Lean Production & Sustainable Supply Chains in the Fast Moving Consumer Goods Industry

Abstract: The Fast Moving Consumer Goods (FMCG) industry consists of a large part of our daily purchases making it to an important industry for the society. Within every industry, operational control and supply chains are important success factors regarding efficiency and profitability. Lately, much attention towards sustainability within the industry has been given, due to environmental and to ethical concerns. The whole industry will be forced to undergo major changes in order to remain and to become sustainable. Therefore, operational control and supply chains need to be effective and sustainable in order to sustain this transformation. In this project, an investigation regarding if Lean production and sustainable supply chains can apply to the FMCG industry is conducted. Difficulties with achieving levelled production and factors to attend to in order to become sustainable will be addressed. A literature review about Lean management and sustainable supply chains will be presented. Furthermore, two case studies will be conducted at two beverage companies where a comparison between theory and reality will be conducted. We found that many of the Toyota Production System (TPS) principles can be hard to implement in the FMCG industry. Therefore, Lean production is not easily obtained within the FMCG industry. Specifically, we found that beverage companies have difficulties obtaining levelled production and implementing production levelling tools suggested in TPS. We found that measures conducted in order to level production mainly focus on optimization of internal processes and shortening of lead times upstream. Work to obtain control over demand management has been done on order to facilitate levelling of the production. Therefore, work to be conducted in order accomplish demand managementis suggested as a recommendation in this report. This recommendation contains factors such as: order placement, lead times pricing and campaigns. Several factors suggested in Sustainable Supply Chain Management literature in order to obtain sustainable supplychains were found in our case studies. We found that information exchange between customer and producer is not optimal. Furthermore, we found that high standards regarding suppliers generally result in that only large suppliers can meet these standards. Thus, making it harder to influence aspects regarding sustainability among suppliers. In closing, the FMCG industry have potential to achieve sustainable supply chains, but some factors remain to be improved.