Common Value Stream Mapping Analysis Mistakes


Value Stream AnalysisOne of the critical steps facing a Value Stream Mapping (VSM) Team is the process analysis step, occurring immediately after drawing the Current State Map with updated and accurate data and information.

The difference and the power of VSM from other mapping processes is in the key process information and data gathered and visually drawn on the Current State map. This information and data determines the base from which they must improve and guides the VSM Team in the right direction towards meeting defined objectives for improving customer value and business processes.

Listed below are the more common mistakes made during the critical analysis step. The result of the mistake is presented in italics and the cause of the mistake is presented in bold:

  1. Leadership team is struggling to define the problem in order to set target conditions:

Operation management terms not standardized or understood – One of the first steps of a Value Stream Mapping (VSM) Team is to standardize the terms to be used during the analysis. They should also clarify the understanding of these terms. Some members might have heard the terms but have a different understanding or do not understood them all together. This ambiguity prevents the problem from being defined correctly which can lead the team in mistaken directions. Here is a listing of the main terms to be standardized and understood by the VSM Team and the stakeholders of the concerned value stream:

Process metrics and concepts

  1. Processing time versus Lead Time
  2. Utilization
  3. Takt time
  4. Little's Law
  5. Make to order versus Make to stock
  6. Bottleneck
  7. Throughput and capacity
  8. Push system versus Pull system
  9. What is WIP
  10. Supply constrained, demand constrained, or process step constrained
  11. Value Add versus Non Value Add

 

  1. Future State solutions have met capacity targets but customer feedback has not been favorable:

Customer Values were misinterpreted by VSM Team and Leadership – Customer Value was determined internally, not by the customer.

  1. The VSM Team has implemented their Future State solutions related to capacity improvement but have not realized the expected results:

Process Data used was not the current measures – In fact, most VSM measures used within the critical analysis step is estimated from the experience of the selected VSM Team. This mistake happens often, even people with >20 years of experience with the concerned process will either over or under estimate key measures like Cycle Time. This fault is critical to the analysis as Cycle Time identifies the Bottleneck which determines the Capacity (or Throughput) of the process. Miss-identifying the bottleneck will send valuable process improvement resources to a non-bottleneck step, resulting in wasted time and possibly wasted money. Why the concern; process capacity is increased when bottleneck cycle time is reduced.

  1. The VSM Team has implemented their Future State solutions related to Lead Time improvement but are disappointed with the small gains:

Information flow has been overlooked during the analysis phase – The information process cycle time of, receiving customer details, transformation, and then correctly distributing to the required points of the value stream can be as long or longer than the value stream process cycle time. Without improvement within this process, Lead Time improvements may be unnoticeable by the customer (from order placed to receiving order at customer location).

  1. Manpower costs have increased with the Future State solutions in place along with the objective of capacity increase not meeting target:

Labor resources have been added at non-bottleneck process steps – If process step cycle times have been estimated, calculated with averages, or improperly measured, the bottleneck can be miss-identified, adding manpower to the wrong process step. There can also be a consensus by the VSM Team that a certain process step has too many problems so they develop solutions like increasing manpower at this process step. The solutions might work but the cycle time was already less than the definite bottleneck. This mistake happens because the team basis their decision on estimation from experience instead of properly collecting the critical process data.

  1. With Future State scrap reduction solutions in place, the COGS target has not been met:

Starting material volumes (overage) to compensate for process scrap have not been reduced – In this case the Future State solutions, developed by the VSM Team, for process scrap reduction is working. However, the starting raw material volumes have not been adjusted for the realized downstream improvements. The excess finished product volumes continue to be scrapped (make to order process), directly impacting COGS, and masking the improvements.

  1. Future State solutions for improving capacity have been implemented correctly but have not been realized:

Capacity and Throughput terms were not understood – The VSM Team developed successful solutions for improving a non-bottleneck process step capacity but the actual bottleneck restricted the Throughput of this step. This misconception also reduces Capacity Utilization (or Direct Labor Utilization for a manual operation).

  1. The Future State solutions for reducing Lead Time have temporarily worked:

Demand has increased and order Arrival Rates have exceeded capacity of the process – This happens because of pressure from sales and customers, the department who schedule the orders start to push orders into the value stream, even with a pull system in place. It starts here but the value stream workers soon start to feel the same pressures and shorter cycle time processes overproduce, increasing WIP and thus Lead Time. Correspondingly there are no WIP level targets or it is not a key operational metric.

  1. The Future State did not provide any solutions for Lead Time improvement:

VSM Team used required Takt Time to determine Lead Time – This mistake happens during the establishment of the Current State timeline. An example, required customer Takt Time (customer demand) might be 4 minutes but the Process Cycle Time is 5 minutes (process itself is balanced). The VSM Team converts the Takt Time to a daily requirement rate of 15 units/hour in order to convert inventory units to time. In this example we have 100 units of WIP in front of a process step. Applying Little's Law shows 20 hours to transform the WIP in front of this step. The converted Takt Time to Throughput then becomes the constant in the formula for every process step. Let's say, in this example, there are 5 process steps. Summing the five inventory times + the step Cycle Times to give us a Lead Time measure of 100 hours + 25 minutes, noted at the end of the Current State timeline. Determining the Lead Time with the measured cycle time of 5 minutes per step we have a Throughput of 12 units/hour. This gives us 25 hours of inventory time at each step. The actual Lead Time is then 125 hours + 25 minutes. Actual Lead Time is 25% higher. The Current State map did not note this difference in Lead Time so improvement was overlooked.

  1. The Future State is in place and includes a complete pull system along with a balanced line but Finance is concerned about lower capacity utilization of some process steps:

Finance not invited to establishment of Future State solutions meeting – The new objective set forth by the Leadership Team was to improve capacity, costs, and Lead Time. The new process design now in place for the last few months have achieved these targets. To do this the VSM Team established a pull system (improving Lead Time and costs) and to increase capacity of the complete process, they balanced the line and removed wastes at the bottleneck. This improved capacity but also led to faster throughput process steps to underutilize their capacity, a needed compromise. Unfortunately, Finance was not invited to the VSM Team meeting after establishing the Current State Map. The objective of this meeting was to inform the value stream Stakeholders as to the why and how the solutions would establish the Future State.

The analysis step must use accurate process data and information. The only way to get it is to go to Gemba and measure (with correct measurement processes) what is happening in the direct value stream processes and value stream support processes, this includes 'outside the four walls of your process.' The VSM Team must also understand the terms within operations management and have the ability to identify where the wastes are in order to successfully determine the Future State. Finally, effective communication throughout the VSM process is key for the acceptance of change by the process Stakeholders, resulting in continuous improvement momentum.

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