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Application of value stream

mapping (VSM) for minimization
of wastes in the processing side
of supply chain of cottonseed oil
industry in Indian context
Dinesh Seth

Supply chain of
cottonseed oil
industry
529
Received May 2007
Revised September 2007
Accepted September 2007

Department of Mechanical and Industrial Engineering, College of Engineering,

Qatar University, Doha, India

Nitin Seth
DAVV, Indore, India, and

Deepak Goel
National Institute of Industrial Engineering (NITIE), Mumbai, India
Abstract
Purpose The purpose of this paper is to identify and address various wastes in the supply chain of
the edible cottonseed oil industry (specifically the processing side) using a value stream mapping
(VSM) approach to improve productivity and capacity utilization in an Indian context.
Design/methodology/approach Critical observations and interviewing techniques were used with
open-ended questions to understand the processes involved in the value chain of the cottonseed oil
industry. Different chain links/members were investigated through personal visits and discussions. VSM
is applied as an approach to the industry to identify and remove non-value-adding (NVA) activities.
Findings Major findings obtained from the study are as follows. There is an excess cumulative
inventory of 244 days in the whole supply chain. The industry is highly fragmented with a large
number of small players present, which hampers the use of economies of scale. There are NVA
activities present in the supply chain such as the moving of cottonseed oil from expeller mill to
refinery. The industry still uses outdated technology which hampers the productivity.
Practical implications Attention needs to be given to boosting the productivity of the oil sector.
Waste removal from the oilseed-processing sector is one key to improving the productivity of the sector.
Originality/value The paper addresses the various wastes in the processing side of the supply chain
of the Indian cottonseed oil industry, using VSM as an approach which was hardly ever attempted
before. Wastes are then individually attacked to reduce or eliminate them from the system. Suggestions
to make the whole chain more productive can be generalized and can be replicated in the context of other
developing countries.
Keywords Edible oils, Waste minimization, Supply chain management, Value chain, India
Paper type Research paper

The authors wish to express their sincerest thanks to the learned referees for their constructive
criticisms that led to the considerable improvement of the earlier version of this paper. The
authors also wish to put on record their indebtedness to one of the Guest Editors of the special
issue, Dr Vipul Jain, for his timely help and for giving them an opportunity to revise the paper.

Journal of Manufacturing Technology

Management
Vol. 19 No. 4, 2008
pp. 529-550
q Emerald Group Publishing Limited
1741-038X
DOI 10.1108/17410380810869950

JMTM
19,4

530

1. Introduction
India, the worlds seventh largest producer of oil crops (2001-2003 average), is a major
producer of soybeans, rapeseed, peanuts, cottonseed, and sunflower seed and their derived
products. India is traditionally an importer of vegetable oils and an exporter of protein
meals, and is not a significant trader in oilseeds. Oil imports have been on the rise as a result
of burgeoning consumer demand and import liberalization measures implemented in 1994.
During 2001-2003, India was the second largest edible oil importer in the world, behind the
European Union (EU-25) and ahead of China. India is also the worlds fifth largest exporter
of oil meals, although exports of soybean and other meals have slowed due to rapid growth
in domestic feed demand. Despite substantial excess capacity in the domestic oilseed
processing industry, imports of oilseeds remain restricted by tariff and non-tariff policies.
Indian edible oil demand is going to increase at the rate of 500,000-600,000 tonnes
per year while production will grow only by 200,000-300,000 tonnes per year (Mehta,
2005, 2006; Sharma, 2006). Despite the huge demand supply gap that persists for
Indian edible oil industry, very little has been done for improvement in the productivity
of the industry. In this paper, an attempt is being made to apply value stream mapping
(VSM) approach to address various wastes in the processing side supply chain of
edible cotton seed oil industry sector in Indian context.
Motivations for the study: a lot of work has been reported in various journals and
study reports to improve the agricultural productivity of oilseeds (i.e. per hectare
production of oilseeds), but hardly any study has been carried out towards the
productivity of oilseed processing industry and process side of supply chain where
most of the players are highly unorganized and fragmented. This is true for majority of
oil seed processing industrial sectors in developing countries including India. In a way,
it is a first attempt to carry out a serious study in a relatively unstudied and
unorganized sector. It is also a unique attempt to connect various links into a network
schema. Considering that Indian cottonseed oil industry is characterized largely by
mechanical expeller units, academic and business needs were long being felt. As cotton
seed oil constitutes an important part among the edible oils family in India.
Another major motivator for this study is, although the researchers have explored
various perspectives related with edible oil industry, yet they are silent on the lead time
to process oilseed and inventory levels at different stages of the processes. Inventory is
an important waste which must be removed to make the supply chain efficient and
effective. Therefore, it was decided to use VSM as an approach to identify wastes in the
processing side of cotton oilseed supply chain. The major strength of this approach is
to highlight individual wastes while maintaining overall perspective of the chain.
1.1 Indias production of cottonseed and other oilseeds
Cottonseed forms a substantial 23 percent (Figure 1) of the total oilseed production of
India.
Production of cottonseed is increasing for last three-four years. In 2004-2005, the
cottonseed production touched 80 lakh tonnes and also similar figures during
2005-2006. Good weather, remunerative prices for cotton, increased use of hybrid and
Bt. cotton seeds have resulted in increasing production of cottonseed and this emerging
as second highest produces oilseed in the industry.
As cottonseed forms a substantial part of total edible oilseed production of India, we
chose to study cottonseed oil sector as a potential research area. This paper makes an

