72 Int. J. Productivity and Quality Management, Vol. 30, No.

1, 2020

Cost value stream mapping as a lean assessment tool

in a small-scale industry

B. Rajesh Menon*
Department of Mechanical Engineering,
NSS College of Engineering, Palakkad,
Kerala, India
Email: brmenonnssce@gmail.com
*Corresponding author

P.R. Shalij
Department of Production Engineering,
Government Engineering College,
Thrissur, Kerala, India
Email: shalij@gectcr.ac.in

K.R. Kiron
Department of Mechanical Engineering,
NSS College of Engineering, Palakkad,
Kerala, India
Email: krkiron@gmail.com

J. Sreejith
Department of Mechanical Engineering,
Amrita School of Engineering,
Coimbatore, Amrita Vishwa Vidyapeetam, India
Email: sree8333@gmail.com

P. Sajeesh
Department of Mechanical Engineering,
NSS College of Engineering, Palakkad,
Kerala, India
Email: sajeeshperil@gmail.com

Abstract: Value stream mapping (VSM) is a lean tool which addresses the
non-value added activities in time domain. But, it fails to address it in a cost
domain. In this work, a new tool called cost value stream map (CVSM) is
proposed, which addresses the problems encountered in conventional VSM
and cost-time profile (CTP) and maintaining the advantages of both. The
determination of work in process inventory and non-value added costs incurred
by using CVSM are demonstrated by presenting a case study. An SME in
Kerala, India is selected for this. Lean techniques applied on the various

Copyright © 2020 Inderscience Enterprises Ltd.

 Cost value stream mapping as a lean assessment tool 73

non-value added activities in the order of their cost investments 27% reduction
in lead time, 27%–32% reduction in WIP inventory and 40%–42% reduction
in cost investment while manufacturing the product. The reductions when
accounted annually there is a saving of INR.2,17,728 in the value added cost.

Keywords: value stream mapping; VSM; cost investment; lean tools; cost-time
profile; CTP; adjustable prop.

Reference to this paper should be made as follows: Menon, B.R., Shalij, P.R.,
Kiron, K.R., Sreejith, J. and Sajeesh, P. (2020) ‘Cost value stream mapping as a
lean assessment tool in a small-scale industry’, Int. J. Productivity and Quality
Management, Vol. 30, No. 1, pp.72–91.

Biographical notes: B. Rajesh Menon is an Associate Professor in Mechanical

Engineering Department at NSS College of Engineering, Kerala. He holds a
Master’s degree in Maintenance Engineering and Management and Bachelor’s
degree in Mechanical Engineering. His research interests include lean
manufacturing and vibration and noise control.

P.R. Shalij is a Faculty Member in the Production Engineering Department at

the Government Engineering College Thrissur, Kerala, India. He holds a
Bachelor in Production Engineering, a Masters in Industrial Engineering and a
PhD in Production Engineering from the PSG College of Technology,
Coimbatore, affiliated to Anna University, India. He has eight years of
industrial experience and 19 years of teaching experience. His areas of research
interest include total quality management, supply chain management,
sustainable engineering and computational fluid dynamics.

K.R. Kiron is currently working as an Associate Professor in the Department of

Mechanical Engineering at NSS College of Engineering, Palakkad, India. He
received his BTech and MTech from Cochin University of Science and
Technology and MBA from Indira Gandhi National Open University. His
research interests include innovation management in small- and medium-sized
organisations.

J. Sreejith is working as a Senior Supply Chain Engineer in Stellar Value Chain

Solutions Private Ltd. and pursuing PhD in Supply Chain Management from
Amrita School of Engineering, Coimbatore. He completed Masters in
Manufacturing Engineering from Amrita School of Engineering, Coimbatore
and BTech from NSS College of Engineering, Palakkad.

P. Sajeesh is working as an Assistant Professor in the Department of

Mechanical Engineering at NSS College of Engineering, Palakkad, Kerala. He
has completed his Doctoral degree from the Department Of Mechanical
Engineering, Indian Institute of Technology, Madras, India. He authored ten
international papers in various journals.

