**2.1 Definition of lean**

Krafcik [23] first introduced the lean concept after studying global automotive manufacturing, with a specific focus on deciphering the inner workings of Toyota's production system. At their core, lean practices aim to streamline the flow of value by systematically reducing waste during the manufacture of a product [23]. However, it was Womack et al. [24] who first produced a consolidated study that claimed that five core lean principles could be applied to every industry [24]. They are:


Whilst the lean concept is nothing new, it was observed by Baker [25] that there are few organizations which fully understand the underlying philosophy behind

its key principles [25]. However, Liker [26] identified that for lean production practices to be effective, they needed to be rooted in a people-centric system where employees are directly involved in the identification and implementation of continuous improvement [26]. This organizational approach was also identified by Hines et al. [27], who focused on the idea of Total Quality Management (TQM) [27]. TQM requires the development of an overall organizational culture which moves beyond the production floor. This is demonstrated by the myriad of businesses who have unsuccessfully attempted to implement lean practices. This organisational approach was also identified by Hines et al. [27], who focused on the idea of Total Quality Management (TQM) [27, 28]. Academic studies have looked at such failures, identifying some common factors as responsible for businesses being unable to successfully enact them. These are: the complexity of lean management implementation; the limitations on a successful impact caused as a result of contingency factors; a focus on Just-In-Time (JIT) practices without sufficient consideration for other key aspects of Operations Management (OM); and the lack of attention paid to Human Resource Management (HRM) Further, the difference between those that were successful and unsuccessful was the implementation of 'soft' lean practices, such as small group problem solving, training to complete multiple tasks, supplier partnerships, customer involvement, and continuous improvement.

## **2.2 Origin of lean production and lean principles**

In retrospect, the term Lean Production System (LPS) was introduced into world industry in order to enhance and maximize efficiency throughout manufacturing processes which became a suitable model for modern manufacturing companies to design processes and procedures in their firms. According to Western industry and Japanese industry, Western world industry employed automation, production systems and computer-aided technologies to enhance manufacturing process whereas the Japanese industries invented a customer-value focused method called "Lean Manufacturing" which also known as "Lean production" [29]. It has become a major driving force of modern business' success and has widely accepted by the companies [30].

The philosophy of Lean was originated by Toyota in the 1950s by Taiichi Ohno. The techniques aim to eliminate all the wastes and excess (called as Muda) from the production system. Lean Production has principles to avoid eight causes of waste which are storage, transport, accessibility of processes, unnecessary movement, waiting times, overproduction, tight tolerances, defects and lastly, unused skills of the employees. Lean principles were further developed which includes the following techniques: value of customers, value stream mapping, flow production capability, pull system and eliminate all forms of waste. More supportive evidence by Bicheno and Holweg [31] state wastes as "non-value added" to the companies which are the factors needed to be minimized to zero as much as possible and maintain valueadded activities (what customers are willing to pay for) in the same or higher level [31]; Practically, it's inevitable in any businesses that wastes will occur.

VDI [32] commented on lean production as "an enterprise-specific methodical system of rules for the continues orientation of all enterprise processes to the customer in order to achieve the largest by the enterprise management" which can lead to a continuous improvement process (CIP) internally [32]. CIP was defined as a "frame of thought and the proceeding actions for formalized, targeted and progressive improvement of activities." and became significantly important to all firms who interested in leans [33]. In order to be successful in terms of continuous improvement of production, integration of the following principles below is needed where the Lean Production principles' symbols shown by House of Lean Production in and Tripathi, D. [34], "Relationship between TQM and TPM implementation factors and business performance of manufacturing industry in Indian context", International Journal of Quality & Reliability Management [35]. However, all of these cannot be done or implemented if a company has a wrong mindset with business culture, leadership and coaching.

#### **2.3 Lean production tools/practices**

This section will discuss six lean production tools/practices which are: 5 s Total productive maintenance (TPM), Total quality management (TQM), Value stream mapping (VSM), Kanban, and Just in time (JIT).

One of the important topics in implementing lean is lean production tools since lean principles were mentioned in the previous part, to find appropriate tools to be used in organization is essential to achieve those principles. An interesting quote from Abraham Maslow in 1966 for his hierarchy of motivation "It is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail" so as lean tools which all firms need to identify their objective before using any lean tools. This can be observed on SMEs companies; these firms will firstly focus on the most necessary lean practices rather than a piecemeal one where most of them start implementing lean by using these tools such as 5 s, Kanban and Total productive maintenance (TPM). "SMEs should start with minimal financial investment on lean practices such as, Kanban, 5s and Honshin" due to their incapability to implement everything at once, so it's exceptional to choose the easiest or cheapest. 5S, one of the most common tools in lean because it's easy to do without the needs of expense. As its name, it has 5 of S which are, Sort, Set-in-order, Scan, Standardize and Sustain. The objective to reorganize workplaces and create a strong mindset for an entire company as a whole in order to maintain workplaces in good condition and promised the employees to be more self-discipline [35]. Another related practice to 5 s is called Total productive maintenance (TPM), "a maintenance program which involves a newly defined concept for maintain plants and equipment" [36].

