Value Stream Mapping: Talk with Omaha Lean User Group

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These are the slides for the talk I gave on Tuesday, May 6, 2014 to the Omaha Lean User Group on my new book, Value Stream Mapping (http://www.bitly.com/VSMbk).

These are the slides for the talk I gave on Tuesday, May 6, 2014 to the Omaha Lean User Group on my new book, Value Stream Mapping (http://www.bitly.com/VSMbk).

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  • 1. Value Stream Mapping: From Tool to Management Practice Omaha Lean User Group May 6, 2014
  • 2.  Consultant / Facilitator / Coach: Lean transformation & business performance improvement in all industries.  Teacher: University of California, San Diego  Author & Speaker: Karen Martin, President 2 www.ksmartin.com/subscribe 2013 Shingo Prize winner!
  • 3. © 2014 The Karen Martin Group, Inc. Wherever there is a request and a deliverable, there is a value stream.
  • 4. Value Stream Defined Value Stream: All of the activities required to transform a customer request into a good or service. 4 First defined in The Machine That Changed the World, James Womack, Daniel Jones, & Daniel Roos, 1990. Process ProcessProcess Customer Request Customer Receipt
  • 5. Value Stream Mapping’s Roots • Value • Value Stream • Flow • Pull • Perfection 1996
  • 6. Work: Degrees of Granularity Value Stream Process Process Process Step StepStep 6 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
  • 7. Value Stream Mapping Progression Mike Rother & John Shook, 1999 Beau Keyte & Drew Locher, 2004 Karen Martin & Mike Osterling, 2014
  • 8. 8 1 Information Flow 2 Work Flow 3 Timeline Basic Current State Value Stream Map: 3 Sections
  • 9. © 2014 The Karen Martin Group, Inc. 9 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
  • 10. Which do you prefer? OR
  • 11. Example of Value Stream Improvement: You Can Achieve HUGE Gains 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
  • 12. Proper Value Stream Mapping Builds Organizational Muscles
  • 13. © 2014 The Karen Martin Group, Inc. 13 Common Failing: Approaching VSM Mechanistically
  • 14. 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? ? ? ?
  • 15. Value Stream Mapping is a Strategic, Leadership-Heavy Activity
  • 16. Who? Accountability Practice / Tool Sr. Leaders “What has to happen” Hoshin Planning, Value Stream Mapping Frontlines “How it will happen” Kaizen Events, Just-do-its, and Projects Improvement RolesStrategicTactical Middle Management
  • 17. © 2014 The Karen Martin Group, Inc. 17 Value Stream Mapping Benefit: Seeing the Whole 17 Value Stream Mapping enables a mapping team to get ABOVE the work
  • 18. 18 Work is More Similar Than Not… …When Viewed from a Macro Perspective
  • 19. VSM Aids in Developing Systems Thinking 19 System Efficiency = Optimal Value Stream Performance Individual Efficiency = Sub-optimization
  • 20. © 2014 The Karen Martin Group, Inc. VSM Helps Break Down Functional Silos 20 Function FunctionFunctionFunction Core Value Streams Support Value Streams Support Value Streams Customer Customer Customer
  • 21. 21
  • 22. 22 Value Stream Maps help visualize problems
  • 23. Value Stream Maps Help Visualize Problems 23
  • 24. 24 Visualize the entire cycle of value delivery on a single sheet of paper © 2014 The Karen Martin Group, Inc. 24
  • 25. Prepare Understand Current State Design Future State Develop Transformation Plan Execute Transformation Plan Three Consecutive Days 4-6 Weeks Prior to Mapping Following Mapping And Repeat Value Stream Mapping Activity Phases and Timing 25
  • 26. Prepare Understand Current State Design Future State Develop Transformation Plan Execute Transformation Plan Three Consecutive Days 4-6 Weeks Prior to Mapping Following Mapping And Repeat Value Stream Mapping Activity Phases and Timing 26
  • 27. 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 Critical planning, communication, and consensus-building tool Available at www.ksmartin.com/charter
  • 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. Prepare Understand Current State Design Future State Develop Transformation Plan Execute Transformation Plan Three Consecutive Days 4-6 Weeks Prior to Mapping Following Mapping And Repeat Value Stream Mapping Activity Phases and Timing 30
  • 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. Always Paper & Post-its First!
  • 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. 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 Available at www.ksmartin.com/vsm-transformation-plan
  • 37. Prepare Understand Current State Design Future State Develop Transformation Plan Execute Transformation Plan Three Consecutive Days 4-6 Weeks Prior to Mapping Following Mapping And Repeat Value Stream Mapping Activity Phases and Timing 37
  • 38. Outpatient CT Scans: Current State Value Stream Map
  • 39. Outpatient CT Scans: Future State Value Stream Map
  • 40. Outpatient Imaging Value Stream Improvement Metric Current State Projected Future State Projected % Improvement Timeline Lead Time 4.0 days 1.3 days 67.5% Timeline Process Time 59 minutes 48 minutes 18.6% Activity Ratio 3.1% 7.6% 145.2% Rolled % Complete & Accurate 30.5% 65.0% 113.1%
  • 41. And Repeat…
  • 42. But wait! Who Owns the Value Stream??? 42
  • 43. 43 Karen Martin, President 858.677.6799 @karenmartinopex Blog & newsletter: www.ksmartin.com/subscribe