Value Stream Mapping: From Tool to Management Practice

Webinar with Gemba AcademyApril 23, 2014

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© 2014 The Karen Martin Group, Inc.

Wherever there is a request and a deliverable,

there is a value stream.

Coach / Facilitator / Consultant / Trainer: Lean transformation & business performance improvement in all industries.

Teacher: University of California, San Diego

Author & Speaker:Karen Martin, President

The Karen Martin Group, Inc.

5www.ksmartin.com/subscribe

2013 Shingo Prize

winner!

www.ksmartin.com/VSM

You will learn…

• Use value stream mapping as an organizational transformation tool

• Properly scope and plan for a value stream mapping activity

• Obtain leadership consensus about the future state design

• Create and execute a highly effective Value Stream Transformation Plan

Value Stream DefinedValue Stream: All of the activities required to transform acustomer request into a good or service.

8

First defined in The Machine That Changed the World, James Womack, Daniel Jones, & Daniel Roos, 1990.

Process ProcessProcess

CustomerRequest

CustomerReceipt

Value Stream Mapping’s Roots

• Value• Value Stream• Flow• Pull• Perfection

1996

Value Stream Mapping Progression

Mike Rother &John Shook, 1999

Beau Keyte &Drew Locher, 2004

Karen Martin &Mike Osterling, 2014

Why We Wrote the Book

• Too many organizations use VSM solely as a work design exercise

• Too many organizations use VSM to make tactical vs. strategic decisions

• Too many organizations map with an inappropriate team—or no team at all

• Too many maps are process maps or contain no metrics• Too many organization miss out on the behavior and culture

shifting benefits of value stream mapping

Which do you prefer?

OR

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%

7

5

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%

11

3

Process 1

Function A

LT = 1 daysPT = 10 mins.%C&A = 50%

5

2

1 items

Information Flow

WorkFlow

Timeline

10 items

13

Basic Current State Value Stream Map: 3 Sections

1

2

3

© 2014 The Karen Martin Group, Inc.

14

Visualize the entire cycle of value delivery on a single sheet of paper

© 2014 The Karen Martin Group, Inc. 14

Value Stream PerformanceProjected Results

Metric Current State Projected Future State

Projected% Improvement

Lead Time(PO to shipping) 17 months 7.5 months 56%

Process Time 600 hours 450 hours 25% (22 FTEs)

Rolled % Complete & Accurate 0% 21% > 2,000%

On-time delivery 13% 90% 592%

# Internally-produced Change Orders 25/project 12/project 52%

Freed Cash flow $25M per year

Common Failing: Approaching VSM Mechanistically

Proper Value Stream Mapping Builds Your Organizational Muscles

Value Stream Mapping is a Strategic, Leadership-Heavy Activity

Value Stream Maps:Strategy Before Tactics

Where am I? Where do I want

to go?

I-80 option I-40 option I-70 option

Which route should I take?

? ??

© 2014 The Karen Martin Group, Inc. 20

Executing Transformation

Plan

Value Stream Mapping

Making Specific

Improvements

© 2014 The Karen Martin Group, Inc. 21

Value Stream Mapping Benefit:Seeing the Whole

21

Value Stream Mapping enables a mapping team to get ABOVE the work

VSM Aids in Developing Systems Thinking

22

System Efficiency = Optimal Value Stream Performance

Individual Efficiency = Sub-optimization

© 2014 The Karen Martin Group, Inc.

VSM Helps Break Down Functional Silos

23

Function FunctionFunctionFunction

Core Value Stream

Support Value Stream

Support Value Stream Customer

Customer

Customer

Work: Degrees of Granularity

Value Stream

Process Process Process

Step StepStep

24

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

Prepare Understand Current State

DesignFuture State

Develop Transformation

Plan

Execute Transformation

Plan

Three Consecutive Days4 Weeks Prior to Mapping

Following Mapping

And Repeat

Value Stream Mapping ActivityPhases and Timing

25

1

2 1

3 2

4 3

5 4

5

1 6

2 7

3 8

4 9

5 10

1

2 1

3 2

4 3

5 4

1

2

3

4 Date: Date:engagement, financials, lead time, safety records, etc.

effectiveness, market trends, customer satisfaction, employee Signature:

Date:

Relevant Data Agreement

Examples: work volume & volume variation, process quality &

Executive SponsorWhat data is required to understand relevant current state isues.

Signature: Signature:

How will the business, internal and external customers, and Function

internal and external suppliers benefit from value stream improvement? SMEs that may not be needed full time

Always a nice touch; keeps the team from wandering

On-site, ample wall space, quiet/private location

Benefits to Customers & Business On-Call Support

Increase <defined metric> from X to Y (Z% improvement).