1 Introduction

Lean manufacturing focuses on elimination of wastes in all forms at the workplace. There
are 29 lean manufacturing elements (Singh et al., 2011) and seven enablers including lost
time analysis, standard work, kaizen, 5S, autonomous maintenance, visual management
74 B.R. Menon et al.

and value stream mapping (VSM) to achieve the lean production (Gupta and Sharma,
2014). VSM is a tool developed by Rother and Shook (1998), which is extensively used
by organisations for streamlining the processes for improving on time delivery and
reducing costs. The two major phases involved in VSM procedure are the preparation of
current value stream map and the design of future state value stream map (Ohno, 1988;
Stamm, 2008). VSM gives prominence to the time domain of processes to reduce the
processing time. Application of VSM in the Singh et al. (2011), Das et al. (2014), Tyagi
and Vadrevu (2015) and Patel et al. (2016) is widely spread into a variety of industries
like paint (Rohani and Zahraee, 2015; Shahid et al., 2013; Adepu et al., 2015), glass
(Atieh et al., 2016), steel (Mishra and Khokhar, 2017; Abdulmalek and Rajgopal, 2007;
Zuting et al., 2014), pharmaceutical field (Chowdary and George, 2011), casting (Singh
et al., 2017), forging (Nivya and Sunil, 2016; Sahoo et al., 2008), food (Tanco et al.,
2013), aircraft maintenance (Stadnicka and Ratnayake, 2017; Wahab et al., 2014;
Ikatrinasari and Haryanto, 2014; Luciana and Lestari, 2015) and construction field
(Gunduz and Naser, 2017; Heravi and Firoozi, 2017). VSM technique is used extensively
in automobile industries all over the world after the evolution of Toyota production
system (Sheth et al., 2014; Songar et al., 2013; Belokar et al., 2012; Andrade et al., 2016;
Lacerda et al., 2016; Carmignani, 2017). VSM is also implemented in the product
development field to minimise the lead-time (Tyagi and Vadrevu, 2015).
Lean guidelines were proposed for Indian industries to survive in the industrial
recession time (Singh et al., 2011). Impact of implementing the VSM along with other
lean tools on manufacturing performance in Indian industries are also studied (Singh
et al., 2011; Gupta and Sharma, 2014; Singh et al., 2017; Kumar and Kumar, 2015; Singh
and Singh, 2013). Lean-kaizen using VSM is reported as another tool for finding out the
non-value added activities and to reduce the cost of the product (Kumar et al., 2018).
Implementation of VSM with 5S in a camshaft manufacturing industry to reduce the
waste is also published (Vinodh et al., 2010). Further, quality function deployment (QFD)
technique along with VSM framework was reported in an Indian pump manufacturing
company (Mohanraj et al., 2011). VSM can be combined with the decision making tools
like discrete event simulation to improve the productive performance of organisations
(Helleno et al., 2015). The challenges and effectiveness of implementing VSM in various
manufacturing organisations world wide is also reported in Andreadis et al. (2017).
In traditional costing analysis, only material cost and the activity cost are considered
while calculating the product cost. Cost-time profile (CTP) is another useful tool
developed by Rivera and Chen (2007), where accumulated cost includes the material cost
and activity cost which are plotted against time to construct CTP. The vertical component
of the CTP represents activity cost and the horizontal component indicates waiting time
for processing the product. CTP is an effective tool to quantify the costs involved in
every stage in a production process of a product. Further, CTP can be extended for the
evaluation of the improvements achieved by the implementation of lean tools and
techniques (Wasim et al., 2013). Cost-time investment (CTI) is another indicator of
resource utilisation in manufacturing a product (Gracanin et al., 2014). It is also reported
that radio frequency identification (RFID) technology is utilised for enhancing the VSM
for cost tracking in lean manufacturing paradigm (Ramadan et al., 2017).
Lean tools are effective in bringing the individual process times in tune with the takt
time, but it fails to bring out the cost incurred in each process. Another drawback of the
VSM is the iteration process to identify the lean tools in the design of future state maps
(Forno et al., 2014). In the CTP and CTI analysis, accumulation of cost for inventory
 Cost value stream mapping as a lean assessment tool 75

