Dairy firm reduces sales losses, wastages and improves profitability through Lean Kaizen

Context and Challenges

A leading dairy processing firm producing dairy products and fruit juices, despite having modern facilities faced multiple performance issues across the value chain including high sales loss due to stock-outs, Significant protein, fat and packaging wastage in processing and packing, High milk losses in raw and pasteurised stages eroding margins, increasing working capital and restricting the company’s ability to grow profitably.

Our Approach

Lean Kaizen implementation was structured around three focused projects:

Reduction of Sales Loss

• Analysed historic sales and stock-out data to quantify sales loss by SKU and channel
• Designed and implemented an inventory planning module to align production with demand for key SKUs
• Defined clear KPIs and review mechanisms for Sales and Marketing to track availability and stock-outs

Reduction of Wastages (Protein, Fat & Packaging)

• Established baselines for protein, fat and packaging losses across the process and by SKU
• Conducted Rapid Improvement Workshops (RIWs) to map processes, identify root causes and design countermeasures
• Standardised processes and controls at critical loss points (standardisation, mixing, filling, packing)
• Introduced regular loss reporting and visual tracking to keep focus on yield and packaging waste

Reduction of Milk Loss (Raw & Pasteurised)

• Mapped the end-to-end milk flow from procurement and reception to processing, storage, packing and dispatch
• Conducted cause–effect and Why–Why analyses on key loss points, including storage tanks, transfer lines, pasteurisation, packing and rework
• Developed and implemented countermeasures across procurement, plant practices and layout/environment, as well as maintenance and planning disciplines

Key Strategies Implemented

• Strengthening Milk Procurement and Quality: Introduced structured milk procurement with clear ownership for collection and quality. Tightened inspection at source and reception, initiated faster testing (e.g. milkoscan), and formalised supplier quality plans to reduce variability right from intake.
• Improving Production Planning and TPM: Shifted planning from theoretical capacity to real bottlenecks, introduced a TPM strategy with clear PM and AM routines, and reduced unplanned stoppages—improving reliability of critical processing and packing equipment.
• Layout, Environment and Packing Improvements: Identified packing-room layout and high-temperature issues, improved environmental control (closing openings, better air movement and temperature), and refined product flows to cut handling effort and loss risk.
• Stores, Spares and Information Management: Introduced stores control procedures and appointed a storekeeper to manage spares and consumables. Standardised documentation and created better access to equipment information and history. Reduced delays due to non-availability of critical spares.
• People Capability, Communication and HR Processes: Developed Daily Standard Work for production teams and improved shift handover practices. Created mechanisms for resolving HR issues and improving morale, supporting a more stable operating environment

Results Achieved

• Significant reduction in sales loss due to stock-outs due to new inventory planning module
• 27% reduction in packaging loss on targeted lines through better process control and material handling discipline
• Combined raw and pasteurised milk loss reduced by 30%, driven by improved operating practices, better environmental control and stronger planning and maintenance
• 80% reduction in protein & fat loss as standardisation, recipe control and process stability improved

By implementing Lean Kaizen in a structured way, the dairy firm has significantly reduced milk, protein, fat and packaging losses, while also tackling sales loss due to stock-outs. The focus on diagnostics, root cause analysis, cross-functional Rapid Improvement Workshops and Daily Work Management created sustainable improvements in yield, reliability and planning discipline.