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Value Stream Mapping
January 21, 2016
Value Stream
A system of interconnected people, equipment, and entities.
2
Wherever there is a request and a deliverable,
there is a value stream.
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What is a Value Stream?
CUSTOMER
1 3 42
All of the activities required to transform a customer request into a good or service.
3B
4
Value Stream – New (Custom) Home
FrameLay
Found.Elect & Plumb
Dry Wall
CUSTOMER
Design
ORDER DELIVERY
Interior finishes
5
Types of Value Streams• Transformation (customer facing)
• Transforming customer request into good or service
• Product Development / Design• Concept to manufacturability or service ready
• Value Enabling• Support processes (e.g., new hire process,
procuring new equipment, technology requests)
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HoustonWe have a problem
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HoustonWe have a problemsV
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Poor Customer
Experience
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UnnecessaryExpense
10
Silo’d thinking; Silo’d behavior
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The Customer Doesn’t Benefit from Functional Efficiency
Functional Efficiency ≠ Optimal Value Stream Performance12
Lack of Leadership Alignment
About Improvement
Needs or Priorities
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Hidden Problems & Murky Understanding
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Value Stream Maps Serve as Visual “Storyboards”
Makes the disconnects and obstacles to flow visible at a macro level
Shows the linkage between material and information flow
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© 2015 The Karen Martin Group, Inc. 16
Value Stream Maps Help Visualize Problems
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VSM Helps Break Down Functional SilosFunction FunctionFunctionFunction
Core Value Streams
Support Value Streams
ExternalCustomer
Internal Customer
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Creates Leadership Alignment, Which
Accelerates Improvement
Cycles
Value Stream Mapping Helps Build Strong Sense of Supplier-Customer Relationships
Customer
Supplier CustomerSupplier Customer
CustomerSupplier
Supplier
Process 1
Process 2
Process 3
Process 4
Where is your focus?
Helps Build External Focus: What Does the Customer Truly Value?
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Proper Value Stream Mapping & Management Generates Significant Business Results
System Efficiency = Optimal Value Stream Performance
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Work: Degrees of Granularity
Value Stream
Process Process Process
Step StepStep
Macro Perspective
• Define strategic direction (“what”)
• Heavy leadership involvement
• Value Stream Mapping
Micro Perspective
• Identify the tactical “how”
• Heavy frontline involvement
• Metrics-Based Process Mapping
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Customer
1
Process 5
Function E
LT = 1 daysPT = 15 mins.%C&A = 95%
4
6
10 mins.480 mins.
5 mins.240 mins.
120 mins.5 days
30 mins.2 days
15 mins.480 mins. Total LT = 9.5 days
Total PT = 180 mins.Activ ity Ratio = 3.9%Rolled %C&A = 30.0%
Process 3
Function C
LT = 5 daysPT = 120 mins.%C&A = 85%
3
4
Process 4
Function D
LT = 2 daysPT = 30 mins.%C&A = 99%
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ABC Technology, Inc.Current State Value Stream Map
Name of Value Stream Being MappedDemand Rate = XX / Year
Name of Value Stream ChampionMapping Date
IT-1 IT-2
45 items
Process 2
Function B
LT = 0.5 daysPT = 5 mins.%C&A = 75%
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3
Process 1
Function A
LT = 1 daysPT = 10 mins.%C&A = 50%
5
2
1 items
Information Flow
WorkFlow
Timeline
10 items
Basic Current State Value Stream Map
Customer
1
Process 3
Function E
LT = 0.5 daysPT = 30 mins.%C&A = 95%
4
4
10 mins.1 days
120 mins.2 days
30 mins.0.5 days Total LT = 3.5 days
Total PT = 160 mins.Activity Ratio = 9.5%Rolled %C&A = 89.3%
Process 2
Function C
LT = 2 daysPT = 120 mins.%C&A = 95%
3
3
ABC Technology, Inc.Future State Value Stream Map
Name of Value Stream Being MappedDemand Rate = XX / Year
Name of Value Stream ChampionMapping Date
IT-1 IT-2
5 items
Process 1
Function A
LT = 1 daysPT = 10 mins.%C&A = 99%
5
2
1 items 10 items
Standard work
Modified approvals
IT interface
Cross-train
Cross-train
Standard workError
proof
Basic Future State Value Stream Map
Basic Value Stream – Current vs. Projected Future State Performance Metrics
Where to start?
© 2016 The Karen Martin Group, Inc. 29
1. Define your core and support value streams.2. Map the value stream.
Where to start?
© 2016 The Karen Martin Group, Inc. 30
1. Define your core and support value streams.2. Map the value stream.
Activity: Identifying & Scoping Value StreamsName of Core Value Stream:
_______________________________________________________________________________
Customer Trigger First Process (verb/noun) Last Process (verb/noun) Final Deliverable
________________________________________________________________________________________
Customer – who initiates the request and receives good or service?Trigger – what signal initiates the value stream?First Process – the first activity that takes place (what does the trigger initiate?)Last Process – the ending point of the value stream; the last activityFinal Deliverable – what is the “finished product” that the customer receives?
Name of Support Value Stream:
_______________________________________________________________________________
Customer Trigger First Process (verb/noun) Last Process (verb/noun) Final Deliverable
________________________________________________________________________________________
Where to start?
© 2016 The Karen Martin Group, Inc. 32
1. Define your core and support value streams.2. Map the value stream.
Activity: Step 1
CustomerDefine who the internal or external customer is for the value stream you’ve chosen
Customer
Process 1
Process 2
Activity: Step 2
Process 3
Process 4
Define the first four processes (handoffs) in the value stream you chose.
Key Performance Metrics
Review Contract
% Complete & Accurate
Process Time15 mins2 days
80%
Finance & Legal
Lead Time
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Key Metric: Percent Complete & Accurate (%C&A)
Customer
Process 1
Process 2
Process 3
Process 4
80% 50%95%
75%
90%
%C&A = % of incoming work that’s “usable as is”; no need for rework:• Correcting information or material that was supplied• Adding information that should have been supplied• Clarifying information that should have or could have been clearer
Customer
Process 1
Process 2
Activity: Step 3
Process 3
Process 4
Add Process Time, Lead Time, and %Complete & Accurate to the process blocks.
From Current State to Future State Design
© 2015 The Karen Martin Group, Inc. 38
• Common current state findings• Disconnected processes• Incomplete & unclear information• Uneven workloads• Wasteful activities• Long delays• Ineffective outcomes• Excessive costs• Poor customer experience
From Current State to Future State Design
© 2015 The Karen Martin Group, Inc. 39
• Future state design – minimum necessary for maximum outcomes• Eliminate delays• Increase information quality• Involve the right people at the right time• Improve effectiveness of outcomes• Improve customer experience
Prepare Understand Current State
DesignFuture State
Develop Transformation
Plan
Execute Transformation
Plan
Three Consecutive Days4 Weeks Prior
to MappingFollowing Mapping
Repeat
Value Stream Mapping ActivityPhases and Timing
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12 13 24 35 4
51 62 73 84 95 10
12 13 24 35 4
1234
Specific Conditions
Engineer to order, requires both hardware & software customization
Value Stream Champion Nancy Little
Demand Rate 1,000 per yearFacilitator Dave Parks
Value Stream Mapping CharterScope Accountable Parties Logistics
Value Stream Capital equipmentExecutive
Sponsor Allen WardEvent Dates
& TimesJuly 24-26, 20138:00 am - 5:00 pm
Last Step Production ships product
Boundaries & Limitations
No new software; only minor changes to existing IT systems; no additional staff; no budget changes
Briefing Attendees
** required *optional
** Allen W (COO), Joe M (CIO), Sal T (VP Sales)* Bruce R (VP Ops), Carlos P (HR), Su T (CFO), Bill M (VP CS)
Base-camp Location Surf's Up - Room A
Trigger Customer submits RFQFirst Step Sales reviews the RFQ Logistics
Coordinator Dave ParksMeals
Provided Continential breakfast & lunch
Desire to stay ahead of the competition & deepen customer loyalty. Function / Title Name Contact InformationForecasted growth of 15% for next fiscal year. Sales, Director Sean Michaels
Briefing Dates &
Times
July 24, 25, & 264:00-5:00 pmImprovement Time
FrameFuture state design is fully realized by December 31, 2013.
