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Kellogg’s kaizen spells success in a product relaunch

Kellogg's kaizen

Executive Summary
A drop in Kellogg’s Special K sales led to a decision to re-energize the brand by improving the recipe and therein the taste of the product. The Querétaro Plant in Mexico went full steam ahead with ambitious production volume targets in order to ensure a seamless product changeover at retailers. After the first week, the plant was running behind schedule, and it took drastic action by way of a kaizen exercise to eliminate the root cause of the problem. Two weeks into the kaizen exercise, the plant was surpassing their volume targets, winning awards for their innovation, inspiring staff and leadership alike, and sales of Special K increased by 30%. This case study explains how they did it.

 

SituationKellogg's kaizen special-k sales
Special K had been on the market for about 12 years, and sales of the product had been dropping over a three-year period, equating to a total drop in sales of 17%. This drop in sales was indicative of the market requiring innovation to the product in order to re-energize the brand. A decision was therefore taken to change the cereal base of Special K from rice to a wheat and rice combination to improve its taste and flavour. This new recipe was well received in consumer focus groups, so the change was set to go ahead.

However, a change of this magnitude did not come without its challenges. For starters, the change required a substantial capital investment in the processing area of around US$1 million and included a full transformation from raw materials to the finished product in the food packing section. Secondly, in order for the product to not lose its current market share during the changeover, it was important to ensure that once the new production commenced, the old product would need to be removed from shelves, and immediately be replaced with the new product so that no retailers experienced empty shelves. This instant changeover made the product change all the more challenging, with no margin for error.

In order to ensure a seamless changeover to the new production, the team on the manufacturing side agreed on a daily target volume to ensure there was enough product to fulfill the pipeline. At the end of the first week, it became evident that they were unable to reach their target volume commitments, and quick action was needed to deliver to their promised on-shelves deadline.

Action
With the new production being extremely capital-intensive, the production, maintenance and engineering departments were all affected, yet they were working in silos. This fragmented approach was what led to nondelivery on production targets. Although each department was working hard, they were not communicating with one another and the result was that each department blamed the next for nondelivery.

Alejandro Arenas, Operations Manager, was responsible for leading production line teams to success, and he felt that the best way to rectify the situation quickly was to embark on a kaizen exercise. The first important decision he made in this regard was to exclude himself from the kaizen team. His reasoning behind this was that in the past, he had found that having management involved in these types of exercises could at times stunt the process for the following reasons:

  • Management is seen to be highly directive, and in that instance, team members take management’s lead instead of solving problems themselves
  • Team members on the ground often understand the machinery and processes in more detail, which makes them better equipped to spot the potential for improvements
  • Management is often too focused on the current data and how to fix it to get immediate results, whereas teams are able to increase the scope of their vision to include longer-term improvements

To this end, Alejandro appointed a project team leader who was an innovative thinker and was able to positively influence teams. His role in the kaizen became an indirect one, which was to coach the team leader, so that team members could work with a leader who was essentially one of their teammates. The project team leader’s first challenge was to break down a well-entrenched paradigm that teams and departments already knew all that they needed to know. Given the highly technical nature of production and engineering job roles, teams were unable to see the necessity in sitting together to discuss what they felt they already knew.

A multidisciplinary team was chosen, consisting of representation from operations, maintenance, engineering, TRACC consultants, continuous improvement and finance. All members of this kaizen project team were part of the TRACC pilot implementation, and were therefore familiar with the K-Lean philosophy. Said Alejandro, “At the time, our TRACC implementation score was 1.66, and we found it really helpful to use TRACC fundamentals as the basis for the kaizen because the TRACC K-Lean philosophy had already changed the way people thought about processes.”

With the processing line being capital-intensive in nature, the kaizen was twofold: Firstly the team performed a Final State Analysis, and then an SMED exercise in order to stabilize the processing line to keep up a consistent volume. One of the largest contributors to the problem was machine stoppages: A conveyor belt on the processing line was experiencing food build-up on the belt. Stoppages occurred at one day (8-10 hours) per seven days of production so that teams could clean the belt.

Once the team put their heads together, the learning was exponential. Engineers could learn about specific machine issues from the machine operators, then use their technical know-how to come up with solutions. Together they found a new type of conveyor belt that food did not stick to. Once they discovered this, they redesigned all the conveyors on all the pipelines and this made cleaning times quicker and machine stoppages shorter.

At the end of the first week it became evident that they were unable to reach their target volume commitments, and quick action was needed to deliver to their promised on-shelves deadline.

Said Alejandro, “Further to the obvious gains in machine efficiency, this kaizen exercise served another important purpose: The process of multifunctional team members putting their heads together to solve problems broke the paradigm that teams could not learn anything from one another. After this exercise, teams no longer saw themselves as separate departments with three separate job functions, but as a multidisciplinary team who were working toward a common goal, and who were capable of better results when they worked together. They now understand how their roles interlink and are continually finding ways within the system to improve.” This team effort became the new way they do their work.

Results
By week two of production — the first week of the kaizen exercise — the production line managed to produce their targeted amount on two days of that week. By the third week of production they were consistently delivering on their production volume targets each day. Teams continued to meet to make minor improvements and adjustments in order to keep these production volumes sustainable. This resulted in delivering the new product to market on time, on schedule, with not one store experiencing empty shelves during the changeover. Kellogg's kaizen spells success in a product relaunch

Over and above the site meeting its production targets, sales were up by 30% and this was sustained a year on. The Querétaro Plant was producing so well that they were asked to produce, not just for Mexico, but for Latin America too. Special K continues to be one of the top five brands in Mexico.

Furthermore, K-Lean has been an inspiration and has offered encouragement to all employees at the plant. When the teams saw the results of their innovative kaizen, they understood more about the importance and benefits of the K-Lean philosophy. They no longer saw it as additional work, but saw it as a way to make everybody’s jobs easier. They also felt encouraged to live the company’s values, known as the K-Values. The K-Values initiative is the largest Kellogg’s initiative, whereby all its employees are encouraged to live the values, not only at work, but in their personal lives as well. The organization recognizes individuals and teams who have displayed their ability to live the values. To this end, the team at Querétaro won the local nomination for this kaizen exercise. They then went on to win the country nomination, and finally the global award.

Company Background
The Kellogg’s Querétaro Plant based in Mexico, has between 700 and 800 employees who produce various Kellogg’s products across their 10 processing lines and 20 packing lines. The plant’s annual capacity is 280 million pounds. It is the largest plant in Latin America and is one of Kellogg’s top five plants worldwide in terms of production volume. Four processing lines and four packing lines in the process area are on K-Lean – Kellogg’s continuous improvement system, which is powered by TRACC.

Disclaimer
This resource has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained herein without obtaining specific professional advice. Competitive Capabilities International (CCi) does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this resource or for any decision based on it.

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