“Value Stream Mapping”- A Model

R.AravindanGM- Operational Excellence

Piramal Healthcare Ltd

PROCESS TECHNOLOGY

PEOPLE

TOTAL COST OFOWNERSHIP

Manpower,Skills, Attitude

Suppliers,Customers

Project Equipment,

Catalyst,Product research

Raw material procurement,

Energy,Packing,Selling,Marketing

Business Cost Management

Some profitBigger profit

Cost to produce

Price to sell

Increase profit by Price Increase

But, may lose customers!

The conventional way: Price = cost +Profit

Operating Benefits – Before VSM

Net Operating Profit

Gross Profit- (G& A+ Marketing+ Interest) Expenses

Gross Profit

Revenue-Cost of Goods Sold ( Material , Labor and Ovhd /Quality)

Revenue100%

= 100% - 65%

35%

= 35%-25%

10%

To be focussed for Process

Improvements

Simply stated, quality comes from meeting customer expectations.This occurs as a result of four activities:

Controlling and managingthose processes so

they consistently deliver to their capabilities.

UnderstandingCustomer

Requirements

Designingproducts and services

that satisfy those requirements

Developing processes that are

capableof producing those goods and services

Understanding Quality

Marketing R&D Operations Quality

Hidden Factory –Origin of COPQ

Quality engineeringand administration

Inspection/test (materials,equipment, labor)

Expediting

Scrap

Rework

Rejects Warranty

claims

Maintenance and service

Cost to customer

Excess inventory

Additional

labor hours

Longer cycle times

Quality auditsVendor control

Lost customer loyalty

Improvement program costs

Process control

Opportunity cost if salesgreater than plant

capacity

Goal – Reduce waste and increase process speed

Focus – Bias for action/ Utilize existing, proven Lean Tools

Method – Kaizen events, Value Stream Mapping

Goal – Improve performance on Critical Customer Requirements

Focus – Use repeatable DMAIC approach for sustained results

Method – Intense focus on projects, performance improvement a key leadership activity

Six SigmaQuality, Cost +

Explicit Approach

LeanSpeed + Waste + Implicit Approach

X

Lean Six

Sigma

Lean Sigma Integrated approach

Key aspects

Most of the material in a manufacturing process spends 95% of its time waiting…waiting for someone to add value to it or waiting in finished goods inventory…By reducing

this wait time by 80%,manufacturing overhead and quality cost can be reduced by 20% ,In addition to the benefits of

proportionally faster delivery and lower inventories.

How Lean Sigma Works

0%

10%

20%

30%

40%

50%

60%

70%

80%

1 2 3 4 5 6 7 8 9 10 11

BeforeLean

Sigma

AfterLean

Sigma

Manufacturing time

% Distribution

Variation reduced

Mean delivery time reduced

Lean Sigma Characteristics

ModerateHighComplexity

DemandDataDriver

1 week – 3 months2 – 6 monthsProject Length

Value stream mappingVarious approachesProject selection

ShortLongLearning Curve

Operating costsCost of poor qualityMain Savings

Speed (velocity)Six sigma (3.4 DPMO)Justification

Reduce wasteReduce variationImprovement

LeanSix SigmaTopic

Six SigmaLean LeanSix Sigma

$$

$

Methodology and Tools of Lean Sigma

MeasureMeasure AnalyzeAnalyze ImproveImprove ControlControlDefineDefine

Value streamMapping

Project Charter

Voice of Customer

Communication plans

CTQ Issues

Business results

Benchmarking

RegressionAnalysis

5 Whys

C & E Diagram

Root CauseAnalysis

ANOVA

Multivari Analysis

HypothesisTesting

DOE

Kaizen Events

TOC

Pull Systems

SMED

5S or 6S

Work Flow Improvement

PrioritizationMatrices

MSA Studies

Capabilitystudies

Video Taping

Time Studies

SIPOC

Collecting Data

SPC

Visual Controls

Control Plans

TPM

Standard Work

Procedures & Work Instructions

Training Requirements

VSM Definition

Value

Stream

Mapping

Value is defined by customer for which to pay for

Activities Captured in two important flows, ie ,Information and Material flows

Drawing the business flow starting fromCustomer, Planning, supplier and Manuf.

