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Embrace those business growing pains

Money Management: A look at how Lean manufacturing is implemented

Let’s say your farm business has been bumping along much as anyone would expect. You’ve been experimenting with some new crops, maybe investing in some updated technology along the way, all the while riding the inevitable ups and downs of the farming road.

Then, out of the blue, something is keeping you up at night.

Maybe it doesn’t feel like it — at least not at 3 a.m. — but in reality, this may be the sound of opportunity knocking.

So, what exactly should you do when morning arrives?

Nelson Leong.
photo: Supplied

“To me, this is telling you it’s time to grow or to bring in some help,” Nelson Leong, founder of Operations Bridge Consulting, says of the kind of the middle-of-the-night experience that interrupts your sleep, especially when you had gotten used to thinking that everything was ticking along just about as well as you could hope.

More to the point, it’s time to think about your business in a different way.

Leong provides hands-on consulting and training services to small- and medium-sized businesses across a number of sectors, and he sees the pattern time and again.

He also knows where to start looking. “Often the leader or the company stakeholder is having difficulty with the letting-go aspect,” Leong says. “They still want to micromanage it, and can sometimes be driven by ego.”

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Sound familiar? Yet while everyone is focused on this control issue, another deeper issue may be undiagnosed. The real problem is not seeing your opportunity.

Probably more than any other sector, agriculture is forging ahead with transition. Many family farms and farm businesses are looking to the next generation to take over.

Huge emphasis is put on that transition process and on how the legal and financial considerations apply to each generation as well as to family dynamics. Somehow, the job becomes making sure everyone is happy and comfortable and is treated fairly (including non-farming family members).

On more and more farms, farm consultants, coaches and other advisers also get called in to assist with transition. But too often, the actual processes that make the business work aren’t part of the agenda.

Plus, while it’s easy to recognize that you need to grow if you’re going to have more family members earning their keep from the farm, that’s a long way from knowing exactly how you will grow.

The obvious first option is purchasing and farming more land. But, with land in tight supply, and with escalating prices, farmers often have to pass up the opportunity to expand.

Ironically, this is another clear signal that there could be big returns to changing your business model, says Leong.

“When you’re turning down opportunities, whether it’s financial, economic or for long-term growth, you know it’s time to grow,” Leong says.

Why Lean is different

Much of Leong’s expertise comes from non-farm sectors, where he specializes in helping companies that have reached revenues in the $5 million mark grow to $10 or $20 million in turnover. The lessons there may apply on the farm too.

To help his clients, Leong employs the principles of Lean (a program designed to eliminate waste and maximize efficiencies in processes and operations that was first introduced in Japan’s manufacturing sector).

Leong is a dynamic business leader, professional manager and organizational coach, and he’s had a varied career, working across many different industries and has progressed through several high-level production and management positions over the past 25 years. After graduating from the University of Manitoba in 1989, he worked for an electronics company for five-and-a-half years before joining the Royal Canadian Mint in Winnipeg, starting as foreman and eventually becoming operations manager.

After the Mint, he then worked in various manufacturing companies, and eventually became CEO of Polar Windows before striking out with his own consulting company a few years ago. Along the way, working with teams of more than 2,000 people, and developing and executing strategic plans and managing several facilities, he has gained perspective on what works and what doesn’t for different entrepreneurial styles and for different companies at different points in their growth.

Leong’s first priority is to understand the company’s goals. “I will meet with the primary stakeholder, it could be the CEO or the owner and/or other key players and figure out what’s the desired outcome or what’s the desired state or future state for the business,” says Leong. “I ask them ‘what is the vision five and 10 years down the road?’ Then I sit down with a lot of the other players one-on-one to get a sense of whether they are familiar with where the stakeholders want to take the business.”

Challenging agriculture to find efficiencies

Leong is a firm believer that Lean principles are applicable to any agricultural business, including the family farm. But farmers and farm operators are often just too busy with the daily business of farming, with the seeding, haying, spraying, swathing, combining and any number of jobs in between, to stop and analyze whether they could make their processes more efficient.

“Farmers are very hardworking people, they know their season, they know the hours, but I don’t think we challenge them enough as far as efficiencies,” says Leong. He advises farm managers or owners who want to take a critical look at their operations with a view to improving efficiency to sit down in front of a blank piece of paper.

“I would recommend that they start by mapping out all the critical steps in their farming operation from start to finish (see next section),” says Leong. “Next they need to see where they are spending a lot of time or money and think about whether there are ways to reduce that, perhaps by investing in more technology.”

Examples in agriculture might be finding ways to reduce labour time at harvest, getting more process-oriented about how you choose inputs, or taking a detailed financial look at when it makes sense to hire more custom work rather than investing in larger and larger machinery.

All these things have the same goals: to reduce waste, to shorten overall cycle times, and to provide management opportunity.

Focus on processes

After assessing the gaps between what the desired or future outcomes for the company are and the current condition of the business, Leong asks another important question: “What is it that the company cannot do today, but if it could, would greatly impact its success?”

In agriculture that might be — “If I could raise 25 per cent more beef on the same asset base,” or “If I could reduce my cost per bushel by five per cent.”

Such questions more or less force the manager to look at the processes, technology and people that the farm has in place to figure out what its capabilities and capacity is.

“It all boils down to the processes, because everything we do is a process,” Leong says. “Having worked in 11 different companies, I began to see patterns… the same things that I’ve applied in operations in manufacturing are actually very applicable in agriculture.”

