Cost Reduction and Lean Thinking
Consistent with “Lean Thinking,” VMEC’s basic philosophy is to continuously identify and eliminate all forms of non-value adding activity (ie. “waste”), which includes unnecessary and/or excessive costs when producing a product and/or delivering a service. First of all, the root causes of all forms of waste need to be relentlessly eliminated. Next, cost reduction strategies should be implemented at the earliest possible stages of the product and business life cycles to increase profitability, versus applying cost reduction and cost containment strategies after products and services have matured and profit margins are declining. Especially in today’s highly competitive and digitally-connected world, the ability to properly identify, calculate and effectively control costs must be part of a successful company’s way of thinking and basic work culture in order to achieve and sustain long-term, profitable growth.
Product and Business Life Cycles
Based on many years of experience, when effective systems and cost reduction strategies such as Lean Manufacturing, Lean Product Design & Development, and Six Sigma are incorporated during the growth stages of the product and business life cycles, resources are freed-up and capacity can be reinvested and redeployed to new, innovative products and business models, thereby allowing the company to continue along a positive profitability curve. But as products mature in the marketplace and competition inevitably increases, price-pressure increases. Additionally, companies that have sound cost reduction plans built into their product life cycle management, and who have staff skilled in applying and sustaining Lean and Six Sigma methodologies, are best positioned to maintain profits.
There are many fertile areas of opportunity where VMEC can support companies / enterprises and help them both as to accelerate their continuous improvement journey and achieve the goal of sustainable profitable growth.
Typical VMEC cost reduction projects with manufacturing and service sector companies often include:
- Value Stream Mapping to reduce Order-to-Cash cycle time
- Quality Improvement projects to eliminate rework and increase first pass yield
- Value Stream Mapping and Value-Added Flow Analysis to identify to reduce process and service steps by 25% to 50%
- Kaizen projects to reduce set-up time, reduce errors, and improve work flow
- Plant floor layout and 5S workplace organization to improve product flow and additionally avoid facility expansion investment
- Lean Product Development methods training and implementation
- Structured Problem Solving and Process variation reduction projects
- Customer and product rationalization analysis
- Supply Chain analysis
- Off-shoring and Reshoring cost analysis