VSM maps and shortens the time line between the customerorder and the product shipment by identifying and eliminatingwaste.

CustomerOrder

Waste ProductShipment

Time

Business as Usual

CustomerOrder

ProductShipment

Time (Shorter)

Waste

Lean Manufacturing

Why VSM is important !

Value stream Mapping - Model

ValueStream

Mapping

The Vision

Future VSMFuture VSM

Constrains

Quick Wins

Forecasts ProductivityImprovement

Program

ForecastAccuracy

Improvement

Flow initiatives

Development of

Key Metrics

Current VSMBusiness Analysis

Information Flow

Material Flow

Physical process data

Quality Systems

Financial data

Customer & Market data

Supplier data

Undesirable Effects

Business Priorities

Strategic / Operating Plan

Metrics Top-DownProjects are identified through association with the Metrics of the company’s Strategic Plan or Business Plan

Opportunities

to reach the

goals

Opportunities

to reach the

goals

Problems, Defects, Dissatisfied

Customers, Unused Capacity

Issues needin

g attentio

n

Issues needin

g attentio

n

• Bottom-UpProjects are identified through association with current process issues

VSM Tool for Project Selection

BusinessObjective

ProgramObjective

Approach

Lean

Methodology

(Value Stream Mapping)

P-1

(DMAIC)

P-2

(DFSS)P-3

(TPM)

P-4

(VA/NVA)P-5

(5S)

SUPPLY CHAIN

HUMAN RESOUCES

FINANCE

MARKETING

PROJECT &TECHNICAL

PRODUCTION

R& D

BUSINESS DEVELOPMENT

Value streamMapping

Forming Cross Functional Team for Creative Results

Right People

Right Training

Right Team

Right Project

Form VSM team

• Product Family – production parts with similar or identical processing operations.

• Material Flow – the sequence of operations involved in transforming raw materials into finished products.

• Information Flow – the sequence of activities involved in translating customer orders into production & delivery schedules.

Value Stream Mapping- Key Inputs

VSM Benefits

ü Seeing the complete business process flow

ü Identifying sources and locations of waste

ü Providing a blue print for Lean and Six sigma ideas

ü Showing material and motion flow linkage

ü Describing the effects of various Metrics

Acme Stamping Current State Value Stream Map. From “Learning to See” Rother & Shook

Current State of Value Stream Mapping

PRODUCTIONCONTROL

MRPWeeklyfax

6-weekForecast

90/60/30 DayForecasts

DailyOrder

18,400 pcs/mo- 12,000 “L”- 6,400 “R”

Tray= 20 pieces

2 Shifts

State StreetAssembly

Tues. &Thurs.

Daily

ICoils5 days

I4600 L2400 R

I1100 L

600 R

I1600 L

850 R

I1200 L

640 R

I2700 L1440 R

EPE=2 weeks

5 days 7.6 days 1.8 days 2.7 days 2 days 4.5 days1 second 39 seconds 46 seconds 62 seconds 40 seconds

Door to Door Lead Time = 23.6

Production Time = 188 sec

Daily ShipSchedule

Weekly Schedule500 ft coils

Michigan Steel Co.

C/T=1 sec.C/O=1 hr.

Uptime=85%27,600sec.avail.

STAMPING

200 T

S. WELD #1

1

C/T=39 sec.C/O=10 min.Uptime=100%

2 Shifts

S. WELD #2

1

C/T=46 sec.C/O=10 min.Uptime=80%

2 Shifts

ASSEMBLY#1

1

C/T=62 sec.C/O=0

Uptime=100%

2 Shifts

ASSEMBLY#2

1

C/T=40 sec.C/O=0

Uptime=100%

2 Shifts

SHIPPING

Staging

Inform

ation

flows Information flows

WIP Material Flows

RMMaterial Flows

FG Material Flows

Sample VSM

Customer Information

SupplierInformation

Operating Data

Informationflows

Informationflows

ü Identify the customer(s) for this productü Determine the production requirements for this

product üuse prior year’s sales numbers; or, forecasted

sales numbers, if expected to be significantly different from past history.

