transactional value stream mapping

Transactional Value Stream Mapping

By Chew Jian Chieh

1

What to do if you want to reduce cycle time?

1. Value Stream Map the Process AND identify the Process Wastes

2. Look for the bottleneck and remove the bottleneck

3. Look for wastes within the process and remove them

4. Look for manual steps and try to automate them

2

Value Stream Map* the ProcessStart

Processing Time = FTE =

Automated? = WIP(in tray) =

Decision

End End

Process StepYou can add more information about the process in the Process Step. Typical Info are Processing Time and Number of Full Time Equivalent (Staffing)



Process Step



Process Step

Document also the End to End Cycle Time. Note there is a difference between Cycle Time & Processing Time.

Processing Time is the time taken to complete processing one job without wait time, interruptions etc.

End to End Cycle Time or Cycle Time is the time it start for one job to move from start to end of a process.

Total Cycle Time – Total Processing Time = Total Wasted Time

Indicate the Arrival Volumes e.g., Vol per day = 30 (Demand)

Indicate the flow time (if possible)

Indicate if the flow is manual or automated

Indicate the Operating Hours of this process e.g., 8 am to 10 pm (Available Time)

3

*this is just a process map with more process related info

Example of a Simple Value Stream Map

Card Application

Processing Time = 2 mins FTE = 1

Automated? = Semi WIP (in-tray) = 50

Approved?

End End

Credit Check & Evaluate

Processing Time = 1 min FTE = 1

Automated? = SemiWIP (in-tray) = 0

Service Activation

Processing Time = 1 min FTE = 1

Automated? = SemiWIP (in-tray) = 0

Send Rejection Letter

Step 1 – Draw the Process FlowStep 2 – Key in the Value Stream Metrics. Step 3 – Compute the Takt Time 300 Credit Card ApplicationsOperating Hours = 8 hoursTakt Time = (8 x 60) min / 300 = 1.6 mins

Yes

NoStep 4 – Find out which step is the Bottleneck Find the step which Processing Time / # of FTE is higher than Takt Time

That step will be the bottleneck and it will likely have Work-in-Progress stuck at the start of the Process

Why is that? See the next few slides.

4

From a Cycle Time Perspective, the ideal is Continuous Flow

ApplicationForm

ApplicationForm

ApplicationForm

Evaluate & Recommend

PT = 10 minutes

Approval

PT = 10 minutes

Service Activation

PT = 10 minutes

10 mins

10 mins

Print Credit Card

PT = 10 minutes

10 mins

10 mins

10 mins

10 mins

Every TenMinutesOne Job ArrivesInto theValue Stream

E.g.,

Inter Arrival Time = 10 mins

Every TenMinutesOne Job leavestheValue Stream

From Start to End, this Value Stream will always take no more than 40 minutes5

How to achieve Continuous Flow in Transactional Processes?

• This is an idealized scenario. No real process actually works like this. However, in order to understand continuous flow, try to understand this.

• Imagine if every 10 mins one job arrives. • Imagine that the 1st step takes 10 mins to process the incoming job. • That means, as the 1st job is exiting the 1st step, the 2nd job is arriving into

the 1st step at exactly the same time. Hence, there is no wait time for the 2nd job.

• Now the 1st job would have entered into the 2nd Step and that would also take 10 mins to complete the processing AND SO ON.

• Hence, if you have such an idealized process, there will be no bottleneck and consequently, you can get continuous flow.

6

Why thrive towards Continuous Flow?

1. More Speed – because in a Continuous Flow, no Work-In-Progress is ever kept Waiting.

2. Consistency – Cycle Time from Order to Delivery is kept consistent and predictable because there is no excess WIP in the Value Stream to cause Lead Time to fluctuate or grow excessively

3. Less Cost – There is no waste of Transportation and Excess Inventory hence the organization does not incur cost associated with the management of them

7

But your process is not idealized. Not every step has the same processing time. How can we achieve continuous flow?

Processing Time = 16 minsFTE =2 Processing Time = 16 minsFTE =2

Every 6 mins, one job arrived

Question – will this process step become a bottleneck? Answer – So long as Processing Time / # of FTE is less than the inter arrival time of jobs, it will not become a bottleneck

16 / 2 = 8 mins > 6 MinsHence, it will become a bottleneck

Question – How can we improve this process so that it ceases to be a bottleneck?a.Reduce the Processing Time to 12 mins or Lessb.Increase the # of FTE by 1 (16/3 = 5.3 mins)c.Increase the interarrival time of jobs (generally out of your control)

8

Note on FTE

• FTE stands for Full Time Equivalent• It represents how many staff are manning the

process on a full time basis• It is not the same as number of employee• Say you employ 10 staff in your team. The team

handles three processes. Your staff divide their time equally between these three processes during the available time.

