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01 October 2012

Arla Foods UK

This Scottish plant proves you don't have to be big to be a winner

Highly Commended: 2012 Best Household & General Products Plant

Process manufacturing often assumes 'good' must be 'big' because productivity demands economies of scale. Arla's Lockerbie dairy upsets all the preconceptions. It processes and packs milk for retailers across Scotland, also supplying bulk cream for further processing. It employs only 115 people yet – in a plant originally designed to pack 90 million litres per annum – it is capable of packing 207 million. And little Lockerbie processes milk at a lower cost per litre than any other in the entire UK dairy industry.

That's not all: it is consistently best in the Arla group for milk shelf life – a direct result of its speedier processing and distribution – and for customer complaints per million units (CPMU), down 34% in 2010-2011 despite processing larger volumes. It has clearly earned customers' respect; it won Asda's Always Available award and was the first UK dairy to achieve Morrison's Added Value status.

Since first qualifying for the Best Factory Awards in 2011, Lockerbie has earned three new customers, taken on 24% more raw milk, 20 more SKUs, handled a 26% increase in cream exports to external sites and now processes 15% more milk by volume. And remarkably, it does it despite a long-standing bottleneck of limited fridge capacity, the result of original expectations of much lower output. The simple answer was extra chilled storage – adding no value whatsoever. Instead, it focused on getting milk through the plant, on the lorry and out to the customer in record time. By reorganising flow and investing in a new, faster line, it cut out three stages of handling. It then reduced the complexity of its distribution routes through innovative logistics partnerships. And, crucially, it set about squeezing out inefficiency throughout the plant.

Underpinning all of Lockerbie's remarkable progress is a thoroughly integrated structure for continuous improvement (CI) with lean at its centre. Arla understands that lean can't be done in the gaps between daily demands. Lockerbie has a full-time lean facilitator, Nicky Gordon, working alongside a full-time process technology and development manager.

There is a structured CI cycle for the site and everyone is expected to contribute ideas as part of their personal development plans (PDPs). Gordon believes the flow of ideas is not just because of PDPs. Providing proper feedback for each suggestion stimulates more: "Now we are seeing much more discretionary effort and we are realising skills and intellectual capital."

Improvements are implemented through a rigorous CI log so nothing gets lost in the process. Ideas agreed by a CI steering group get focused support: trained lean leaders act as sponsors to help develop and implement effective changes. They work with a team of operators and engineers until the improvement is made and closed off in the log. Progress at every level is clear for all to see: logs, matrices and progress charts are open for inspection at a central lean hub and keenly observed. There is a real drive for the shopfloor to lead the dairy forward. A concerted focus on multi-skilling means that six out of 10 operators can do every job on the line. And everyone has received lean training: Lockerbie is the first Arla site to have a training matrix for lean essentials like SMED, kaizen and 5S.

The project results are stunning: a kaizen blitz on a bottling line delivered 3% efficiency increase; by cutting changeovers in the production plan, the same line gained another 2%; and a project to optimise CIP (cleaning in place) is on track to save £60,000-£70,000. A single project realised an extra 21 million litres in capacity. Now it has accepted a tight target to achieve £220,000 in cost savings and increase capacity by 46% within the next year – and it is on track to achieve it. Lockerbie's passionate desire to lead from the front is admirable.

Top 3 Points

  • A small plant with a big reputation – the lowest processing cost in the entire UK dairy industry
  • Continuous improvement and lean are at the heart of everything it does
  • A passionate desire to lead from the front in throwing out the inefficiencies and setting the pace of change


Arla Foods UK plc

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