The article is about to reduce the transportation cost of an outsourcing component which has the main usage for testing. It involves five sub-contractors in order to complete the required demand. A main contractor whose job is to manufacture valves for various customers will outsource some of its work with these sub-contractors. A simple linear programming model is constructed mathematically with the supply and demands as constraints. This model is used to optimize the transportation cost by following the shortest distance from each source to destination which results about Rs.17270 for the entire supply chain on a day. The overall flow process is simulated which results in the number of components produced per day is 64. A value stream map is drawn for the current state of the industry and it is improvised with some alternatives to reduce the lead time and increase the productivity in the future state mapping. By this alternatives the lead time is reduce from 431.60 minutes to 345.20 minutes and the Non-Value Added Time is reduced from 1.60 minutes to 20 seconds.