Value Stream Analysis: Beyond the Mechanics - Part 1 (Planning)

Value Stream Analysis:Beyond the Mechanics (Part 1)

WebinarJanuary 7, 2014

© 2014 The Karen Martin Group, Inc.

Welcome!

• Argentina• Australia• Belgium• Bulgaria• Canada• Denmark• France• Great Britain• Israel

• Lithuania• Latvia• Morocco• Netherlands• New Zealand• Russia• Saudi Arabia• Spain• United States

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Industries Represented• Accounting• Aerospace• Banking• Biotech & Pharma• Construction• Defense• Education• Energy• Financial Services• Government

• Healthcare• Information Technology• Insurance• Legal• Manufacturing• Publishing• Real Estate• Retail• Telecommunications• Transportation

Coach / Facilitator / Consultant / Trainer: Lean transformation & business performance improvement in all industries.

Teacher: University of California, San Diego

Author & Speaker:Karen Martin, President

The Karen Martin Group, Inc.www.ksmartin.com

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2013 Shingo Prize winner!

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© 2014 The Karen Martin Group, Inc. 5

After the webinar…• All recordings are available on:

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Before the webinar…• The materials are available on:

– www.ksmartin.com/files/webinarmaterials/MM‐DD‐YYYY_slides.pdf (or _handout.pdf)

More VSM Webinars!11:00 am‐12:15 pm PT

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• Tuesday, January 21, 2014– Value Stream Analysis: Beyond the Mechanics – Part 2 (Mapping Execution)

– https://www2.gotomeeting.com/register/835695002• Tuesday, February 18, 2014

– Value Stream Analysis: Beyond the Mechanics – Part 3 (Executing the Transformation Plan)

– https://www2.gotomeeting.com/register/154959186• Thursday, March 27, 2014

– Value Stream Mapping: Case Studies– https://www2.gotomeeting.com/register/288652530


Prepare Understand Current State

DesignFuture State

Develop Transformation

Plan

Execute Transformation

Plan

Three Consecutive Days4 Weeks Prior to Mapping

Following Mapping

Repeat

Value Stream Mapping ActivityPhases and Timing


TuesdayJanuary 7, 2014

TuesdayFebruary 18, 2014

TuesdayJanuary 21, 2014


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You will learn…

• The importance of a well‐crafted charter.• Leadership’s role in the planning process & engagement tips.

• How to define the scope and set appropriate target objectives.

• Which leaders MUST be on the mapping team.• Techniques for properly socializing the VSM charter.• Logistics details that matter.


Why Value Stream Mapping? Why Now?

To order from Amazon: www.bitly.com/VSMbkFor more information: www.ksmartin.com/VSM


Value Stream Mapping’s Roots

• Value• Value Stream• Flow• Pull• Perfection

1996

Value Stream Defined

Value Stream: All of the activities required totransform a customer request into a good or service.

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Value Stream

First defined in The Machine That Changed the World, James Womack, Daniel Jones, & Daniel Roos, 1990.

Process ProcessProcess

CustomerRequest

CustomerReceipt



Value Stream Mapping’s Roots

Mike Rother & John Shook, 1999 Beau Keyte & Drew Locher, 2004

Whenever there is a product for a customer, there is a value stream.

The challenge lies in seeing it.

— Mike Rother & John Shook, Learning to See


Value Stream Mapping: Common Failings

• Using the mapping process solely as a work design exercise

• Using the map to make tactical improvements• Creating maps but taking no action• Mapping with an inappropriate team—or no team at all• Creating value stream maps during a kaizen event• Creating maps with no metrics• Mapping without a team charter or not socializing it


Value Stream Mapping Benefit:Seeing the Whole

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Value Stream Mapping enables a mapping team to get ABOVE the work

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Value Stream Mapping: Visualize your Entire Operation on a Single Sheet of Paper



VSM Promotes Systems Thinking

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System Efficiency = Optimal Value Stream Performance

Individual Efficiency = Sub‐optimization

Work: Degrees of Granularity

Value Stream

Process Process Process

Step StepStep

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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


Work: Degrees of GranularityOrder Fulfillment Value Stream

Order Fulfillment

Quote Design Produce

Fabricate ShipAssemble

TacticalProcess‐level Perspective

StrategicValue‐stream Perspective

20© 2014 The Karen Martin Group, Inc.

