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Value Stream Mapping: From Tool to Management Practice

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Recorded webinar: http://slidesha.re/1sKe9P7

Recorded webinar: http://slidesha.re/1sKe9P7

Subscribe: http://ksmartin.com/subscribe

Purchase the book: http://bit.ly/VSMbk

Too many organizations today suffer from silo-centric behavior and intra-organizational conflict. Yet most don’t understand what’s holding them back from achieving outstanding performance.

Value Stream Mapping (VSM), popularized in Mike Rother and John Shook’s landmark book Learning to See, is a highly effective method for improving performance across an organization. However, VSM is commonly misunderstood, misapplied and under-utilized. Properly executed, value stream mapping is much more than an operations design tool. It also results in a more engaged and knowledgeable leadership team; surfaces hidden cultural and organizational issues; and aligns values, resources, goals and priorities.

In this webinar, you’ll learn how to

* Use value stream mapping as an organizational transformation tool
* Properly scope and plan for a value stream mapping activity
* Obtain leadership consensus about the future state design
* Create and execute a highly effective Value Stream Transformation Plan

Published in: Business, Education

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  • 1. Value Stream Mapping: From Tool to Management Practice Webinar with Gemba Academy April 23, 2014
  • 2. Housekeeping • Questions/Polls – Please ask them! – Use Webinar Panel Question Box, or – Email to ron@gembaacademy.com • Slides & Audio – Enlarge screen as desired – Master volume on computer • Recorded Version – This webinar will be available online within 3 days – Presentation notes will be shared in PDF format – An email will be sent once it’s ready • Live Tweet your questions and comments with #GembaWebinar
  • 3. About Gemba Academy • Producers of Online & DVD Based Lean & Six Sigma Training • 500+ Videos (and growing) • Subscriptions available for Individuals & Organizations
  • 4.  Coach / Facilitator / Consultant / Trainer: Lean transformation & business performance improvement in all industries.  Teacher: University of California, San Diego  Author & Speaker: Karen Martin, President The Karen Martin Group, Inc. 4 www.ksmartin.com/subscribe 2013 Shingo Prize winner!
  • 5. www.ksmartin.com/VSM
  • 6. You will learn… • Use value stream mapping as an organizational transformation tool • Properly scope and plan for a value stream mapping activity • Obtain leadership consensus about the future state design • Create and execute a highly effective Value Stream Transformation Plan
  • 7. © 2014 The Karen Martin Group, Inc. Wherever there is a request and a deliverable, there is a value stream.
  • 8. Value Stream Defined Value Stream: All of the activities required to transform a customer request into a good or service. 8 First defined in The Machine That Changed the World, James Womack, Daniel Jones, & Daniel Roos, 1990. Process ProcessProcess Customer Request Customer Receipt
  • 9. Value Stream Mapping’s Roots • Value • Value Stream • Flow • Pull • Perfection 1996
  • 10. Value Stream Mapping Progression Mike Rother & John Shook, 1999 Beau Keyte & Drew Locher, 2004 Karen Martin & Mike Osterling, 2014
  • 11. Why We Wrote the Book • Too many organizations use VSM solely as a work design exercise • Too many organizations use VSM to make tactical vs. strategic decisions • Too many organizations map with an inappropriate team—or no team at all • Too many maps are process maps or contain no metrics • Too many organization miss out on the behavior and culture shifting benefits of value stream mapping
  • 12. Which do you prefer? OR
  • 13. 13 1 Information Flow 2 Work Flow 3 Timeline Basic Current State Value Stream Map: 3 Sections
  • 14. 14 Visualize the entire cycle of value delivery on a single sheet of paper © 2014 The Karen Martin Group, Inc. 14
  • 15. Value Stream Performance Projected Results Metric Current State Projected Future State Projected % Improvement Lead Time (PO to shipping) 17 months 7.5 months 56% Process Time 600 hours 450 hours 25% (22 FTEs) Rolled % Complete & Accurate 0% 21% > 2,000% On-time delivery 13% 90% 592% # Internally-produced Change Orders 25/project 12/project 52% Freed Cash flow $25M per year
  • 16. Common Failing: Approaching VSM Mechanistically
  • 17. Proper Value Stream Mapping Builds Your Organizational Muscles
  • 18. Value Stream Mapping is a Strategic, Leadership-Heavy Activity
  • 19. Value Stream Maps: Strategy Before Tactics Where am I? Where do I want to go? I-80 option I-40 option I-70 option Which route should I take? ? ? ?
  • 20. © 2014 The Karen Martin Group, Inc. 20 Executing Transformation Plan Value Stream Mapping Making Specific Improvements
  • 21. © 2014 The Karen Martin Group, Inc. 21 Value Stream Mapping Benefit: Seeing the Whole 21 Value Stream Mapping enables a mapping team to get ABOVE the work
  • 22. VSM Aids in Developing Systems Thinking 22 System Efficiency = Optimal Value Stream Performance Individual Efficiency = Sub-optimization
  • 23. © 2014 The Karen Martin Group, Inc. VSM Helps Break Down Functional Silos 23 Function FunctionFunctionFunction Core Value Stream Support Value Stream Support Value Stream Customer Customer Customer
  • 24. Work: Degrees of Granularity Value Stream Process Process Process Step StepStep 24 Macro Perspective • Define strategic direction (“what”) • Heavy leadership involvement • Value Stream Mapping Micro Perspective • Identify the tactical “how” • Heavy frontline involvement • Metrics-Based Process Mapping
  • 25. Prepare Understand Current State Design Future State Develop Transformation Plan Execute Transformation Plan Three Consecutive Days 4 Weeks Prior to Mapping Following Mapping And Repeat Value Stream Mapping Activity Phases and Timing 25
  • 26. 1 2 1 3 2 4 3 5 4 5 1 6 2 7 3 8 4 9 5 10 1 2 1 3 2 4 3 5 4 1 2 3 4 Date: Date:engagement, financials, lead time, safety records, etc. effectiveness, market trends, customer satisfaction, employee Signature: Date: Relevant Data Agreement Examples: work volume & volume variation, process quality & Executive SponsorWhat data is required to understand relevant current state isues. Signature: Signature: How will the business, internal and external customers, and Function internal and external suppliers benefit from value stream improvement? SMEs that may not be needed full time Always a nice touch; keeps the team from wandering On-site, ample wall space, quiet/private location Benefits to Customers & Business On-Call Support Increase <defined metric> from X to Y (Z% improvement). Reduce <defined metric> from X to Y (Z% improvement). Measurable Target Condition What's driving the need for improvement? Function Leadership-heavy Current State Problems & Business Needs Mapping Team Boundaries & Limitations Improvement Time Frame What is the team NOT authorized to change? Typically 3-6 months Last Step Task on last process block Logistics Coordinator Not always needed Aids in consensus building and organizational learning. Typically the last hour of the day. First Step Task on first process block Briefing Dates & Times Meals Provided Briefing Attendees ** required *optional List the the people that are required to attend the briefings (**) and those whose attendance is optional (*). Demand Rate Trigger How many times is this done per wk, qtr, mo, or yr? What initiates the process? Value Stream Mapping Charter Scope Accountable Parties Logistics Required: typically VP or C-level If needed—often director or manager level Specific Conditions What circumstances are included and excluded? (e.g., type of customer, geographic location, etc.) Value Stream Champion Value stream being improved Executive Sponsor Value Stream Event Dates & Times 3 days typically; consecutive is best; 6 hrs per day minimum; 7 or 8 hrs is best Required: skilled, objective person leading the activity Base-camp Location Facilitator Name Name FacilitatorValue Stream Champion Contact Information Contact Information Charter: Critical planning, communication, and consensus-building tool Available at www.ksmartin.com/vsm-charter
  • 27. Accountable Parties • Executive Sponsor – Typically VP or higher – Authority over significant portion of value stream (or strong relationship w/ peer group) – Ultimately accountable for results – Must attend briefings • Value Stream Champion – Oversee significant portion of the value stream – Heavily engaged in entire value stream transformation (own the transformation plan) – Member of mapping team – In small companies or those just starting out, the VS Champion and Exec Sponsor could be the same person. • Facilitator – Objective; no “skin in the game” – Skilled in both mapping/improvement mechanics, and high-level team dynamics.
  • 28. Where should the “fenceposts” be? Function Activity Marketing Generates sales leads Sales Calls on and qualifies customers Customer Submits RFQ to sales Sales Reviews RFQ Estimating Generates quote Sales Approve quote Customer Accepts quote; submits a PO Sales Approves PO Customer service Creates SO; compiles spec package EE/ME design Designs product; generates BOM Customer Approves design EE/ME design Forwards design to SW dev Software Dev Writes code Purchasing/Planning Releases WO; schedules production Supplier (external) Delivers materials Production Manufactures & ships product Customer Installs equipment Field service Conducts 90-day follow-up
  • 29. Value Stream Scoping Diagram Defining Specific Conditions Golden State Equipment, Inc. Capital Equipment Catalog Configure to order Engineer to order Custom hardware Custom software Both New Product Development Spares & subassemblies Catalog Engineer to order 29
  • 30. © 2014 The Karen Martin Group, Inc. 30 Who should be on the team, be on call, and attend briefings?
  • 31. Briefing #1 31 Purpose: Reduce resistance to future state design
  • 32. Briefing #2 32 Purpose: Build consensus around future state design
  • 33. Briefing #3 33 Purpose: Gain commitment re: improvement priorities, ownership, resources needed, and timeline.
  • 34. Socializing the Charter • Conversation, not merely an email attachment. • To the entire workforce who will be affected by change. • Adjust the charter if new discoveries or concerns surface.
  • 35. © 2014 The Karen Martin Group, Inc. 35 Customer 1 Process 3 Function E LT = 0.5 days PT = 30 mins. %C&A = 95% 4 4 10 mins. 1 days 120 mins. 2 days 30 mins. 0.5 days Total LT = 3.5 days Total PT = 160 mins. Activity Ratio = 9.5% Rolled %C&A = 89.3% Process 2 Function C LT = 2 days PT = 120 mins. %C&A = 95% 3 3 ABC Technology, Inc. Future State Value Stream Map Name of Value Stream Being Mapped Demand Rate = XX / Year Name of Value Stream Champion Mapping Date IT-1 IT-2 5 items Process 1 Function A LT = 1 days PT = 10 mins. %C&A = 99% 5 2 1 items 10 items Standard work Modified approvals IT interface Cross- train Cross- train Standard work Error proof Basic Value Stream Map: Future State
  • 36. Value Stream Performance Improvement Projected Results Metric Current State Projected Future State Projected % Improvement Lead Time (PO to shipping) 17 months 7.5 months 56% Process Time 600 hours 450 hours 25% (22 FTEs) Rolled % Complete & Accurate 0% 21% > 2,000% On-time delivery 13% 90% 592% # Internally-produced Change Orders 25/project 12/project 52% Freed Cash flow $25M per year
  • 37. J F M A M J J A S O N D 1 PROJ Steve 0% 2 PROJ Steve 100% 3 KE Bruce 50% 4 KE Bruce 50% 5 PROJ Jessie 100% 6 PROJ Sally 100% 7 KE Jessie 0% 8 PROJ Mike 100% 9 JDI Jessie 50% 10 PROJ Steve 80% 11 PROJ Steve 10% 12 PROJ Bob 0% 13 JDI Jessie 100% 14 PROJ Marcia 25% 15 PROJ Tom 30% 16 KE Marcia 50% 17 PROJ Sally 50% Value Stream Champion Sally Brooks Value Stream Mapping Facilitator Karen Martin Value Stream Transformation Plan Value Stream Product Y Scheduled Review Dates Executive Sponsor Jim McMahon 2/10 + bi-weekly Thu 10 am Socialize new criteria for engineering, quality, & purchasing involvement. Date Created 1/5/2014 Kaizen Burst # Improvement Objective / Hypothesis Proposed Countermeasure Exec. Method * Owner Planned Timeline for Execution Status Create procedure/train GS service engineers to properly feedback suggestions to engineering. Create bulletin re: standardized headplate design to eliminate flange orientation. Create visual "milestone" timeline to educate customers. Define technical info needed from customer and when. Signature: Signature: Signature: Revise standard Ts & Cs to incorporate time limit for customer approval for final payment. Error proof P.O. info (correct specs, ship to, etc.); notify customer re missing info and drop dead date. Create criteria for LOI acceptance. Add initial project release in SF. Resocialize existing customer-requested CO procedure. One piece engineering flow Agreement Executive Sponsor Value Stream Champion Value Stream Mapping Facilitator * Execution Method = JDI (Just-do-it), KE (Kaizen Event), or Proj (Project) Move to one release (pump & systems) Date: Date: Date: Create commodity management team & supplier SLAs. Standardize WPS/PQR from suppliers. Revise proposal template to limit time to 4 revisions. Create pull signal for invoicing. Create trigger to release (BOMs) for purchase. ConfidentialContentRemoved
  • 38. Who? Accountability Tool Sr. Leaders “What has to happen” Hoshin Plan, A3, Value Stream Mapping Frontlines “How it will happen” Kaizen Events, Just-do-its, and Projects Improvement Roles StrategicTactical Middle Management Tactical
  • 39. Physically Post the Future State Map Physically Post the Transformation Plan
  • 40. And Repeat…
  • 41. Who Owns the Value Stream? 41
  • 42. Karen Martin, President 858.677.6799 ksm@ksmartin.com For Further Questions Blog & newsletter: www.ksmartin.com/subscribewww.bitly.com/VSMbk www.ksmartin.com/VSM