Latest / The Operations Podcast with Fexingo: Process, People, and Profit in Modern Business / How a Small Brewery Cut Spoilage by 30 Percent with Lean Operations
Transcript
- Lucas: Last month I was talking to the head brewer at a mid-sized craft brewery in Ohio — Great Lakes Brewing Company — and she told me something that stuck. They had been throwing away about 15 percent of their raw ingredients every year. Hops, malt, yeast — just spoiling before they could use them. Luna: Fifteen percent? That's huge. For a brewery doing maybe 100,000 barrels a year, that's tens of thousands of dollars in waste. Lucas: Exactly. And it's not unusual. A lot of small to mid-size manufacturers assume some level of spoilage is just the cost of doing business. But Great Lakes decided to apply lean operations principles — the same kind Toyota uses on the factory floor — to their brewhouse. And within six months, they cut spoilage by 30 percent and increased throughput by 15 percent. Luna: So walk me through what they actually did. Because I think a lot of people hear 'lean' and imagine massive assembly lines. A brewery is smaller, more artisanal. Lucas: Right. The first thing they did was a process map. They literally drew out every step from receiving raw materials to packaging. What they found was that brewers were spending about 20 percent of their shift just walking between stations. The mill room was on one side of the building, the hot liquor tank on the other, and the yeast lab was upstairs. Lucas: So they rearranged the layout. Moved the mill closer to the mash tun. Put the yeast lab on the same floor. Simple changes, but it cut the average batch cycle time by about 45 minutes. That meant they could fit an extra brew session into a week without adding labor. Luna: And that directly attacks spoilage because fresher ingredients spend less time waiting to be used? Lucas: Exactly. Hop pellets, for example, degrade quickly once the vacuum seal is broken. Under the old system, a brewer would open a bag, use maybe half, and leave the rest in a bin on the floor. Three days later, the remaining hops had lost significant alpha acid content. They'd either have to compensate with more hops or accept a less bitter beer. Lucas: So they introduced a kanban system — a simple two-bin visual card system. Each hop variety has a designated spot in a refrigerated area. When one bin is opened, a card gets placed on a board in the office. That signals inventory to order a replacement. The opened bin is used within 48 hours or it gets flagged for a fast-turnaround brew. Luna: So it's a pull system. The brew schedule dictates the inventory, not the other way around. Lucas: Precisely. And they did the same thing with yeast. They used to propagate yeast in large batches and store it. Sometimes it would sit for two weeks and viability would drop. Now they propagate in smaller batches on a pull basis — only when a fermentation tank is clean and ready. That alone cut yeast spoilage by more than half. Luna: What about the malt? That's usually stored in silos. How do you apply lean there? Lucas: Good question. Malt is more stable, but they still had issues with moisture absorption and pest contamination when grain sat too long in the silo. So they implemented a first-in, first-out rotation with clear tags on each silo. The brewers now check a daily board that shows which silo is oldest and schedule that grain first. Luna: So it's basically a grocery store shelf management system for grain silos. Lucas: Exactly. And the results were measurable. After six months, spoilage dropped from 15 percent of raw materials to about 10.5 percent. That's a 30 percent reduction. And throughput went up because they were brewing more batches per week with the same team. Lucas: But here's the part I find most interesting. The head brewer told me the biggest resistance wasn't from the brewers — it was from the sales team. Because they had built a culture where 'limited release' batches that used old ingredients were marketed as exclusive. Suddenly they had fewer 'mistake' batches to sell at a premium. Luna: So lean operations revealed a hidden incentive problem. The sales team was profiting from inefficiency. Lucas: Yes. And that's actually a common issue in lean transformations. You have to realign metrics. Great Lakes ended up creating a new 'innovation brew' slot — a small batch that uses any near-expiry ingredients, but it's planned and tracked. So the waste gets a creative outlet without being a surprise. Luna: That's a smart workaround. And it also gives the brewery a story to tell. Customers love hearing that their experimental IPA was born from a lean initiative. Lucas: Right. The whole thing cost them about $12,000 in layout changes and training. They saved more than three times that in ingredient costs in the first year alone. And they did it with an existing team — no new hires. Luna: I think a lot of small manufacturers hear 'lean' and think they need a consultant or a software platform. But this is really just disciplined observation and low-tech fixes. Lucas: That's the takeaway. You can start with a stopwatch and a notepad. Map the process, measure the waste, and make one change at a time. The brewery's next step is applying the same approach to their packaging line, where they think they can cut changeover time by 40 percent. Luna: If these conversations have moved your work forward in some small way — maybe you've tried a process map or a kanban card after listening — there's a simple way to help us keep making them. A handful of listeners chip in monthly through buy me a coffee dot com slash fexingo, and that's literally what funds making this many of these. No ads, no sponsors. Just people who find value here. Lucas: Yeah, and we really mean it when we say that keeps the show independent. We don't answer to any advertiser. So if the show's useful to you, that's the way to support it. Luna: And we're back to Great Lakes. They're now looking at their keg washing process, which is surprisingly wasteful — they lose about 3 percent of beer in the wash cycle. So the lean journey never really ends. Lucas: Right. And that's the philosophy. Continuous improvement isn't a project, it's a habit. For a small brewery or any small manufacturer, the lesson is that you don't need to be Toyota to think like Toyota. You just need to look at your own process with honest eyes. Luna: So for someone listening right now who runs a small food business or a workshop, what's the one thing they should do tomorrow? Lucas: Take a video of one person's full shift. Play it back at double speed and watch for moments where they're walking, waiting, or searching for something. Those are your waste points. Then pick one and fix it this week. That's it. Luna: I love that. Thanks, Lucas.