Consultants in Logistics

Value Stream Mapping: Taking the Cost Out of Operations

Value Stream Mapping: Taking the Cost Out of Operations

Businesses are continually challenging their heads of department to identify cost savings and service improvements. However, done in isolation, this can result in them ‘robbing Peter to pay Paul’, achieving improvements in one area at the expense of efficiency in a neighbouring part of the business. For example, increasing the batch size of inbound goods to achieve greater purchasing discounts and vehicle utilisation is likely to increase storage costs, extend the cash-to-cash cycle time and increase the risk of obsolescence.

Value Stream Mapping techniques allow companies to avoid this type of scenario by exploring opportunities for improvement and cost reduction throughout the entire Supply Chain. By observing activity in real-time and engaging with those responsible for carrying out that activity, companies can effectively map their Supply Chains to achieve a simple diagrammatic representation that is not constrained by internal or external boundaries. This offers a unique end-to-end view and allows them to seek out efficiency improvements and cost savings from the operation as a whole whilst ensuring there is no negative impact elsewhere in the Supply Chain.

What are the benefits of Value Stream Mapping?

Value Stream Mapping techniques allow companies to quickly and accurately evaluate their current operations and expose hidden improvements and/or cost saving opportunities. In the course of recent value stream mapping projects, Davies & Robson has worked with clients to:

  • Save £2m in Supply Chain Costs: Reduced the end to end Supply Chain lead-time by lowering stock levels and increasing frequency of shipping
  • Demonstrate the Benefits of an Integrated WMS: Identified obstacles to information flow and the need to improve accuracy of data exchange and reduce enquiry process time in order to relieve pressure on a team with limited capacity
  • Identify Opportunities to Improve Efficiency: Recommended process and layout improvements for goods receiving to reduce cost of temporary labour and improve throughput
  • Simplify Inventory Management Methods: Identified the opportunity to introduce Kanban stock controls for fast moving stocks eliminating the requirement for labour intensive preparation of stock forecasts and order schedules
  • Reduce Transport Costs: Cut transport costs by identifying the potential to cross-dock and consolidate deliveries

Five steps to successful Value Stream Mapping

Davies & Robson has identified five steps to successful Value Stream Mapping. These are:

  1. Ascertain Supply Chain Process and Risk

    Follow the physical route of the Supply Chain, capturing details relating to the entire operation. This direct observation of processes and environments and contact with operatives at every stage enables risks to be assessed.

  2. Create the Value Stream Map

    The resulting comprehensive understanding of the Supply Chain and the inherent risks is translated into the simple, diagrammatic Value Stream Map (see above/below/left/right). The map itself is constructed using universal icons.

  3. Review Findings

    The Value Stream Map is easily interpreted with limited technical knowledge. Findings should be validated through consultation with the process owners.

  4. Evaluate Improvement Opportunities

    Once the map is agreed, the findings can be interpreted to identify improvement opportunities. The map literally directs the reader to areas of opportunity that have previously been unseen. Each potential area for improvement is highlighted using a flash icon.

  5. Assess Benefit, Impact and Risk

    The most critical aspect of interpreting the Value Stream Map is to fully assess the benefits of the proposed improvements, in terms of cost and quality of service. The act of considering the benefit to the entire Supply Chain ensures that the value of the improvement always translates to the bottom line. In conjunction with evaluating the benefits of proposed improvements, consider the impact and risk of the improvements to ensure that these can be neutralised.

A unique feature is that the Value Stream Map is not constrained by any boundaries and seeks to achieve total Supply Chain efficiency and cost benefits and neutralise negative impact. The benefits of the Value Stream Mapping approach to improvement and cost reduction are clear when compared with the traditional methods of department-led improvements that do not always consider the effect on the Supply Chain as a whole.

How can we help? Davies & Robson offer both Value Stream Mapping consultancy services and training packages to teach your managers to see the opportunities for improvement. For more information contact us on 01327 349090 or email info@daviesrobson.co.uk

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