Evaluating Costs in the Entire Value Stream

Finding Cost Reductions in the Value Stream

1. We used Value Stream Mapping to evaluate costs from “Field to Table”.
2. 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.
3. Examples of processing costs were distribution direct labor, store direct labor, purchasing labor, management labor, accounting labor and transportation costs.
4. A cross functional team of employees was formed including accounting, retail store , distribution center, marketing, purchasing and merchandising.
5. 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.
6. Labor functions were time studied.
7. Outside purchased service costs were gathered.
8. In addition, observations during the time studies led to other cost-reduction opportunities.
9. The team identified 30 cost reduction opportunities. See Slide 2 for the entire list.
10. Starting on Slide 3 is a more detailed explanation of the top 4 cost reduction opportunities.
11. Results were presented to senior management who initiated Lean Six Sigma teams, under our guidance to realize these savings.