ü Determine frequency of customer deliveriesü Determine the pack-out quantity; or, average ship

quantity

Customer Information

Inventory daysWIPFloor SpaceFSFirst time QualityFTQWaiting timeWTNo of Operators#ONo of Machines#MUptimeU/TPiecesPART #’SChange over timeC/OCycle timeC/T

Collect Data on the Shop Floor

Operations Data

• C/T is Cycle Time - Elapsed Time from one Completed Part to the Next Completed Part.

• C/O is Changeover Time - Elapsed time from Last Piece to First Good Piece of Next Run.

• Part #’s - # of Part Variations Sharing the Equipment.• Uptime – % of Scheduled time that is Productive Time.• Machines - Number of Machines Available.• Operators - Number of operators available.• Shifts - Number of Shifts Currently Scheduled.• Working Time – Scheduled Time in Minutes Minus Time

Scheduled for Breaks, Meetings, Clean-up, etc.,. • First Time Quality – Good Pieces / Total Pieces (before

rework).• Floor Space - Square Footage of Work Area.

Data Definitions

üCount the number of pieces of inventory at each storage location in the value stream:üInclude Raw Material Inventory StoresüInclude Work-In-Process Inventory üInclude Finished Goods Inventory Stores

üDivide the number of pieces of inventory by the average daily quantity sold to determine the number of days of inventory at each location.

Inventory days

üDraw value-added time down on the timeline, draw non value-added time up

Inventory Days Inventory DaysCycle Time Cycle Time Cycle Time

Total N.V.A. Time

Total V.A. Time

VA and NVA timelines

Process of VSM

Define Product family

Draw the Current State Map

Draw the future state Map

Implementation Planning

Use the Product Equipment Matrix

Do this Personally as it is

Use Creative concepts

Can take 6 to 12 Months

PRODUCTS

Operations

SHEAR PUNCH FORM 1 FORM 2 WELD 1 WELD 2 DEBUR

TOP SHELF

BOTTOM SHELF

RH SIDE PANEL

DOOR BRACE

LH SIDE PANEL

HINGE

DOOR PANEL

X X X XX X X X

X

X

X

X

X X

X

X

X

X

X

X

X X

X

X

X

X

Identify Value Streams- Product family

OutsideCustomer or

Supplier

Operation

Operator

I

InventoryStorage Point

I

InventoryPushed AheadShipment

Data Box

Electronic Information Flow

Scheduling Information Flow

Customer Delivery

Supplier Delivery

Current State Mapping icons

Current State Map

Ø Used to facilitate the process analysis

Ø Map the process with backward flow is from customer to supply chain

ØStart with quick orientation of process routes

Ø Personally follow the material and information flows

Ø Collect the data personally

Ø Map the whole stream

Ø Create a pencil drawing of value stream

Ø Typical Process data include , Cycle time, changeover time, uptime, No of Operators, First time right, WIP and scrap rate.

Acme Stamping Current State Value Stream Map. From “Learning to See” Rother & Shook

PRODUCTIONCONTROL

MRPWeeklyfax

6-weekForecast

90/60/30 DayForecasts

DailyOrder

18,400 pcs/mo- 12,000 “L”- 6,400 “R”

Tray= 20 pieces

2 Shifts

State StreetAssembly

Tues. &Thurs.

Daily

ICoils5 days

I4600 L2400 R

I1100 L

600 R

I1600 L

850 R

I1200 L

640 R

I2700 L1440 R

EPE=2 weeks

5 days 7.6 days 1.8 days 2.7 days 2 days 4.5 days1 second 39 seconds 46 seconds 62 seconds 40 seconds

Door to Door Lead Time = 23.6

Production Time = 188 sec

Daily ShipSchedule

Weekly Schedule500 ft coils

Michigan Steel Co.

C/T=1 sec.C/O=1 hr.

Uptime=85%27,600sec.avail.

