Reducing Process Costs with Lean, Six Sigma, and Value Engineering Techniques

A company with effective cost reduction activities in place will be better positioned to adapt to shifting economic conditions. In fact, it can make the difference between organizations that thrive and those that simply survive during times of economic uncertainty. Reducing Process Costs with Lean, Six Sigma, and Value Engineering Techniques covers the methods and techniques currently available for lowering the costs of products, processes, and services.

Describing why cost reductions can be just as powerful as revenue increases, the book arms readers with the understanding required to select the best solution for their company’s culture and capabilities. It emphasizes home-grown techniques that do not require the implementation of any new methodologies—making it easy to apply them in any organization.

The authors explain how to reduce costs through traditional Lean methods and Lean Six Sigma. They also present Six Sigma cost savings techniques from Manufacturing Six Sigma, Services Six Sigma, and Design for Six Sigma. The book also presents optimization techniques from operations research methods, design experiment, and engineering process control.

Helping you determine what your organization’s value proposition is, the text explains how to improve on the existing proposition and suggests a range of tools to help you achieve this goal. The tools and techniques presented vary in complexity and capability and most chapters include a rubric at the start to help readers determine the levels of competence required to perform the tasks outlined in that chapter.

Introduction
The Use of Rubrics
Questions to Ponder
Cost Improvement Scenario
     Situation 
     Objective 
     Action 
     Results 
     Aftermath
A Brief Overview of Value Engineering
Product Life Cycle
What Is Value?
Cost Improvement Challenge
Cost Avoidance
Cost Reduction
Profit Improvement
Green and Corporate Stewardship Are the Same
The Case for Cost Reductions
Planning for and Managing a Value Improvement Project 
     Project Concept
     Project Information
     Project Business case
Conclusion

Saving Money with Homegrown Ideas
Rubric for Homegrown Ideas
Questions to ponder
Cost Improvement Scenario 
     Situation 
     Objective 
     Action 
     Results 
     Aftermath
Your People Matter
Laboratory Equipment
Production Equipment
Production Test Equipment
Logistics Material
Engineering
Marketing
Accounting/Finance
Procurement
A. Financial Determination
Brainstorming 
     Product, Process or Service Preparation for Critique 
     Numbers Count
     Suspend Judgment 
     Build on Ideas
Mind Mapping
Selection Method 
     Weighted Matrix such a Pugh Matrix 
     Majority Decision 
     Voting Decision 
     Consensus 
     Rating 
     Delphi Method 
     Nominal Group Technique
     Group Passing Technique
     De Bono and his Thinking Hats 
     Advocacy and inquiry
     Strategic Assumption Surfacing And Testing (SAST) 
     Team Syntegrity 
     Facilitation

ARBITRARY COST DOWN APPROACH

Rubric for Costing Down
Questions to Ponder
Cost Improvement Scenario 
     Situation
     Objective 
     Action 
     Results 
     Aftermath
Why the Arbitrary Cost Down Approach
Cost Down Process
Cost Management Cycle
When to Use
The Greedy Approach
Cost Generators
Generators and Cost Cutting

The Isuzu Approach to Tear Downs
Rubric for Tear Downs
Questions to Ponder
Cost Improvement Scenario
     Situation 
     Objective 
     Action 
     Results 
     Aftermath
What is the Isuzu approach 
     Dynamic Tear Down 
     Cost Tear Down 
     Material Tear Down 
     Matrix Tear Down
     Process Tear Down 
     Static Tear Down
Why use this technique
Tear Down Example 
     Design for Assembly 
     Value Analysis Contribution to the Tear down Process 
     Value analysis Tear down and Improvement/Innovation 
     Value analysis Tear down Method and its Components 
     Recognizing Parts Suppliers Competitive Capability
     Collecting New Suggestions for Improvement 
     Case Study

The DOD Approach
Rubric for DoD Approach
Questions to Ponder
Cost Improvement Scenario 
     Situation 
     Objective 
     Action 
     Results 
     Aftermath
Benefits
Function
Worth
Cost
Value
Effective Value Engineering Programs
Cost Analysis 
     Variance Analysis
     Ratio Analysis 
     Trend analysis 
     Management analysis

Classical Value Analysis / Value Engineering Techniques
Rubric for Classical Techniques
Questions to Ponder
Cost Improvement Scenario 
     Situation 
     Objective 
     Action 
     Results 
     Aftermath
Benchmarking 
     Is Benchmarking Valuable?
     Performance Benchmarking
     Benchmarking Process

Classical Techniques
Rubric for FAST Approach
Questions to Ponder
Cost Improvement Scenario 
     Situation 
     Objective 
     Action
Results 
     Aftermath
FAST introduction
Creating a FAST model

Saving Money with Six Sigma Projects
Rubric for Six Sigma Projects
Questions to Ponder
Cost Improvement Scenario
     Situation 
     Objective 
     Action 
     Results
     Aftermath
What is Six Sigma?
How Does Six Sigma Relate to Value Engineering?
The Phases of Six Sigma
Choosing Six Sigma Projects
Costing Six Sigma Projects
Using Design for Six Sigma
Rational Expectations From Six Sigma 
     Enterprise Process Management and Metrics 
     Define
     Measure 
     Analyze
     Improve 
     Control 
     Design for Six Sigma (DFSS) Frameworks and Methodologies

Saving Money with Lean Manufacturing
Rubric for Lean Manufacturing
Questions to Ponder
Cost Improvement Scenario 
     Situation
     Objective 
     Action 
     Results 
     Aftermath
What Is Lean?
Production Organization or 5S
Lead Time Reduction
Kanban
Demand Segmentation
Production Scheduling
Inventory Reduction
Lean Six Sigma
     Lean Six Sigma Overview 
     Lean Six Sigma Goals 
     LSS Project Management 
     Team Organization & Dynamics
     Defining Opportunities 
     Measurement Techniques
     Analysis Techniques 
     Improvement Techniques 
     Control Concepts 
     Design Improvement

Saving Money with Optimization
Rubric for Optimization
Questions to Ponder
Cost Improvement Scenario 
     Situation 
     Objective
  &nbs

Kim H. Pries & Jon M. Quigley
Co-Founders, Value Transformation, LLC