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Value Stream Mapping

Making Improvements That Add Value

What adds value for the customer?

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 provides 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: