Mid Sweden University

It has always been an advantage to reduce and know the supplier´s manufacturing costs when a customer negotiates with the supplier. Now more than ever, when the competition is getting harder, it is necessary to use lean to remove all non-adding value to the final product and reduce all possible costs. This paper is about the benefits of cost engineering enabled by value stream mapping that die casting customers can obtain towards suppliers. The research shows how lean and value stream mapping can be used to identify and remove certain wastes at supplier’s manufacturing to reduce costs.  A multiple supplier production permits the costumer to identify wastes and find improvements in an efficient manner.   In addition, cost engineering can be enabled by value stream mapping to estimate costs in current and future production after the application of lean to obtain real fact of production costs. The cost estimation done using real information of production can be used to gain bargaining power, in contrast to actual strategies where the costumer negotiates price by comparing diverse suppliers with different production conditions. The proposed methodology combines value stream mapping and cost estimation to take advantage of the benefits of cost reduction and cost estimation to generate savings.