I became a coach for the Lean Enterprise Institute, most of my work was supporting companies operating in this sector. Even now that my role within LEI has changed, transforming the food industry remains one of the things I am passionate about.
The industry is ripe for change, and it’s been undeniably slower than others in its adoption of lean principles. I believe it represents an incredible opportunity for us as a community, and I would like to use this article to tell you why.
Let’s start the way lean thinkers always start – by defining the problem to be solved.
At a macro level, I am calling out three major industry-wide issues:
- Supply doesn’t equal demand. It is estimated that a 60% increase in food production will be needed by 2050 due to population growth, resource scarcity, and climate change. At the same time, we are facing an absurd situation whereby 40% of what’s grown today is wasted and 12% of the world’s population is food insecure. It’s the paradox of hunger. There is a complete disconnect between food processing, production, packaging and consumption.
- In every step of the food value chain, bad jobs – and bad work – are the norm. Agriculture and retail appear at the top of rankings for unhappy employees. In the US, the food service business employs 15 million workers (20% of whom are immigrants) and turnover for hourly employees is 100%. That means that, if you have a team of 10 people working in your restaurant, there is a chance they will all leave by the end of the year.
- Business conditions are incredibly hard. The restaurant business is particularly tough: the likelihood of going out of business is very high. In the US, 10,000 new restaurants are added every year, and that’s the result of 60,000 openings and 50,000 closures. Competition is fierce and the proliferation of social media puts restaurants under more scrutiny than ever before: with half of the US population using food delivery services, in this day and age a single mistake can cost a restaurant dearly. Managing the work is very difficult, too, because there is no successful operating model. You can only try to correct bad behaviors and hire good people.
At a micro level, we see even more problems: food products are often stocked out (or “86ed”) and wasted; there are long lead-times all along the value chain (which results in our food being filled with preservatives to make it last longer, something that an efficient system of supply would make unnecessary); untimely, missed and inaccurate deliveries; dynamic and unpredictable demand (in a restaurant, you can have 30 people show up within 10 minutes and then nobody for half an hour); poor and inconsistent quality; tons of product variety; physically hard work and long shifts; and rising infrastructure costs.
It’s a pretty bleak picture, which is why I want to introduce lean thinking to the industry so badly.
If we look at the extended value chain of the food industry, we can see how lean is certainly more present in its upstream section: albeit to different degrees, processing, manufacturing and distribution have all benefited from the application of lean principles – with thousands of examples of successful applications around the world. What we have not been able to tackle consistently yet is the part of the value chain closest to the customer: grocery, preparation, hospitality, even education as it pertains to food (think culinary and business schools).
We are lucky to have a few, excellent examples that demonstrate the viability of a lean approach in the food industry. From Ben Hartman’s lean farm in Indiana to the 365 café chain in Barcelona, from the Xibei restaurant chain in China to Tesco in the UK. And then, of course, Starbucks, Zingerman’s and Legal Sea Foods. We need more examples! Beyond these pioneering organizations, lean thinking is pretty much unknown in the sector, or still considered a cost-cutting approach rather than a people-centric management system that grows people into powerful problem solvers.
The food industry doesn’t fully embrace the idea of people development, partly because of that 100% turnover they experience – “Why would I invest time and money in someone who is going to leave in a few months’ time?” Lean, however, puts value-creation and capability development at the heart of the work, like it’s done successfully in organizations like 365, Legal Sea Foods and Starbucks.
There are several organizations out there that are looking to influence the food industry in a positive way, from The Good Jobs Institute to the Food Tank and even TSSC (Toyota Production System Support Center). There is a fair amount of investment and energy being put into addressing these problems, but the lean community isn’t a major player yet. We want to change that and bring lean at the center of the conversation. As I see it, our challenge is twofold: we first need to spread the right interpretation of what lean is and then take that thinking across the whole industry (now it is concentrated in the upstream).
In my mind, to succeed in this undertaking we’ll need to focus on two core activities:
- Leadership chef development. I remember listening to David Chang’s podcast, in which he often interviews other chefs. What they talk about predictably every time is how challenged they are with developing the next generation of management and chef talent. The primary reason is that the only way to teach what they know is the one that was used on them – being crushed by brutal chef-dictators running kitchens (interestingly, they acknowledge their success is in part due to it). This approach no longer works, as new generations are not willing to tolerate such an abusive approach to development. Lean thinking, of which respect for people is a pillar, represents the perfect alternative to this.
- Demonstrating the immediate viability of lean. There is a common acceptance that the food industry is broken, and that the only way out of this mess is technology. Indeed, a lot of the investment being made in the industry goes toward developing technical solutions – the hamburger flipper being perhaps the best-known example. Sure, in the future some of the work will be done by robots and some of the thinking will be done by AI, but it’s important we show the industry that, in the meantime, there is something available to them right now – lean. It is (relatively) easy to apply and effective. It can enhance value, help us solve the supply/demand conundrum, develop our successors, and improve the work.
The food industry needs to change, and I believe lean thinking is the only approach we can use to successfully do it. At the Lean Enterprise Institute and the Lean Global Network, we have been learning a lot about lean in this industry and we would love the opportunity to share our experience with you. Let’s get it done, together.
If you are interested in some food for thought (pun intended), join us at a Public Event on November 6th in Boston, Massachusetts.
Josh Howell is President and Executive Team Leader at the Lean Enterprise Institute.