Work: Degrees of GranularityHiring Value Stream

Hire

Recruit Select Onboard

Write job description Post externallyPost internally


TacticalProcess‐level Perspective

StrategicValue‐stream Perspective


Value Stream Maps ≠ Process Flow Charts


Value Stream Maps ≠ Swim Lane Process Maps0

10

156-1

0Activity PT LT %C&A Activity PT LT %C&A Activity PT LT %C&A Activity PT LT %C&A Activity PT LT %C&A

1 Fax PO to Sales Rep 0 0 45%

2

Review PO; clarify with

customer as needed

20 2 90% Fax PO to warehouse 10 4 90%

5

6

Check inventory levels; notify

Sales Rep re: status

5 4 95% Fax PO to Sales Rep 5 0.33 90%

0 20 10 5 50 2 4 4 0.33

45% 90% 90% 95% 90%0 20 10 5 5

Rolled %C&ACritical Path LT

Total PT

Critical Path PT

5431 2

Mary Townsend

Hours Worked per Day Sally DampierOccurrences per Year Sam Parks

Current State Metrics-Based Process Map

Dave Morgan25-Jun-088 Facilitator

Process Details

Michael Prichard

Order FulfillmentProcess NameSpecific Conditions Domestic orders through sales force

37,500

Date Mapped

Sean Michaels

Sales Rep

Ryan AustinDiane O'SheaMapping Team

LT Units

Function / Department

PT Units

Step # ►

Customer

Finance

Warehouse / Shipping

Seconds

Minutes

Hours

Days

Seconds

Minutes

Hours

Days

Metrics‐Based Process Mapping is used to improve tactically & define standard work


Value Stream Maps:Strategy Before Tactics

Where am I? Where do I want

to go?

I‐80 option I‐40 option I‐70 option

Which route should I take?

? ??


Value Stream Mapping Benefit:Reaching Leadership Consensus

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Basic Current State Value Stream Map: 3 Sections

1

2

3



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%

3

3

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 Value Stream Map: Future State


Basic Value StreamFuture State Performance Metrics

Metric Current State ProjectedFuture State

Projected% Improvement

Total Lead Time 9.5 days 3.5 days 63.2%

Total Process Time 180 minutes 160 minutes 11.1%

Activity Ratio 3.9% 9.5% 143.6%

Rolled % Complete & Accurate 30.0% 89.3% 197.7%

User defined

User defined


Executing Transformation

Plan

Value Stream Mapping

Making Specific

Improvements


DesignFuture State


Plan


Plan

Three Consecutive Days4 Weeks Prior to Mapping

Following Mapping

Repeat

Value Stream Mapping ActivityPhases and Timing



DesignFuture State


Plan


Plan

Activity Preparation

1. Engage executive sponsor2. Draft charter3. Socialize charter4. Plan logistics5. Gather data6. Deliver VSM overview



VSM Preparation Phase Activities

• Hold initial conversation with executive sponsor, value stream champion & facilitator.

• Draft charter– Purpose– Goals– Scope– Team– Logistics (start/end times,

location, briefings)

• Socialize charter

• Plan logistics– Send meeting invitations (to

briefing attendees as well)– Talk with prospective gemba

interviewees– Gather relevant data– Book “base camp” room– Gather supplies– Order food

• Gather relevant data• Hold value stream mapping

overview session

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Key Roles: Considerations• Executive Sponsor

– Typically VP or higher– Authority over significant portion of value stream (or strong

relationship w/ peer group)– Ultimately accountable for results– Must attend briefings

• Value Stream Champion– Oversee significant portion of the value stream– Heavily engaged in entire value stream transformation (own the

transformation plan)– Member of mapping team– In small companies or those just starting out, the VS Champion

and Exec Sponsor could be the same person.• Facilitator

– Objective; no “skin in the game”– Skilled in both mapping/improvement mechanics, and high‐level

team dynamics.