India's Production of Cultivated Oilseeds (Nov.-Oct.) (Lakh

Tonnes) 2004-05
70.2, 21%

79.9, 23%

Supply chain of
cottonseed oil
industry

8.3, 2%
1.8, 1%
83.6, 25%
1, 0%
1.7, 0%

531

7.1, 2%
12 .22, 4%

Groundnut
Sesamum
Sunflower
Niger
Castor

75.1, 22%
Rapeseed & Mustard
Soybean
safflower
Linseed
Cottonseed Production (lakh tons)

Figure 1.
Indias production of
cultivated oilseeds

Source: AICCA (2005-2006), Solvent Extractor's Association of India

attempt to address the waste removal and productivity improvement for the edible oil,
specifically Indian cottonseed oil sector.
1.2 World cotton/cottonseed production scenario
Several factors influence the world cotton trade, prime amongst them has been the
plantation activity which is again dependent on weather conditions. Secondary factors
include the growth in economy, inventory levels, synthetic products availability and
development in these products usability, etc. Global cotton scenario has been fast
changing due to obvious reasons. While cotton is one of the important cash crops,
changing user preferences have been guiding the production pattern.
The world crop estimates for the year 2005-2006 is expected at 24.75 million tonne
as against last years crop of 26.2 million tonne. The world average yield in 2004-2005
was 731 kg per hectare. The world average yield is expected to drop to 688 kg per
hectare in 2005-2006 due to poor weather conditions.
China leads the world cotton production with 5.82 million M.T of crop estimated in
2005-2006 (Figure 2). The USA and India with figures of 4.49 and 3.36 million M.T,
respectively, stand at second and third positions.
The USA is the largest exporter for cotton. The USA is expected to export 3 million
M.T of cotton in 2005-2006.
World Cotton Production 2005-06 Million MT

5.24, 22%

5.82, 26%

1.02, 4%
1.31, 6%
2.13, 9%

4.49, 19%
3.36, 14%

China (Mainland)
USA
India
Pakistan
Brazil
Uzbekistan
Others

Source: Annual reports of AICCA (2004-2005, 2005-2006)

Figure 2.
World cotton production

JMTM
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532

India has been one of the important cottonseed producers in the world. The country
during the last 50 years has undergone various changes in agriculture sector, in
general, and in cotton cultivation, in particular. Cotton being the cash crop has
witnessed increased activity in cultivation. Recently, India stands number three for
cotton/cottonseed production.
2. Literature review
The Indian oilseed processing sector is characterized by a large number of relatively
small-scale, low-technology plants and substantial excess capacity. The structure of the
industry is heavily influenced by government policies that regulate plant scale, capital
intensity, and oilseed/product marketing; which also act as incentives for adding new
capacity; and at times discourage imports of oilseeds for processing. This structure is
also influenced and shaped by domestic demand preference for crude oils; demand for
quality feed protein, and erratic supplies of domestic oilseeds for processing.
Indian oilseed processing units operate at just 30-40 percent of installed capacity in
contrast with the 90 percent utilization of the US-oil industry (Persaud and Landes,
2005). Indian vegetable oil industry comprises over 15,000 oil mills, 600 solvent
extraction units, 650 refining units and 250 vanaspati units, operating between 40 and
50 percent capacity (Mehta, 2005; Sharma, 2006). They identified the unorganized
structure of Indian oil processing sector and discuss the in-competitiveness of the oil
units because of various wastes and the usage of old techniques.
Sharma (2006) discusses how some policy changes can help to remove excess
capacity and wastes from the Indian edible oil industry. He emphasizes the imports of
oilseeds to support the excess capacity in oil units and diversification of farm products
by shift in yield from grains to oilseeds. Price policy initiatives need to be taken to
promote the farming of oilseeds.
In another notable work done Cheng Hai (2002), has identified the supply chain
members present in the Palm Oil Industry. Though, more or less similar structure of
the supply chain will be applicable for all the edible oils, attention needs to be given to
Indian environment for cottonseed industry. This is because of extremely small
capacities installed and highly unorganized industry structure of India. Also for
cottonseed oil industry, most of the installed capacity is in mechanical expellers.
Specific attention has to be given to such small mechanical expeller units.
Bohra (2002) of M/s. Rama Phosphates Ltd (oil division), has made an excellent
attempt to identify some waste streams present in the solvent extraction units. He has
identified losses occurring at different stages of process viz oil loss in de-oiled cake
(DOC), oil loss in refinery, Hexane loss in DOC, excessive wastewater generation and
poor treatment, energy loss, inadequate steam generation, emission in work
environment, improper material handling and house keeping practices. He has also
suggested ways to remove such losses. But, the research work is silent on losses and
other wastes like inventory and un-necessary transportation in mechanical expeller
units. Lean manufacturing approaches and the concepts like VSM were never
attempted in this sector. It will be meaningful to share about lean manufacturing and
value stream at this junction.
Lean manufacturing is the systematic approach to identifying and eliminating
waste (non-value added activities) through continuous improvement by flowing the
product at the pull of the customer in pursuit of perfection (NIST-MEP Lean, 2000).