The benefits of using TPM is to minimize defects, breakdown and accidents as much as possible in all functional workplaces, also involve entire organization to work together as a team by sharing knowledge and experience. Moreover, it shares the same principle to 5 s, which is to keep the workplace clean and sustainable [36]. One of the tools that are worth to mention is Total quality management (TQM), the tool that shares similarities with TPM and often used interchangeably [37]. The main concept of TQM is to have continuous improvement in all work; it means that from strategic planning and decision-making to the execution in the shop floor [38]. The principle of TQM is that mistaken from human, which might be occurred from faulty systems, needed to be prevented from a repetition of the same mistake by establishing the new process.

The next tool is called Value stream mapping (VSM), an effective tool for the practice of lean manufacturing. It is used to visualize the steps needed from the beginning of product creation until delivering to end-customer. The map will help us to identify where in the process is a bottleneck so operators could identify and improve it. Lastly, a well-known lean method called Kanban, aims to minimize inventory at any one time [39]. It is used to indicate when the demand of product is available in the specific circumstances so production can operate in the right time. Kanban system is very popular in Japanese companies due to the cost saving by avoiding overproduction, improving flexibility in each work stations, reducing inventory stock, waiting times and logistics costs. Kanban is one of the methods used to achieve Just-in-time manufacturing (JIT), a management philosophy implemented and designed by Taiichi Ohno, 1998. Just-in-time (JIT) is most widely adopted and practices recently in several organizations, which aims to have the right items with certain quantity and quantity in the right place and time [40].

### **2.4 Definition of circular economy**

The early thought of circular economy can be tracked back to 'the spaceship theory' mentioned by Boulding in 'Economics of the coming spaceship earth' in 1966. Boulding [41] stated that in an isolated and closed spacecraft, due to limited resources, if resources are not recycled, it will eventually go to destruction, the same is true of the earth [41]. After Boulding put forward this theory, people began to realize the importance of sustainable development to human beings. Then, in 1989, Pearce and Turner formally and systematically put forward the concept of circular economy, and explained the transition from traditional linear economy to circular economy.

However, since the different proposed antecedents and scopes, different literature give different answers to the definition of circular economy. Circular economy is an economic development mode that minimizes material, energy and environmental damage without restricting economic growth and social and technological progress. Hobson [42] defined circular economy as a regenerative industrial system, which aims to eliminate waste and be regenerate mainly through better design of material, system and business model [42]. Murray et al. [43] claimed that circular economy is an economic model that achieves ecosystem optimization through rational design and management of resources, procurement, production and recycling processes [43].

Although there is no comprehensive and commonly accepted definition of circular economy at present, some common goals are revealed in relevant literature. First of all, most of the definitions of circular economy in the literature mention that circular economy is used to replace the traditional linear economy, and through intentional design and management to make the economic model restorative [44]. Govindan and Hasanagic [45] pointed out that because the traditional linear economy did not consider the impact of natural resources and human resources, such as social capital, the use of circular economy to replace the linear economy can make resources reflect not only economic value but also environmental and social value [45]. Secondly, relevant literature also point out that circular economy is to minimize the waste and damage of natural resources and environment caused by economic development. Thirdly, circular economy aims to improve economic, social and environmental values rather than pursuing economic values alone [46]. Last but not least, at the macro level, circular economy system are more resilient because they rely less on external resources [47]. A common point of most circular economy definitions: closed flow of materials and the use of materials in multiple stages. As a result, the above five points explain the goal of circular economy, and this also gives a clearer framework and direction for this research's further discussion. Although there is no comprehensive definition of circular economy at present, considering the characteristics of supply chain, this study will follow Murray et al.'s definition: circular economy is an economic model that achieves ecosystem optimization through rational design and management of resources, procurement, production and recycling processes.

### *2.4.1 "3R" principles*

The 3R principles refer to reduction, reuse and recycle. As the core principles in the practice of circular economy, 3R principles have been widely discussed in many studies [48]. In the Circular Economy Promotion Law promulgated by the

#### *Circular and Lean Food Supply Chains DOI: http://dx.doi.org/10.5772/intechopen.99769*

Chinese government in 2008, the Chinese government also directly defined circular economy as a reduction, reuse and recycling activity in the process of production, circulation and consumption [49]. Thus, it can be seen the 3R principles are of great significance in the practice of circular economy.

• Reduction principle

Reduction is the first principle in the 3R principles, which means reducing resource consumption and waste generation through better design or management at the production and consumption stage [50]. The purpose of reduction principle is to improve from the source of production stage, so as to reduce materials and energy entering the production and consumption stage. Therefore, the reduction principle is aimed at requiring businesses to start considering material and energy savings and waste reduction at the input end, rather than making great efforts on recycling or waste disposal stage after the waste is generated. For enterprises, there are many measures to implement reduction principle. Using environmentally friendly raw materials, environmentally friendly production methods, simpler packaging design and more compact and lightweight product design are all effective ways for enterprises to implement reduction principle. Enterprises can also better apply the principle of reduction by improving their ecological efficiency, although ecological efficiency also plays a positive role in the other two principles.

