Purpose The main purpose of this paper is to analyze the current state of a bonnet-manufacturing industry and to optimize the process by designing a future state map using simulation approach. Design/methodology/approach The case study approach has been proposed to highlight the applicability of value stream mapping (VSM) in an Indian bonnet manufacturing organization. The methodology used relies on formulation of VSM being the main tool used to identify the opportunities for classifying and eliminating bottlenecks with the help of various lean techniques. A contrast of present and past scenarios is highlighted to underscore the importance of using VSM with ARENA simulation. Findings Application of the proposed simulation approach has helped the organization reduce the cycle time significantly by 30 per cent over the entire production time. The average number of work-in-progress pieces has also decreased by about ten. In addition, enhancements have been seen with respect to ecological parameters, e.g. carbon footprint has been reduced to 83.7 percent across the process. Research limitations/implications The proposed approach of using a simulation-based VSM helps in reducing the time involved in traditional VSM method. This approach is also easy to implement at any organizational level. Practical implications It is believed that this paper will aid not just industrialists but also academic professionals to appreciate the role of simulation using ARENA in helping them understand how to attack the various problems faced by industries. The results of the study indicate that by applying this methodology, there will be a reduction not only in cost but also in environmental impacts. Originality/value The paper incorporates a real case study, which shows application of VSM for implementing lean principles in a bonnet-manufacturing industry. Break-even analysis presented fills the gap which previous literatures have been missing.