Value Stream Mapping (VSM) is an important tool to reduce lead time in production processes and services. Therefore analysis of value streams significantly contributes to elimination of waste in processes or makes waste visible, respectively. For conducting analysis of value streams it is import that all involved employees have a clear picture of definitions, terms and goals for value stream analysis first.
What is a value stream? A value stream represents all activities that are necessary to provide products or services to the customer. Therefore a value stream extends from suppliers over manufacturing (or service organization) up to the (end) customer. Naturally, the value stream consists of “value added” and “non value added” activities. It may surprise that the portion of “non value added” activities exceeds “value added” activities by far. On world class level in electronic manufacturing “value added” activities represent only 5% of the entire manufacturing process. In average, not highly optimized processes, the portion of “value added” activities is as small as 0.5% – 1.0%. Only detailed analysis of value streams can reveal these low portions of “value added” activities. On the other hand value stream analysis do provide a totally different view on the performance of a company and the potentials for performance improvements.
Pic 1: Lead time seperated by “value added” and “non value added” activities
Pic 1 illustrates the relationship of “non value added” (NVA) and “value added” (VA) activities in a simple way. For completion, the “essential non value added” (ENVA) activities were added. Typically ENVAs are handled separately in VSM events. For example, such ENVAs may be regulatory requirements which do not add features to the product or service.
Also shown in Pic 1 is the classic focus on VA, production or process engineers usually have. This may be scrap reduction, improvement of machine performance and many things more. These are important and necessary improvements which lead to cost reduction in production. On the other hand, these improvements only affect a very small portion of the entire value stream. It would be very worthwhile also to focus on the other 95% – 99% of the value stream that represent the “non value added” activities of the production or service processes.
To determine the VA and (E)NVA part of the value stream, it must be mapped. The result of mapping the value stream is the Value Stream Map. Beside the process flow, the VSM contains all current data for each single production process step (inventory, work in progress, cycle times, number of operators, … ). In addition, also the information flow is mapped. Only the holistic view of the material and information flow will provide goal oriented and breakthrough improvements.
Creating the VSM is only one step in the direction of successful improvements and an optimized value stream. Typically, these improvements can only be accomplished in a cross functional team. Many stakeholders will be involved and may have very different opinions in the beginning. A common vision of the approach and the goals for improvements must be created. Therefore a VSM event should be conducted in 8 consecutive steps as described in Pic 2.
Pic 2: The 8 Steps of continuous improvement via Value Stream Mapping
Initially, strategic business requirements should be defined, explained and agreed with all stake holders of the VSM event. In many cases it is not obvious to all participants of the VSM event why reduction of lead time, reduction of waste and work in progress, is necessary to achieve the desired goals. For example, a reduction of lead time by 30% – 50%, which is possible to achieve in several improvement steps, will result into following improvements:
- Saving of floor space in production and warehouse: 50-70%
- Improvement of delivery reliability: 30-45%
- Increasement of productivity: 20-40%
- Reduction of stock: 50-70%
In the next step, the scope for the VSM event should be defined. A limitation of the scope to a single product or service family is reasonable to keep the complexity of the VSM event under control. In general, only comparable products or services can be improved with uniform improvement measures. In the following steps the current VSM and future VSM will be created. Important will be not to plan very large improvement steps, because these improvements have to be implemented in a running production environment. Typically, these improvements should be accomplished in a 2-3 months time frame.
When the implementation plan is created, a VSM-Manager should be assigned. The VSM-Manager should be empowered to implement the improvement measures independent from possible resistance by single departments or functions. The role of the VSM-Manager is also to communicate all planed improvements throughout the organization. Only an open and honest communication of all planed improvements and the resulting consequences will lead to acceptance in the organization. Not before all stakeholders are committed to the entire improvement plan, starting with improvement projects and Kaizens is recommended. Of course, improvement projects and Kaizens are the ultimate goal of the VSM event.
When all projects and Kaizens are closed and the effectiveness of the VSM event is proved, successes should be celebrated and participants of the VSM event should be awarded. This will lead to high motivation of the employees for the next following VSM events.