Value Stream Mapping

Achieving high quality at a low cost through cost and time reduction is a major challenge facing manufacturers. Under increasing competition and speed to market, most industries now experience significant pressure to reduce the lead time to market for their products and services. Different approaches are used to improve the productivity and efficiency of production lines, for example, computer simulation, statistical analysis and lean manufacturing. Today, the most popular approach widely implemented in many manufacturing industries around the world is lean manufacturing. One of its primary goals is reducing waste, with the main focus on cost and time reduction by eliminating waste or non-value-added activities. Manufacturing industries trying to continuously improve productivity performance seek to minimize production lead time and waste. One lean manufacturing tool used to eliminate non-added-value activities in production lines is value stream mapping (VSM). VSM identifies wastage of resources and eliminates or reduces them to improve productivity. VSM clearly shows the ineffectiveness of action, measures the waste level and supports in designing the appropriate changes, independently and economically.

What Is Waste?

VSM and lean thinking generally create an eye for flow and another eye for waste. Waste is any activity that consumes resources, but does not add value to the product or service a customer receives. Based on the lean community, there are eight categories of waste that can have a significant impact on the development process.

1. Overproduction is making more than is needed or making it earlier or faster than is needed by the next process. In this case, the product or service is provided before it is actually required. Overproduction leads to high levels of inventory and increases storage cost.

2. Waiting means the time operators, mechanics, or anyone else spend waiting for material or for the equipment to be ready to use. If a customer has to wait beyond an acceptable time frame, customer satisfaction will decline.

3. Transportation refers to the movement of information, service, resources, or inventory. When the movement does not create value, then it is considered as waste. Transportation waste can affect the time, cost and quality.

4. Overprocessing is when teams or machines expend extra effort that is more than necessary or needed by the customer. This waste leads to extra steps or entire processes, which are non-value-added, to perform the required job.Having non-value-added increases time and costs.

5. Inventory includes raw materials, work in process (WIP) and finished products. When inventory exceeds the minimum required to maintain uninterrupted flow of information or service, the time and cost will increase.

6. Defects means producing defective goods, mishandling materials, or providing incorrect services or information. Typical causes of defects are poor equipment maintenance and/or poor quality systems, training, work instructions, or product design. The result of this type of waste is reworking (i.e., correction) or scrapping the product, which can require tremendous effort and cost, plus time.

7. Motion is any complicated and unnecessary movement that is not necessary to the successful completion of an operation.

8. Underutilized Expertise/Talent results when organizations do not use the full skills and abilities of its workforce. People are the most valuable resource in the business and should be recognized and utilized in an appropriate way for the success of the business.

The VSM Process

The three critical management tasks of any business applying lean thinking are:

  1. Problem-solving, from concept to production launch;
  2. Information management, from order taking to delivery;
  3. Physical transformation, from raw materials to finished product to the customer.

The value stream is the set of all specific actions required to bring a specific product or service through the critical management tasks. Obviously, the relationship among the three tasks is strong and each task impacts others either positively or negatively. For example, poor information management from the market will negatively impact the problem-solving value stream.

The value stream mapping process consists of four major steps, as shown in Figure 1.

Figure 1: The key steps of a VSM process

Preparation is the first step and includes identifying the mapping team, product, or project to study, and how the project or product will be mapped. Next is the current state, which consists of agreeing on a well understood map of the current state of processes. Then, in the future state, a shared vision of lean is developed. Finally, an implementation plan is developed to achieve a future state. After implementing the plan, an evaluation of results is conducted to ensure the continuous improvement and the process moves in the right direction to achieve the expected benefits.

Typical VSM Icons

Value stream mapping consists of three main components:

  1. Flow of materials from receipt of supplier material to delivery of finished goods and services to customers (e.g., raw material shipped on a regular basis (daily, weekly, etc.) from supplier to the organization by truck);
  2. Transformation of raw materials into finished goods or inputs into outputs (e.g., production steps like cutting, welding, grinding, etc.);
  3. The flow of information required to support the flow of material and transformation of goods and services (e.g., internal work order).

The value stream map uses simple graphics and icons to illustrate the movement of material, information, inventory, work in process, operators, and so on. Standard icons, as shown in Figure 2, are used to make the VSM more visual and more readily understood.

Figure 2: Typical VSM icons

The Benefits of Value Stream Mapping

A value stream mapping format is designed to improve the process operation. Value stream mapping shows how end-to-end operations work and tracks actual performance, which leads to more efficiency.

Some major benefits of value stream mapping include:

Waste Identification – recognizes which activities are non-value-adding;

Process Efficiency – links material and information flows and determines takt time, lead time, and cycle times between each point along the process;

Bottleneck Identification finds large shortages (Resources ≤ Takt/Demand & Process Step Utilization ≥ 100%);

Cross-Functional Collaboration Improvement – includes all interdepartmental stakeholders, from upper management, through middle management, to the operations, administration, sales and logistics teams, and others involved with the various process stages;

End Product Quality Improvement – increases customer values (e.g., eliminating waste and lowering costs) that lead to higher quality and improved customer satisfaction;

Better Decision-Making – shows a clear picture of all processes, allowing decision makers to base decisions on accurate information and values;

Better Future Planning – helps organizations develop plans with high efficiencies and low costs by eliminating wastes.