waiting period is also addressed (Rivera and Chen, 2007). This unique feature of CTP is
incorporated in the conventional VSM approach to avail the advantages of both the
methods.
VSM is also applied on installation of underground pipeline projects. Gunduz and A.
Naser (2017) considered the expenses like salary of the workers, expenses not directly
associated with construction activities such as design, engineering and purchase, rent of
the equipments, maintenance cost and operation costs for implementing the cost analysis
in VSM. The future state map is prepared by balancing the resources using line of
balance (LOB) technique. Any costs outside the VSM including resource cost and cost
investments (CIs) are not accounted in the VSM costing analysis and further in the future
state map. The CIs which were the major concern for accounting the non-value added
costs are needed to be addressed in the costing of VSM.
In this paper, a new tool is proposed, which can incorporate the advantages of both
VSM and cost-time analysis. The newly developed tool is designated as cost value stream
map (CVSM). In CVSM, cost involved during the various value added and non-value
added activities are accounted in the micro level perspective and is combined with the
time scale. The wastages can be directly quantified in monetary terms by this method,
using which priorities for improvements can be set. A small and medium scale enterprise
(SME) situated in Palakkad District, Kerala State, India where ‘adjustable prop’ is
manufactured is selected as the case study for the proposed work.

2 Principle of CVSM

CVSM includes six steps starting from the identification of products in a company. The
steps involved during the CVSM analysis is presented in Figure 1. An organisation
desiring to develop CVSM can follow these steps for the easy implementation of
this method. Normally, organisations may have different products having different
configurations. The selection of the product family is the first step, to which CVSM is
implemented. The selection is based on the total revenue generated and the utilisation of
machining stations in the company.

Figure 1 Steps involved in making a CVSM (see online version for colours)

Develop Develop
Product Prepare Prepare a Implement
current state future state
Identification current VSM modified CTP lean tools
CVSM CVSM

Next step is to prepare the current state VSM of the selected product. Manufacturing
operations of the identified product are to be studied by constructing the process flow
diagram. The data such as number of operators, cycle time, change over time, up time
and number of shifts of operation are to be collected for each manufacturing operation.
Takt time is to be calculated by recording the customer demand and the available
production time in a shift. Time taken during each activity shall be measured to plot cycle
time which is compared with the calculated takt time. Using the above information,
current state map of VSM can be prepared. Further, various costs including activity cost,
material cost, operator cost, resource cost, machine depreciation and maintenance cost are
collected for all the selected activities. With this, CTP of various activities are prepared.
76 B.R. Menon et al.

During this analysis, CTI is the money invested in various stages of production including
the waiting periods. Combining the time data from VSM and CI data from CTP, a present
state map of the CVSM can be developed. In the present state CVSM, a cost line is also
drawn along with the time line that finally depicts the cost and the time of all non-value
added activities.
From this CVSM map, non-value added activities are identified and ranked for
adopting appropriate lean tools. The current CVSM has to be redesigned by considering
the ranked non-value added activities for preparing the future state CVSM and these
identified lean tools are further implemented.

3 Case study of CVSM in an SME

For illustrating the proposed CVSM, an ISO 9001 certified SME established in the
year 1999 and located in Palakkad, Kerala, India was considered. The company has
40 permanent employees. Working time is from 8 am to 5 pm with a lunch break of 1 hr
and two tea breaks of 15 min duration. The entire company is managed by a production
supervisor. The main products of the company are supporting structures for civil
constructions including adjustable props, adjustable spans, centring sheets, frames,
column and boxes. The main raw material for the above products is mild steel and
galvanised iron pipes. Adjustable prop was the selected product for the present research
work because it involves almost all the machining processes and also it contributes to
more than 80% turnover of the company.

