Value Stream mapping

Value stream mapping helps companies avoid randomly making improvements by allowing them to identify and prioritize areas of improvement up front as well as to set measurable goals for improvement activities. This is accomplished through three stages:

  • Create a current state map showing how the company serves its customers today.
  • Create a future-state map showing the reduction of waste and the effects of the changes.
  • Develop and implement a plan to reach the future state.

One of the key elements of value stream mapping is that it can provide a baseline of defined processes

The critical phrase in this definition is, “the customer is willing to pay for.”

Every process the customers sees involves work that adds value in their eyes. Unfortunately, every process the customers sees also involves work for which they are not willing to pay – waste. While no one can eliminate all waste, using value stream mapping to identify waste helps determine a plan for eliminating it.

However, before a company can identify its value stream, it needs to determine:

  • The value in the process that the customer is willing to pay for.
  • The steps required to deliver the product or service to the customer.
  • What is significant in each.

Three Steps in Understanding the Value Stream

Before a current-state value stream map can be created, a project team must identify and understand the value stream. Following is a three-step method for identifying value streams:

1. Create a list of products and group them in families. Some companies offer varied products and services. For example, an investment company offers different investment opportunities, such as mutual funds, 401Ks, stocks, etc. A finance company offers different types of loans, including first mortgages, home equity, car loans and small business loans. It is relatively easy to group products into families by constructing a simple table, like the one below. The goal is not only to identify all product families, but also to identify what process steps each product utilizes. This will be a living, breathing table, so a project team should be prepared to make further revisions as it dives deeper into its analyses.

Table: Grouping Products or Services Into Families
Product/

Service

Process Step 1

Process Step 2

Process Step 3

Process Steps 4, 5, 6…

A

x

x

B

x

x

C

x

x

x

D, E, F…

2. Determine which product or service is considered primary. While a product/service may utilize different processes, a company needs to concentrate on one process at a time, focusing on processes critical to company goals. In many instances, a company’s improvement plans may be filled with process improvement projects with no clear link to its overall goals or vision. With limited resources available, efforts need to be concentrated only on those projects that really need to be done. Selecting which product family to analyze will depend on the individual business situation. Examples of products/services to analyze include those that:

  • Stem from company goals/vision.
  • Utilize the most process steps.
  • Are known to have high defect rates.
  • Represent the voice of the customer and offer the highest customer rate of return.
  • Are high volume in dollars and/or units.

3. Document the steps of the process – initial walk-through. Use a SIPOC diagram (suppliers, inputs, process, output, customers) to document the process steps. Begin with the customers and work backward. A project team will gain more insight by working in reverse order. During the walk-through, think about the customer. How does the customer receive the product or service? What triggers the product or service to be delivered to the customer? What are the inputs? From where are these inputs supplied? Once the walk-through is completed, there should be enough initial data to understand the value stream, and begin creating a current-state value stream map with a more detailed depiction of the value stream.

‘Which Process Map Should I Use?’

Why not take advantage of both models by using detailed process mapping and adding value stream mapping data into it. While each type of map is used to identify different variables, there is more value in combining components of value stream with detailed process mapping. Detailed process mapping has all the process components the value stream map does, and it can be broken down in much greater detail. Due to the time involved in constructing detailed process maps, one could include detailed process mapping after value stream mapping has located the bottleneck.

Value stream mapping requires both current- and future-state process maps. However, future-state maps are often less well-defined in services or administrative organizations. These organizations typically require a strategic perspective, like what the new service delivery model looks like. Value stream mapping typically focuses on a single product family, but choosing only one product family may not be appropriate in a service organization – especially if the customer can choose between different channels. For example, in banking, the customer may choose channels such as online, email or telephone banking. Focusing on a single product family may not provide the insight needed to identify all available improvement opportunities. In such cases, the value stream mapping methodology can be combined with other tools such as a bottleneck analysis.

Bottom line, value stream mapping is a powerful tool that helps identify the vital few Lean and Six Sigma projects that will yield the most value to the process tagged for improvement. And its approach of current- and future-state maps allows Six Sigma practitioners to know where they are starting from, where they are going and how they will get there. When a company reaches tomorrow, it will be much more rewarding if it knows the route it followed.

 

Source: www.isixsigma.com 

 

 

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