Value Stream Mapping - Getting Quantitative Value from the Method

Value stream mapping (VSM) has been referred to as the language of lean.  The book Learning to See became an overnight sensation and people quickly began filling walls with maps.  Those in services also found they could map complex processes that cut across departments, even in long cycle technical processes like product development.  Often, maps of non-routine processes cannot include a lot of precise metrics making post-it notes with arrows enough to visualize the flow.  In the diagrams, we show swim lanes by function and the process unfolding over time.  As a result, we can, for example, visualize what each function is doing at a point of time, and it becomes clear in the current state that downstream functions like manufacturing have little input into the product development concept—a powerful insight.

There is no question that VSM is a powerful tool for understanding how material and information flow from point A to point B and allow us to visualize the waste.  Learning to See teaches that we should always develop a future state VSM which provides a vision of where we want to go.  However, there are important questions often missed in how we apply VSM:

1. What is the purpose?
2. Who is engaged and accountable?
3. How do we drive to the future state in an effective and sustainable way?
4. What does the organization learn from the experience?

What is the Purpose?

Too often value stream mapping is viewed as a technical activity to identify and eliminate waste.   This is a complete misunderstanding of the methodology.  Value stream mapping is a tool to help the right group of people visualize the current process and come to agreement on a future state to serve a specific purpose.

There can be many strategic purposes for value stream mapping.  For example, reducing lead time can contribute to improving customer responsiveness, allowing a bundle of products to arrive together at the right time (e.g., all the cabinets for a new kitchen), and reducing holding costs of inventory.  Another goal might be flexibility in making the right products at the right time in the right amount when there are many part numbers.  Or, the goal might be to reduce waiting time of customers to improve customer satisfaction.  The strategic purpose should be clearly defined at the start of the VSM activities.

The value stream to be improved can be defined based on the purpose, which will lead to the key stakeholders who should be engaged.  This should not be for a generic value stream (e.g., how we develop new products), but for a specific value stream (e.g., we are about to develop the next generation hand held spot welder). 

Who is engaged and accountable?

We need representatives from all the major functions or departments in the value stream.  These are the people responsible for the work in each step.  If the value stream extends to customers and suppliers, we may want to include them too.  Support staff like finance and quality as well as higher-level decision makers might also need to be included. These people need to be pulled together for a facilitated session (normally 2-4 days) to develop a map of the current condition, the future state vision, and an action plan for implementation.

The reason for engaging these people is twofold.   First, they collectively will understand the current condition from a variety of perspectives. 

Second, through the process of collecting the information and developing the future state, they will come to agreement on a shared vision and begin to take ownership. What we see repeatedly is that developing a realistic future state involves people imagining new ways of working that, in the current condition, do not seem possible.  This development also results in the team members making commitments to each other. 

In a past blog post, we discussed how Solar Turbine developed current state and future state value streams maps to develop a new gas to electric power generator.  Sales had promised a delivery date for the new technology which was not achievable with the current way of developing new products.  Many changes in the future state enabled Solar to achieve the shorter lead time needed by Sales.

For example, a common bottleneck was getting iron castings needed to make prototype machined parts.  In the current state, it became clear that all the castings were ordered at once as a large batch which overwhelmed the casting supplier (represented on the VSM team).  A future state vision was crafted by engineering who agreed to release part designs as they became confident they would not change, purchasing who agreed to send out a series of smaller purchase orders for these parts, IT who agreed to change the computer system to allow these partial purchase orders, and the supplier who agreed to expedite these orders as they came in.  All these people made commitments and needed to be accountable.

How do we drive to the future state in an effective and sustainable way?

The future state is often a great vision, but it is not reality.  In fact it can be viewed as a challenge.  “At a big picture level this is the value stream we are challenging ourselves to achieve.”  Executing toward the vision will continually reveal new obstacles that were not anticipated and, unless the people engaged are willing and able to identify and creatively innovate to overcome these obstacles, the future state will not be achieved.  In other words, rather than “implement” the future state, we experiment our way to the future state through incremental cycles of Plan-Do-Check-Act (PDCA). 

Solar Turbine’s future state map for developing a higher power turbine did not become reality until the core team that did the mapping began meeting each week in a room designated for the project (see obeya).   There were powerful concepts in the future state and a clear timeline for the program, but as they actually worked in each stage, they discovered a wealth of obstacles to be addressed in order to progress.  For example, in the obeya, they established metrics for timing, quality and cost that drove weekly PDCA cycles of improvement.  Each week many red items appeared that needed to be addressed. The result of strong leadership and learning their way to the future state was on-time, on budget, and a successful new product.

What does the organization learn from the experience?

The Solar Turbine example was actually one of two learning pilots.  They learned many things from this experience.

1. Need for Strong Leadership – The project manager role was historically managing timing and cost.  In this case, the manager acted more like a Toyota chief engineer and drove improvement, keeping the group focused week by week on what they did, what they learned, and their plan for the next week.
2. Team Building Power of VSM – It became a norm to launch every new product program with a VSM session for team building and working to make each program better then the last.
3. The Importance of Weekly Meetings and Visual Management – The obeya became the standard format for pacing the development process and ongoing PDCA.
4. The Need for Accountability – Each function had a representative on the team responsible for updating their information on the wall, reporting out on problems they were facing, and resolving those problems. 

5. They Had a Long Way to Go – Rather than celebrate their new lean state, they realized the great opportunities they had to improve.  They were beginners and have been improving for almost a decade and still feel like beginners.

Think of the future state VSM as a 30,000 foot sketch in which the details get filled in as the improvement process progresses.   Mike Rother, author of Learning to See, argues that each process owner along the map should be following the same improvement process.  In this way, the target conditions reflected in the future state vision translate to aligned PDCA experiments at all levels.  The result is collective activity to learn your way to a desired future state.

Dr. Jeffrey Liker is professor of industrial and operations engineering at the University of Michigan and author of The Toyota Way.  He leads Liker Lean Advisors, LLC and his latest book (with Gary Convis) is The Toyota Way to Lean Leadership.