Figure 2 Image of the adjustable prop with dimensions (see online version for colours)
Beam Head 6mm
thick plate
Adjusting
mechanism
Supporting Flat
G Pin 32 x 6mm
5mm fillet weld Supporting
Section
Pipe Ø 48.3x3.2 mm
Handle
MS Pipe (OD 60.3
Ø 10 mm X 4 holes
mm), 2000 mm
length with 12 holes
MS Plate (6 mm
thick), 150 mm
square
Circular Weld(5
mm)

Base plate

3.1 Product identification

The image of the finished product with the components labelled is shown in Figure 2.
The outer pipe and inner pipe are fabricated in the company itself and the other parts
namely open-nut, handle and the G-pin are outsourced. The various production
parameters involved in the production process are cycle time, change-over time, waiting
 Cost value stream mapping as a lean assessment tool 77

time, number of operators and the work in process (WIP) inventory. These values for
various machining activities in the production from A to W are listed in Table 1.

Table 1 Various production parameters of machining processes involved

Cycle Change Waiting

No. of WIP
Activity Description time over time time
operations inventory
(mins) (mins) (mins)
A Band saw cutting (outer) 1.71 5 15.48 1 50
B Thread rolling (outer) 0.86 - 21.16 1 18
C Base plate welding (outer) 0.92 - 0.60 1 23
D Outer pipe slotting 0.20 - 10.64 2 3
E Nut assembly (outer) 1.33 - 30.5 2 8
F Slag removal and cleaning 1.22 - 44.1 2 50
G Painting (outer) 1.47 - - 1 50
H Curing (outer) 4.44 - - - -
I Outer plate cutting 0.41 - 11.55 1 35
J Outer plate punching 0.21 - 15.84 1 55
K Outer plate grinding 0.36 - 21.30 1 44
L Inner pipe cutting 2.08 5 27.6 1 48
M Drilling (inner) 1.38 - 6.25 1 20
N Top plate tack welding 1.25 - 6.25 1 10
(inner)
O Welding one side (inner) 1.25 - 6.25 1 10
P Welding opposite side 1.25 - 27.5 1 10
(inner)
Q Slag removal and cleaning 1.10 - 49.92 2 50
(Inner)
R Painting (inner) 1.56 - - 2 18
S Curing (inner) 4.4 - - - -
T Inner plate and flat cutting 0.23 - 8.64 2 48
U Inner plate punching 0.24 - 33.55 1 36
V Inner plate drilling, 3.05 - 20.00 3 33
straightening and grinding
W Assembly and stacking 2.50 - - Temp -

3.2 Preparation of current value stream map

For the preparation of the current VSM, takt time for the product has to be calculated. For
calculating the takt time, daily demand of the selected product and net available working
time in a day is required. Here, the daily demand of adjustable prop was identified from
the shipments of the past months, which are 300 units. The time available per shift is
78 B.R. Menon et al.

540 min with a break time of 90 min. Takt time is calculated as 1.5 min/unit, considering
the net available time and product demand.
A comparison of the cycle time and the takt time can be made from a bar chart, which
is depicted in Figure 4. From Figure 4, processes like curing, cutting, inner plate
preparation and assembly are found to be well above the takt time value. Inner plate
preparation and assembly are essential non-value added activities. But curing and cutting
operation includes lot of non-value added time which should be eliminated.

Figure 3 Process flow diagram

J
2 3
I K
A B C D E F G H
4 5 6 7 8 9 10
W
20
1
11 14 15 16 17 18 19
L M N O P Q R S
T V
12 13
U

Figure 4 Comparison of takt time and cycle time of activities (see online version for colours)

All the information required for preparing the current state VSM was collected during the
production process. The material and information flow within the company was obtained
from the production line. All the information collected from the company for preparing
the current state VSM is also detailed in Table 1. The current state VSM for the outer
pipe and inner pipe of the adjustable prop is prepared separately for easy understanding
and is shown in Figures 5 and 6, respectively. The cycle time, change over time, WIP
inventory and the number of operators is entered with the corresponding symbols in the
prepared VSM.
 Cost value stream mapping as a lean assessment tool 79