Reduce <defined metric> from X to Y (Z% improvement).

Measurable Target Condition

What's driving the need for improvement? Function

Leadership-heavy

Current State Problems & Business Needs Mapping Team

Boundaries & Limitations

Improvement Time Frame

What is the team NOT authorized to change?

Typically 3-6 months

Last Step Task on last process block

Logistics Coordinator

Not always needed

Aids in consensus building and organizational learning. Typically the last hour of the day.

First Step Task on first process block

Briefing Dates &

Times

Meals Provided

Briefing Attendees

** required *optional

List the the people that are required to attend the briefings (**) and those whose attendance is optional (*).

Demand Rate

Trigger

How many times is this done per wk, qtr, mo, or yr?

What initiates the process?

Value Stream Mapping CharterScope Accountable Parties Logistics

Required: typically VP or C-level

If needed—often director or manager level

Specific Conditions

What circumstances are included and excluded? (e.g., type of customer, geographic location, etc.)

Value Stream Champion

Value stream being improvedExecutive

SponsorValue Stream

Event Dates & Times

3 days typically; consecutive is best; 6 hrs per day minimum; 7 or 8 hrs is best

Required: skilled, objective person leading the activity

Base-camp Location

Facilitator

Name

Name

FacilitatorValue Stream Champion

Contact Information

Contact Information

What &

Why? Who? When?

Charter: Critical planning, communication, and consensus-building tool

Available at www.ksmartin.com/downloads

Accountable Parties• Executive Sponsor

– Typically VP or higher– Authority over significant portion of value stream (or strong relationship w/ peer

group)– Ultimately accountable for results– Must attend briefings

• Value Stream Champion– Oversee significant portion of the value stream– Heavily engaged in entire value stream transformation (own the transformation

plan)– Member of mapping team– In small companies or those just starting out, the VS Champion and Exec Sponsor

could be the same person.

• Facilitator– Objective; no “skin in the game”– Skilled in both mapping/improvement mechanics, and high-level team dynamics.

Where should the “fenceposts” be?Function Activity

Marketing Generates sales leads

Sales Calls on and qualifies customers

Customer Submits RFQ to sales

Sales Reviews RFQ

Estimating Generates quote

Sales Approve quote

Customer Accepts quote; submits a PO

Sales Approves PO

Customer service Creates SO; compiles spec package

EE/ME design Designs product; generates BOM

Customer Approves design

EE/ME design Forwards design to SW dev

Software Dev Writes code

Purchasing/Planning Releases WO; schedules production

Supplier (external) Delivers materials

Production Manufactures & ships product

Customer Installs equipment

Field service Conducts 90-day follow-up

Value Stream Scoping DiagramDefining Specific Conditions

Golden State Equipment, Inc.

Capital Equipment

Catalog

Configure to order

Engineer to order

Custom hardware

Custom software

BothNew Product Development

Spares & subassemblies

Catalog

Engineer to order

29

© 2014 The Karen Martin Group, Inc. 30

Who should be on the team, be on call, and attend briefings?

Briefing #1

31

Purpose: Reduce resistance to future state design

Briefing #2

32

Purpose: Build consensus around future state design

Briefing #3

33

Purpose: Gain commitment re: improvement priorities, ownership, resources needed, and timeline.

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.

© 2014 The Karen Martin Group, Inc. 35

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 work

Error proof

Basic Value Stream Map: Future State

Value Stream Performance ImprovementProjected Results

Metric Current State Projected Future State

Projected% Improvement

Lead Time(PO to shipping) 17 months 7.5 months 56%

Process Time 600 hours 450 hours 25% (22 FTEs)

Rolled % Complete & Accurate 0% 21% > 2,000%

On-time delivery 13% 90% 592%

# Internally-produced Change Orders 25/project 12/project 52%

Freed Cash flow $25M per year

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 Brooks

Value 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 1/5/2014

Kaizen Burst #

Improvement Objective / Hypothesis Proposed CountermeasureExec.

Method *Owner

Planned Timeline for ExecutionStatus

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.

Confi

denti

al C

onte

nt R

emov

ed

Who? Accountability Tool Sr. Leaders “What has to happen” Hoshin Plan,

A3, Value Stream Mapping

Frontlines“How it will happen” Kaizen Events, Just-do-its, and Projects

Improvement RolesSt

rate

gic

Tacti

cal

Middle Management

Tacti

cal

Physically Post the Future State Map

Physically Postthe Transformation Plan

And Repeat…

Who Owns the Value Stream?

41

Karen Martin, President858.677.6799

ksm@ksmartin.com

For Further Questions

Blog & newsletter: www.ksmartin.com/subscribewww.bitly.com/VSMbk

www.ksmartin.com/VSM