Epsilon Archive for Student Projects

Abstract

The competitiveness and profitability of swedish farm enterprises is frequently discussed in agricultural media. Increased exposure to the surrounding world with greater competitive pressure and considerable price fluctuations in the agricultural markets demand new ways of acting to secure the agricultural sector’s long-term survival and profitability. Structural change and/or diversification leads to increased numbers of stake-holders around the farm enterprise and thereby also the expectations of the farmers ability to lead and coordinate resources.

Lean is the name of a management model developed by Toyota, influenced by the lack of resources in Japan during the post WWII period. Lean is defined as a collection of tools for streamlining production lines in industrial production, although there is support for a wider definition where lean is to be viewed as a culture with a holistic approach to resource-optimized management. Correctly applied is lean expected to engage staff in a process of long-term continuous improvements, with reduction of waste that does not add to the value of the final product as the guiding star. The management-system has proven to be effective in manufacturing industries where it is widely spread, but is also implemented in healthcare and many other fields of trade.

The aim of the study is to evaluate if lean can contribute to strengthen Swedish farmers in their management, by eliciting how lean needs to be adapted to the biological processes that enable, but also limit, farm the business. The study also illustrates how a model for implementing lean on a farm enterprise level could be designed and if an implementation of lean can lead to improved profitability and farm performance. Case studies based on three farm enterprises representing the three types of production piglets/pork, milk and grain was carried out as well as visits to companies in other industries utilizing lean and interviews with researchers and advisors to provide empirical data for the study.

The study evinces that lean may contribute towards providing the farmers a more analytical approach to the production within the own firm and better engagement of the co-workers in a systematic improvement-work. Yet there is a need for some of the basic principles of lean to be adjusted in order to be applicable in an agricultural context and a model for implementation of lean concept needs to be compiled. From the adaptation of the lean principles following the structure of the Balanced Scorecard, and the model developed in this study, is shown that lean has potential to improve the profitability on the case farms. For example is an average increase in the return on total assets of 1.5 % -units and a 5.6 % -units increase of profits before depreciation in relation to the turnover of the respective company.