Applying lean principles in craft brewing to improve quality and reduce costs : two KwaZulu-Natal case studies.
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A significant number of companies around the world have implemented lean methodologies in order to remain competitive. Although these were initially developed for large manufacturing companies, the principles that serve as a foundation for these methodologies are, arguably, also applicable to small companies. The proposed research will focus on small craft breweries in the KwaZulu-Natal province of South Africa to determine if they too can benefit from implementing practices that are based on lean principles. The world’s craft brewing industry is well-established and growing rapidly. Most of the beer brewed in South Africa is mass-produced at comparatively low cost. Craft beer brewed by smaller scale breweries is relatively more expensive to produce and consumers have to accept trade-offs between the perceived better quality and higher cost of craft beer. In order to gain and maintain market share, craft brewers need to produce quality beer whilst reducing production costs. The objectives of this study were threefold. Firstly, it sought to identify appropriate assessment tools that may be used to measure waste in craft breweries. Secondly, to identify and measure any sources of waste that may occur in craft breweries. Lastly, to determine if and how craft brewers can introduce lean methodologies based on lean principles in their production processes in order to improve quality and reduce costs. The study was guided by lean theory. The principles derived from this directed the deployment of lean tools and practices to implement lean production methodologies. Lean theory argues that lean methodologies, if implemented correctly, will yield positive results for all firms in all industries. A multi-case study approach was used, supported by five data collection instruments; direct observations, participant observations, documents & records and semi-structured interviews. A convergent, parallel, mixed methods design was used as this allowed both qualitative and quantitative data to be gathered, analysed and then merged to interpret the findings and results. The data was analysed using content analysis with NVivo software. The main findings of this study indicate that: 1. Lean tools, like the Lean Assessment Tool, which consists of several lean improvement programmes and tools (e.g. setup time reduction, visual controls) may be used to assess waste in craft breweries. 2. The sources of wastes and inefficiencies which were identified from the case studies relate to inventory, overproduction, waiting time, unnecessary transporting, processing waste, inefficient work methods, product defects and underutilised human resources. 3. Identifying lean tools and programmes that the company can implement under its current production capabilities is a key success factor in becoming a lean organisation. 4. Having a step by step implementation model which is clear to follow will help companies to implement lean production. 5. To produce good quality beer, the ingredients used must be of good quality. Also, close monitoring of the brewing processes, times and temperatures is essential. 6. The current challenges in the craft beer industry include high levels of competition from the mainstream beer producing giants, distribution problems, maintaining consistent quality and developing effective marketing plans in a highly contested market. The study was concluded by discussing the implications of these findings for theory and literature, as well as for practitioners. Recommendations, specific for these case studies were provided and areas for future research suggested.