The Value of a Value Stream Map (VSM)
What is a value stream? A value stream is the flow of all information and materials used to create customer value. This "value" could be a finished product, information or a service. A value stream includes logistics, planning, receiving, inventory, transportation, conversion, changeovers, unplanned downtime, inspections, packaging, storage, handling, shipping and finally delivery to your customer. A Value Stream Map (VSM) is a drawing that depicts this flow from customer order receipt to delivery to the customer's door. A VSM provides a lean practitioner a birds-eye-view of the entire value stream including the good, the bad and the ugly of it all.
The value of a Value Stream Map is that it separates that value-adding activities from the non-value adding activities that occur within the value stream. Value-adding activities include only the activities that the customer is willing to pay for and that is simply the cost of actual conversion from raw material to finished good. This includes only raw material, direct labor and equipment costs for that given conversion time.
Non-value activities include everything else. In lean terms these non-value activities are called MUDA or lean waste. There are eight types of waste listed below. A lean practitioner will create a current-state VSM, identify all of the MUDA contained within the value stream, brainstorm methods to reduce or eliminate MUDA and then create a future-state VSM. A Lean Champion does all of this with the help of a Kaizen Team.
The Value Stream Map is the mother of all of the lean tools because it is what it used to develop a company's lean attack plan, and by lean attack plan, I mean a strategy to drive-out waste, create flow and increase value stream velocity. The higher the velocity of conversion speed from order entry to delivery, the lower the product costs will be.
VSM: AN EXAMPLE SHARED
Below is a real example of a VSM that I created with a management team at a diaper manufacturing company. This VSM reflects the actual value stream before we made any improvements. Without getting into too much detail, take note of just a few key points. First, the thin arrows depict the flow of electronic information, such as PO's and shop orders. Second, the thicker arrows depict the flow of a physical material, either raw material, WIP or finished goods. Third and most important is the identification and quantification of value adding steps and non-value adding steps. This can be seen in the timeline at the bottom of the VSM.
Note that this is a simple process flow but one that is great for illustration purposes. To follow the flow of this VSM, start with the "Retail Customer" icon and follow the flow of orders (narrow black arrows) from order receipt to the "Packaging Supplier" icon, then follow the product flow via the wide arrows from the Packaging Supplier through production and to the customer as the order is fulfilled.
In the bottom section of the VSM, we see the timeline of product flow through the factory. The top part of the line is the sequential time of non-value adding activities. During this non-value time, nothing is happening to the product that adds customer value. The raw materials and products are just sitting there not moving.
Value-adding time is when the product is actually being converted into something that the customer wants. It’s like the chocolate chip morsels in your pantry. They can sit in your pantry for six months not adding value to you. But, when you take them out of the pantry and mix them with batter and bake the cookies, well then that is truly a value adding activity (yum!). It is the same concept in a diaper factory. The only value adding activity is the actual diaper production and it only take 42 seconds to produce an entire case of diapers.
You can see in the "before" VSM (above) that there were 239 days of non-value adding time and only 42 seconds of value adding time. THIS CONDITION WAS NOT GOOD! You see, the 8-types of waste were preventing this factory from reducing the non-value adding time. Our goal then became to implement lean methods, eliminate MUDA and to try to get the non-value adding time as low as possible. We knew that by doing this, our value stream velocity would improve and this would in-turn improve on-time delivery and reduce factory costs.
We used our current-state VSM (above) to brainstorm improvement projects. We then selected, prioritized and methodically implemented our strategic projects. Below is our post-project VSM. In other words, our final results. By implementing lean manufacturing, dramatic improvements to the product flow were made. As you can see in the below value stream timeline that our non-value adding time was reduced from 239 days to under 30 days! The final results were outstanding!
THE VALUE OF A VALUE STREAM MAP
I have led value stream mapping events multiple times throughout my 35-year leadership career. The VSM is an essential improvement tool because it is the only way to truly identify and quantify the impact of MUDA within a value stream. A lean strategy needs to start with a current-state VSM. Then project brainstorming will lead you to your future-state map. Finally, prioritization and implementation will convert your lean plans into a reality.
When you identify your ideal future state and map-out a plan to get there, then your ideal future state will become your new current state. And thus, your new current state is a better place to be. Customers will be happier, employees will be more engaged and profits will be higher.
Learn How To Effectively Launch Lean Manufacturing
Stay connected with news and updates!
If you want some weekly T4T wisdom coming straight to your inbox for your reading pleasure - look no further! Join our mailing list to receive the latest blogs and updates.
Don't worry, your information will not be shared.
We hate SPAM. We will never sell your information, for any reason.
