Lean and food

I have worked in the food industry for most of my career. Even when I became a coach at the Lean Enterprise Institute, most of my work was supporting companies operating in this sector. Even now that my role at LEI has changed, transforming the food industry remains one of the things I am passionate about.

The sector is ripe for change and has undeniably been slower than others in adopting lean principles. I believe it represents an incredible opportunity for us as a community, and I would like to use this article to explain why.

Let's start the way lean thinkers always start – by defining the problem to be solved.

At the macro level, I highlight three major problems across the sector:

• Supply does not 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 face an absurd situation in which 40% of what is grown today is wasted, and 12% of the world's population has insecure access to food. It is the hunger paradox. There is a complete disconnect between food processing, production, packaging, and consumption.
• At every stage of the food value chain, bad jobs – and bad work – are common. Agriculture and retail rank at the top for dissatisfied employees. In the U.S., the food service industry employs 15 million people (20% of whom are immigrants), and turnover among hourly employees is 100%. This means that, if you have a team of 10 people working in your restaurant, there is a chance that all of them will leave by the end of the year.
• Business conditions are incredibly difficult. The restaurant business is particularly hard: the probability of failure is very high. In the U.S., there are 10,000 new restaurants each year, but that is 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: with half of the U.S. population using food delivery services, nowadays a single mistake can cost a restaurant dearly. Managing the work is also very difficult, because there is no successful operating model. You can only try to correct bad behaviors and hire good people.

At the micro level, we see even more problems: food products are frequently stockpiled and wasted; there are long lead times along the entire value chain (which results in our food being filled with preservatives to last longer, something an efficient supply system would make unnecessary); premature, missed, and inaccurate deliveries; dynamic and unpredictable demand (in a restaurant, you may have 30 people for 10 minutes and then no one for half an hour); poor and inconsistent quality; too much product variety; physically hard work and long shifts; and rising infrastructure costs.

It is a rather bleak picture, and that is why I am so keen to introduce lean thinking into the sector.

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: although to different degrees, processing, manufacturing, and distribution have benefited from the application of lean principles – with thousands of examples of successful applications around the world. What we have not yet managed to address consistently is the part of the value chain closest to the customer: grocery, preparation, hospitality, and even food-related education (think of culinary and management schools).

We are fortunate to have some 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 coffee shop chain in Barcelona, to the Xibei restaurant chain in China, and to Tesco in the United Kingdom. Also, of course, Starbucks, Zingerman's, and Legal Sea Foods. We need more examples! Beyond these pioneering organizations, lean thinking is practically unknown in the sector or is still considered a cost-cutting approach, rather than a people-centered management system that turns them into powerful problem solvers.

The food industry does not fully embrace the idea of people development, partly because of the 100% turnover it experiences – “Why would I invest time and money in someone who will leave in a few months?”. Lean, however, puts value creation and capability development at the center of the work, as has been done successfully at organizations such as 365, Legal Sea Foods, and Starbucks.

There are several organizations out there seeking to influence the food industry in a positive way, from the Good Jobs Institute to Food Tank and TSSC (Toyota Production System Support Center). A fair amount of investment and energy is being put into solving these problems, but the lean community is not yet a major player. We want to change that and put lean at the center of the conversation. In my opinion, our challenge is twofold: first we need to spread the correct interpretation of what lean is, and then take this thinking to the entire industry (right now it is concentrated upstream).

In my opinion, to succeed in this endeavor, we need to focus on two main activities:

• Developing chefs. I remember listening to David Chang's podcast, in which he often interviews other chefs. What they predictably talk about every time is how challenged they feel to develop the next generation of chefs. The main reason is that the only way they know how to teach is the way they learned – by being crushed by brutal dictator-chefs running kitchens (curiously, they say their success is due, in part, to that). This approach no longer works, because new generations are not willing to tolerate 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, much of the investment made in the sector is directed at developing technical solutions – the burger-flipping machine is perhaps the best-known example. Of course, in the future, part of the work will be done by robots, and part of the thinking will be done by AI, but it is important to show the industry that, in the meantime, there is something available to them now – lean. It is (relatively) easy to apply and effective. It can increase value, help us solve the supply/demand dilemma, 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 do this successfully. At the Lean Enterprise Institute and the Lean Global Network, we have been learning a lot about lean in this industry and would love to have the opportunity to share our experience with you. Let's do this, together.