Value Stream Mapping

January 21, 2016

Value Stream

A system of interconnected people, equipment, and entities.

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Wherever there is a request and a deliverable,

there is a value stream.

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What is a Value Stream?

CUSTOMER

1 3 42

All of the activities required to transform a customer request into a good or service.

3B

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Value Stream – New (Custom) Home

FrameLay

Found.Elect & Plumb

Dry Wall

CUSTOMER

Design

ORDER DELIVERY

Interior finishes

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Types of Value Streams• Transformation (customer facing)

• Transforming customer request into good or service

• Product Development / Design• Concept to manufacturability or service ready

• Value Enabling• Support processes (e.g., new hire process,

procuring new equipment, technology requests)

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HoustonWe have a problem

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HoustonWe have a problemsV

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Poor Customer

Experience

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UnnecessaryExpense

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Silo’d thinking; Silo’d behavior

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The Customer Doesn’t Benefit from Functional Efficiency

Functional Efficiency ≠ Optimal Value Stream Performance12

Lack of Leadership Alignment

About Improvement

Needs or Priorities

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Hidden Problems & Murky Understanding

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Value Stream Maps Serve as Visual “Storyboards”

Makes the disconnects and obstacles to flow visible at a macro level

Shows the linkage between material and information flow

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© 2015 The Karen Martin Group, Inc. 16

Value Stream Maps Help Visualize Problems

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VSM Helps Break Down Functional SilosFunction FunctionFunctionFunction

Core Value Streams

Support Value Streams

ExternalCustomer

Internal Customer

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Creates Leadership Alignment, Which

Accelerates Improvement

Cycles

Value Stream Mapping Helps Build Strong Sense of Supplier-Customer Relationships

Customer

Supplier CustomerSupplier Customer

CustomerSupplier

Supplier

Process 1

Process 2

Process 3

Process 4

Where is your focus?

Helps Build External Focus: What Does the Customer Truly Value?

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Proper Value Stream Mapping & Management Generates Significant Business Results

System Efficiency = Optimal Value Stream Performance

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Work: Degrees of Granularity

Value Stream

Process Process Process

Step StepStep

Macro Perspective

• Define strategic direction (“what”)

• Heavy leadership involvement

• Value Stream Mapping

Micro Perspective

• Identify the tactical “how”

• Heavy frontline involvement

• Metrics-Based Process Mapping

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Customer

1

Process 5

Function E

LT = 1 daysPT = 15 mins.%C&A = 95%

4

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10 mins.480 mins.

5 mins.240 mins.

120 mins.5 days

30 mins.2 days

15 mins.480 mins. Total LT = 9.5 days

Total PT = 180 mins.Activ ity Ratio = 3.9%Rolled %C&A = 30.0%

Process 3

Function C

LT = 5 daysPT = 120 mins.%C&A = 85%

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4

Process 4

Function D

LT = 2 daysPT = 30 mins.%C&A = 99%

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ABC Technology, Inc.Current State Value Stream Map

Name of Value Stream Being MappedDemand Rate = XX / Year

Name of Value Stream ChampionMapping Date

IT-1 IT-2

45 items

Process 2

Function B

LT = 0.5 daysPT = 5 mins.%C&A = 75%

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3

Process 1

Function A

LT = 1 daysPT = 10 mins.%C&A = 50%

5

2

1 items

Information Flow

WorkFlow

Timeline

10 items

Basic Current State Value Stream Map

Customer

1

Process 3

Function E

LT = 0.5 daysPT = 30 mins.%C&A = 95%

4

4

10 mins.1 days

120 mins.2 days

30 mins.0.5 days Total LT = 3.5 days

Total PT = 160 mins.Activity Ratio = 9.5%Rolled %C&A = 89.3%

Process 2

Function C

LT = 2 daysPT = 120 mins.%C&A = 95%

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ABC Technology, Inc.Future State Value Stream Map

Name of Value Stream Being MappedDemand Rate = XX / Year

Name of Value Stream ChampionMapping Date

IT-1 IT-2

5 items

Process 1

Function A

LT = 1 daysPT = 10 mins.%C&A = 99%

5

2

1 items 10 items

Standard work

Modified approvals

IT interface

Cross-train

Cross-train

Standard workError

proof

Basic Future State Value Stream Map

Basic Value Stream – Current vs. Projected Future State Performance Metrics

Where to start?

