Strategies for Building High Performance Organizations Report

This report examines the concept of building high-performance organizations through the lens of lean manufacturing and supply chain principles. It delves into the core elements of lean, including waste reduction, inventory control, and the pull system, emphasizing their importance in achieving competitive advantages. The report uses KFC as a case study, illustrating how the company applies lean principles to optimize its supply chain and improve customer service. It also explores the challenges and implications of implementing lean strategies, particularly in food processing companies like Absolute Foods. Recommendations are provided, focusing on strategies to minimize waste, enhance inventory turnover, and adopt a pull system to align production with customer demand. The report underscores the significance of lean production in the current business landscape, emphasizing its role in cost reduction and improved operational efficiency.

Running head: HIGH PERFORMANCE ORGANIZATIONS 1
Building High Performance Organizations
Student’s Name
Institutional Affiliation

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Table of Contents
Executive Summary.............................................................................................................3
PART A: Lessons Learnt.....................................................................................................4
The Development of the Philosophy, Principles, and Process of Lean...........................4
Implications and Challenges............................................................................................5
Recommendations............................................................................................................6
Part B: Reflections within the Context of an Organization.................................................6
Reflection of the Principles on KFC................................................................................6
Benefits of Lean on KFC.................................................................................................7
References........................................................................................................................9
Appendices........................................................................................................................10

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Executive Summary
Lean production and supply chain has become an essential element in modern businesses
as they strive to reduce expenses and gain a competitive advantage in the industry. The concept
comprises five principles that define how companies minimize wastage by enhancing processes
through which they deliver products to consumers. Moreover, this strategy enables businesses to
reduce lead time as they produce according to demand using pull strategy. Absolute Food is an
example of a food processing company that could adopt this approach. Although this method is
mostly adoptable in the manufacturing sector, several studies have shown its applicability in the
service and food industries. In this regard, Absolute Foods has the potential to implement it in
their processing and supply of fresh meat and meat products. While the strategy results in
improved business performance, it also has numerous drawbacks including how to define
wastage among other factors. However, inventory control would be the suitable recommendable
method for achieving lean model. This strategy would mean procuring raw materials according
to the demand. To this end, the company would have to check some raw materials, inventory,
and finished product. On the other hand, the pull strategy would help them process final products
based on the demand. Finally, this approach has been successful in KFC where the company uses
the wastage control principle of lean to ensure that their supplies are only enough to cover the
demand in their branches. This method affords the firm a competitive advantage as it improves
customer service while operating at reduced prices.

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Building High-Performance Organizations
PART A: Lessons Learnt
The Concepts of Lean
Lean manufacturing or production is traceable to a long time ago in 1900 when
companies such as textiles services and transportation through the silk route during the Middle
Age until the first revolution when the economic importance was lost. The production system
later emphasized through the introduction of automotive companies by dropping of the mass
production technique. Lean concept manufacturing later popularized in 1990 by Womack and
Jones who state the origin of lean manufacturing as from the shop-floors of Japanese Toyota
manufactures. The companies faced challenges in meeting the customers’ demands that kept on
growing on varied issues and options, as a result, led to the adoption of the lean manufacturing
process. Given its dynamic nature, its philosophy definable in various ways since it is applicable
differently in every country. According to Dickson, Singh, Cheung, Wyatt, and Nugent (2009), it
comprises techniques and principles that help organizations to improve their products by
fostering valuable, relevant, and necessary steps while eliminating the less important ones. This
way, it is a tool for providing customer satisfaction through efficient processes. Through, the
non-value-added activities, the companies can supply customers with a more satisfactory product
without incurring more cost that will eventually increase the price. The main elements that lean
manufacturing address are such as overproduction of items that eventually leads to a poor flow
of goods and supply to the market. The batch production also led to wastage of time as many
customers took a long time to receive their goods, which eventually put pressure on the process;
as a result, there were so many defected products. The process also eliminates the unnecessary
movements caused by large number of employees through introduction of appropriate processing