• Hence, the FTE per process is NOT 10 but 10/3 = 3.333.

9

How do I know what is the interarrival time of jobs for my process?

• In reality, no transactional process has a constant inter arrival time of jobs (i.e., every X mins, one job arrives)

• However, let’s say for one day, your process has to complete processing X jobs (let’s call this it’s Demand)

• And let’s say, your process operates for Y mins a day (let’s call this available time)

• Then, you can say that practically, every Y / X mins, one job arrives.

• This Y / X or Avail Time / Demand is called the Takt Time.• In order words, if you know the Takt Time of your process,

you can identify the bottleneck of your process.

10

Note on Available Time

• Available Time has nothing to do with the staffing level of the process

• It refers to the time the process is available for processing of jobs

• Hence, let’s say we have two Mac Donalds. They are both opened 24 hours. The 1st Mac Donalds has 10 staff, and the 2nd has 20. Their available time is the same – 24 hours. Staffing has nothing to do with it.

11

Let’s use an example that looks complicated like your own production process to convince you that this works

P/T = 25 minsFTE = 2P/T = 25 minsFTE = 2

P/T = 15 minsFTE = 0.5P/T = 15 minsFTE = 0.5





P/T = 45 minsFTE = 3P/T = 45 minsFTE = 3

StartStart EndEnd EndEnd

50%

50%

So which step will be the bottleneck? 12

Step 1 – Compute the Takt Time

Daily Demand = 60Avail Time = 10 hrsTakt Time = 10 x 60 / 60 = 10 mins

P/T = 25 minsFTE = 2TT = 10PT/FTE =






P/T = 2 minsFTE = 0.5TT = ?PT/FTE =


P/T = 6 minsFTE = 0.5TT = 10PT/FTE =




P/T = 45 minsFTE = 3TT = ?PT/FTE =

P/T = 45 minsFTE = 3TT = ?PT/FTE =


50%

50%

13

Step 2 – Look at the points where the flow is separated and compute the Takt Time for each new stream

Daily Demand = 60 / 2 = 30Avail Time = 10 hrsTakt Time = 10 x 60 /30 =600 / 30 = 20 mins
















50%

50%

14

Step 3 – Compute the PT/FTE for every step

P/T = 25 minsFTE = 2TT = 10PT/FTE = 12.5


P/T = 15 minsFTE = 3TT = 10PT/FTE = 5




P/T = 2 minsFTE = 0.5TT = 20PT/FTE = 4


P/T = 6 minsFTE = 0.5TT = 10PT/FTE =12







50%

50%

15

The 1st process step where the PT/FTE is greater than the Takt Time will be the bottleneck. All subsequently steps where PT/FTE is greater than the Takt Time will in turn become bottlenecks

when the bottleneck higher up in the flow becomes unclogged.
















50%

50%

16

A simple and quick way to improve this process is to take staff from those steps that are have too much FTE (those in Green) and assign them to the bottlenecks
















50%

50%

17

Generic Ways to remove a bottleneck?

• Reducing Processing Time to synchronize with Takt Time– Simplification– Automation– Line Balancing

• Increase FTE– Optimize the Staff allocation by identifying process

steps that are over staffed and assigning those excess staff to bottlenecks

• Reduce the Demand (normally not possible)18

What is Line Balancing?1. Plot the processing time for every process step Each Process Step is separated into its Work Elements.

E.g., Update Records = Boot Up System (WE1) + Key in the Record (WE2) + Save the Record (WE3)

2. Draw the line that represents the Takt Time

3. Identify the Bottleneck Step

4. If possible shift Work Elements from one process step to another so that the entire line is “balanced”

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Thinking about Waste

• A simple way of thinking about improving cycle time – finding and eliminating waste. So the task is two fold:– We must know how to find waste– We must know how to reduce or eliminate waste

• What is Waste? – Anything other than the absolute minimum of

material, machines, and manpower required to add value to the product.

– Everything that is not value-added is waste

20

Value and Non Value Added Activities

Value Added ActivitiesNecessary but Non

Value AddedNon Value Added

Whether an activity is value adding depends on how the customer sees it

Activities core to the product or service that

the customer wantsWhat is it?

Typically, over 80%

Activities that do not add value from customer’s

perspective but is required by the business

Activities that do not add value from customer’s perspective and is not

willing to pay for

How to see it?

Is the Product or Service Transformed by this activity?