© 2016 The Karen Martin Group, Inc. 29

1. Define your core and support value streams.2. Map the value stream.

Where to start?

© 2016 The Karen Martin Group, Inc. 30

1. Define your core and support value streams.2. Map the value stream.

Activity: Identifying & Scoping Value StreamsName of Core Value Stream:

_______________________________________________________________________________

Customer Trigger First Process (verb/noun) Last Process (verb/noun) Final Deliverable

________________________________________________________________________________________

Customer – who initiates the request and receives good or service?Trigger – what signal initiates the value stream?First Process – the first activity that takes place (what does the trigger initiate?)Last Process – the ending point of the value stream; the last activityFinal Deliverable – what is the “finished product” that the customer receives?

Name of Support Value Stream:

_______________________________________________________________________________

Customer Trigger First Process (verb/noun) Last Process (verb/noun) Final Deliverable

________________________________________________________________________________________

Where to start?

© 2016 The Karen Martin Group, Inc. 32

1. Define your core and support value streams.2. Map the value stream.

Activity: Step 1

CustomerDefine who the internal or external customer is for the value stream you’ve chosen

Customer

Process 1

Process 2

Activity: Step 2

Process 3

Process 4

Define the first four processes (handoffs) in the value stream you chose.

Key Performance Metrics

Review Contract

% Complete & Accurate

Process Time15 mins2 days

80%

Finance & Legal

Lead Time

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Key Metric: Percent Complete & Accurate (%C&A)

Customer

Process 1

Process 2

Process 3

Process 4

80% 50%95%

75%

90%

%C&A = % of incoming work that’s “usable as is”; no need for rework:• Correcting information or material that was supplied• Adding information that should have been supplied• Clarifying information that should have or could have been clearer

Customer

Process 1

Process 2

Activity: Step 3

Process 3

Process 4

Add Process Time, Lead Time, and %Complete & Accurate to the process blocks.

From Current State to Future State Design

© 2015 The Karen Martin Group, Inc. 38

• Common current state findings• Disconnected processes• Incomplete & unclear information• Uneven workloads• Wasteful activities• Long delays• Ineffective outcomes• Excessive costs• Poor customer experience

From Current State to Future State Design

© 2015 The Karen Martin Group, Inc. 39

• Future state design – minimum necessary for maximum outcomes• Eliminate delays• Increase information quality• Involve the right people at the right time• Improve effectiveness of outcomes• Improve customer experience

Prepare Understand Current State

DesignFuture State

Develop Transformation

Plan

Execute Transformation

Plan

Three Consecutive Days4 Weeks Prior

to MappingFollowing Mapping

Repeat

Value Stream Mapping ActivityPhases and Timing

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12 13 24 35 4

51 62 73 84 95 10

12 13 24 35 4

1234

Specific Conditions

Engineer to order, requires both hardware & software customization

Value Stream Champion Nancy Little

Demand Rate 1,000 per yearFacilitator Dave Parks

Value Stream Mapping CharterScope Accountable Parties Logistics

Value Stream Capital equipmentExecutive

Sponsor Allen WardEvent Dates

& TimesJuly 24-26, 20138:00 am - 5:00 pm

Last Step Production ships product

Boundaries & Limitations

No new software; only minor changes to existing IT systems; no additional staff; no budget changes

Briefing Attendees

** required *optional

** Allen W (COO), Joe M (CIO), Sal T (VP Sales)* Bruce R (VP Ops), Carlos P (HR), Su T (CFO), Bill M (VP CS)

Base-camp Location Surf's Up - Room A

Trigger Customer submits RFQFirst Step Sales reviews the RFQ Logistics

Coordinator Dave ParksMeals

Provided Continential breakfast & lunch

Desire to stay ahead of the competition & deepen customer loyalty. Function / Title Name Contact InformationForecasted growth of 15% for next fiscal year. Sales, Director Sean Michaels

Briefing Dates &

Times

July 24, 25, & 264:00-5:00 pmImprovement Time

FrameFuture state design is fully realized by December 31, 2013.

