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?

1 2 3 4
CUSTOMER

3B
All of the activities required to transform
a customer request into a good or service. 4
Value Stream – New (Custom) Home

ORDER DELIVERY

CUSTOMER

Lay Elect & Dry Interior

Design Found. Frame
Plumb Wall 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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Houston
We have a problem

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Houston
We have a problems
V

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 Poor
Customer
Experience

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Unnecessary
Expense

10
Silo’d thinking; Silo’d behavior

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 The Customer Doesn’t Benefit
from Functional Efficiency

Functional Efficiency ≠ Optimal Value Stream Performance

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 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 Shows the linkage

and obstacles to flow between material and
visible at a macro level 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 Silos
Function Function Function Function

External
Core Value Streams
Customer

Support Value Streams

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

Process Process Process Process

1 2 3 4

Supplier Customer
Supplier Customer
Supplier Customer
 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
Macro
Perspective Value
• Define strategic Stream
direction (“what”)
Heavy leadership
•
involvement
Micro
• Value Stream Process Process Process Perspective
Mapping • Identify the
tactical “how”
• Heavy frontline
involvement
Step Step Step • Metrics-Based
Process Mapping

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 Basic Current State Value Stream Map
ABC Technology, Inc.
Current State Value Stream Map
Name of Value Stream Being Mapped
Demand Rate = XX / Year
Name of Value Stream Champion
Mapping Date

1
Customer

Information IT-1 IT-2

Flow

2 3 4 5 6
Process 1 Process 2 Process 3 Process 4 Process 5

Work
Function A Function B Function C Function D Function E
Flow
1 items 5 11 45 items 3 10 items 7 4
LT = 1 days LT = 0.5 days LT = 5 days LT = 2 days LT = 1 days
PT = 10 mins. PT = 5 mins. PT = 120 mins. PT = 30 mins. PT = 15 mins.
%C&A = 50% %C&A = 75% %C&A = 85% %C&A = 99% %C&A = 95%

Timeline 480 mins. 240 mins. 5 days 2 days 480 mins. Total LT = 9.5 days

10 mins. 5 mins. 120 mins. 30 mins. 15 mins. Total PT = 180 mins.
Activ ity Ratio = 3.9%
Rolled %C&A = 30.0%
Basic Future State Value Stream Map
ABC Technology, Inc.
Future State Value Stream Map
Name of Value Stream Being Mapped
Demand Rate = XX / Year
Name of Value Stream Champion
Mapping Date

1
Customer

IT interface

Standard IT-1 IT-2

work
Error Cross-
proof Modified train
approvals
2 Cross- 3 Standard 4
Process 1 train Process 2 work Process 3

Function A Function C Function E

1 items 5 5 items 3 10 items 4
LT = 1 days LT = 2 days LT = 0.5 days
PT = 10 mins. PT = 120 mins. PT = 30 mins.
%C&A = 99% %C&A = 95% %C&A = 95%

1 days 2 days 0.5 days Total LT = 3.5 days

10 mins. 120 mins. 30 mins. Total PT = 160 mins.
Activity Ratio = 9.5%
Rolled %C&A = 89.3%
Basic Value Stream – Current vs. Projected Future
State Performance Metrics
 Where to start?

1. Define your core and support value streams.

2. Map the value stream.

© 2016 The Karen Martin Group, Inc. 29

 Where to start?

1. Define your core and support value streams.

2. Map the value stream.

© 2016 The Karen Martin Group, Inc. 30

Activity: Identifying & Scoping Value Streams
Name of Core Value Stream:

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

________________________________________________________________________________________

Name of Support 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 activity
Final Deliverable – what is the “finished product” that the customer receives?
 Where to start?

1. Define your core and support value streams.

2. Map the value stream.

© 2016 The Karen Martin Group, Inc. 32

 Activity: Step 1

Define who the internal or

external customer is for the Customer
value stream you’ve chosen
 Activity: Step 2

Customer

Process Process Process Process

1 2 3 4

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

Review
Contract
Finance & Legal

% Complete & 15 mins Process Time

Accurate 80%
2 days Lead Time
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 Key Metric:
Percent Complete & Accurate (%C&A)

Customer
75%

Process Process Process Process

1 2 3 4
80% 95% 50% 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
 Activity: Step 3

Customer

Process Process Process Process

1 2 3 4

Add Process Time, Lead Time, and %Complete & Accurate to the process blocks.
 From Current State to Future State Design
• Common current state findings
• Disconnected processes
• Incomplete & unclear information
• Uneven workloads
• Wasteful activities
• Long delays
• Ineffective outcomes
• Excessive costs
• Poor customer experience
© 2015 The Karen Martin Group, Inc. 38
 From Current State to Future State Design
• 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
© 2015 The Karen Martin Group, Inc. 39
 Value Stream Mapping Activity
Phases and Timing
Repeat

Develop Execute
Understand Design
Prepare Transformation Transformation
Current State Future State
Plan Plan

