Lean Principles

As lean flow becomes more common place in the green industry, there is one misconception that you should be aware of. When companies implement lean flow they do not have to go out and buy fancy expensive or automated equipment. Part of the lean flow philosophy is to use what you have. This means utilizing the current equipment in your facility before buying something new. Your equipment may be old but if it runs and does what you need it to do, then there is no reason to buy a new one with all the latest bells and whistles. Also, if you can design a lean flow process with people that can do the work of a machine more efficiently, then buying equipment doesn't make sense. However, this does not mean that lean is against automating your facility; all it means is that you need to do your homework before spending your money. So the question you should ask is, "When should I automate?"
 

To automate or not to automate?
Coming from outside the green industry and never having had the opportunity to visit growers in Holland, I hear quite often of how impressive the greenhouses in Holland are with all the automation. The growers in Holland are quite different in some respects from the growers here in the United States. In Holland many growers don't have the vast number of SKUs that the U.S. growers have. We work with many growers that have thousands of SKUs. As Americans, we feel the need to offer an unlimited amount of choices to our customers that, in some cases, may be overkill. Because of the high mix of SKUs that U.S. growers produce, automation may not always be the answer.

As an example, if you have to run 20 to 30 different varieties a day through an automatic transplanter, you may spend more time doing changeovers than running production. If each of the changeovers takes five to 10 minutes, that equates to 100 to 300 minutes of changeover a day – more than half of the day is used up in changeovers and not production. The problem is that the people working on the line are not doing value-added work while the machine is being changed over. The issue is not only machine utilization, but people efficiency. However, if you only run a few varieties a day that are high volume, then using an automatic transplanter makes sense. These machines can typically do it faster than a human being.

There are obvious processes that should be automated – such as flat filling, pot filling, and automated watering booms. If you look at equipment such as an automatic pot or flat dispenser, these pieces of equipment, in essence, eliminate the need to have a full-time person loading the flat filler or potting machine.

As you're looking to automate your greenhouse, you need to look at the rate at which the machine can produce at. We worked with a grower in Florida who was in the process of purchasing a potting machine. The one he was looking at would produce twice the volume that we were designing the lean process for. I explained to the owner that the machine will be idle most of the time since the rate it could produce at was twice what they needed. So instead of buying the bigger machine he purchased the smaller, lower-volume machine. The machine is running fine and keeping up with their production. What you need to do is determine at what volumes you expect to be at in three to five years, and buy a machine that will be able to handle that volume.
 

How to justify automating your facility
In lean flow, we make decisions based on math and not emotions or gut feel. When we design a process the calculated mathematical results will lead us to an efficient design.

When you are looking at equipment, you need to do your math as well and calculate the return on investment (ROI) and payback period. How long is it going to take to get your money back from your investment? In the green industry, equipment is typically used only several months out of the year. This means that the equipment will sit idle for a good portion of the year. The table below shows an example of an ROI calculation.
 

The decision of whether to buy is based on the calculated results above. We are only using productivity improvement to calculate the benefits; it may be the case that with this machine additional savings can be achieved through improved quality and other factors. Just make sure that all the savings are quantifiable. In example 1, the machine cost $150,000 and the productivity improvement annually is $30,000. This means you are getting 20 percent of your money back every year. It will take five years to fully recapture your investment. In example 2 you are getting a higher ROI at 67 percent, and it will only take 18 months to recapture your investment. The issue is not so much the piece of equipment that you are going to buy, but what the financial numbers work out to be. In the table on the previous page, we are not talking about a specific machine but based on the calculated results, we would say don't buy it if it's going to take five years to get your money back. Eighteen months is a more reasonable timeframe; companies in many industries will not even look at an investment where the payback is more than 36 months. Again let the numbers help you make the decision, don't do it based on "gut feel."
 

So should you automate?
In the end, automation may be the best fit for your company. The only way to find out is by doing your homework as stated above. Before any company goes out and spends money on any equipment or lean consultant for that matter, they need to determine what will give their company the biggest return on their investment. As we design lines and processes for our clients, there are cases where automation makes sense and we design as part of the lean flow process. There are also cases where we work with clients that are looking at redesigning their greenhouse with all automated equipment, and we have to deter them from doing it because it just doesn't make financial sense. Again, lean flow is not against automation, only against doing it because they went to another greenhouse and it looked very impressive.

Gerson Cortes is co-founder, FlowVision LLC,
www.flowvision.com.