Current State Problems & Business Needs Mapping Team

Competition's RFQ LT is 1 wk; PO to delivery is 4 wks Scrum Master Ryan Austin Goals & Measurable Target Conditions Engineering, Vice President Nancy Little

Unclear & incorrect information flowing through value stream. IT, Director Diana MarieRFQ lead time = 2 weeks; PO to software dev lead time = 5 weeks Finance, Controller Dave Gerald

Improve quality of information flowing throughout value stream. Customer (contract manufacturer) JR Hunt

Reduce RFQ LT from 2 weeks to 3 days (70% improvement). Manufacturing, Director Ambreen MotiwalaReduce PO to software dev LT from 5 wks to 3 wks (40% improvement) Customer Service, Manager Danny Tran

Faster delivery; less hassle; less cost. Function Name Contact InformationBetter working relationships between sales, estimating & engineering. Planning / Purchasing, Planner Lourdes Dwyer

Benefits to Customers & Business On-Call Support

Relevant Data Agreement

Freed capacity to absorb additional business w/o increasing staff. Production Supervisor Tom St. James

Operational: LT in segments (RFQ to quote; PO to development). Signature: Signature: Signature:

Sales effectiveness: RFQ conversion rate. Executive Sponsor Value Stream Champion FacilitatorFinancial: Estimate-to-actual cost comparison.

Date: Date: Date: 41

Socializing the Charter

Conversation, not merely an email attachment.To the entire workforce who will be affected by change.Adjust the charter if new discoveries or concerns surface.

Prepare Understand Current State

DesignFuture State

Develop Transformation

Plan

Execute Transformation

Plan

Three Consecutive Days4 Weeks Prior

to MappingFollowing Mapping

Repeat

Value Stream Mapping ActivityPhases and Timing

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Daily Leadership Briefings

#1 – Reduce resistance#2 – Build consensus#3 – Gain commitment

J F M A M J J A S O N D

1 PROJ Steve 0%

2 PROJ Steve 100%

3 KE Bruce 50%

4 KE Bruce 50%

5 PROJ Jessie 100%

6 PROJ Sally 100%

7 KE Jessie 0%

8 PROJ Mike 100%

9 JDI Jessie 50%

10 PROJ Steve 80%

11 PROJ Steve 10%

12 PROJ Bob 0%

13 JDI Jessie 100%

14 PROJ Marcia 25%

15 PROJ Tom 30%

16 KE Marcia 50%

17 PROJ Sally 50%

Value Stream Champion Sally BrooksValue Stream Mapping Facilitator Karen Martin

Value Stream Transformation PlanValue Stream Product Y Scheduled Review Dates

Executive Sponsor Jim McMahon 2/10 + bi-weekly Thu 10 am

Socialize new criteria for engineering, quality, & purchasing involvement.

Date Created 1/5/2014Kaizen Burst # Improvement Objective / Hypothesis Proposed Countermeasure Exec.

Method * OwnerPlanned Timeline for Execution

Status

Create procedure/train GS service engineers to properly feedback suggestions to engineering.

Create bulletin re: standardized headplate design to eliminate flange orientation.

Create visual "milestone" timeline to educate customers.

Define technical info needed from customer and when.

Signature: Signature: Signature:

Revise standard Ts & Cs to incorporate time limit for customer approval for f inal payment.

Error proof P.O. info (correct specs, ship to, etc.); notify customer re missing info and drop dead date.

Create criteria for LOI acceptance.

Add initial project release in SF.

Resocialize existing customer-requested CO procedure.

One piece engineering flow

Agreement

Executive Sponsor Value Stream Champion Value Stream Mapping Facilitator

* Execution Method = JDI (Just-do-it), KE (Kaizen Event), or Proj (Project)

Move to one release (pump & systems)

Date: Date: Date:

Create commodity management team & supplier SLAs.

Standardize WPS/PQR from suppliers.

Revise proposal template to limit time to 4 revisions.

Create pull signal for invoicing.

Create trigger to release (BOMs) for purchase.

Conf

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onte

nt R

emov

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Key Success Factors for Value Stream Improvement & Ongoing Management

• Frequent review of transformation plan progress (& obstacle removal when necessary)

• Clear value stream manager/owner/champion• Defined value stream KPIs (key performance

indicators)• Frequent KPI review & continuous improvement

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mike@mosterling.cominfo@ksmartin.com

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