Evaluating Costs in the Entire Value Stream
Finding Cost Reductions in the Value Stream
- We used Value Stream Mapping to evaluate costs from “Field to Table”.
- All processing costs were analyzed. The scope was to attack overhead costs and processes that were increasing expenses or reducing sales. “Costs of goods sold” was excluded.
- Examples of processing costs were distribution direct labor, store direct labor, purchasing labor, management labor, accounting labor and transportation costs.
- A cross functional team of employees was formed including accounting, retail store , distribution center, marketing, purchasing and merchandising.
- All departments that had a role in purchasing, advertising, distributing, retailing and accounting were mapped. An overview of the departments and processes analyzed using time study and financial data is shown on slide 1 of Field to Table.
- Labor functions were time studied.
- Outside purchased service costs were gathered.
- In addition, observations during the time studies led to other cost-reduction opportunities.
- The team identified 30 cost reduction opportunities. See Slide 2 for the entire list.
- Starting on Slide 3 is a more detailed explanation of the top 4 cost reduction opportunities.
- Results were presented to senior management who initiated Lean Six Sigma teams, under our guidance to realize these savings.