Current State Problems & Business Needs Mapping Team
Competition's RFQ LT is 1 wk; PO to delivery is 4 wks Scrum Master Ryan Austin Goals & Measurable Target Conditions Engineering, Vice President Nancy Little
Unclear & incorrect information flowing through value stream. IT, Director Diana MarieRFQ lead time = 2 weeks; PO to software dev lead time = 5 weeks Finance, Controller Dave Gerald
Improve quality of information flowing throughout value stream. Customer (contract manufacturer) JR Hunt
Reduce RFQ LT from 2 weeks to 3 days (70% improvement). Manufacturing, Director Ambreen MotiwalaReduce PO to software dev LT from 5 wks to 3 wks (40% improvement) Customer Service, Manager Danny Tran
Faster delivery; less hassle; less cost. Function Name Contact InformationBetter working relationships between sales, estimating & engineering. Planning / Purchasing, Planner Lourdes Dwyer
Benefits to Customers & Business On-Call Support
Relevant Data Agreement
Freed capacity to absorb additional business w/o increasing staff. Production Supervisor Tom St. James
Operational: LT in segments (RFQ to quote; PO to development). Signature: Signature: Signature:
Sales effectiveness: RFQ conversion rate. Executive Sponsor Value Stream Champion FacilitatorFinancial: Estimate-to-actual cost comparison.
Date: Date: Date: 41
Socializing the Charter
Conversation, not merely an email attachment.To the entire workforce who will be affected by change.Adjust the charter if new discoveries or concerns surface.
Prepare Understand Current State
DesignFuture State
Develop Transformation
Plan
Execute Transformation
Plan
Three Consecutive Days4 Weeks Prior
to MappingFollowing Mapping
Repeat
Value Stream Mapping ActivityPhases and Timing
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Daily Leadership Briefings
#1 – Reduce resistance#2 – Build consensus#3 – Gain commitment
J F M A M J J A S O N D
1 PROJ Steve 0%
2 PROJ Steve 100%
3 KE Bruce 50%
4 KE Bruce 50%
5 PROJ Jessie 100%
6 PROJ Sally 100%
7 KE Jessie 0%
8 PROJ Mike 100%
9 JDI Jessie 50%
10 PROJ Steve 80%
11 PROJ Steve 10%
12 PROJ Bob 0%
13 JDI Jessie 100%
14 PROJ Marcia 25%
15 PROJ Tom 30%
16 KE Marcia 50%
17 PROJ Sally 50%
Value Stream Champion Sally BrooksValue Stream Mapping Facilitator Karen Martin
Value Stream Transformation PlanValue Stream Product Y Scheduled Review Dates
Executive Sponsor Jim McMahon 2/10 + bi-weekly Thu 10 am
Socialize new criteria for engineering, quality, & purchasing involvement.
Date Created 1/5/2014Kaizen Burst # Improvement Objective / Hypothesis Proposed Countermeasure Exec.
Method * OwnerPlanned Timeline for Execution
Status
Create procedure/train GS service engineers to properly feedback suggestions to engineering.
Create bulletin re: standardized headplate design to eliminate flange orientation.
Create visual "milestone" timeline to educate customers.
Define technical info needed from customer and when.
Signature: Signature: Signature:
Revise standard Ts & Cs to incorporate time limit for customer approval for f inal payment.
Error proof P.O. info (correct specs, ship to, etc.); notify customer re missing info and drop dead date.
Create criteria for LOI acceptance.
Add initial project release in SF.
Resocialize existing customer-requested CO procedure.
One piece engineering flow
Agreement
Executive Sponsor Value Stream Champion Value Stream Mapping Facilitator
* Execution Method = JDI (Just-do-it), KE (Kaizen Event), or Proj (Project)
Move to one release (pump & systems)
Date: Date: Date:
Create commodity management team & supplier SLAs.
Standardize WPS/PQR from suppliers.
Revise proposal template to limit time to 4 revisions.
Create pull signal for invoicing.
Create trigger to release (BOMs) for purchase.
Conf
iden
tial C
onte
nt R
emov
ed
Key Success Factors for Value Stream Improvement & Ongoing Management
• Frequent review of transformation plan progress (& obstacle removal when necessary)
• Clear value stream manager/owner/champion• Defined value stream KPIs (key performance
indicators)• Frequent KPI review & continuous improvement
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mike@mosterling.cominfo@ksmartin.com
Blog & newsletter: www.ksmartin.com/subscribe
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