4 Weeks Prior Following

to Mapping Three Consecutive Days Mapping

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 Value Stream Mapping Charter
Scope Accountable Parties Logistics
Executive
Value Stream Capital equipment Allen Ward
Sponsor Event Dates July 24-26, 2013
Specific Engineer to order, requires both hardware & Value Stream & Times 8:00 am - 5:00 pm
Nancy Little
Conditions software customization Champion
Demand Rate 1,000 per year Base-camp
Facilitator Dave Parks Surf's Up - Room A
Trigger Customer submits RFQ Location
First Step Sales reviews the RFQ Logistics Meals
Dave Parks Continential breakfast & lunch
Last Step Production ships product Coordinator Provided

Boundaries & No new software; only minor changes to existing IT Briefing ** Allen W (COO), Joe M (CIO),
Limitations systems; no additional staff; no budget changes Briefing
Attendees Sal T (VP Sales) July 24, 25, & 26
Dates &
Improvement Time Future state design is fully realized by ** required * Bruce R (VP Ops), Carlos P 4:00-5:00 pm
Times
Frame December 31, 2013. *optional (HR), Su T (CFO), Bill M (VP CS)

Current State Problems & Business Needs Mapping Team

1 Desire to stay ahead of the competition & deepen customer loyalty. Function / Title Name Contact Information
2 Forecasted growth of 15% for next fiscal year. 1 Sales, Director Sean Michaels
3 Unclear & incorrect information flowing through value stream. 2 IT, Director Diana Marie
4 RFQ lead time = 2 weeks; PO to software dev lead time = 5 weeks 3 Finance, Controller Dave Gerald
5 Competition's RFQ LT is 1 wk; PO to delivery is 4 wks 4 Scrum Master Ryan Austin
Goals & Measurable Target Conditions 5 Engineering, Vice President Nancy Little
1 Reduce RFQ LT from 2 weeks to 3 days (70% improvement). 6 Manufacturing, Director Ambreen Motiwala
2 Reduce PO to software dev LT from 5 wks to 3 wks (40% improvement) 7 Customer Service, Manager Danny Tran
3 Improve quality of information flowing throughout value stream. 8 Customer (contract manufacturer) JR Hunt
4 9
5 10
Benefits to Customers & Business On-Call Support
1 Faster delivery; less hassle; less cost. Function Name Contact Information
2 Better working relationships between sales, estimating & engineering. 1 Planning / Purchasing, Planner Lourdes Dwyer
3 Freed capacity to absorb additional business w/o increasing staff. 2 Production Supervisor Tom St. James
4 3
5 4
Relevant Data Agreement
1 Sales effectiveness: RFQ conversion rate. Executive Sponsor Value Stream Champion Facilitator
2 Financial: Estimate-to-actual cost comparison.
3 Operational: LT in segments (RFQ to quote; PO to development). Signature: Signature: Signature:
4 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.
 Value Stream Mapping Activity
Phases and Timing
Repeat

Develop Execute
Understand Design
Prepare Transformation Transformation
Current State Future State
Plan Plan

4 Weeks Prior Following

to Mapping Three Consecutive Days Mapping

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Daily Leadership Briefings

#1 – Reduce resistance
#2 – Build consensus
#3 – Gain commitment
 Value Stream Transformation Plan
Value Stream Product Y Scheduled Review Dates
Executive Sponsor Jim McMahon 2/10 + bi-weekly Thu 10 am
Value Stream Champion Sally Brooks
Value Stream Mapping Facilitator Karen Martin
Date Created 1/5/2014
Kaizen Exec. Planned Timeline for Execution
Improvement Objective / Hypothesis Proposed Countermeasure Owner Status
Burst # Method * J F M A M J J A S O N D
Create procedure/train GS service engineers to
1 properly feedback suggestions to engineering.
PROJ Steve 0%

Confidential Content Removed

Create bulletin re: standardized headplate
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design to eliminate flange orientation.
PROJ Steve 100%
Create visual "milestone" timeline to
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educate customers.
KE Bruce 50%
Define technical info needed from
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customer and when.
KE Bruce 50%
Socialize new criteria for engineering,
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quality, & purchasing involvement.
PROJ Jessie 100%
Revise standard Ts & Cs to incorporate time limit
6 for customer approval for final payment.
PROJ Sally 100%
Error proof P.O. info (correct specs, ship to,
7 etc.); notify customer re missing info and KE Jessie 0%
drop dead date.

8 Create criteria for LOI acceptance. PROJ Mike 100%

9 Add initial project release in SF. JDI Jessie 50%

Resocialize existing customer-requested
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CO procedure.
PROJ Steve 80%

11 One piece engineering flow PROJ Steve 10%

12 Move to one release (pump & systems) PROJ Bob 0%

Revise proposal template to limit time to 4
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revisions.
JDI Jessie 100%

14 Standardize WPS/PQR from suppliers. PROJ Marcia 25%

Create commodity management team &
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supplier SLAs.
PROJ Tom 30%
Create trigger to release (BOMs) for
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purchase.
KE Marcia 50%

17 Create pull signal for invoicing. PROJ Sally 50%

Agreement
Executive Sponsor Value Stream Champion Value Stream Mapping Facilitator
Signature: Signature: Signature:

Date: Date: Date:

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

 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.com
info@ksmartin.com

Blog & newsletter: www.ksmartin.com/subscribe

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