The lean paradigm has developed as a holistic approach to manufacture and business
(Womack and Jones, 1996). To support the implementation of lean principles,
increasingly holistic approaches to mapping and evaluating the supply chain have
been developed (Rother and Shook, 1999; Jones and Womack, 2002).
A value stream is all the actions (both value and non-value added) the required to bring
a product, or group of products that use many of the same resources in much the same
way, through the main flow essential to every product from raw material to the arms of
the customer (Browning, 1998). VSM is a pencil and paper visualization tool that shows
flow of material and information as a product makes its way through the value stream
(Rother and Shook, 1999). VSM serves as a starting point to help management, engineers,
suppliers, and customers recognize waste and its sources. These concepts are developed
primarily with two requirements one to understand the interdependence of one function,
department or even whole unit over other and, to capture holistic view about a situation
where the conventional industrial engineering recording tools do not help much.
As the complexity of manufacturing and business is growing newer value stream tools
are emerging. Recently, there exists a plethora of different tools and techniques developed
for different purposes and waste reduction or elimination (Seth and Gupta, 2005).
The combination of supply chain and sustainability thinking demonstrates the
value of an objective integrated appraisal of supply chain, various wastes and even
emission aligned to a systems approach. VSM (Rother and Shook, 1999) has been
widely used to evaluate intra- and inter-company waste. The mapping reviews the
flows of information and physical goods, aiming at eliminating waste and thereby
improving quality, cost and delivery. Value added time percentage is the key metric of
the mapping comparing value adding (VA) with non-value adding (NVA) activity
(Monden, 1993; Irani et al., 2000).
Hines and Rich (1996) have identified seven VSM tools to identify the wastes
present in any system in form of inventory, overproduction, over capacity, wrong
processing methods, NVA activities, etc.
This paper attempts to identify and remove wastes present in the cottonseed oil
industry using VSM. Two tools, viz process activity mapping and supply chain response
matrix as suggested by Hines and Rich (1996) have been used to effect. An attempt is made
to draw a current picture of value stream and develop a framework for the investigation.
3. Research methodology
3.1 Sampling
Consistent with the purpose of study, corporations carrying out different activities for the
value chain were sampled. We selected listed members of All India Cottonseed Crushers
Association (AICCA) in three states, namely Maharashtra, Karnataka and
Andhra Pradesh. Maharashtra is the second highest producer of cottonseed in India. So
its choice as a sampling state was appropriate.
A questionnaire was prepared to structure interviews and discussions, and
information was collected for markets of each commodity, plant processes, machines,
processing costs, parity calculations, etc. through interviews and discussions with the
mill owners, traders and brokers in the above three states. About ten oil mill owners, 17
traders and brokers and ten expeller/extraction machinery manufacturers were
interviewed. Some questions were reworded to improve validity and clarity based on
recommendations from practicing managers.

Supply chain of
cottonseed oil
industry
533

JMTM
19,4

The questionnaires were answered by individual visit interviews or telephonic

interviews. The respondents were mainly business owners who were responsible for
major supply chain activities in the companies.
As mentioned earlier, sampling states were taken as Maharashtra, Andhra Pradesh
and Karnataka. Assumption has been made that the research implications for these
three states would be applicable for all other states.

534
3.2 Overall, supply chain mapping
The first stage of the project was value chain mapping and identifying the Supply
Chain Members for Cotton. The data were collected from the reports of AICCA
(2005-2006) and Cotton Corporation of India Annual Reports for demand, supply,
import, export, prices, etc. of each commodity involved in the value chain of cotton.
3.2.1 Processing sector structure, capacity, and costs. The Indian Oilseed Processing
Industry includes three major processing technologies (Figure 3, Table I):
(1) traditional mechanical crushing, or expelling, used for oilseeds with relatively
high-oil content;
(2) solvent extraction for processing oilseeds and expeller cake with less than
20 percent oil content; and
(3) expander-solvent extraction, a hybrid process used for raw materials with
higher oil content.
The traditional mechanical crushing industry has two segments: the very small-scale
ghanis and the small-scale expellers. The processing industry also includes an oil
Nonsoft seeds 1
(soybeans, cottonseed)

Soft seeds
(peanuts, rapeseed, sunflower)

Solvent extraction

Expander

Mechanical expellers
Losses
Expeller oil

Filtration

Solvent extracted oil

Expeller oil cake

Fertilizer
& waste

Oil refinery

Losses

Losses
Refined oil

Filtered oil

Domestic oil market

Figure 3.
Indias oilseed processing
sector

Deoiled cake

Domestic feed market

1Solvent

Feed export market

extraction is used for raw materials, such as soybeans, cottonseed, and expeller oilcake
with less than 20 percent oil content.