Figure 5 Current state VSM for the outer pipe of adjustable prop
Production
Control
Works Manager

Weekly Weekly orders

Weekly orders
Customer
Supplier
Production
supervisor
Daily
Daily
We ekly Daily
Daily
Daily

35 55 44
I J K
1 1 1
Da i ly
0-41 0-21 0-36
0 0 0 Ship
100 100 100
1 1 1

50 A 18 B 23 C 3 D 8 E 50 F 30 G 0 H 150 W
1 1 1 2 2 2 1 0 3

1-71 0-86 0-92 0-20 1-33 1-2 1-47 4-4 2-50

5 0 0 0 0 0 0 0 0
98-8 100 100 100 100 100 100 100 100
0-166 1 0-06 1 0-076 1 0-01 1 0-026 1 0-166 1 0-1 1 0 1 0-5 1
1-71 0-86 0-92 0.20 1-33 1-2 1-47 4.4 2-50

Process Box Legend

Process
Operator Total lead time < 1-104 days
Cycle T ime
Total VAT < 14-59 min
Change Over T ime
Up Time
Shifts

3.3 Cost analysis for preparing CVSM

In CTP, the activity cost refers to the sum of operator cost and the cost of the various
resources took part in the activity. Operator cost rate in any organisation can be
calculated from the annual emoluments given to the operator. Mostly value added costs
were only considered while plotting a conventional CTP, which is shown in Figure 7. But
in actual practise, if we analyse the cost of resources, it includes the depreciation cost of
the machine and machine maintenance cost. Let the subscripts i, j and k indicate the
various activities, materials and machine centres involved in the production. Machine
depreciation cost can be found out by dividing the price of equipment with the product of
equipment’s service life and the time units it was used in a year as shown in equation (1).


Cost of the equipmentk
Machine depreciation cost ratek , j  (1)
j
Years of life   Cycle time
j
k, j
80 B.R. Menon et al.

On the other hand, the machine maintenance cost is found out by dividing the
maintenance cost per year with the time units it was used in a year as shown in
equation (2).


Maintenance cos t per yeark
Machine maintenance cost ratek , j  (2)
j
 Cycle time
j
k, j

The resource cost rate can be found by adding the machine depreciation cost rate
and machine maintenance cost rate, which can be calculated as shown in equations (1)
and (2). Resource cost rate calculated for the various machines involved during the
manufacturing of an adjustable prop is reported in Table 2.

Figure 6 Current state VSM for the inner pipe of adjustable prop
Production
Control
Works Manager

Weekly Weekly orders

Weekly orders
Customer
Supplier
Production
supervisor
Daily
Daily
Weekly Daily
Daily
Daily

48 36 33
T U V
2 1 3
Dai ly
0-23 0-24 3-05
0 0 0
Ship
100 100 100
1 1 1

48 L 20 M 10 N 10 O 10 P 50 Q 18 R 0 S 150 W
1 1 1 1 1 2 2 0 3

2-08 1-38 1-25 1-25 1-25 1-10 1-56 4-4 2-50

5 0 0 0 0 0 0 0 0
98-88 100 100 100 100 100 100 100 100
0-16 1 0-066 1 0-033 1 0-033 1 0-033 1 0-166 1 0-06 1 0 1 0-5 1
2-08 1-38 1-25 1-25 1-25 1-10 1-56 4-4 2-50

Total lead time < 1-051 days

Total VAT < 16-77 min
 Cost value stream mapping as a lean assessment tool 81

Figure 7 CTP of an adjustable prop (see online version for colours)

1200 385
Cutting
383
Thread Rolling e f
Welding‐Outer 381

Cost (INR)
Slotting
379
Nut Assembly and Drilling b c
Painting 377
1000 Plate Cutting
375
Punching a d g
0 4 8 12 16 20
Grinding Time (Min)
Inner Pipe Cutting
Drilling
Welding 1
Welding 2
800 Welding 3
Inner Pipe Painting
Inner Plate Cutting
Inner Plate punching
Cost (INR)