VSM Preparation Phase Activities• Hold initial conversation

with executive sponsor, value stream champion & facilitator.





briefing attendees as well)– Prepare for value stream walks

(e.g., talk with prospective gemba interviewees)

– Book “base camp” room– Gather supplies– Order food


overview session

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http://www.ksmartin.com/wp‐content/files/Value‐Stream‐Mapping‐Charter.xlsx


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1234 Date: Date:engagement, financials, lead time, safety records, etc.

effectiveness, market trends, customer satisfaction, employee Signature:Date:

Relevant Data Agreement

Examples: work volume & volume variation, process quality & Executive SponsorWhat data is required to understand relevant current state isues.

Signature: Signature:

How will the business, internal and external customers, and Functioninternal and external suppliers benefit from value stream improvement? SMEs that may not be needed full time

Always a nice touch; keeps the team from wandering

On-site, ample wall space, quiet/private location

Benefits to Customers & Business On-Call Support

Increase <defined metric> from X to Y (Z% improvement).Reduce <defined metric> from X to Y (Z% improvement).

Measurable Target Condition

What's driving the need for improvement? FunctionLeadership-heavy

Current State Problems & Business Needs Mapping Team

Boundaries & Limitations

Improvement Time Frame

What is the team NOT authorized to change?

Typically 3-6 months

Last Step Task on last process blockLogistics

Coordinator Not always needed

Aids in consensus building and organizational learning. Typically the last hour of the day.

First Step Task on first process block

Briefing Dates &

Times

Meals Provided

Briefing Attendees

** required *optional

List the the people that are required to attend the briefings (**) and those whose attendance is optional (*).

Demand RateTrigger

How many times is this done per wk, qtr, mo, or yr?

What initiates the process?

Value Stream Mapping CharterScope Accountable Parties Logistics

Required: typically VP or C-level

If needed—often director or manager level

Specific Conditions

What circumstances are included and excluded? (e.g., type of customer, geographic location, etc.)

Value Stream Champion

Value stream being improvedExecutive

SponsorValue StreamEvent Dates

& Times

3 days typically; consecutive is best; 6 hrs per day minimum; 7 or 8 hrs is best

Required: skilled, objective person leading the activity

Base-camp LocationFacilitator

Name

Name

FacilitatorValue Stream Champion

Contact Information

Contact Information

Charter: Critical planning, communication, and consensus‐building tool


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1234 Date: Date:

Name

NameLourdes Dwyer

Diana MarieDave GeraldRyan Austin


Sean MichaelsContact Information

Contact Information

Demand RateTrigger

1,000 per yearCustomer submits RFQ


Allen Ward

Nancy LittleSpecific Conditions

Engineer to order, requires both hardware & software customization


Capital equipment Executive SponsorValue Stream

Event Dates & Times

July 24-26, 20138:00 am - 5:00 pm

Dave Parks Base-camp LocationFacilitator




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

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

Last Step Production ships productLogistics

Coordinator Dave Parks

July 24, 25, & 264:00-5:00 pm

First Step Sales reviews the RFQ

Briefing Dates &

Times

Meals Provided

Briefing Attendees


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

(Competition's RFQ LT is 1 wk and PO to delivery is 4 wks) Scrum Master

Goals & Measurable Target Conditions Engineering, Vice President

Unclear & incorrect information flowing through value stream. IT, DirectorLead time for RFQ turnaround = 2 weeks; PO to software dev = 5 weeks Finance, Controller

Desire to stay ahead of the competition & deepen customer loyalty. Function / TitleForecasted growth of 15% for next fiscal year. Sales, Director

Reduce PO to software development lead time by a minimum of 50%. Customer Service, ManagerAmbreen MotiwalaDanny Tran

Nancy LittleReduce RFQ lead time by a minimum of 50%. Manufacturing, Director

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

Faster delivery; less hassle; less cost. FunctionBetter working relationships between sales, estimating & engineering. Planning / Purchasing, Planner

Continential breakfast & lunch

Surf's Up - Room A

Tom St. James


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

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


Financial: Estimate-to-actual cost comparison.Executive SponsorSales effectiveness: RFQ conversion rate.



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Briefing Dates &

Times

Meals Provided

Briefing Attendees



Demand RateTrigger






Specific Conditions





& Times




Name

Name


Contact Information

Contact Information

Patient care

Inpatient

Medical/Surgical

Intensive Care

Pediatric

Outpatient

Vaccine Clinic

Imaging

X‐Rays

CT Scans

MRI

Mammography

OB/GYNServices

Value Stream Scoping DiagramDefining Specific Conditions

Potential selection criteria:• Highest volume?• Highest margin?• Most painful?• Most supportive

leadership?


