Have you ever wondered about the number of steps that things around you have to go through before acquiring the final shape you see? We’re talking about services, smartphones, furniture, clothing and even food. Everything that surrounds us had to go through some kind of process before coming to us. There’s tons of invisible work a company invests in to secure customers.
These processes usually remain out of the client’s sight and have a direct impact on Lead Time and Cycle Time. Don’t worry, we will explain the jargon later, but for now, keep this in mind: they influence in key points like quality, price and profitability. By tracking the processes, it’s possible to find opportunities for improvement—something you will identify through a (ta-da) Value Stream Mapping (VSM).
Value Stream Mapping: What’s The Point?
A VSM is an essential tool for any company that aims for better outcomes. There’s a bunch of practices that help you to accomplish outstanding results, but none of them are as effective as Lean. It’s okay if you’re not familiar with its concepts, but keep in mind that the VSM is one of the pillars of Lean Philosophy. For further information on this topic, read our Beginners Guide.
A value stream is composed of each step necessary to bring demand from its early stages to its final ones. The role of the VSM is to display all steps required to deliver value to the customer, whether they are external or internal (like in an HR department, where the customers are the other employees). It’s a tool that allows you to see the big picture of your processes and pinpoint everything that can be improved.
When companies of different sizes, markets and contexts decide to implement Lean practices to have better processes, it’s almost indispensable to perform Value Stream Mapping. The VSM is the real compass that will help you visualize and guide your actions throughout any process of development. Through it you will be able to:
- See the flow of your entire chain.
- Identify wastes and their sources.
- Form the foundation of an improvement plan.
- Make flow decisions visible to the entire team.
- Set which actions will be taken to achieve the goals.
It’s fundamental to have a holistic view of your workflow. Only then will things truly evolve. The goal here is to improve everything that can be improved—not just isolated phases of the process. That’s why at the end of the VSM, you’ll always be left with two scenarios: one representing the current state and another representing the future state.
The current state is how your value stream works right now and the future state is the goal to be achieved. The future state is built by identifying wastes of the current state and dropping them to the max. Note that this is cyclical. Whenever you reach your future state, it becomes your current state, so there’s always room for more improvement!
From The Manufacturing World To All Markets
The first version of the VSM was developed in the Toyota Production System (TPS) back in the 40s, but only later transformed into the tool that we know today. The earliest versions of VSMs were quite complex and industry oriented (and it still holds a huge industry interest today). You can see an example of a traditional factory VSM below. Yes, it can be scary, but stick around and you will soon understand how to make this a simple and effective method for you.
All these boxes, symbols and arrows represent specific actions, interactions, people and periods required to deliver a service or a product to the customer. This model is just for your reference, so don’t focus on fully understanding it. Although this is an example of a classic VSM, most markets (mainly services) will have VSMs that look a little simpler than this one.
Note that the VSM term was only popularized in the 90s by different professionals and scholars, such as James Womack and Daniel Jones with the book “Lean Thinking”. Until then, most of the Lean concepts were restricted to factories of mass production. Luckily, for the sake of better processes and business, things changed when Lean and VSM spread to other fields.
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Now, companies of all kinds, regardless of size, can design a VSM to help improve their processes. Any process that generates value can—and should—have its value stream mapped. That’s what we’re going to teach you how to do in the next steps, so come along for the journey.
VSM’s Anatomy: Knowing How It Works
Before jumping into how to design a proper VSM, you’ll need to understand the shape of it. Yes, we’re talking about categories and metrics you’ll find in any Value Stream Mapping. It’s vital to understand each phase of the process clearly. Check out the core elements of any VSM (click to expand the pic):
We also have Takt Time, which is the available amount of time divided by customer demand (something that works thoroughly in repetitive processes when demand is often predictable). For example, for someone who works six hours per day in a call center and takes about 180 calls daily, the Takt Time would be two minutes per call.
However, things change when we talk about dynamic processes that don’t follow patterns. In those cases, you won’t be able to calculate the Takt Time. But that’s okay, the goal here is to have a good understanding of the big picture and the problems you’re trying to solve (and the other mentioned metrics provide this overview). Let’s go to the example.
Roll Up Your Sleeves, It’s Time To Build A VSM!
Now that you’re familiar with its components, let’s learn how to build your VSM. Keep in mind that we’re talking about the current state here, where bottlenecks and wastes must be highlighted in order to be eliminated.
If you feel the need, it’s possible to do a Gemba Walk (a walk through the place where the work happens) to discuss with everyone involved in the process. This way you can better understand the whole process to then put it into the VSM. Any VSM is a collaborative tool that employees from different hierarchical levels can engage in to help to build the most accurate version.
You can follow this trail to begin your VSM:
- Select the process to be mapped.
- Sketch the value stream of it (appoint all of its stages in columns).
- Designate who is responsible for what (everybody in the process).
- How or by which means tasks are done (face to face, emails, apps, etc.).
- Calculate all the metrics (Lead Time, Cycle Time and the Percentage of C&A).
Stand back to analyze it after it’s completed. Don’t be afraid to redraw the VSM if necessary and to talk to the people involved in the process until you get the most accurate representation of it. Let’s study an example to better understand how a VSM is built from scratch to end.