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methods, therefore, making it an essential element in modern businesses. The process depends
mainly on the organization flexibility to change from the automation technique to adjusted
processes that oversee one product at a time in response to the customer’s specifications. Most of
current industries and companies have embraced the concept of lean manufacturing including
food industries such Kentucky. Kennedy, Plunkett, and Haider (2013) explain that this model of
building high-performance organizations is appropriate for food processing companies.
Markedly, it helps them to assess and eliminate unimportant inventory and other wastages along
the supply chain. Many food industries are adopting the lean concept since hundred millions of
people contract from them, and their needs keep on changing.
Companies that utilize lean manufacturing operate on the five principles that co-mutually
depend on one another to have a continuous improvement. The principles include identification
of value, mapping of the value stream, a creation of the flow, establishment of pull, and seeking
of perfection (Womack & Jones, 1996). The authors posit that identification of value in lean
production refers to adherence and capability to provide products and services that are
unconformity of customer needs during production, which includes price, production timeline,
and delivery among others. Value stream aims at examining the processes and steps taken in
transforming products from raw materials to the customer’s final product. They explain that flow
is the continuous product movement along the production process in a smooth way without
unnecessary interruption. The value stream is therefore, achievable through the efficient
organization of the workplace, by providing the required tools, giving the right information and
specifying duties in accordance to the workload. Further, the pull concerns the improved time to
customer due to the flow to avoid overproduction and supply. Finally, perfection regards the
constant vigilance and effort to make the process perfect.

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These principles apply to the food processing industries such as in Absolute Foods
Limited and many others, since it has to understand customer needs, such as gluten and lactose
preferences to remain relevant in the market. In the industry, value stream would mean
evaluating the production process, such as the supply of ingredients. Further, the principle of
flow is relevant in the industry, where the company could aim at ensuring uninterrupted product
flow along the production process, which would automatically result in the shorter customer
waiting time. The company’s chain begins from the sourcing of raw materials to the company,
production of the products and then supply to the customer. The concept has helped AF in
keeping up with the storage as many customers need fresh foods and at the same time, the foods
are highly perishable. The companies can maintain the sanitation through proper cleanliness of
the tools, equipment, and surface preparation thereby reducing the probability of contamination.
Throughout this process, the lean concept eliminates unnecessary transportation, overproduction
of foods that might affect the storage plans and a large number of defected products. The food
items, therefore, finally reaches the customer with no added cost, but with the same specified
value. However, the company needs to monitor this system continually and to make it even
better. In the end, the application of lean processing in food processing should help businesses in
this industry to reduce wastage and operate profitably.
Implications and Challenges
Despite the numerous advantages stemming from the adoption of lean production, the
literature reveals that there are various implications and challenges might emanate from its
application in a food processing company. Mostly the automotive companies have benefited
from the concept since they formed the origination unlike the service industries that are less
pronounceable than manufacturing processes, which could make it difficult to identify which

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ones should be changed and fixed (Christopher & Peck, 2004). To this effect, Absolute Foods
may find it difficult to determine how to do value stream mapping as staff finds it difficult to
agree the best approach to specific tasks. Mainly, this problem may arise where the demand for
fresh meat and meat products is variable and unpredictable. Consequently, the adoption of lean
production at AF may have implications on several service departments including the
distribution, supply of ingredients, and the standard units. The literature further reveals that lack
of proper leadership contributes to the significant failure of the adoption of lean production
concept by a high number of companies, as many managers fail to focus on the specific issues.
On the supply chain, AF must work on the flow of the incoming raw materials and
outgoing products due to poor coordination of suppliers, vast ordering system that finally affects
the operational demand. The implementation of the concept has created gaps in the employee
development due to inadequate job rotation. When employees use the same method every day,
they tend to lose the ability to improve and be creative resulting in job loss. The technique also
requires highly skilled personnel that can inspect, repair, and design the required layout as
specified, these employees tend to be expensive to most of the fast food companies. The lean
manufacturing concept requires a significant investment in the technologies that will oversee the
production system, the statistical analysis, and monitoring software, therefore, the company to
rely on technology than the past. The lean concept tends to cause cultural issues as few
employees assigned more responsibilities, creating a blur in the job descriptions.
On the other hand, food processing companies, such as AF, could find it difficult in
defining waste processes. According to Manzouri, Ab-Rahman, Zain, and Jamsari (2014), just
like in lean production, lean supply chain finds and eliminates all types of waste in a distribution
channel. However, most literature findings define waste as all the processes that do not offer

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value to customers or contribute to the efficiency in running services. In spite of the definition,
AF to some extent still find it challenging to identify waste as the management differs on
aspects that should constitute waste in the company’s production process and distribution
channel.
In spite of the challenges, the decision to adopt resilient, accountable, and transparent
supply chain operations in a processing company has numerous implications. This innovation
aims at reducing waste in human effort, manufacturing space, time, inventory, and lead time
(Lopes, Freitas, & Sousa, 2015). Correspondingly, it should improve responsiveness to consumer
demands while availing quality products. The analysis of its adoption in manufacturing has
shown massive success in decreasing logistics and costs of production while increasing
production levels and quality. Therefore, a proper implementation at AF should result in similar
outcomes since it would include reducing waste processes by adhering to customer values such
as gluten and lactose specifications while improving distribution and processing time.
Recommendations
It is indisputable that lean production and supply chain is an important initiative for
companies to improve meet customer needs in a highly competitive business environment.
Globalization and rapid industrial development require contemporary entrepreneurs to innovate
better actions and functions to gain competitiveness (Kareska & Davcev, 2016). Adopting lean
strategies is one of the ways to achieve competitiveness since it enables enterprises to reduce
costs of production and improving customer service. Even though the model has several
challenges for various service industry (Elnadi, 2013), Absolute Foods should consider
implementing several lean strategies. Besides, Lehtinen and Torkko (2005) have shown that the
model has the potential for growth in the food processing industry.

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The first recommendation is for AF to consider cutting down wastes level in the
inventory process found in finished goods, unfinished products, and raw materials. Research
shows that increase in the stock of the three categories results in less inventory turnover as
according to Sundar, Balaji, & SatheeshKumar (2014). Mostly, excess raw materials could be the
result of improper projections of the product and often leads to more work experienced in the
production progress. In the end, the company indulges into unnecessary transportation of raw
materials and goods .In this regard; the company should start by evaluating the amount of fresh
meat and meat products it stocks in a given time. In case of excess or waste supplies, AF could
reduce it to increase inventory turnover.
Another recommendation for AF would be the adoption of the pull system where they
produce according to customer needs. Markedly, a successful pull system involves flowing
products in small batches, avoiding overproduction, and signaling replenishment. Using this
method, Absolute Foods should consider evaluating the products needed in commercial
companies, supermarkets, and restaurant chains with the aim of applying the pull system in
which they should produce burgers and sausages based on the demand. This model works well
with a replenishing signal that would help avoid overproduction.
All in all, lean strategy has been a useful tool in the manufacturing industry for some time
now. While it a common phenomenon in the manufacturing industry, it is also gaining popularity
in the service industry. Absolute Foods could use this method to improve its performance by
reducing waste and pulling customers through a lean supply chain. However, the strategy is
likely to face challenges in management deciding what to regard as waste in their operations. In
spite of the difficulties, going lean would mean low processing costs and a competitive edge for
the company.