Value Stream Scoping DiagramDefining Specific Conditions

Golden State Equipment, Inc.

Capital Equipment

Catalog

Configure to order

Engineer to order

Custom hardware

Custom software

BothNew Product Development

Spares & subassemblies

Catalog

Engineer to order



Where should the “fenceposts” be?Function Activity

Marketing Generates sales leads

Sales Calls on and qualifies customers

Customer Submits RFQ to sales

Sales Reviews RFQ

Estimating Generates quote

Sales Approve quote

Customer Accepts quote; submits a PO

Sales Approves PO

Customer service Creates SO; compiles spec package

EE/ME design Designs product; generates BOM

Customer Approves design

EE/ME design Forwards design to SW dev

Software Dev Writes code

Purchasing/Planning Releases WO; schedules production

Supplier (external) Delivers materials

Production Manufactures & ships product

Customer Installs equipment

Field service Conducts 90‐day follow‐up


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Briefing Dates &

Times

Meals Provided

Briefing Attendees



Demand RateTrigger






Specific Conditions





& Times




Name

Name


Contact Information

Contact Information


Who should be on the team, be on call, and attend briefings?











overview session

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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.











overview session

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overview session

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12 13 24 35 4

51 62 73 84 95 10

12 13 24 35 4

1234 Date: Date:

Name

NameLourdes Dwyer

Diana MarieDave GeraldRyan Austin


Sean MichaelsContact Information

Contact Information

Demand RateTrigger

1,000 per yearCustomer submits RFQ


Allen Ward

Nancy LittleSpecific Conditions

Engineer to order, requires both hardware & software customization


Capital equipment Executive SponsorValue Stream

Event Dates & Times

July 24-26, 20138:00 am - 5:00 pm

Dave Parks Base-camp LocationFacilitator




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

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

Last Step Production ships productLogistics

Coordinator Dave Parks

July 24, 25, & 264:00-5:00 pm

First Step Sales reviews the RFQ

Briefing Dates &

Times

Meals Provided

Briefing Attendees


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

(Competition's RFQ LT is 1 wk and PO to delivery is 4 wks) Scrum Master

Goals & Measurable Target Conditions Engineering, Vice President

Unclear & incorrect information flowing through value stream. IT, DirectorLead time for RFQ turnaround = 2 weeks; PO to software dev = 5 weeks Finance, Controller

Desire to stay ahead of the competition & deepen customer loyalty. Function / TitleForecasted growth of 15% for next fiscal year. Sales, Director

Reduce PO to software development lead time by a minimum of 50%. Customer Service, ManagerAmbreen MotiwalaDanny Tran

Nancy LittleReduce RFQ lead time by a minimum of 50%. Manufacturing, Director

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

Faster delivery; less hassle; less cost. FunctionBetter working relationships between sales, estimating & engineering. Planning / Purchasing, Planner

Continential breakfast & lunch

Surf's Up - Room A

Tom St. James


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

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


Financial: Estimate-to-actual cost comparison.Executive SponsorSales effectiveness: RFQ conversion rate.












overview session

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Value Stream Mapping OverviewRecommended Content

• Define value stream• Explain VSM benefits• Difference between value stream and process mapping – Show sample maps

• How the mapping activity will be structured– What they can expect– Roles & responsibilities– Approximate agenda– Deliverables– “Rules of engagement”

• Review the charter in detail• Assign homework, if needed.


Your Questions• How to deal with information flow problems between sales, management, and engineering before and during production.

• For an organization just beginning their Lean transformation, how do you encourage effective use of VSM? Data that exists is often questionable. It's difficult to get leaders to commit the time to do it right.

• I’m looking to implement a continuous improvement culture in an office environment. Where should I start?


To order from Amazon: www.bitly.com/VSMbkFor more information: www.ksmartin.com/VSM

Available Now!


Karen Martin, President7770 Regents Road #635San Diego, CA 92122

858.677.6799

[email protected]

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For Further Questions

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Value Stream Analysis: Beyond the Mechanics - Part 1 (Planning)

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Transcript of Value Stream Analysis: Beyond the Mechanics - Part 1 (Planning)