Does it add a feature, function or form to the product or service that the customer is willing to pay for?

Does this activity:

1. Reduce Financial Risk?2. Comply with some

regulation?3. Comply with some internal

control?4. Does anything bad happen if

we remove this step?

1. Does this activity create a known type of waste?

2. Is the customer willing to pay for it?

3. Is it rework or corrective action?

Action Mode Increase the Quality of this StepTry to separate this activity from the main flow so that the customer is not impact by the time it consumes

Reduce and ultimately eliminate it

21

How much Waste in Process?

In Box

ApplicationForm

ApplicationForm

ApplicationForm

ApplicationForm

Out Box

ApplicationForm

ApplicationForm

ApplicationForm

ApplicationForm

Wait for Collection =60 mins

Transport to Mail Room =20 mins

Application for Credit Card =

10 minsSorting and Wait in

Mail Room = 180 minsTransport =

20 mins

Wait in In Box =60 mins

Credit Check10 mins

Out Box

ApplicationForm

ApplicationForm

ApplicationForm

ApplicationForm

Wait in Out Box =60 mins

Transport =20 mins

Sorting and Wait inMail Room = 180 mins

Transport =20 mins

In Box

ApplicationForm

ApplicationForm

ApplicationForm

ApplicationForm


Approval =2 mins

Out Box

ApplicationForm

ApplicationForm

ApplicationForm

ApplicationForm


Transport =20 mins

Sorting and Wait inMail Room = 180 mins Transport =

20 mins

In Box

ApplicationForm

ApplicationForm

ApplicationForm

ApplicationForm


Card Activation= 3 minsPrint Card =

10 mins

Out Box

ApplicationForm

ApplicationForm

ApplicationForm

ApplicationForm


Transport =20 mins


Batch MailingTo Customer = 30 mins

Two Days Later Customer Gets Card

Spoilage =5%

22

Which Activity is Value added?

In Box

ApplicationForm

ApplicationForm

ApplicationForm

ApplicationForm

Out Box

ApplicationForm

ApplicationForm

ApplicationForm

ApplicationForm

Wait for Collection =60 mins

Transport to Mail Room =20 mins

Application for Credit Card =

10 minsSorting and Wait in

Mail Room = 180 minsTransport =

20 mins


Credit Check10 mins

Out Box

ApplicationForm

ApplicationForm

ApplicationForm

ApplicationForm


Transport =20 mins


Transport =20 mins

In Box

ApplicationForm

ApplicationForm

ApplicationForm

ApplicationForm


Approval =2 mins

Out Box

ApplicationForm

ApplicationForm

ApplicationForm

ApplicationForm


Transport =20 mins

Sorting and Wait inMail Room = 180 mins Transport =

20 mins

In Box

ApplicationForm

ApplicationForm

ApplicationForm

ApplicationForm


Card Activation= 3 minsPrint Card =

10 mins

Out Box

ApplicationForm

ApplicationForm

ApplicationForm

ApplicationForm


Transport =20 mins


Batch MailingTo Customer = 30 mins

Two Days Later Customer Gets Card

Spoilage =5%

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% Value Added Time

• Total Time = 4225 Minutes*• Value Adding Time = 23 Minutes• % Value Adding = 0.5%• Waste = 99.5%

One Business’ Reaction

“When we stepped back and evaluated our processes to determine what steps created customer value, we were shocked to discover that almost 99% of our work adds no value for customers. In fact we were so demoralized by this finding that we consider adjusting this criteria”

VP of a Bank

*Actually it is more because we have not even counted the time lost after the work day has ended

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Production Wastes7 Types of Waste + 2

Defects

Service Examples

Errors and ReworkWork not meeting Requirements

Missing Info

WaitingJob waiting in In-Box, Out-Box

Equipment DowntimeWaiting for Info, Approval etc

Over ProcessingUnnecessary StepsMultiple Handoffs

Unnecessary MotionWalking

Searching for Files

Inventory Excessive Backlog / WIP

Unnecessary Transportation Routing around the office

Over ProductionThis does not really happen in Service

Environments

Manufacturing Examples

Scrap, Defects

Equipment DowntimeWaiting due to Batch Processing

Processing Step that adds any feature that the customer does not value

Walking to get parts

Excessive Raw Material, WIP and Finished Goods that has not been sold yet

Routing around the Factory

Producing more than what is require to meet demand

Abilities Not using a staff to his or her full potential Not using a staff to his or her full potential

Customer’s Time Queues, Asked to redo a task due to rework Delays due to Stock-out

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transactional value stream mapping

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