Drilling,Straighten & Grinding

Assembly
600

400

200

0
0 100 200 300 400 500 600
Time (Min)
Note: CTP of the cutting process is shown in the inset.
Effective cost rate of the operator was calculated by dividing the annual remuneration
with the effective time of work in the company. Resource cost rate as indicated in Table 3
can be added with the operator cost rate for obtaining the activity cost rate. Activity cost
rate and further the corresponding activity cost in the production can be found from
equations (3) and (4),

 Operator cost ratei ,k , j

 k
Activity cost ratei , k , j   k  Resource cost ratei , k , j 
(3)

 Activity cost
i
i,k , j    Activity cost rate
i
i,k , j  Cycle timei  (4)

In this work, waiting cost of the WIP inventory, which is the major non-value added cost
in manufacturing a product, is further termed as ‘CI’. From the conventional CTP,
horizontal lines indicate the waiting cost for WIP and the area below the horizontal lines
in CTP will imply the term CI. Moreover, this non-value added costs should be
minimised to make the company more profitable.
CI can be found from the plotted CTP (Figure 7) as shown in equation (5). The areas
of CTP multiplied by internal rate of return (IRR) % represent the CI of the product. The
82 B.R. Menon et al.

CTP of first activity (cutting) is shown in Figure 7 (inset). Here, the area of the CTP is
‘abefg’, which is used to calculate CI value. In this analysis, the IRR for this particular
company is taken as 15% for the CI calculation, where IRR percentage can be determined
by the financial condition of the company.

 Cost investment
i
i,k , j    Material cost
i
i,k  Cycle timei 

1
  Activity costi,k  Cycle timei    Activity costi ,k  Material costi ,k  (5)
2

Waiting timei , k   IRR %

Further direct cost of the product can be calculated as shown in equation (6). Table 3
depicts the calculation of various value added, no-value added activity costs and finally
direct costs incurred in various activities involved in manufacturing of the adjustable
prop.

 Direct cos t   Activity cost   Material cost   Cost investment

i
i
i i i
(6)

Table 2 Resource cost calculation for various machines

Machine cost Machine depreciation Machine maintenance Resource cost

Activity
(INR) (INR/min) (INR/min) rate (INR/min)
A 231,376 0.214 0.231 0.45
B 189,583 0.109 0.266 0.38
C 61,185 0.244 0.185 0.43
D 104,228 0.060 0.138 0.20
E 8,338 0.004 0.046 0.05
F 1,000 0.003 0.002 0.005
G 1,534 0.0007 0.023 0.02
H 1,250 0.0004 0.014 0.01
I 1,234 0.005 0.092 0.10
J 36,913 0.015 0.115 0.13
K 1,422 0.004 0.007 0.01
L 200,000 0.102 0.185 0.29
M 1,523,064 3.525 0.254 3.78
N 10,235 0.003 0.069 0.07
O 83,102 0.192 0.069 0.26
P 83,102 0.192 0.069 0.26
Q 1,000 0.003 0.002 0.005
R - - - -
S 1,422 0.004 0.007 0.01
T 17,805 0.009 0.094 0.1
U 34,927 0.016 0.101 0.12
V 8,338 0.004 0.069 0.07
W - - - -
 Table 3
Operator cost Resource cost Activity cost Activity Material Total cost Cost investment Direct

Cost value stream mapping as a lean assessment tool

Activity Operators IRR (%)
rate (INR/min) rate (INR/min) rate (INR/min) cost (INR) cost (INR) (INR) (INR) cost (INR)