VSM Case Study

Introduction

In order to evaluate the benefits of using value stream mapping (VSM) in lean manufacturing, a case study is presented where VSM helped the team(s) understand the scope of the project(s), the information flows and waste identification and how to reduce or eliminate it without compromising the quality of the services being delivered. The following case study corresponds to a project executed in transactional organizations.

Current State Mapping

A typical problem lean practitioners face when working in transactional organizations is a lot of data is collected without a good measurement system analysis (MSA) applied beforehand. So, one of the first tasks to embrace is cleaning the data and mapping the process.

The power of combining data and the real knowledge of the first-line staff members during a VSM exercise allows for visualization of the process and identification of the hidden problems that reside in it. It also allows practitioners to make sense of the data by clearly identifying clusters of data that represent the problems and the outliers.

Another benefit of doing VSM exercises during a lean project is to clearly understand how the unit of work navigates from suppliers to the customers and how it is touched and transformed by different departments or groups in the company until it gets to the destination.

This case study involves different teams from sales, client engagement and research working with different social media companies. The verbatim feedback collected from their customers revealed the process takes too long and is bothersome. Data shows current proposal age varies from 0 days to 405 days, with median cycle time (CT) of 69 days for won and high deals and 30 days for won and low deals.

Variation and lack of prioritization in the upstream sales process created waste and duplication in the downstream processes for sales operations, business services and research. As a result, there were high levels of handoffs and rework across the core functions.

After completing the first high-level VSM with the group, it was decided to conduct a kaizen event that focused on two main areas, with the goal of decreasing the cycle time for the end to end sales process by 60 percent.

Figure 3: Value stream map of the request for proposal process



Figure 4: Targeted subprocess: Data’s distribution and descriptive statistics

Figure 5: VSM with non-value added activities

During this case study, the team identified 45 non-value-added steps that represented different forms of waste as reworks, excessive handoffs and waiting time. Some takeaways:

  • Too much waiting time and rework with legal documentation;
  • Process inconsistencies and lack of clarity on requirements;
  • Lack of understanding of clients’ needs;
  • Deals that were not a good fit for the company were detected too late in the process.

Future State Mapping

A new, five-stage process with client assessment and requirements up-front was designed, streamlining the sales and pricing process from 45 to 21 steps.

Figure 6: Proposed value stream map

Solutions were piloted in two areas or account types of the business and hypothesis testing (test for median difference – Kruskal-Wallis test due to instability and skewed data) and control charts were used to prove for differences in cycle time.

Figure 7: Won deals cycle time control charts

Results

Results showed CT improvements in 77 percent of won deals and 80 percent of low deals. The new streamlined process, consisting of 21 steps and five stages, was rolled out together with new standards of work, a measurement system, training and daily management standards.

The new standards of work, which include client needs assessment, clear vision, legal guidelines and a project approach framework, were rolled out together with a responsible, accountable, consulted and informed (RACI) chart by functions, a prioritization and escalation process, and a new key performance indicator (KPI) tracking dashboard.

Tracking key metrics on a dashboard, orientation of staff on KPIs to improve an understanding of the metrics and increase ownership and accountability over cycle time, the size of the deal by account type, and a proposal added to closed deals to rate performance were all part of the new daily management approach.

Conclusion

This case study exemplifies the use of VSM for analyzing the current state and designing a future state that meets customer requirements by taking the services or product from the beginning of the process until it reaches the customer. This visual tool displays all critical steps, making it easier for the team to understand how to add value to the services, bridge the gaps between different groups to collaborate on a shared goal, and quantify the time and volume taken at each stage of the process.

Adriana Rodriguez

Adriana B. Rodriguez is a performance improvement project manager at BayCare, one of the largest healthcare systems in the U.S. Adriana holds the ASQ Master Black Belt and SME Lean Silver certifications. Within the consulting sphere, she has managed global interdisciplinary projects in various service companies, and in the healthcare sector; developed training programs; advised C-level executives in strategy deployment using data mining, data modeling and statistical analysis; among others. Adriana received her doctoral degree in Industrial Engineering and a M.S. degree in Engineering Management at the University of Central Florida.

Husain Al-Omani

Husain Al-Omani, CCM, CIA, CEP, EVP, PSP, DRMP, ASQ-MBB, MBA, is a Board Member of the AACE International Marketing Board. Husain is a Master Black Belt and has a Mechanical Engineering (BS) with double post-graduation in Construction Engineering and Management (CEM) and Management Business Administration (MBA) from King Fahd University of Petroleum and Minerals (KFUPM). Husain has over 15 years of project management, project controls, construction experience and Lean/Six Sigma.

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