Why map value streams?

by Mark Gooch

Five years ago I seldom heard companies discuss value streams or value stream analysis. Ten years ago I never heard the phrase.

Today, I not only hear these phrases, but I do not begin working with a company until we complete a value stream analysis and develop a transformation plan. This is truly new and different from the past.

Why?

First let me make a point that we use every time we perform a value stream analysis — the gold and success in a value stream analysis is NOT the maps!  So, what is the gold and why conduct a value stream analysis? It is for the transformation plan and actions developed during the analysis!

What maps do
The maps developed during a value stream analysis are to help business leaders and team members SEE the waste and opportunities in the business, the flow of value being created and, more importantly, flow being hindered or stopped in the creation of value for the customer. A value stream is the steps and actions required by a company or organization to create or generate value for the customer. 

Many levels of the value stream can be evaluated:
1. Enterprise level
2. Business unit level
3. Plant level
4. Product line level
5. Operating unit level

Some people believe there are far more levels, such as at a functional level, but in reality, very few functional levels create value by themselves, hence the matrix or cross-functional organization. Trying to analyze value creation at too low of a level hinders real opportunities and may well compromise true improvement; i.e. the immediate area may be improved but the total flow of value inside the organization may be hindered.

Ever have one area of the company improve at the detriment of another?  This is why we need to look at a complete value stream to see where flow is being compromised and stopped.

A good value stream analysis for a manufacturing organization should include at a minimum the flow of value through design engineering, program engineering/ management, purchasing, manufacturing, assembly/test, shipping and delivery, marketing, sales, customer service and finance.

Many more areas could be considered and will as organizations mature in the process. Again, you are looking for improving the complete flow of value creation through the value stream and how these organizations and functions interact and interface. These often include: missed handoffs; looking out for what one function needs vs. the value stream; impaired communication and poor coordination of activities. These in turn create long lead times, increased inventory, slow response to market, inability to improve products fast enough, missed opportunities and more. All this is WASTE and true lean activities are focused on waste elimination. Don’t look to improve waste, look to eliminate it — improving waste usually only helps a company make all the same mistakes faster.

Make the invisible visible
The mapping activity is to make the waste and all the issues noted above visible to everyone and make sure everyone involved knows what is really going on. Then we want to quantify the flow of activities with data:

• What is the level of inventory in the system (Remember that in many companies engineering time goes into a pool that is not liquidated until a product being developed needs to be delivered — the longer the development cycle, the higher that pool becomes, at that point the labor is the same as inventory and should be considered as such in terms of improvement.)

• How many people are involved in the system?

• What is the cycle time or lead time for the system?

• Are we batching the processes and where do we have opportunities for single piece flow?

• What is the first pass yield (FPY) of the system — not just a single work station?  Don’t make the mistake of averaging the percent across steps; multiply the percentage: 95 percent FPY at 5 consecutive work centers is not a system FPY of 95 percent, it is a system FPY of 77.4 percent. That is a HUGE difference, and opportunity.

• How many hand-offs and approvals are there throughout the process?  (The more hand-offs you have, the more opportunity you have for failure, delay, missed intent, etc.)

• How many non-value added steps (NVA) are required throughout the process (obvious opportunities)?

• How many inspections and checks are required?

This is not an all inclusive list; these are just some of the more common data that need to be collected and married to the areas/steps inside the value stream.

Make the connection of this data and the steps as visual as possible in the mapping exercise. Use different colored and sizes of Post-its, designate sizes and colors to specific items and flows; do whatever it takes to make things visual and obvious to everyone looking at the map.

Once this is completed and easily understood, it is time to begin evaluation and creation of solutions to improve or create flow of value creation. Truly drive for a value STREAM, or stream of value. This is the real objective of the value stream analysis. What steps and process changes can be taken or implemented to improve the business?  We like to develop an action plan consisting of three actions:

1. Rapid Improvement Events — similar to the one week, Kaizen Blitz events

2. Projects — cross-function actions requiring longer time frames for activity than a week and usually larger groups of people to implement the activities

3. Do-Its — actions that just make sense to do, do not take much time or resources to make happen and can be completed relatively soon

Once the activities have been grouped, a time line needs to be established to accomplish the agreed transformation. Getting concurrence from leadership and managers may be the toughest action of all since these are dramatic steps to change the course of the company and not everyone may believe they will work, yet, this is the ‘moment of truth’. Will you, or will you not embrace significant, radical improvement?  If so, begin implementation. What does all that mean?

That is for another time.

This article appeared in the December 2005/January 2006 issue of MRO Today magazine. Copyright 2005.

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