Note: See appendix 1 for detailed picture

Process
Mechanical crushing
Ghanis
Expellers
Solvent extractionb
Vanaspati
Oil refining

Units (number)

Total (million tons)

Capacitya
Average (tons/day)

130,000
20,000
766
241
800

2.0
40.5
36.0
4.8
4.7

0.05
7
157
66
20

Use rate (percent)

10
30-40
30-40
35
35

Notes: aCapacity and use based on raw material; 300 days/year, 24 hours/day basis; bincludes
expander units
Source: Solvent Extractors Association of India Reports (2005-2006)

refining sector, which primarily refines domestic solvent-extracted oils and imported
crude and solvent-extracted oils, and a vanaspati (hydrogenated oil) sector that
refines and hydrogenates domestic and imported oils.
Each segment of Indias Oilseed Processing Industry has small capacities and
low-technical efficiency compared with other major processing countries. On average,
Indias solvent extraction plants are about one-sixth the size of those in the USA and
the EU and use significantly more power, steam, and hexane solvent per unit of
oilseeds processed. Even Indias largest integrated expeller-solvent extraction plants
are small and high-cost by international standards.
Indian processing units also have more excess capacity than units in other major
processing countries. On average, Indian expeller and solvent extraction plants operate
only around the domestic raw material harvest, or at about 30-40 percent of capacity.
This contrasts with capacity utilization rates of 92-96 percent for US plants (Millard,
2001). Low rates of capacity use compound relatively poor technical efficiency and
further increase the average and marginal costs of processing raw materials, because
fixed costs must be recouped over fewer units of output.
Additional inefficiency arises because some processes are not well integrated. While
it is common to see an oil refinery and/or vanaspati unit combined with a solvent
extraction plant, expeller units are often not integrated with solvent extraction units.
As a result, oil and meal production is lost because significant amounts of expeller cake
are not solvent-extracted. In addition, the costs of solvent-extracting the expeller cake
rise, and processing delays reduce the quality of the oil and DOC.
Indias oilseed processors are able to operate profitably despite their high-costs
largely because of the high-border protection afforded to vegetable oils. In addition,
because the price of oilseeds is determined by the cost of processing together with
the market value of the derived oil and meal high processing costs dampen oilseed
prices, partially offsetting benefits to producers from Indias tariffs on oilseeds and oils.
This paper also highlights some of the inefficiencies present in the oilseed,
specifically cottonseed processing sector in India and suggests the ways to remove them.
3.3 Supply chain of cottonseed oil industry
The value chain starts from sowing of cotton in the month of June. The cotton crop is a
120 days crop and gets ready for harvesting in October. The arrival of crop starts in the
last week of October/first week of November and continues till mid of April.

Supply chain of
cottonseed oil
industry
535
Table I.
Structure of Indias
oilseed processing sector

JMTM
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536

After the arrival of cotton starts in, the traders (through brokers) or government
purchase the unginned cotton (called Kapas) and they process it in the contract-based
ginning mills. Ginning machines separate the ginned cotton and cottonseed from Kapas.
The cotton thus produced is pressed into bales and then sold to the textile industry for
the production of clothes. Cottonseed produced is sold to the cottonseed oil mills. The
cottonseed oil units may be expeller units or solvent extracted units. The yields of
expeller mill are cakes (82-84 percent), oil (12-14 percent) and soap (1-2 percent), rest
being losses (detailed value chain of cottonseed oil industry is explained in Appendix 1).
The major players in the cottonseed oil industry in India are shown in Figure 4; the
players are grouped under the following clusters:
.
Upstream producers essentially involved in the cultivation of cotton,
production of cottonseed from cotton.
.
Downstream producers cottonseed oil refiners, kernel crushers, traders, brokers.
.
Exporters and importers of cottonseed oil.
.
Customers institutional buyers and retail customers and investors.
.
Industry organizations representing the interests of the upstream and
downstream producers.
Farmers

Ginning
Mills

Upstream
Producers

Crushers

Refineries

Customers
Major players in
the cottonseed
oil supply chain

Downstream
Producers

Exporters
/Importer

Govt
Organizations,
e.g CCI

Industry
Organizations,
e.g SEA

Figure 4.
Supply chain members at
different stages of cotton

Solvent
Extraction
Plants

Other
Organizations,
e.g AICCA

Government agencies associated with the industry, particularly in respect of

research and development and regulatory functions.
Other players who have an interest and/or stake in the oil industry (NGOs,
unions, etc.).

Supply chain of
cottonseed oil
industry

3.4 Application of VSM to identify and remove wastes from cottonseed processing industry
3.4.1 The seven VSM tools. The typology of the seven new tools (as suggested by Hines
and Rich (1996)) is presented in terms of the seven wastes (Table II).
3.4.1.1 The seven wastes of cottonseed processing industry:

537

(1)
(2)
(3)
(4)
(5)
(6)
(7)

Overcapacity (overproduction).
Unavailability of cottonseed (waiting).
Raw material and finished good transport (transport).
Use of mechanical expeller mills (inappropriate processing).
Cottonseed inventory (unnecessary inventory).
Unnecessary movement of RM/FG (unnecessary motion).
Defective cottonseed oil or cakes (defects).

In this paper, VSM tools are applied to understand these wastes clearly and an attempt
is made to eliminate or reduce them.
3.4.1.2 Waste removal inside value streams. As the focus of the value stream
includes the complete VA (and NVA) process, from conception of requirement back
through to raw material source and back again to the consumers receipt of product,
Mapping tool
Supply
Decision
Demand
Production Quality
chain
Process
amplification point
filter
variety
activity response
analysis
mapping
mapping
funnel
Waste/structure mapping matrix
Over
production
Waiting
Transport
Inappropriate
processing
Unnecessary
inventory
Unnecessary
motion
Defects
Overall
structure

L
H
H

M
H

L
L

M
M

Physical
structure
(a) volume
(b) value

M
M
L

H
L

L
H

H
M

Notes: H high correlation and usefulness; M medium correlation and usefulness; L low
correlation and usefulness
Source: Hines and Rich (1996)

Table II.
Seven value stream
mapping tools

JMTM
19,4

there is a clear need to extend this internal waste removal to the complete supply chain
(Figure 5) (Andersen, 2001; Hines et al., 1996, 1999).

538

3.5 Process activity mapping

In an internal manufacturing context, there are three types of operation that are
undertaken. According to Ishiwata (1991), Monden (1993) and Murman et al. (2002),
these can be categorized as:
(1) non-value adding;
(2) necessary but non-value adding (NNVA); and
(3) value adding.
The first of these is pure waste and involves unnecessary actions which should be
eliminated completely. Examples would include waiting time, stacking intermediate
products and double handling.
NNVA operations may be wasteful but are necessary under the current operating
procedures. Examples would include: walking long distances to pick up parts;
unpacking deliveries; and transferring a tool from one hand to another. In order to
eliminate these types of operation it would be necessary to make major changes to the
operating system such as creating a new layout or arranging for suppliers to deliver
unpacked goods. Such change may not be possible immediately.
VA operations involve the conversion or processing of raw materials or semi-finished
products through the use of manual labour. This would involve activities such as:
sub-assembly of parts, forging raw materials and painting body work.
On the basis of above, VA and NVA activities are identified by the process map as
given (Table III).
In summary:
.
VA activities 7;
.
NNVA activities 10; and
.
NVA activities 6.

Supplier

Manufacturing
Unit

Seed
Cleaner

Figure 5.
Current state of cottonseed
processing supply chain

1 day 80-90 days

Expeller

Refinery

Neutraliser

10-20 days

Customer

Refinery

S No.

Step

Value

1
2
3
4
5
6
7
8
9
10
11
12
13
14(a)
14(b)
15
16
17
18
19
20
21
22

Cottonseed received
Cottonseed moved to drying platform
Cottonseed unpacked
Cottonseed dried
Cottonseed packed
Cottonseed moved to stores
Cottonseed stored
Cottonseed moved to seed cleaner
Cottonseed unpacked and fed to seed cleaner
Cottonseed cleaned
Cottonseed moved to expeller
Cottonseed fed to expeller
Crushing of cottonseed
Cottonseed oil from expeller moved to tank
Cottonseed cake moved to packing area
Cottonseed oil fed to neutralizer
Neutralisation of cottonseed oil
Neutralised cottonseed oil stored in tanks
Neutralised cottonseed oil shipped to refinery
Refining of cottonseed oil
Refined cottonseed oil stored
Refined cottonseed oil packed
Cottonseed oil shipped to market

NNVA
NNVA
NNVA
NNVA
NVA
NVA
NVA
NVA
NNVA
VA
NNVA
VA
VA
NNVA
NNVA
NNVA
VA
NVA
NVA
VA
NNVA
VA
VA

3.6 Application of supply chain response matrix

This mapping approach first project by Jessop and Jones (1995) as shown in Figure 6,
seeks to portray in a simple diagram the critical lead-time constraints for a particular
process. In Figure 6, the horizontal measurements show the lead time for the product
both internally and externally. The vertical plot shows the average amount of standing
inventory (in days) at specific points in the supply chain.
In the cottonseed processing industry case, the horizontal axis shows the
cumulative lead time to be 124 working days. The vertical axis shows that a further
120 working days of material are held in the system. Thus, a total response time in this
system of 244 working days can be seen to be typical. Once this is understood, each of
the individual lead times and inventory amounts can be targeted for improvement
activity, as was shown with the process activity mapping approach.
4. Discussion and suggestions
The following observations can be made from the use of above tools on the cottonseed
industry:
.
There is excess cumulative inventory of 244 days in the whole supply chain.
This includes the inventory locked at manufacturer who stores the inventory of
90 days for the fear of unavailability of raw materials.
.
There is no big player present in the market. There are large number of small
expeller mills which are unable to operate with economies of scale.

Supply chain of
cottonseed oil
industry
539

Table III.
Process activity mapping

JMTM
19,4

Cumulative
Inventory = 120
days
1 day
7 days

Total Lead
Time = 244 days
Shipping
Refinery
Transportation
& receiving

1 day

540
90 days

Oil Expeller lead time to produce 4 tonnes of

Cottonseed oil

Transportation
& receiving

1 day
10 days

Figure 6.
Supply chain response
matrix

Farmers growing Cotton and supplying cotton /

cottonseed to traders (Inventory considered is
at traders store)
120 days

2 days
2 days

Cumulative Lead
Time = 124 days

There are NVA activities present in the supply chain such as moving of cottonseed
oil from expeller mill to refinery. This can be avoided if refinery is integrated with
the expeller mill. This is possible only if large-scale projects are implemented.
The industry still uses outdated technology which hampers the productivity.