STAMPING

200 T

S. WELD #1

1

C/T=39 sec.C/O=10 min.Uptime=100%

2 Shifts

S. WELD #2

1

C/T=46 sec.C/O=10 min.Uptime=80%

2 Shifts

ASSEMBLY#1

1

C/T=62 sec.C/O=0

Uptime=100%

2 Shifts

ASSEMBLY#2

1

C/T=40 sec.C/O=0

Uptime=100%

2 Shifts

SHIPPING

Staging

Schedule Leveledto Demand

Making the processesControlled and Capable Improved

Productivity

Improved Plant& Equipment

Availability

Supply FlowImprovement

Development and Deployment of Sigma Matrices

Schedule Leveledto Demand

Current state of VSM

Lean Metrics

• The amount of time it takes one piece of the product to move through all of the processes

Lead time

Takt time

• It is the available production time divided by rate of customer demand

Inventory days

• It the ratio of WIP inventory to the Production per day

In Lean Process Cycle time < = Takt time

Lean Metrics

Process Efficiency

Value Addition time

• The amount of time spent transforming the product for

which the customer is ready to pay for

Non - Value Addition time

• The amount of time spent transforming the product for

which the customer is not ready to pay for- All 7 waste in the

process and also includes inventory days

Process Efficiency = Value added timeValue added+ Non Value added

• Transportation of Parts & Materials• Inventory – Sleeping Money• Motion• Waiting• Overproduction• Over Processing – more than what is

required• Defects - Cost to find, fix or replace

7 wastages of Manufacturing

VA and NVA

Non Value Added work is any item that does not change the fit, form or function and thus does not add any value to the final product and

should be eliminated

Value added work is anything that changes the fit, form or the

function of a process or a product. Stated another way value added

items are anything the customer is willing to pay for

Non Value added but necessary work is required to run the

business but does not change the fit, form or the function of the

process. It should be considered to be non value added but may

not be able to be eliminated completely.

Takt time analysis

Future State Map – Key Questions

DEMAND

1) Takt time?

MATERIAL FLOW

2) Where can we use one-piece / continuous flow?

3) Where can we use FIFO lanes? 4) Where do we have to use supermarket

(replenishment) pull systems?

Future State Map – Key Questions

INFORMATION FLOW

5) At what single point in the productionchain do we trigger production?

6) How much work do we release & take away?7) How do we level the production mix?

SUPPORTING IMPROVEMENTS

8) What process improvements are necessary (e.g., uptime, changeover, cycle-time reduction)?

Lean Tools Used

• Kanban• SMED• Cell Design• Set up reduction• Continuous flow manuf• Kaizen• 5S• Pokayoke• Visual Controls• TPM

534.5 days2 days-1 day1.5 daysFuture

1023.6 days4.5 days6.5 days7.6 days5 daysCurrent

Total Inventory turns

Production lead time

Finished GoodsInventory

Weld/Assy WIPInventory

Stamped PartsInventory

CoilsInventory

State

Future state of VSM

Stamping Loop

Supermarket for pull and

continuous flow

Batch ofKanbans

Supplier Loop

Pacemaker Loop

Cell Design

Lean companies use less of everything than do more traditionally managed companies:

– half the human effort in the factory,– half the manufacturing space,– half the investment in tools, – half the engineering hours to develop a new

product in half the time,– less than half the inventory

*Womack, Jones, et.al., “The MachineThat Changed the World.”

The Lean Enterprise

A Typical World Class

A lean process is one in which the value added time in the process is more than 25% of the total lead time of that process

Operating Benefits – After VSM

Net Operating Profit

Gross Profit- (G& A+ Marketing+ Interest) Expenses

Gross Profit

Revenue-Cost of Goods Sold ( Material , Labor and Ovhd /Quality)

Revenue100%

= 100% - 58.5%

41.5%

= 41.5%-25%

16.5%

Reduction of 10% of Cost of

Goods Sold

Some profit

Bigger dual profit

Cost to produce

Price to sell

Increase profit by Cost Reduction

The new way: Price - cost =Profit

Key Learnings

Quality

Profitability

Productivity

Industry

Breakthro’Improvements

Lean

SPEED + ACCURACY

UNIMAGINABLE PERFORMANCE

Conclusion