Sales & Operations Process Improvement
Finding Cost Reductions in Your Value Stream

June 2010
In This Issue
Client Testimonial
What is Mitch Doing?
Lean Projects vs. Kaizen Events
Greetings!
 
This month we are presenting another idea for attacking overhead costs across all of your organizations. 

Our discount grocery retailer Client wanted to evaluate its cost structure from procurement through distribution, retail and accounting functions.   The CEO felt that costs had crept into their processes over the years and that the company had migrated away from its low cost structure. 

We led a team of ten employees through this month long "Field-to-Table" project to quantify Value Stream costs and identify cost reduction and sales improvement projects. 
 
Sincerely,
 
Mitch Millstein & Ray Davis
Client Testimonial

"We are using Supply Velocity's Lean Six Sigma methods to analyze a variety of processes including rationalizing SKUs (stock-keeping-units).  By using math to evaluate SKUs we took some of the emotion out of our decisions.  We expect significant increases in sales and productivity from reducing poor performing SKUs. "

Mark Kelso
Director of Process Improvement
 
Lean SimulationWhat is Mitch Doing?

Mitch is conducting a Lean Six Sigma workshop for 36 of a global Client's middle managers. 

If you have ever been through our "Non-Lean" simulation you will recognize Mitch "yelling" at one of the "employees" and telling her to get moving! 
 
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 

    http://www.supplyvelocity.com/files/Field_to_Table_June_2010.ppt

  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.