• Reuse principle

Reuse principle refers to the reuse of product or product packaging in an initial form as many times as possible and in various forms, so as to prevent it from becoming waste too early. Extending the service life of products as far as possible is also a requirement of the reuse principle. The implementation of the reuse principle means that companies can save a lot of resources, labor and energy to manufacture new products or components and packaging of products [51]. However, the principle of reuse also puts forward a higher requirement for companies. Prendeville et al. [52] pointed out that the company not only needs to be able to design products with longer service life, but also needs to consider how to encourage consumers to recycle and reuse products or packages [52]. Therefore, it also shows that the principle of reuse not only puts forward certain requirements for enterprises, but also depends on the attitude and participation of consumers. In the process of implementing reuse principle, all stakeholders need to participate, including consumers' recycling and reuse of products and packaging.

• Recycle principle

The recycle principle refers to the recycling of wastes as much as possible through the reprocessing of wastes, so that they can be converted into useful resources and thus reduce the generation of non-recyclable garbage [53]. There are also two ways of recycling wastes: primary recycling and secondary recycling. Henshaw et al. [54] mentioned that primary recycling refers to recycling and processing waste to form new products or packages identical to the original (such as using scrap steel to produce new steel) [54], while secondary recycling refers to using waste as raw materials for other products with different properties without considering the original properties of waste. The principle of recycling can be used to control the end of the waste generation,

so that the waste can be re-entered into the production or consumption stage, which also reduces the possible environmental pollution. However, once a company pays too much attention to the recycling process and achieves good results, it will not be interested in controlling the amount of waste.

#### **2.5 Definition of circular supply chain**

Under the trend of globalization, the importance of supply chain management has become increasingly prominent. Many scholars even emphasize that the competition among enterprises today is the competition among supply chains [55]. At the same time, how to make the supply chain greener and more sustainable has become a key issue under the situation that all parties are paying more and more attention to environmental protection [56, 57]. With the continuous development of circular economy concept, an increasing number of scholars begin to study the application and practice of circular economy in various fields and levels. As a result, the application of circular economy in supply chain has naturally become a hot research topic.

When discussing the concept of circular supply chain, many scholars will compare several concepts of supply chain sustainability with that of circular supply chain [58]. These concepts related to supply chain sustainability are mainly reverse logistics, green supply chain, sustainable supply chain and closed-loop supply chain. Although these concepts cannot fully contain the meaning of the circular supply chain, the four concepts each contain some scopes and circular flows of the circular supply chain. Reverse logistics enables products or materials to flow reversely from consumers, the end point of the supply chain, to each node of the supply chain along the supply chain channel, so that discarded or damaged products can regain their value and avoid becoming waste. The definition of green supply chain refers to the purpose of minimizing the impact on the environment from raw material acquisition, processing, production, packaging, warehousing, transportation, consume to scrap disposal [59]. Sustainable supply chain management emphasizes a broader and comprehensive supply chain strategic management, taking into account the environmental, economic and social factors in supply chain management, so as to achieve the goal of long-term sustainability of the supply chain [60]. Finally, as a relatively new concept, closed-loop supply chain integrates the forward and reverse supply chains and covers the whole life cycle of products from cradle to grave, in order to close the flow of materials and reduce pollution and waste generation [61].

The above concepts of supply chain sustainability include some circular flows of the circular supply chain, but not all scopes and circular flows. The model of circular supply chain needs to be extended on the basis of closed-loop supply chain, and the extension point is the scope and focus of material recovery system. For the scope, post-production management should be taken into account in the circular supply chain so as to include open-loop in the supply chain; for the focus, the value chain system of the circular supply chain also needs to be derived from the related byproduct synergies and waste recovery flows. As a result, Batista et al. [58] defined the circular supply chain as "The coordinated forward and reverse supply chains via purposeful business ecosystem integration for value creation from products or services, by-products and useful waste flows through prolonged life cycles that improve the economic, social and environmental sustainability of organisations."

#### **2.6 Characteristics of food supply chain**

Food industry as an industry closely related to people's daily life, because of the particularity of food itself, food supply chain also has many different

#### *Circular and Lean Food Supply Chains DOI: http://dx.doi.org/10.5772/intechopen.99769*

characteristics. Maloni and Brown [62] pointed out that due to the food safety and hygiene, the product quality requirements of food supply chain are strictly regulated [62]. At the same time, food supply chain is also highly dependent on the environment because of its vulnerability to deterioration. Similarly, due to the limitation of shelf life, the change of raw materials, semi-finished products and final product quality change is also a challenge for the food supply chain. Moreover, Papaioannou et al. [63] also stated that the food supply chain has inherent uncertainties in demand, process and suppliers [63]. First of all, it is not easy to forecast the demand of customers, and the food supply chain also needs to face further challenges from the disturbance of weather changes and customer preference changes. At the same time, due to yield changes, seasonal factors, some perishable food and other factors, its supply and production and storage process will also face certain uncertainties and risks.