Various value and non-value added costs incurred in various activities

A Op. 1 1.82 0.45 2.27 3.86 378 381.8 15 983.8 1366
B Op. 2 2.22 0.38 2.60 2.23 0 2.23 15 7.23 9.5
C Op. 3 1.95 0.43 2.38 2.19 0 2.19 15 0.35 2.54
D Op. 4 and 5 3.37 0.20 3.57 0.71 0 0.71 15 1.15 1.9
E Op. 6 and 7 3.54 0.05 3.59 4.78 80 84.78 15 404.29 489
F Op. 8 and 9 3.49 0.005 3.49 4.26 0 4.26 15 28.59 32.9
G Op. 10 1.74 0.02 1076 2.58 16 18.58 15 3.81 22.4
H - - 0.01 0.01 0.04 0 0.04 15 0.01 0.06
I Op. 11 1.68 0.10 1.78 0.73 42 42.73 15 76.63 119.4
J Op. 12 1.68 0.13 1.81 0.38 0 0.38 15 0.91 1.3
K Op. 13 1.60 0.01 1.61 0.58 0 0.58 15 1.86 2.4
L Op. 14 1.77 0.29 2.06 4.28 327 331.28 15 1474.19 1806.5
M Op. 15 2.22 3.78 6.00 8.28 0 8.28 15 16.38 24.7
N Op. 16 1.60 0.07 1.67 2.09 0 2.09 15 1.37 3.46
O Op. 17 1.80 0.26 2.06 2.58 0 2.58 15 2.17 4.8
P Op. 18 1.80 0.26 2.06 2.58 0 2.58 15 10.87 13.5
Q Op. 19 and 20 3.4 0.005 3.40 3.74 0 3.74 15 28.35 32.1
R Op. 21 and 22 3.4 - 3.40 5.30 16 21.30 15 4.37 25.7
S - - 0.01 0.01 0.04 0 0.04 15 0.01 0.06
T Op. 23 and 24 3.37 0.1 3.47 0.80 85 85.80 15 114.14 199.9
U Op. 25 1.68 0.12 1.80 0.43 0 0.43 15 2.18 2.6
V Op. 26, 27 and 28 4.80 0.07 4.87 14.87 0 14.87 15 48 62.9
W (Temp) 2.66 - 2.66 6.65 0 6.65 15 1.25 7.9

83
84 B.R. Menon et al.

Figure 8 Current CVSM for the outer pipe of the adjustable prop

3.4 Development of current CVSM

From the current VSM as shown in Figure 6, the total lead time required for a finished
product is 1.052 days and the actual value added time is only 16.77 min. It can be
observed that the non-value added time and the cost incurred for the production is
much higher, which needs to be identified and reduced. Lean techniques including 5S,
Six Sigma, kaizen, SMED, etc. can be applied to reduce these types of wastes in the
production process. Objective of this work is to construct a new tool which combines
both VSM and costing. CVSM can be plotted by combining the costing with the value
 Cost value stream mapping as a lean assessment tool 85

stream map. For this, it is required to include a cost line graph below the time line graph
in the value stream map. In this current CVSM, CI and activity cost can be obtained in
cost line parallel to lead time and value added time in the time line. Current CVSM for
the outer pipe and the inner pipe of the adjustable prop is shown in Figures 8 and 9,
respectively. From Figure 8, it can be noted that the total CI and activity cost for the outer
pipe of an adjustable prop are (Indian rupees – INR) INR.1,509.93 and INR.544.99,
respectively. From Figure 9, it can also be observed that the total CI and value added
activity cost for the inner pipe of the adjustable prop are INR.1,703.18 and INR.479.66.
Apart from the conventional CTP and VSM, CVSM gives the real production cost
including the cost of non-value added activities involved during the production processes.

Figure 9 Current CVSM for the inner pipe of adjustable prop

86 B.R. Menon et al.

3.5 Ranking of non-value added activities

Value added costs and the non-value added costs including the total CI can be observed
form the current CVSM. From this current CVSM, it is easy to pinpoint the wastages in
time and cost on various activities. Further, a ranking can be assigned to various
processes and WIP inventory based on the CI values. Various processes in the order of
their CI can be listed as follows. Outer pipe band saw cutting (A), inner pipe cutting (L),
nut assembly (E), curing of painted inner and outer pipes (H and S).