One thing Leong focuses on is “cycle times” — basically how long it takes to complete a specific process from start to finish. By analyzing all the steps it takes to complete the process, he looks for ways to economize or optimize things like movements and machine and operator times, materials available, equipment and even environmental surroundings.

“I look at the ‘waste’ involved in the process steps by reviewing the Seven Types of Waste (see sidebar) that is a part of the Lean analysis process,” says Leong.

Filling up the walls

Leong’s next step is to begin covering the walls of the office or board room with large pieces of paper with charts, arrows connecting notations, diagrams and handwritten sticky notes. The jumble of ideas, goals and actions will become the nerve centre of the business, where regular meetings are held with all the stakeholders.

An important component on the wall is a value graph that translates brainstorming sessions during meetings into short-term and long-term strategic plans for the business.

Like any other chart, the value chart has a horizontal X axis and a vertical Y axis. The X axis represents value or return from small to big (left to right) and the Y axis represents effort from low to high (bottom to top).

“Anyone can come up with an idea, put it on a sticky note and put it on the value graph and then we evaluate what the return is,” says Leong. “The value chart, which they see every day, is generated by ideas from the people working in the business.”

If you imagine a chart with four boxes (see illustration), on the top right quadrant of the chart are the strategic items that have high or big value and require high effort. Below the strategic items are “gems” that are high value but require a low to medium effort. To the left of these on the chart are the “quick hits” which give small to medium value but require low to medium effort.

“The strategic items are the ones that will take two to six months to be implemented, so you focus first on the gems because they will require less effort but still give a high value, and then you look at the quick hits,” says Leong.

A process map details all the processes and actions required to produce a product in the case of a farm business, crops or livestock and shows all the interactions between them. It’s a highly visual tool that is designed to help get buy-in from everyone involved in those processes. Without that buy-in it’s hard for any business to achieve its vision.

Each process is broken down into a number of steps and building blocks with timelines and weekly and monthly goals. Everyone is involved in the process. The map reminds everyone of the direction they should be heading and what they each need to do to get there.

“Some companies implement key performance indicators and metrics to death,” says Leong. “You have to break down the goals so people can relate how they can contribute to these overall goals of the business.”

That said, all businesses need some metrics or key performance indicators in place to measure whether they are meeting their goals. If the business is only meeting 75 per cent of its goals, it’s time to look in the mirror and figure out what it needs to do to hit at least 95 per cent all the time, adds Leong.

Many of the changes Leong has managed over his career have been large, such as amalgamating two facilities into one or applying advanced technology to speed up processes and reduce labour costs, but they all start out the same way, with a certain amount of resistance to change.

Obvious examples in agriculture might be automating processes like grain drying to reduce labour time at harvest, locating fertilizer storage closer to the field to reduce conveyance time or using a high-capacity grain cart to unload grain on the go and reduce combine downtime.

Then it’s time to drill deeper for less obvious steps that will reduce the time needed to perform an individual process and improve overall cycle times.

In the manufacturing sector, automation and robotics have played a key role over the past 50 years in increasing efficiencies and productivity, and Leong firmly believes it’s only a matter of time before agriculture catches up. A number of companies have developed driverless tractors, including SeedMaster, which recently unveiled DOT — its autonomous farm technology.

“Some countries already have driverless trucks and trains,” he says. “Farmers may shortly have the opportunity to make an investment in technology that can run 24 hours a day without them needing to be present.”

As much as that might seem a bit like science fiction right now to many farmers, technology has a habit of becoming the conventional practice — fast. What isn’t always as easy to accept as the latest gadget or software program is the idea of change itself.

Many of the changes Leong has managed over his career have been large, such as amalgamating two facilities into one or applying advanced technology to speed up processes and reduce labour costs, but they all start out the same way — with a certain amount of resistance to change.

“When you introduce change it’s best to do it in baby steps and when making a big change like an amalgamation or implementation of Lean I don’t use those terminologies, because there is always a fear factor when it comes to change,” says Leong.

“It comes down to presenting the facts and data to show the benefits of reducing waste in the operation and that the things you want. Go for the quick hits and show people that changes can bring success.”

Eliminate waste on the farm

“Everytime we eliminate waste from the farm, we increase capacity.”

One of the foundations of Lean is to eliminate waste. Eliminating waste means adding capacity, says Ben Hartman of Clay Bottom Farm who applies Lean principles to his nine-acre farm near Goshen, Indiana, which grows specialty vegetables including for local artisanal restaurants.

Eliminating waste involves analyzing every process on the farm, and it involves all the steps needed to complete those processes, whether we’re talking seeding, fertilizing, spraying, feeding or moving livestock, harvesting, loading, unloading and transporting grain and animals.

Lean defines seven types of waste (some versions add an eighth) and it’s probably not hard for most farmers, if they cast a critical eye over their operation, to come up with a few examples of each on their own farm.

Leong’s seven (or eight) types of waste are:

  1. Overproduction — producing more product than is needed by customers or before they need it.
  2. Idle time or waiting — down time for owners, employees or machinery waiting for tools, supplies or repairs.
  3. Transportation waste — either time spent getting product to a customer, or conveying or handling of materials or product on-farm.
  4. Inventory — excess product, supplies or equipment and tools that take up extra storage space or require additional handling.
  5. Motion — unnecessary work movements.
  6. Correction — reworking or downgrading of defective products or products that don’t meet the customer’s specifications.
  7. Excess processes — additional steps that are not essential to complete a process.
  8. Non-utilized people – not identifying and applying the talents that people have to the best use.

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Angela Lovell

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