Eliminating waste through Value Stream Mapping

Proval Consulting > Operational Consulting > Eliminating waste through Value Stream Mapping

Problem Statement

The client, a manufacturing company producing custom-engineered components, faced significant challenges in the production of Product Line 1. High manufacturing costs, especially during discount periods, led to lower gross margins. Compounding this issue, the company had accumulated excess inventory and frequently dealt with missing parts during various stages of production. These problems not only hindered profitability but also compromised the company’s ability to meet customer demand.

Challenges at a Glance:

  • High Manufacturing Costs: Production costs for Product Line 1 were too high, eating into profitability, especially when products were discounted.
  • Excess Inventory: The company held more inventory than necessary, leading to inefficiency and wasted resources.
  • Missing Parts: Missing parts throughout the value stream created production delays and confusion.
  • Decreased Cash Return on Investment (CRI): Due to these issues, the company struggled to meet customer demand, affecting their CRI.
  • Reduced Profitability: The culmination of these factors decreased overall profitability.

Goals

  • Reduce Lead Time: Aiming to cut lead time by 25%, improving overall efficiency.
  • Lower Manufacturing Costs: Decrease production costs by 15%.
  • Align Product Line Layout: Reconfigure Product Line 1 to mirror the more efficient layout of Product Line 2.
  • Reduce Inventory: Slash excess WIP inventory by 50%

Value Stream Mapping: The Key to Unlocking Efficiency

The Importance of Value Stream Mapping (VSM): Value Stream Mapping (VSM) is a powerful tool used in Lean manufacturing to identify inefficiencies, bottlenecks, and non-value-added activities in a process. For our client, VSM was critical in helping us visualize the entire production process for Product Line 1. The exercise allowed us to not only see the current state of operations but also pinpoint specific areas that were causing delays and increasing costs.

By creating a comprehensive Value Stream Map, we were able to break down the production flow into individual stages and analyze each step to determine whether it added value to the process. VSM allowed us to:

  • Visualize the flow of materials and information: From order entry to delivery, we tracked how materials moved, identifying where they got stuck or delayed.
  • Identify waste: By mapping out the process, we could clearly see where time, resources, or efforts were being wasted, such as unnecessary movement of materials or delays in communication.
  • Highlight bottlenecks: VSM helped us pinpoint specific areas of the production line where bottlenecks occurred, leading to production slowdowns and inefficiencies.

Key Problems Identified through VSM

The VSM exercise revealed several critical issues across the value stream:

  • Missing Parts: There was no formal process for part retrieval, leading to confusion and a lack of accountability. Employees picked parts at random, often resulting in shortages.
  • Delays in Heating Element Production: The heating element was identified as a significant bottleneck, taking longer than necessary.
  • Communication Gaps: Departments operated in silos, leading to frequent communication breakdowns and production delays.
  • High Costs for Purchased Parts: The company was overpaying for parts, and deliveries from suppliers were frequently late, further delaying production.
  • Inefficient Storage: Parts were stored haphazardly, causing delays as workers struggled to find the necessary components.

Solutions: Quick Fixes and Long-Term Improvements

After identifying these issues through the Value Stream Mapping exercise, we categorized them into two areas: Quick Fixes that could provide immediate relief and Long-Term Solutions that would address the root causes of the problems.

Quick Fixes

  1. Daily Stand-Up Meetings: We instituted daily meetings to review missing parts and address issues in real time.
  2. Relocation of Equipment Cleaning: The task of cleaning equipment before shipping was reassigned to warehouse personnel to free up production resources.
  3. Material Runner: A dedicated runner was assigned to deliver raw materials to production lines, reducing delays caused by material shortages.
  4. Improved Communication: We established clearer communication channels between departments to prevent misunderstandings and delays.

Long-Term Solutions

  1. Kanban System Implementation: To prevent missing parts, we introduced a Kanban system both in-house and with suppliers, ensuring continuous flow and timely restocking of parts.
  2. Supplier Quality Improvement: We worked with suppliers to implement processes that improved both the quality and timeliness of delivered parts.
  3. Sub-Assembly Cells: We introduced sub-assembly cells, allowing workers to focus on specific tasks, improving efficiency, and reducing bottlenecks.
  4. Production Layout Redesign: By aligning Product Line 1 with the more efficient layout of Product Line 2, we reduced movement and streamlined the production process.
  5. Kanban Training: We provided comprehensive training for production and planning teams on how to effectively use the Kanban system, ensuring it was fully integrated into daily operations.
  6. Supplier Price Negotiation: We renegotiated supplier contracts, securing better pricing for parts, which directly reduced manufacturing costs.
  7. Structured Weekly Meetings: Regular, structured meetings were implemented to ensure ongoing communication and collaboration across departments.

Results Achieved

  • Lead Time Reduction: Lead time was reduced by 25%, meeting the target and improving overall production efficiency.
  • Manufacturing Cost Savings: The cost per unit dropped by 15%, directly boosting profitability.
  • Inventory Reduction: WIP Inventory levels were reduced by 50%, freeing up valuable resources and improving cash flow.
  • Improved Cash Return on Investment (CRI): With fewer delays and improved production flow, the company was better positioned in CRI
  • Enhanced Profitability: The combination of lower manufacturing costs, streamlined operations, and reduced inventory contributed to a significant increase in overall profitability.

Conclusion

By using Value Stream Mapping, we were able to dissect the complex manufacturing process of Product Line 1, uncover critical inefficiencies, and implement both quick fixes and long-term solutions. The result was a more efficient, cost-effective production line that not only reduced lead times but also improved profitability and customer satisfaction.

Ready to transform your production process? At Proval Consulting, we specialize in uncovering hidden inefficiencies and optimizing manufacturing operations. Contact us today to find out how Value Stream Mapping can help you streamline your processes and achieve your business goals!

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Project Details

  • Category: Operational Consulting
  • Client: A manufacturing company producing custom-engineered components.
  • Location: U.S.A
  • Challenge: High manufacturing costs, excess inventory, and frequent missing parts in production.
  • Objective: Identify inefficiencies, reduce lead time by 25%, and lower manufacturing costs.