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Cost reduction: step 1

Cost reduction: step 1

Continuing the previous post about reducing costs, let’s talk a little bit more of each of the five steps. In this post we will deal with the first step:

1 – Meet the business and employees. Start by mapping all processes of your business. Make an analysis of the current situation is always the best starting point. This step also helps to involve employees in the process.

The suggestion of the previous post was starting to cost reduction for the mapping of the processes. I would support a little more this tool.

The mapping of the processes or value stream mapping is a tool of Lean Manufacturing. The Lean Thinking is based on five principles: value, value stream, streaming, production pulled and perfection.

Value: is the value perceived by the customer for the products and services on the basis of their attributes and characteristics. The value is defined by the client and not by the company.

Flow of value: is the set of all processes needed to manufacture a product, detailing a project, launch a product on the market, receiving a request, deliver, etc. It is necessary to make the value stream.

Continuous flow: is literally make the value stream. Streaming means that each item walks continuously of a stage to the next without charts or stock.

Pull production: manufacture only when the client request.

Perfection: pursue the continuous improvement of processes and activities, reducing costs, improving quality, eliminating waste, streamlining flows and increasing the value of products.


Now let’s see in more detail the value stream mapping. The Lean Thinking organizes the company in value for products or product families and not for traditional departments. Each stream is treated as a business unit. This allows each Manager make decisions directed to profitability and growth of the flow of value. This is a valuable tool to help understand the current situation, identify opportunities for improvement and to involve employees in the process. A stream of value contains all activities to produce a product or service, from the raw material to the final consumer as well as the flow of information.

The Lean Thinking changes the way the company serves its customers. Lean organizations seek to maximize the value of your products and services to its customers. This approach requires new types of financial and performance information. Lean organizations are controlled visually. They have the information in the own factory floor and their staff have access to this information. Are also encouraged to solve problems where they appear. The impact of these changes are felt in the accounting system and are reflected in the financial statements. However, managers recognize that the information based on the traditional costing systems no longer meet these organizations. Can even submit impact otherwise, conflicting or distorted.

In the third step we will present an accounting system more suitable for organizations that intend to go through these changes. Using this system it is possible to measure the cost reduction.
Using this tool we will have the best starting point: current situation analysis performed by employees of the company.
We must not forget that cost reduction is a result of process improvement.



  1. […] vimos no post anterior, um dos princípios do Lean Thinking é o identificar o valor. E o valor na realidade não é […]

  2. […] além de descrever a produção em larga escala, afirma que não há eficácia se não houver redução de custo, ou seja, buscar a eficácia, e até mesmo a eficiência, traz também como consequência a […]

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