Specialty Food Magazine is the leading publication for retailers, manufacturers and foodservice professionals in the specialty food trade. It provides news, trends and business-building insights that help readers keep their businesses competitive.
Issue link: https://www.e-digitaleditions.com/i/438836
FROM THE PUBLISHER Lean and Mean: Using Lean Process to Find Margin HAVE A COMMENT? Visit specialtyfood.com/ ccrocker/leanmean S pecialty food entrepreneurs face countless challenges in building a business, but a deadly one is the inability to generate sufficient gross margins, which should typically be in the 40 to 60 percent range. If you don't have enough margin at current scale, you can't fund your own growth. If you can't see a way to produce that margin at future scale, there is no point in grow- ing, even in the unlikely event you find the money to expand. Assuming you aren't in a position to increase price, your best path to profitability is by reducing cost. While a mass-market producer may have more latitude to " just add water," sacrificing product quality is antithetical to the premise of specialty foods. There are ways, however, to fer- ret out hidden waste in your business that can reduce costs and even increase quality. One approach has worked especially well for specialty food manufacturers. Lean Process Improvement is a scien- tific approach that uncovers and eliminates cost in business processes. It's based on the principal that any activity that doesn't add value to the product is generating unnecessary expense. The process comprises five basic steps: • Identify your product's value from the perspective of the customer. • Map all of the steps in the process to make that product and get it to the customer. • Identify those elements that don't contribute to the identified value, and eliminate them. • Establish and apply measures of efficiency. • Repeat the process, continually pursuing peak efficiency. Chris Crocker Senior Vice President, Content & Media ccrocker@specialtyfood.com In principle, it sounds simple, but it isn't easy. Done right, Lean Process eliminates rework, overproduction, excess inventory, unnecessary motion, and delay. Special- ty food producers who have employed it in their opera- tions have been surprised by both the quality improve- ments and the cost savings they've found. Even if you're not a manufacturer, Lean Process can improve your bot- tom line. It is a discipline that can be applied to almost any aspect of your business, from order processing to of- fice administration. As a small or micro-business, you may think you're already "lean and mean," and that you have neither time, nor money, nor opportunity to find efficiency. Without dwelling on that irony, it's worthwhile to make the time to make money now, so your business can grow. On Sunday, Jan. 11 at the Winter Fancy Food Show, Bill Whittier of the Manufacturing Extension Partnership will present "How Lean Manufactur- ing Can Boost Your Productivity," focused on how these manufacturing principals can help your bot- tom line. To learn more and register to attend, go to specialtyfood.com/winter/whittier. For more information on lean manufacturing, including local resources, visit mep.org. WINTER 2015 5