Let us
(1)
(2)
(3)
(4)
(5)
(6)
(7)

attack each waste one-by-one to eliminate it! (Figure 7):

Overcapacity (overproduction).
Unavailability of cottonseed (waiting).
Raw material and finished good transport (transport).
Use of mechanical expeller mills (inappropriate processing).
Cottonseed inventory (unnecessary inventory).
Unnecessary movement of RM/FG (unnecessary motion).
Defective cottonseed oil or cakes (defects).

Overcapacity can be reduced by consolidation of the industry. As pointed out earlier in this
paper, the industry is highly unorganized with large number of small players present
in the industry. This restricts the players from exploiting economies of scale possible
from operating on large-scale. Thus, consolidation is the key to remove this waste.
Policy changes such as import of oilseeds and price policies to favor the production of
oilseeds in the field by farmers will also help to feed the excess capacity.
Unavailability of cottonseed can be addressed once the industry moves towards
consolidation. The bigger players can integrate backwards till farmers in form of
contract farming (exploiting economies of scale) and thus eliminate the risk of

Supplier

Manufacturing
Unit

Refinery

Customer

Supply chain of
cottonseed oil
industry
541

Seed
Cleaner

1 day 80-90 days

Expeller

Neutraliser

Refinery

10-20 days

unavailability of raw material. This can also help to reduce the amount of inventory
held at expeller mill levels from 90 to 6-7 days (as identified in supply chain response
matrix). Again, policy changes cited above may be useful to remove the problems
caused by unavailability of cottonseed.
Transportation can be addressed with the large-scale units located near to farm
fields and consolidating the outbound shipment through large distributors.
Inappropriate processing methods viz. use of mechanical expeller is causing a huge loss
of cottonseed oil. Even after crushing with a mechanical expeller, there is 6-7 percent oil left
in the cottonseed meal. If the solvent extraction is used instead of mechanical expellers, the
oil can be extracted to the maximum and many more useful by products in the form of
linters and hulls can be obtained. Generally the oil left in decorticated (solvent extracted)
meal is only 0.5 percent. Solvent extraction mills are profitable only at large-scale. Thus,
consolidation of industry is again useful for removal of this waste.
Other NVA activities identified in process activity mapping can also be reduced by
use of better processing methods and use of mechanical conveyors which can directly
deliver the dried cottonseed from the drying platform to store and then to seed cleaner.
Unnecessary inventory in the form of cottonseed can be addressed by backward
integration with the farmers. Also automatic conveyors can be used to eliminate
unnecessary WIP from the process.
Unnecessary motion as identified in the process activity mapping, the oil refineries
are located far away from the expeller mills. Because of this, the neutralized cottonseed
oil has to be transported to the refineries, which causes extra lead time. Thus,
integration of refineries with the expeller mills will help to reduce the extra lead time of
unnecessary transportation. This will be possible when an expeller unit is operating on
a large-scale to feed the refinery with sufficient volume to run profitably.
Cottonseed oil defects can be eliminated by carefully purchasing the right quality of
cottonseed and selecting the right make and technology of expeller unit. Proper storage

Figure 7.
Current state of cottonseed
processing industry

JMTM
19,4

542

of raw material and finished goods (oil and meal) is essential to remove the storage
related losses and defects.
Thus, all the wastes need to be addressed for the successful transition of Indian
Cottonseed Oil Processing Industry from an inefficient supply chain to an efficient
supply chain.
The future state (to be state) of the oil processing units is shown diagrammatically
(Figure 8).
5. Conclusions
Rother and Shook (1999) rightly argue that whenever there is a product for a customer,
there is a value stream. The challenge lies in seeing and working on it. VSM can be
done in the same way for practically any business activity and expanded upstream
or downstream. Indian Cottonseed Industry has a huge potential due to fast rising
demand and insufficient supply of edible oil in India. Use of inappropriate methods of
processing, unorganized industry and presence of large number of non-networked
small players is making the overall supply chain inefficient and is causing losses and
wastes.
Thus, the wastes of the industry in terms of overcapacity, unnecessary inventory,
motion and transport, etc. need to be addressed to improve efficiency and effectiveness
of supply chain. Four major recommendations come out of this paper for the industry.
One, consolidation of the industry to form bigger players who can exploit economies
of scale. Second, backward integration with the farmers to assure continuous supply of
raw material (cottonseed). Third, forward integration with refineries or combining the
refineries with the oil mills. Finally, last but not the least, use of solvent extraction to
extract the maximum oil from oil meal.
In the existing scenario of processing capacity and low-capacity utilization Indias
processors operate their plants at a level where average costs are high. They can

Supplier

Manufacturing
Unit

Seed
Cleaner

Figure 8.
State of cottonseed
processing industry

1 day 5-6 days

Expeller

Customer

Refinery

Neutraliser

1 day

Refinery

reduce unit processing costs by increasing capacity use. In the future, costs can drop
further if larger, more technically efficient plants are built and can operate at high
levels of capacity use. Lower processing costs would create a stream of benefits to
processors that could be shared with producers (in the form of higher oilseed prices)
and consumers (in the form of lower oil prices).
With the above recommendations being in practice, the cottonseed oil industry
might look into future with positive outlook. The future scope of work lies in exploiting
other powerful tools of value stream to attack down stream wastes in the supply chain
of edible cotton seed oil industry. Similarly, the concepts can be replicated for other
edible oil industries to capture various scenarios and attack wastes in processing and
distribution chains. Similarly, studies can be used to compare value streams in context
to country specific situation.