Figure 10 Future state CVSM for the outer pipe of adjustable prop
 Cost value stream mapping as a lean assessment tool 87

Figure 11 Future state CVSM for the inner pipe of adjustable prop

3.6 Future state CVSM

Production processes having higher non-value added costs, which is identified from
current state CVSM has to be reduced by applying the lean tools. Cycle time for cutting
the outer and inner pipe of adjustable prop appears to be slightly higher than the takt
time. First, 5S can be applied to the outer pipe cutting area for material stacking and
movement. Next, inner pipe cutting machine facility can be modified for simultaneously
loading two pieces of inner pipe and bring the cutting time close to the takt time. A
kanban system can be further implemented in the outer and inner pipe cutting operation
to further reduce the wastage and make it in rhythm with the takt time. Nut assembly is
also contributing further as a major value of CI. By analysing the micro motions during
the nut assembly, the procedure for nut assembly can be standardised and thus the
88 B.R. Menon et al.

waiting time for the semi-finished product can be reduced. The assembly time can be
further reduced by keeping the standard nuts and bolts in proper racks and close to the
worker.
Curing of inner and outer pipes are the major non-value added costs. This waiting
time and the cost inventory can be reduced by accelerating the curing process. It will be
possible by introducing low-cost improvements in curing process such as air blowing,
providing roof ventilation and providing translucent roof sheets that allow natural
heating. Future state CVSM for the outer and inner pipe of the adjustable prop, after
implementing these lean tools are shown in Figures 10 and 11.

4 Comparison of current state CVSM and future state CVSM

After applying the lean tools, it is observed that total lead time and the value added time
is reduced to 0.804 days and 12.14 min, respectively. Whereas, the total CI and activity
cost for the outer pipe of an adjustable prop are further reduced to INR.892.85 and
INR.544.04, respectively in future state CVSM. From Figure 11, it can be seen that the
lead time and the value added time for the inner pipe is reduced to 0.771 days and
14.03 min. The total CI and value added activity cost for the inner pipe of the adjustable
prop are also reduced to INR.976.59 and INR.478.09, respectively. By applying the lean
tools there are reduction of value added time, lead time, WIP inventory, CI and value
added cost as presented in Table 4.
Table 4 Comparison of current state CVSM and future state CVSM

Current state VSM Future state VSM % reduction

Variables Outer Inner Outer Inner Outer Inner
pipe pipe pipe pipe pipe pipe
Value added time (mins) 14.59 16.77 12.14 14.03 16.79 16.33
Lead time (days) 1.10 1.05 0.80 0.77 27.17 27.05
WIP inventory (no. of units) 332 316 242 212 27.10 32.91
Cost investment (INR) 1,509.9 1,703.2 892.9 976.6 40.86 42.66
Value added cost (INR) 545.0 479.7 544.0 478.0 0.17 0.32

From the CVSM analysis, there is a reduction in the value added cost. Savings in value
added cost can be calculated by multiplying the difference in total value added cost of the
prop assembly multiplied by the number units produced annually. This is found out as
INR.2,17,728 when considering the minimum unit as 300 per day.

5 Conclusions

In this work, we propose a new tool called CVSM which can address the problems
encountered by both VSM and CTP separately and should have the advantage of both the
tools. With the help of CVSM, CI for the outer pipe and inner pipe of the adjustable prop
is INR.1,509.93 and INR.1,703.18, respectively, whereas the value added costs are
INR.544.99 and INR479.66, respectively. As per the modified method, cost of the outer
pipe and inner pipe of the adjustable prop shows an increment of 2.7 times and 3.55 times
 Cost value stream mapping as a lean assessment tool 89

that of the conventional value added cost. After applying the lean techniques for the
various non-value added activities in the order of their CI, future state CVSM can be
made with nearly 27% reduction in lead time, 27%–32% reduction in WIP inventory and
40%–42% reduction in CI. This proposed CVSM addresses the major non-value added
activities and their CI in an organisation. The values of CI and value added cost point
towards the fact that the production process is carried out in a near perfect manner and it
requires only a slight improvement but the huge loss which reflects from the CI figure
can be minimised by addressing the WIP inventory and the delay in the process.

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