Value Stream Mapping event leads to $800K in revenue opportunities and $500K in inventory reduction

A small-town factory was looking to identify cost savings opportunities along with improved customer delivery and satisfaction. It was decided that a value stream map would be conducted within a few weeks to understand the current state. Meetings were quickly organized to gather as much baseline data as possible prior to the upcoming trip. Normally we would like more time to plan, but had to be flexible to deal with management needs and schedule availability of the team. We decided that the prep would have to be included in the event, and they wanted to map two different value streams, making the event 3 weeks in duration (internal prep + 2 VSMs) instead of the typical 1 week duration (external prep + 1 VSM).

The team arrived at the facility for introductions and a tour during the first week. The plan and agenda for the next 2-3 weeks was determined.

The 1st week was planning and start on the current state VSM

• Day 1 – Site tour, planning agenda for next 2 weeks​
• Day 2, 3 and 4 – Develop current state VSM
• Day 5 – Fill in data boxes and information flow gaps in VSM, discuss findings with leadership, adjust plan for week 2​

The 2nd week was spent finalizing the current state with more data collection, and making sure we didn’t overlook anything

• Day 1 – Conducted interviews with those who didn’t participate yet, finalize VSM for takt time and inventory​
• Day 2 – Team review of current state VSM, brainstorming problems​ and opportunities
• Day 3 – Additional updates/data collection for current state VSM​
• Day 4 – Interviews with union, add to list of problems
• Day 5 – Review of tiered huddle meetings, interviews with union leaders, finalize list of problems

The 3rd week was the VSM Future State event for one of the value streams only (to reduce scope)

• Day 1 – Agenda review, event goals, short training on Lean tools and concepts, watched “The Goal” movie 
• Day 2 – Reviewed the Current State VSM, discussed Ideal State concepts (about 3-5 years in the future)
• Day 3 – Identified potential projects and feasibility of each (effort, timeline, cost). We separated projects into no/low cost, within current budget, or additional capital investment needed.
• Day 4 – Separated the projects into 3 months (Implementation phase), 1 year (Future State) and over 1 year (Ideal State), and we estimated the impact of the projects under 3 months
• Day 5 – Met with union and walked through the projects to get feedback, mapped out the Future State VSM, along with notes about what should be accomplished for each project.

A few of the key projects and kaizen events identified:

• Unload raw material directly to point of storage
• Improved maintenance through resources and parts
• Reduced setup times
• Establish proper maintenance and tooling plan
• Determine faster way to cool down product after bake
• Fix printing issue at packaging
• Improve partial pallet inventory management
• Improve driver communication and restrict access in building
• Reduce equipment setup reduction (SMED) time

For the projects that needed to be completed in the next 3 months (90 days), it was estimated that they would result in the following impact.

Reducing downtime (increasing output) in pre-production area = $300K annual revenue increase
Reducing downtime (increasing output) in post-production area = $500K annual revenue increase
Reducing post-production inventory = $500K increase in cash flow ($50K cost of capital)

The budget for our services was 4 weeks of time (including preparation and on-site facilitation) plus travel expenses for 3 full weeks. With $800K of potential revenue increase (without additional capital investment), and $500K in increased cash flow, the event was a great return on investment for the expertise and facilitation services we provided.

The scope of work for this project was only the facilitation of the event, and did not include the follow-up and tracking of action items, so we will try and update this case study at the end of 2024. However, the time we spent engaging the teams and building support for each idea will likely result in a successful implementation.