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Mumbai.
Andersen, H. (2001), The history of reductionism versus holistic approaches to scientific
research, Endeavour, Vol. 25 No. 4, pp. 153-6.
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Cambridge, MA.
Cheng Hai, T. (2002), A Report on Palm Oil Supply Chain, Plantation Agriculture, WWF
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NAPM Annual Academic Conference, Portland State University, Portland, USA, pp. 69-86,
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Hines, P., Rich, N. and Esain, A. (1999), Value stream mapping: a distribution industry
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Irani, S.A., Zhang, H., Zhou, J., Huang, H., Udai, T.K. and Subramanian, S. (2000), Production
flow analysis and simplification toolkit (PFAST), International Journal of Production
Research, Vol. 38 No. 8, pp. 1855-74.
Ishiwata, J. (1991), Productivity through Process Analysis, Productivity Press, Cambridge, MA.
Jessop, D. and Jones, O. (1995), Value stream process modelling: a methodology for creating
competitive advantage, Proceedings of the 4th Annual IPSERA Conference, University of
Birmingham, Birmingham.
Jones, D.T. and Womack, J. (2002), Seeing the Whole Mapping the Extended Value Stream, The
Lean Enterprise Institute, Cambridge, MA, pp. 1-100.

Supply chain of
cottonseed oil
industry
543

JMTM
19,4

544

Mehta, B.V. (2005), India mover & shaker of global vegetable oil market, paper presented at
The National Seminar on Oil Palm, Bali (organized by Indonesian Palm Oil Producers
Association (GAPKI), November 17-18.
Mehta, B.V. (2006), Overview of the Indian oilseed sector and demand of edible oils,
Proceedings of Exchange Traded Commodities Outlook 2005-06, (organized by Foretell
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Millard, R. (2001), Value stream analysis and mapping for product development, Masters
thesis, Massachusetts Institute of Technology, Cambridge, MA.
Monden, Y. (1993), Toyota Production System: An Integrated Approach to Just-in-Time,
Industrial Engineering and Management Press, Norcross, GA.
Murman, E. et al. (2002), Lean Enterprise Value, Palgrave, Basingstoke, p. 72.
NIST-MEP Lean (2000), Lean Certificate Series, NIST Manufacturing Extension Partnership,
Gaithersburg, MD.
Persaud, S. and Landes, M.R. (2006), The role of policy and industry structure in Indias oilseed
markets, Policy and Industry Structure in Indias Oilseed Markets/ERR-17, Economic
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Corporation, Simon and Schuster, New York, NY.
Appendix 1. Value chain of cotton
Cotton

Losses (2%)

Lints Used for

Textile Industry
(33% of cotton)

Ginning

Cottonseed
(65% of cotton)

Cleaning

Extraction Unit

Figure A1.

(a)

Twigs, leaves and

other trash

Expeller Unit

(b)

Supply chain of
cottonseed oil
industry
(a)
Cottonseed (100%)

545

Extraction Unit
First cut linters
Delinting

Linters (4.2 %)
Second cut linters

Delinted
seeds
Hulling

Hulls (26.4%)

Kernels
(meats)
Flaking
rollers
Thin flakes
of meat
Cooking at 170 F
(to reduce moisture)

Screw press
mills

Solvent
extraction mills

Cottonseed crude oil

(12.5%)

Cottonseed
meal (extraction) (49.2%)

Washing with
Caustic Soda
Losses 5.6%
Washed Oil

Figure A2.

JMTM
19,4

546

(b)
Cottonseed (100%)

Expeller Unit

Dry

Moist

Dried

Crushing

Oil (11 %)

Washing with
Caustic Soda

Washed Oil

Figure A3.

Cake (84 %)

Evaporation losses at
machine temperature
(3 %)

Soap stock
(2 %)

86.4
66.6
6
53.8
12.7
4.3
1.8
3.3
8.9
243.8
47

75.8
60
5.3
51
12.6
3.8
1.9
2.9
7.8
221.1
43

37.15

213.2

73.7
47
5.7
64.6
8.9
1.2
1.4
2.4
8.3

40.96

247.5

89.8
56.7
5.3
71.4
9.4
2.4
1.4
2.7
8.4

38.8

207.3

52.7
57.9
4.8
70.8
6.9
2.6
1.5
2.4
7.7

32.17

184.4

64.1
41.9
5.2
52.8
6.5
2
1.1
2
8.8

52.61

207

70
51
7
60
7
2
1
2
7

45.29

151

44
39
4
46
9
2
1
2
4

58.94

253

82
62
8
79
10
1
1
2
8

79.9

261.02

70.2
83.6
7.1
75.1
12.22
1.7
1
1.8
8.3

1995-1996 1996-1997 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005

Source: AICCA (2004-2005, 2005-2006), Solvent Extractors Association of India Reports (2005-2006)

Groundnut
Rapeseed and mustard
Sesamum
Soybean
Sunflower
Safflower
Niger
Linseed
Castor
Total production of nine other
oilseeds in lakh tonnes
Cottonseed production
(lakh tons)

