Value Stream Mapping: Get To Know Your Process

Posted on28. Apr, 2009 by carolesf.

Q:  When you start a project of business process improvement, what’s one of your most useful and versatile tools? 
A:  Value Stream Mapping. 

Value Stream Mapping

is a tool of Lean Thinking which enables you to identify the activities of a business process and their associated costs.  VSM is a great way to create and communicate process changes, and hence is a key component of any change management strategy.  Mapping the current process is usually applied during the “Measure” phase of DMAIC in Lean Six Sigma.  Mapping the desired future process is part of the “Improve” phase. 

The most basic philosophy of Lean Thinking is “Add only value — that the customer is willing to pay for.”  To achieve this, one of the most important activities you can undertake is to map out your process and discover which steps waste time and/or money.  In Value Stream Mapping, you’ll identify every activity currently required to produce your company’s product or service to the customer.  Each activity must then be assessed as to which of the following categories it falls into: 

(1) Value-add:  Activities which are required to produce what your customer wants to buy.  These are activities which the customer would gladly pay for, if they knew you were doing them behind the scenes.  By all means try to control these costs, but never at the risk of reducing the product’s value in the eyes of the customer.

(2) Non-Value-add:  These are activities which the customer would not want to pay for, but which are required for legal, regulatory, or business reasons.  These also include supporting administrative functions such as HR and Accounting.  They may not directly lead to your customer’s desired product, but just try to run your business without them!  Certainly try to reduce these costs, but you will not be able to eliminate them outright.

(3) Waste:  These are activities which the customer would not want to pay for, and no one else should either.  In Lean Thinking Generates Value — And Profits, I give examples of the “Seven Deadly Wastes”.  Eliminate these immediately if not sooner. 

Makes a lot of sense, but if it were easy, everyone would do it, right?  So how is Value Stream Mapping done?

(1) Start by mapping the existing process.  Map not only materials flow, but also paper flow and information flow.  Such maps often seem complicated and even intimidating at first glance, but once you get to know what the different symbols mean, it will start to make a lot of sense. 

(2) Assess the current process in terms of Value-add, Non-value-add, and Waste activities.  (In some cases, Non-value-add and Waste are binned together.)

(3) Develop a map of the streamlined future process, eliminating wasteful activities.  This is where the art and science come in, and a Lean Six Sigma Black Belt can help.  Takt time, kaizen, kanban, and all those other concepts and techniques of Lean can be used individually or in combination to help you achieve this step. 

(4) Implement the future map. 

Value Stream Mapping is one of the key inputs to assessing how to streamline a given process.  Often once you have identified the costs and binned them into Value-add, Non-value-add, and Waste categories, the necessary process changes can seem to leap right off your computer monitor.  If you know the cost of the original process, and the cost of the streamlined process, the difference is the cost savings directly attributable to your project team’s efforts.

And that makes Value Stream Mapping a highly “valuable” tool for your career, too.

Welcome back to Lean Six Sigma Source! Thanks for your continued support.

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Lean Thinking Generates Value — And Profits

Posted on24. Apr, 2009 by carolesf.

The Value of Lean Thinking

What does the “Lean” in “Lean Six Sigma” stand for? And what is “Lean Thinking”?

Both Lean and Six Sigma have their roots in manufacturing process improvement. Over the past decade or so, they have been integrated into a combined approach that has been applied to the full range of business processes, not just manufacturing.

The term “Lean” originated in “Lean manufacturing.” This is a manufacturing method which was famously pioneered by Toyota, as documented in the 1990 book “The Machine That Changed the World” by James Womack, Daniel Jones, and Daniel Roos. Womack and Jones later released another influential book titled “Lean Thinking” (1996) which sets forth the basic principles of the lean model of business.

The core concepts of Lean could be summed up as: (1) Add nothing but value. (2) Value is in the eyes of the customer. (3) Therefore, the enterprise should be oriented along lines that enable the customer’s needs to “pull” raw materials, services, and information along the most-efficient, least-wasteful path or “flow.” At the end of this flow, the customer has received the product or service he or she wanted.

Clear enough, but what does a Lean Thinking company look like in practice? And can it work in a non-manufacturing firm?

In the simplest terms, a Lean organization has a short order-to-delivery cycle. The shorter the cycle, the leaner the company.

It doesn’t really matter what the customer is ordering. It could be rapid transportation to a distant city (airline tickets). It could be showerheads (Home Depot). It could be the opportunity to buy or sell something at the best possible price (eBay). A sense of connectedness to friends and family (Twitter). In all cases, the customer wants to obtain something that he or she values, and some organization is trying to deliver whatever that something is.

What adds value to the order-to-delivery cycle? The activities of receiving the order, preparing the product or service to fulfill the order, and delivering the order.

What does not add value? In other words, what would customers not be willing to pay for, if they knew it was going on behind the scenes? How about stockpiling raw materials to enable the company to produce someone else’s order (inventory)? How about not having enough capacity to fulfill the customer’s order right away (backlog)? (A non-manufacturing example of this: Overbooking an airline flight.) How about an order entered incorrectly? Or a lost shipment? What if a particular webmail service kept crashing your web browser whenever you tried to check your email?

Lean Thinking is a mindset that doesn’t so much seek to avoid wasteful mistakes in a step as to eliminate a wasteful step entirely.

For example, if an order is entered incorrectly, the Lean approach would ask, “Do we need to do order-entry at all?” Maybe if the customer orders on-line, then we automate the order-entry process and eliminate that wasteful step in the process. On the other hand, maybe your particular customers want to “be taken care of” and would resent an expectation that they “do it themselves.” If that is the case, then, yes, we must continue to do order-entry and moreover, it should provide a personal touch to these customers. This is why understanding the customer’s wants and needs is so central to designing Lean processes. One customer’s trash is another one’s treasure — and you need to know which customer you’re dealing with.

In embracing Lean Thinking, a company is dedicated to discovering what their customers want, and providing it to them in a way that adds nothing but value — that the customers will pay for. By doing so, the company will create value (profits) for itself as well.

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