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Value Stream Mapping

Making Improvements That Add Value

Organizations continually strive for lean and efficient operations. Particularly in the current economic climate, your company may ask you to find opportunities for lean improvement in your department or area, so that you can deliver the same value to the customer at lower cost to your organization. However, it can be a challenge identifying where these opportunities are.

For example, you may know that you need to improve your production process, because products are coming back with defects. In that situation, what do you need to do to improve quality? One option is to put more resources into physical inspections. But will that solve the problem, or will it just add cost to a process that's flawed somewhere else?

Process Improvement

Process improvement is successful only when you address the underlying problem. A useful way of improving processes successfully is to use a lean manufacturing technique called Value Stream Mapping (VSM). It originated at car manufacturer Toyota, where they called it 'material and information flow mapping.' VSM is now widely used in a variety of industries as a way of identifying improvement projects.

The basic idea behind Value Stream Mapping is this: if the underlying process is right, the outcome will be reliable. To get the process right, you have to understand the sequence of activities that provide value to your customers.

VSM looks at the full, end-to-end process. It helps you map visually how information and materials flow through all of the activities that occur – from the time an order is placed, to the time the product or service is delivered. The start is with customer needs, where the map shows how and when information is received. The end is when the product or service is delivered to the customer, with the map showing how decision-making and communication processes affect the whole flow.

By looking at your process from start (receiving orders or forecasts) to finish (warehousing or distributing the product), you can clearly identify steps where no real value is added, or where there's a bottleneck – and thus, you can eliminate these types of waste. Your original Value Stream Map becomes the baseline for improvement initiatives that eliminate no-value, wasteful activities.

Note that the map is only as detailed as it needs to be. In other words, it has to contain enough information about the flow of information and physical products to help you identify problems and potential improvements, but no more than this.

Don't confuse Value Stream Mapping with Value Chain Analysis or Porter's Value Chain. These tools look at the strategic part of what your company offers its customers. They ask you to evaluate whether your final product can be improved, so that you add more value for your customers, and thus increase your appeal. By contrast, VSM looks at how the product is made – to ensure that each step adds value to the overall process. Also, don't confuse VSM with flow maps or flow charts. Value Stream Maps look at processes at a higher level than typical process flow maps or flow charts. Traditional process flow charts are typically used to examine one specific process in detail (for example, how a customer complaint is handled). Producing a VSM helps you identify what the key value-add activities are, so you can eliminate the activities that don't add value.

How to Create and Use Your Value Stream Map

The objective of Value Stream Mapping is to create a picture of how items (such as materials, designs, or customer needs) flow through the value stream – from raw materials and inputs through to the customer's end product.

Value Stream Mapping is best applied to processes that are reasonably routine and standardized. Manufacturing companies are obvious examples of these, however, any organization that delivers a standard set of products or services is likely to benefit from applying VSM. Value Stream Mapping is unlikely to be useful where work processes change continuously or where bespoke products are delivered, because the flow may change with each customer or project.

Take these steps to use the Value Stream Mapping tool:

• Step One – Identify the Product or Service to Map
  
  Choose a process for which you would like to implement leaner, more efficient practices.
  
  It's important here to define the scope of your map. Identify the start and end points, and make sure that you map from one end of the process to the other end, so you can see where the blockages and non-value activities are.
  
  You also need to identify which part of the overall process you need to look at. As an example, if the amount of profit you're generating from each order is falling, then you may want to look at how an entire order is fulfilled. If the volume of orders is falling, then you may want to look at the sales process in more detail.
  
  If you have shared equipment or other resources then, instead of looking at the manufacture of one product, you might want to look at manufacturing as a whole system.
  
  To illustrate the steps of creating a Value Stream Map, we'll use a simple example: the process of transforming an Internet order into a shipped product.
  
  
• Step Two – Draw the Current Value Stream Map
  
  To help you draw the map, gather a team of people representing the stakeholders in the process. Include people who both manage and support the various parts of the value stream. It is vitally important here to include people who actually do the work, and not just the managers of team leaders - otherwise you risk creating a VSM that shows what should happen, rather than what actually happens.
  
  You can then observe and gather data to complete the map:
  
  
  • Brainstorm who is involved, both internally and externally; what is needed to deliver the product or fulfill the customer need; and the tasks or activities that go into producing the products.
  • Put these tasks in order, as much as possible, and include costs and actual working time for each task, in order to build up a picture of average performance for each task (and – ultimately – for the entire, end-to-end process).
  • Look at the delays in between stages of the process – for example, the length of time a task sits in someone's in-tray – and add that.
  
  Here are the tasks involved in order processing and delivery for our example:
  
  
  • Order entry and processing.
  • Supplier liaison.
  • Inventory management.
  • Order picking.
  • Packaging.
  • Shipping.
  
  Depending on your operations, any of these tasks could be the subject of its own Value Stream Map – that's why defining scope is so important.
  
  Here's how you would organize the tasks in our example:

There are software programs available to draw Value Stream Maps, and there's a set of shapes typically used to represent various parts of the process. You may or may not want to use these, however it's important to map your process clearly, and it's also important to ensure that everyone understands what the symbols you use mean.

• Step Three – Assess the Current Value Stream
  
  In this step, you analyze whether each activity in the process is adding value. This is where you can look for lean improvement opportunities:

What is 'value add'? Value-add activities change an item, and make it worth more to the customer. Car assembly is a perfect example: as the car body moves along the production line, more and more pieces or assemblies are added, making it more complete. Eventually, it becomes a fully operational vehicle that people will buy. Each step adds value (although clearly the most value is added when the final component is installed!)

• At each point in the map, ask yourself, “Does this activity add value?”
• Identify your value-add points.
• Identify your no-value-add points (for example, places where material is stored, redundant or excessive paperwork, and places where there are long lead times).
• Determine which no-value-add points are still necessary (for example, for meeting regulatory requirements, addressing other compliance issues, and ensuring worker safety).

• Step Four – Create a 'Future State' Value Stream Map
  
  Map how you want your improved process to look in the future. How will the process work after you've eliminated the waste you identified in the previous step? Follow these tips:
  
  
  • Assume that anything is possible.
  • Ask yourself what your leanest competitor would do.
  • Consider how you would structure the process if you were starting the business today with unlimited capital.
  • Look for similar activities, and see if there's a way to group them.
  • Identify bottlenecks and critical events.
  • Look for ways to simplify activities that are complex.
  • Confirm that customers actually value each transformation activity.
  
  Look for common forms of waste, such as these:
  
  
  • Moving product/materials inefficiently.
  • Using equipment and people unnecessarily.
  • Keeping too much or too little inventory.
  • Performing inefficient quality checks.
  • Stockpiling finished goods.
  • Adding features or conducting processing that the customer does not value.
  
  Here are some of the opportunities for improvement in our example:
  
  
  • Eliminate redundant approvals or move them earlier in the process to prevent unnecessary work.
  • Improve the flow of information (paper or electronic).
  • Restructure the warehouse operations for efficiency.
  • Update the inventory control system.
    
    
• Step Five – Create a Plan to Implement the Desired State
  
  When you have identified your objectives, you can develop a plan for change. At this point, many organizations also begin other lean processes – like Kaizen, Kanban, and Just In Time. Remember, though, that the time you invest in VSM will pay off only if you follow through with the implementation plan.
  
  These guidelines will help you do that:
  
  
  • Use the VSM to communicate your goals and objectives.
  • In your VSM team, include people who will work with the new activities. This helps increase buy-in.
  • Talk frequently about lean and efficient operations so that it becomes part of your corporate culture.
  • Look for ways to reward efficient work and efficiency suggestions.
    
    
• Step Six – Implement the Plan
  
  Various techniques can be used, but one of the most popular used with VSM is a series of 'Kaizen Blitzes,' each lasting approximately one week. These gradually move you from the current state to the future state.
  
  
• Step Seven – Review the Results, and Repeat

Key Points

Value Stream Mapping creates a graphic representation of how a process works, showing the links between flows of material and information.

It provides a common language for people to use to communicate what's happening, and why things need to change. By working through the process, you'll have a much better understanding of how your work activities fit together – and you'll be able to create an action plan for eliminating waste and, ultimately, for increasing profits for your organization.

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