Oilseeds

Appendix 2. Oilseed tables

Supply chain of
cottonseed oil
industry
547

Table AI.
Indias production
of cultivated oilseeds
(November-October) (lakh
tonnes)

JMTM
19,4

548
Table AII.

Year

2003-2004

2004-2005

158

136

177

240

52.61

45.29

58.94

79.9

11.3
41.31

10
35.29

12
46.94

16
63.9

2001-2002

2002-2003

2003-2004

2004-2005

277

269.19

559.73

726.49

Note: Availability of cottonseed for processing in India

Source: Annual Report of AICCA (2005-2006)

Exports of cottonseed (in tonnes)

Source: Annual Report of AICCA (2005-2006)

State

Table AIV.
Area wise production of
cottonseed (lakh tonnes)

2002-2003

Cotton production (lakh bales)

Cottonseed production
(@333 kg/bale) (lakh tonnes)
Retained for sowing and direct
consumption (lakh tonnes)
Marketable surplus (lakh tonnes)

Year
Table AIII.
Export of cottonseed by
India

2001-2002

Punjab
Haryana
Rajasthan
North Zone
Gujarat
Maharashtra
MP
Central Zone
AP
Karnataka
TN
South Zone
Other states
Loose cotton
All India

2002-2003

Production
2003-2004

2004-2005

2.64
2.81
1.49
6.94
10.07
7.92
5.94
23.93
6.6
1.98
1.32
9.9
0.33
3.8
44.9

3.66
3.83
2.83
10.32
16.65
10.32
6.49
33.46
8.65
1.33
1.16
11.14
0.33
3.66
58.91

6.24
5.82
3.41
15.47
23.31
17.31
5.49
46.11
10.32
2.66
1.83
14.81
0.5
2.99
79.88

Source: Annual Reports of AICCA (2004-2005, 2005-2006)

Appendix 3. Oil tables

Year
Table AV.
Exports of cottonseed oil

Export qty (tonne)

2001-2002

2002-2003

2003-2004

2004-2005

101.1

643.96

5,629.17

2,007.99

Source: Annual Reports of AICCA (2004-2005, 2005-2006)

Oil year
(November-October)

Domestic vegetable oil

availability
(lakh tonnes)

1996-1997
1997-1998
1998-1999
1999-2000
2000-2001
2001-2002
2002-2003
2003-2004
2004-2005 (P)
2005-2006

74.2
67.9
69.1
63.2
58.1
67.2
51.5
75.9
74.2
77

Import of vegetable oil

Total import
veg oil
Edible Non-edible (lakh tonnes)
17.5
20.8
43.9
44.9
48.3
44.2
51.1
43.9
50
52.5

1.5
1.6
1.9
2.5
2.6
3.9
2.8
2.3
3
4

19
22.4
45.8
47.4
50.9
48.1
53.9
46.2
53
56.5

Total
availability
(lakh tonnes)
93.2
90.3
114.9
110.6
109
115.3
105.4
122.1
127.2
133.5

Source: Sharma (2006)

Year

4.8
3.4
5
4.3
4
4.13
3.53
4.69
6.39

Source: Ministry of Agriculture, Government of India, Cottonseed Complex Report (2005-2006);

adopted from www.mcxindia.com

Soybean oil
Cotton oil
Gn oil
Sun oil
Rape oil
Sesame oil
Palm oil
Coconut oil
Castor oil
Ricebranoil
Others
Total
Population (millions)
Per cap kg
Source: Dorab (2006)

549

Table AVI.
Indias vegetable oils
production and import
(million tonnes)

Output

1996-1997
1997-1998
1998-1999
1999-2000
2000-2001
2001-2002
2002-2003
2003-2004
2004-2005

Consumption in lakh tonnes

Supply chain of
cottonseed oil
industry

2002-2003

Actual
2003-2004

2004-2005

17.8
3.9
7.4
5.75
11.9
1.5
40
4.5
1
5.5
1.8
101.05
1,060
9.53

19
5.2
11
5
17
2
35
5
1
6
2
108.2
1,070
10.15

28
6.6
9.5
5
14.2
2
33.2
4.5
1
6
3.5
113.5
1,080
10.5

Table AVII.
Production of cottonseed
oil in India (lakh tonnes)

Estimates
2005-2006
2006-2007
31.5
7.2
10.2
6.8
19
1.6
26
4.5
1.2
6.5
3.5
118
1,090
10.83

33.7
7.5
10
6.8
19
2
29
4.5
1.2
6.5
3.5
123.7
1,100
11.25

Table AVIII.
Indias consumption

JMTM
19,4

550
Table AIX.
Indias imports of
cottonseed oil

Year
1997-1998
1998-1999
1999-2000
2000-2001
2001-2002
2002-2003
2003-2004
2004-2005

Quantity (lakh tons)

0.0443
0.3824
0.4316
0.238
0.1175
0.0055
0.0089
0.0271

Source: DGCIS, Ministry of Commerce, Cottonseed Complex Report (2005-2006); adopted from www.
mcxindia.com

Corresponding author
Dinesh Seth can be contacted at: dineshtseth@qu.edu.qa; dineshtseth@rediffmail.com

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