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Part B: Reflections within the Context of an Organization
Reflection of the Principles on KFC
The five principles of lean are applicable in the context of an organization of choice, such
as KFC. KFC is a fast food chain that deals with fried chicken as well as wings and sides. Its
supply chain consists of three primary processes including procurement of raw materials,
preparation of product at the branch, and replenishment of branches depending on requirement.
The five principles of lean involve reducing wastage, time, stock, manufacturing space, and lead
time (Womack & Jones, 1996). KFC complies with the five principles throughout the supply
chain in the following ways.
First, it reduces wastage through procurement of inventory that forms the most significant
factor in controlling waste, therefore, calls for proper management. The waste happens at every
stage of the production staring from the supply to service and door to door delivery of the
products to customers. In failure of the waste reduction, the company’s performance is affected
both the product as well as employees performance. Additionally, the inventory control specifies
type of chicken that are supposed to be acceptable depending on the weight and age. The average
weight and aged ensures standardization of the chicken products; hence customers are unable to
realize any difference regarding texture. The purchasing officer inspects the chicken breast,
thighs, legs and wings as the first step in ensuring quality. Usually, store managers order for raw
materials by filling term-type orders depending on the weekly orders. They arrive at the ordering
volume by subtracting the available inventory from the demand, where the need depends on the
historical sales data. The store observes value stream through supply resource file which
indicates the supplier response time and processing and transmission of orders. Additionally, the

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distribution planning that generates summary tables, packing, picking, and pickers enhance the
flow.
The organization of production system is in an efficient way that ensures a constant flow
of good quality fried chicken through the use of first in-first out (FIFO) to ensure that no chicken
stays in the storage facility for a more extended period that will eventually affect its freshness.
The preparation involves standardized stages such as dunking the chicken into the brine to get
the breading to stick then drying of the chicken by tossing it seven times to ensure that the
chicken is not too wet when it hits the breading. The chicken then placed onto the secret
“original recipe breading” then after some time they are placed into the chicken frying rack to fry
for about ten minutes. These processes practiced in every Kentucky location ensure a
standardized taste of the chicken across all customers.
Additionally, delivery routes, loading efficiency, and punctuality are highly observable
due to the high degree of the perishability of the raw materials. The process of delivery ensures
that the flow of the ordered products from the restaurant to their customers take the shortest time
as specified by the customers as required by the pull principle. The distribution process aided by
various destinations of the restaurant across the Australia, recruitment of different delivery staffs
and having a good number of vehicles to reduces the problem that might cause by distance
thereby; the company improves the delivery time to consumers. Finally, KFC has continually
innovated economical menus, such as KFC Coffee, and messaging services that facilitate
customers services. Given that it observes the five principles, it is indisputable that KFC has a
lean production and supply chain process.

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Benefits of Lean on KFC
The primary advantage of companies that implement lean is the competitive edge in the
market in which they operate. With the large growing production at KFC, the lean production
concept is evident and has led to a significant number of benefits. The restaurant has gained a
high number of satisfied customers due to the realization of their needs and values. The
customers have made likely impacts on the restaurant through practicing word of mouth
campaign.
The restaurant therefore, through reduced inventory wastage, which involves placing
orders for raw materials based on demand has realized massive profits, improved employee
morale and improved delivery. Sundar, Balaji, and SatheeshKumar (2014) posit that stocking
excess raw materials reduce inventory turnover. Moreover, procuring materials upon request
reduces wastage considering the nature of KFC’s raw materials that are prone to perishability.
This way, the company reduces its operational costs, a phenomenon that enables it to provide
products at lower prices hence more sales.
Additionally, KFC achieves a competitive advantage through the reduced lead time.
Markedly, it uses a pull method in its supply chain to move products and materials along the
production process. In this approach, the company pulls products to the next step only when the
there are sufficient arrangements. As such, it relies on the batch system to move its products
through delivery routes depending on loading efficiency as well as the picking and packing
procedures. In using this method, KFC eliminates bottlenecks in the supply chain, and in the end,
it reduces lead time. Ultimately, this strategy improves customer service since customers do not
wait for the delivery of a product. This way, KFC creates a competitive advantage in the fast
food industry since most customers are satisfied with the model of service provision.