Let’s suppose we’re analyzing the purchase process that happens in a company called ACME. First of all, be aware that this process is only needed for purchases over US$ 5,000. Due to governance, security and internal policies, it’s mandatory to follow this path:
- The employee uses an MS Excel template to fill out the purchase order request.
- The employee emails the request to the financial manager, who checks the budget.
- The team leader reviews the request by email as does the area manager.
- The general manager analyzes the request to then pass it to the procurement analyst.
- The analyst enters the request on the ERP system for the procurement manager.
- The procurement manager finally approves the request through the ERP system.
- The purchase order is finally sent to the supplier and the process is finished.
Now it’s time to put all that information on paper (or on-screen). Following the VSM framework we presented before we can draw this current state VSM (click to expand the pic):
Remember to calculate the key metrics as they’ll be essential to analyze future opportunities for improvement. Also, C&A Percentage plays a vital role in this evaluation. It can be calculated by measuring the percentage of tasks done right the first time. The objective is to detail the entire process flow allowing anyone to easily pinpoint bottlenecks and wastes that can be targeted.
This VSM model can be adapted to multiple scenarios. This is not and should not be the only template you can use, so feel free to tailor it to whatever best suits your needs. Also, plenty of VSMs have both data and material flow combined together, while others map just data flow (mainly office ones). Once the current state is ready, it’s time to project the future state.
Designing The Future
The future state is the desirable stage you set as target according to the data you’ve collected from the current state. To design a feasible projection, it’s recommended to examine the value stream with picky eyes to diagnose areas of waste, overprocessing and bottlenecks that may not be so easy to identify.
To help you out follow this query:
- What is the fundamental problem that needs to be solved?
- What bottlenecks stop or delay the flow of the process?
- What phases of the process have low %C&A? Why?
- What process have overly long Lead Times? Why?
- Is it possible to find redundant phases or activities?
- Are technology tools being used to the best of their abilities?
- Is it necessary to adjust internal policies?
- Are employees performing their task the best they can?
Lean concepts and practices can help you answer such questions in an easier way. Techniques like the 5 Whys (questioning yourself and your team five times until reaching the root cause of an issue) and concepts like Jidoka (the automation with a human touch) provide exceptional approaches to how to solve a problem. VSM works more smoothly when aligned with Lean.
Moving back to the ACME example: once the employees involved in the process studied the current state VSM, it was evident that a lot of changes were needed. There were just too many people included in the process, not to mention the bureaucracy of it and the lack of a better and integrated system to connect every step.
The flow was piling up in several places due to the long, overly complex process to acquire the purchased item. The general manager usually had 16 requests waiting for approval while the procurement manager often had more than 42 requests to review. Both of them were huge bottlenecks due to the fact that they couldn’t handle the massive volume of requests per day.
MS Excel was also a major concern since it was not error-proofing or streamlined. People could easily make mistakes with the archive since it wasn’t clear. Overall, the whole process was too big and unnecessarily bureaucratic. With all this in mind, they designed the future state VSM (click to expand the pic):
Check out the benefits accomplished through the Value Stream Mapping:
- The process involves fewer people, the ones that really matter.
- With only four phases, the steps were cut so the process moved quicker.
- MS Excel was thrown away as well as the requests by email that pile up.
- ACME began to use Pipefy to connect and centralize requests for everyone involved.
Pipefy has error-proofing mechanisms that drastically increased the %C&A. The requests were filled more easily and sent through the platform to the next responsible, allowing anyone to see which stage the request was. Also, all employees were emailed when the request took more than one day to be approved to the next step. Check out the metrics outcome:
- People involved in the process dropped from eight to four.
- Lead Time was remarkably reduced from 9 days to 2.5 days.
- Cycle Time had a significant decrease from 120 min to 55 minutes.
- Percentage of C&A went from 0.5% to 89% (an outstanding success).
The great blast of this VSM was the Percentage of C&A that went from 0.5% to 89% with the combined help of Pipefy, the exclusion of MS Excel and the decline of people involved in the process. Also, the future state shows that there will be no more than two requests queued up before the procurement manager and buyer. Growth in all aspects!
The Journey for Continuous Improvement
Once the future state is set it is time for change. The first step is to create a PDCA (or action plan) to implement all the mapped adjustments in the process. The easiest way to do that is by splitting up the future state into smaller pieces and improving one segment at a time.
The changes will happen phase by phase and may take a while according to the process you’ve mapped. But rest assured that when everything is up-to-date and streamlined, you’ll have the greatest version of the process (at least for that moment). However, the cycle of improvement doesn’t end here. It’s a never-ending effort that should be intrinsic to the company’s culture.
Keep in mind that this is a long journey of continuous improvement or, in Lean terms, Kaizen, so when you reach your future state, it automatically becomes your current state.
Always ask yourself: is it possible to deliver more value in a better way? You’ll answer in the affirmative the majority of the time. So why not always strive for the best? Lean tools such as Value Stream Mapping help you and your organization accomplish a state of balance that truly transforms the way your whole operation works, constantly aiming for continuous improvement.