You are here:Home>Emails>Finding Value in the Value Stream

Finding Value in the Value Stream

The Company* Inc. uses ProcessModel to reduce operating expenses by $133 million over three years by directly attacking the value stream. See the strategy. Founded in Michigan in 1912, the Company helps individuals and the organizations that employ them around the world to work more effectively. The company has led the office furnitureValue Stream industry in sales every year since 1974. Its product portfolio includes seating, lighting, storage, furniture systems, interior architectural products, technology products and related products and services. Worldwide net sales, including unconsolidated joint ventures, were in excess of $3.4 billion. Dedicated to providing the finest office furniture and systems available in the market, The Company, takes its job seriously. Their motto is to “transform the ways people work…to help them work more effectively than they ever thought they could.”

The Company and its subsidiaries and joint ventures have dealers in more than 800 locations, more than 49 manufacturing plants in 35 locations, 80+ sales offices…dealers in more than 800 locations… 540+ product lines…21,000+ employees around the world and … 88 years of tradition.

Problem

Despite rises in revenues, overall earnings actually decreased 16.8 percent, as compared to the previous year. Several factors contributed to this decrease in profitability. The major reason for this dive was lower sales among the company’s larger customers. Other elements identified by The Company were:

  • Competitive pricing pressures that occur when a market grows slowly
  • Expenses involved in completing acquisition of another line of office furniture
  • A one-time $15 million after-tax charge to cover retrofits at several of their customers’ facilities
  • New product introduction and ramp-up costs

Solution

To overcome this setback, The Company outlined key goals (four corporate strategies and six growth strategies). The four corporate strategies were:

  • Be a work effective company
  • Achieve operational perfection
  • Pursue ambitious financial goals
  • Live core values

The six growth strategies involved:

  • Focusing on product innovation
  • Pursuing new acquisitions, alliances, and new ventures
  • Leveraging the company’s global presence
  • Leveraging the company’s dealer network
  • Leveraging the company’s installed based
  • Increasing international revenues (by fulfillment of the above objectives)

The Company North America has identified several initiatives to help them reach their goals. One of those initiatives is Value Stream. This initiative has a primary goal of eliminating redundancy and reducing SG&A expenses by $133 million over three years. In addition, the team has developed an ongoing continuous improvement process with a long term focus on eliminating redundancy and reducing costs. This process fully implemented will allow evaluation of projects so see if they contribute to Value Stream goals. The Company needed to have a tool that aided in their analysis efforts. That’s when they turned to ProcessModel.

Our goal was to create a Value Stream “as-is” map, make it the standard for the company and then benchmark proposed process, service and technology changes against the “as-is” to validate and understand the impact before we committed to the project. Working against the five-phase “ProcessModel Project Process,” The Company and ProcessModel began model design and development. The Company has finished phase 2 of the model and is moving into phase 3.

The Process Model Project Process involves

  • Development of project goals
  • Establish a project plan, data collection, and “as is” model creation
  • Validate “as is” model and understand results
  • Analyze “as is” model
  • Develop alternatives.

Future Application

As subsequent phases of the simulation process are reached, it is expected that ProcessModel will highlight areas where The Company will be able to increase revenues and reach their goal of reducing expenses by $133 million over the next three years. Providing enhanced value—from the point of customer engagement to the point of customer satisfaction is the ultimate focus of The Company.

One Comment

  1. Berry Mohan February 26, 2015 at 10:48 AM - Reply

    Scott, I don’t feel hemmed in with any approach, and version 5.5 is a huge leap forward in the multimethod capability. We usually make changes with our eyes wide open thanks to ProcessModel

Leave A Comment