8 Ways Value Stream Maps Can Reduce Supply Chain Costs

A value stream map (VSM) is a powerful tool that can be used to optimize the flow of materials and information in a supply chain. By analyzing and visualizing the entire process from raw materials to finished goods, organizations can identify bottlenecks, inefficiencies, and areas for improvement.
Once these issues have been identified, organizations can implement changes to improve the flow of materials and information in their supply chain – which ultimately can reduce costs and improve their bottom line.

Here are 8 ways a value stream map can help cut costs in the supply chain:

1. Reduced Inventory Costs

By identifying and eliminating waste in the production process, companies can reduce the amount of inventory they need to hold, which can save money on storage, insurance, and handling costs. This can also lead to savings on the cost of capital, as less money is tied up in inventory.

2. Shorter Lead Times
By identifying bottlenecks and delays in the production process, companies can reduce the lead times for delivering products to customers, which can save on transportation costs and improve customer satisfaction. This can also lead to reduced costs for expediting and airfreight, as well as improved on-time delivery performance.

3. Increased Efficiency
By eliminating waste and inefficiencies in the production process, companies can reduce the amount of energy consumption, minimize scrap and rework, and improve machine utilization.

4. Reduced Scrap and Rework
By identifying and eliminating causes of defects, companies can reduce the amount of scrap and rework generated by overproduction or lack of quality control.

5. Reduced Downtime
By identifying and eliminating bottlenecks and delays, companies can reduce downtime caused by overproduction or lack of resources, which can lead to cost savings through increased productivity and reduced maintenance costs.

6. Increased Customer Satisfaction
By reducing lead times, increasing on-time delivery, and improving product quality, companies can improve customer satisfaction which can lead to cost savings through reduced returns, increased sales, and improved customer loyalty.

7. Improved Supplier Relationships
By identifying issues with suppliers, such as delays in delivery times, organizations can take action to improve these relationships and negotiate better prices or delivery terms. This can help reduce costs for raw materials and other resources.

8. Reduced Operational Costs
By analyzing the entire supply chain process, value stream mapping can help identify areas where costs can be reduced, such as reducing the number of suppliers, consolidating orders, or reducing packaging materials.

Using the right tools

While value stream mapping can certainly be done on paper, using powerful, visual business tools like those in Minitab Workspace or Minitab Engage  can make the process a lot easier, particularly when your teams are located in different regions or office locations.

Watch our video below to learn how to use value stream maps to examine the flow of information and materials through the value stream: