Value Stream Mapping is a System Approach…Or Is It?

Value stream Map DashboardWhen an organization makes the decision to use the Lean tool of Value Stream Mapping (VSM) they are wanting to improve value delivered to their customers through a system. Regrettably, in many cases, the system does not improve to its potential, because the improvement focus was isolated to a process step.   

A value stream can be defined as a series of events that take a product or service from its beginning (supply chain) through to the customer (where the product or service is expended). Let’s clarify this description, a series of events that are suitably interconnected to where customers realize the expected value.

Considerate of customer value and how it is built throughout a system is key in understanding the depth of required analysis, improvement execution, and sociology to be successful in realizing organizational results by improving an interconnected system. Dr. Russ Ackoff provides outstanding explanations as to why systems thinking is key in continuous improvement in this 1994 video:

Most Value Stream Mapping Facilitators will guide a team to understand measures like Cycle Time, Yield Loss, Down Time, Setup Time, and Inventory Level. These are key measures but the mistake made is limiting the improvement focus to certain process steps that may not improve the targeted system.

Some case studies:

1.     To understand the significance of process yield it  must be analyzed throughout the system.  One process step might have a higher yield loss than the others but will improving this step be noticed by the customer. Let’s take a five-step process Step 1 = 0.97 Yield loss, Step 2 = 0.94, Step 3 = 0.98, Step 4 = 0.99, and Step 5 = 0.97, this equal to a process yield of 85.8%. The untrained VSM Facilitator suggests to focus on Step 2 for improvement and the result improves process step 2 yield to 97%. What does the customer realize? The answer is 0.97 x 0.97 x 0.98 x 0.99 x 0.97 = 88%. The process step improvement provides a process improvement of 2.6%. The Value Stream Mapping Team celebrated their process step improvement success. Two months later the Sales Department reports the customer has not noticed any improvement in yield.

2.      For improving process capacity, a trained Value Stream Mapping Facilitator knows to first find the process constraint, the bottleneck. This is system thinking but what I am used to hearing next is find the process step with the most WIP in front of it and that step is the bottleneck. Let’s look at the throughput rates of a three-step process, Step 1 – 60 units/hour, Step 2 – 50 units/hour, and Step 3 – 42 units/hour. In this example, Step 2 has the most potential to build the most WIP in front of it, at a rate of 10 units/hour. Step 3 has the next potential to build WIP but at 8 units/hour, though Step 3 is the actual system constraint because of the lowest throughput rate. Once again, the VSM Team makes a mistake because of narrowing their analysis and sending valuable improvement resources to an individual process step to improve the throughput rate of Step 2. The result, the system capacity does not improve.

3.      In this example an organization had just finished improvements to increase capacity within a department that was providing a sub-assembly for the main value stream. We will call this sub-assembly department Step1 which had a throughput of 40 units/hour, Step 2 – 30 units/hour, Step 3 – 20 units/hour, and Step 4 – 25 units/hour. The organization’s strategy was to increase capacity. The Department Manager of Step 1 decided that by adding one more employee to support Step 1 they could double the throughput. The Department Manager was correct, the throughput of Step 1 doubled to 80 units/hour. The decision was not strategy aligned and was not a system improvement. The results realized from this process step decision was an increase in direct labor costs, an increase in lead time, and no system capacity increase.     

If the challenge is achieving a higher level of quality than competitors, define, analyze, and improve the system. If the challenge is achieving lower operational costs than your competitors, define, analyze, and improve the system. If the challenge is achieving faster products and services flow than your competitors, define, analyze, and improve the system.  

The Lean tool of Value Stream Mapping has three basic steps; 1) Defining and Analyzing the Current State of a value stream 2) Defining a Future State Map 3) Executing the tactical plan to achieve the Future State.

Documenting the current state of the concerned value stream has always been the first step in Value Stream Mapping. What has been mostly disregarded during this step is re-counting and understanding of how all the key measures are interconnected in making up the system.

The mistake of departing from a focus on value stream system improvements can happen at any of the value stream mapping execution steps. I have already provided the case studies of how this happens during the Current State but what about the Future State and the Execution of Future State achievement.

The most common mistake during the Defining a Future State Map is omitting key value stream inputs. As examples, if the challenge is lead time I have found administration tasks like, work order generation, can take up 50% of the total customer lead time. This key input can become the system constraint. If the challenge is capacity, customer demand or the supply chain, can also be the process constraint. If the challenge is quality, the supply chain can be the cause of significant yield loss. These key inputs may not fit the sometimes used value description of, “something the customer is willing to pay for,” but without carrying out these connected work task transformations the customer described product or service value is unable to meet customer expectations.  

During the execution of tactical plans the mistakes are sociology related. There can be significant resources invested in accumulating the needed process data, analysis by a diverse VSM Team, and experimental related costs during the Current and Future State steps. The value stream mapping process timeline can become exhausting, especially for Department Managers who had agreed upon volunteering some of their key staff. Fires start popping up and managers start to change priorities for their staff. There are now unexpected pressures put on the VSM Team members and they start to focus on what they think as “quick win” solution execution. These quick wins are the limiting process step solutions, probably not resulting in system improvements.

Oddly, keeping the VSM Team attentive on system improvements is not difficult and the approach has a lesser timeline in the achievement of system challenges. The three keys to incorporate are 1) organizational readiness 2) a supportive and knowledgeable leadership team 3) a well trained and experienced Value Stream Mapping Facilitator. Each one of these keys is really a separate blog I will be writing about. Stay tuned.

Lean Teams USA

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