Value Stream Transformation:
Achieving Excellence through Leadership Alignment
and Holistic Design

CONNECT
January 8, 201...
Why Value Stream Mapping?
Why Now?

© 2014 The Karen Martin Group, Inc.

To order from Amazon: www.bitly.com/VSMbk
For mor...
Value Stream Mapping’s Roots
•
•
•
•
•

Value
Value Stream
Flow
Pull
Perfection
1996

© 2014 The Karen Martin Group, Inc.
...
Value Stream Defined
Value Stream: All of the activities required to
transform a customer request into a good or service.
...
Silo-Centric vs. Value Stream Thinking
Function

Function

Function

Function

Support Value Stream
Value stream
segment

...
Value Stream Mapping’s Roots

Mike Rother & John Shook
1999

Beau Keyte & Drew Locher
2004

Whenever there is a product fo...
Value Stream Mapping: Common Failings
•
•
•
•
•
•
•

Using the mapping process solely as a work design exercise
Using the ...
Value Stream Thinking: Strategy Before Tactics
Where am I?
Where do I want
to go?
Which route
should I take?
I-80 option

...
Value Stream Mapping Benefit:
Reaching Leadership Consensus

© 2014 The Karen Martin Group, Inc.

9
Value Stream Mapping enables a
mapping team to get ABOVE the work
© 2014 The Karen Martin Group, Inc.

10
VSM Promotes Systems Thinking

Individual Efficiency = Sub-optimization

System Efficiency = Optimal Value Stream Performa...
Work: Degrees of Granularity
Macro
Perspective
•

•
•

Value
Stream

Define strategic
direction (“what”)
Heavy leadership
...
Work: Degrees of Granularity
Order Fulfillment Value Stream
Order
Fulfillment

Strategic
Value-stream
Perspective
Quote

T...
Value Stream Mapping:
Visualize your Entire Operation on a Single Sheet of Paper

© 2014 The Karen Martin Group, Inc.

14
Basic Value Stream Map:
3 Sections
ABC Technology, Inc.
Current State Value Stream Map
Name of Value Stream Being Mapped
D...
Basic Value Stream Map:
Future State
ABC Technology, Inc.
Future State Value Stream Map
Name of Value Stream Being Mapped
...
Basic Value Stream
Future State Performance Metrics
Current State

Projected
Future State

Projected
% Improvement

9.5 da...
Value Stream
Mapping
Executing
Transformation
Plan

© 2014 The Karen Martin Group, Inc.

Making
Specific
Improvements

18
Value Stream Mapping Activity
Phases and Timing
Repeat
Prepare

4 Weeks Prior
to Mapping

© 2014 The Karen Martin Group, I...
Charter: Critical planning, communication, and consensus-building tool
Value Stream Mapping Charter
Scope

Accountable Par...
Charter: Critical planning, communication, and consensus-building tool
Value Stream Mapping Charter
Scope

Accountable Par...
Charter: Critical planning, communication, and consensus-building tool
Value Stream Mapping Charter
Scope

Accountable Par...
Charter: Critical planning, communication, and consensus-building tool
Value Stream Mapping Charter
Scope

Accountable Par...
Value Stream Scoping Diagram
Defining Specific Conditions
Catalog

Configure
to order

Custom
hardware

Engineer
to order
...
Where should the “fenceposts” be?
Function

Activity

Marketing
Sales

Calls on and qualifies customers

Customer

Submits...
Who should be on the team, serve on-call,
and attend daily briefings?

© 2014 The Karen Martin Group, Inc.

26
Charter: Critical planning, communication, and consensus-building tool
Value Stream Mapping Charter
Scope

Accountable Par...
Create the Current State Map
Prepare

1.
2.
3.
4.
5.

Understand
Current State

Design
Future State

Develop
Transformatio...
Effective Way to Visualize Relationships between
IT Systems and the Operation

© 2014 The Karen Martin Group, Inc.

29
Create the Future State Map
Prepare

Understand
Current State

Design
Future State

Develop
Transformation
Plan

Execute
T...
How will you realize the future state?
Prepare

Understand
Current State

Develop
Transformation
Plan

Design
Future State...
Where the rubber meets the road…
Prepare

Understand
Current State

Design
Future State

Develop
Transformation
Plan

Exec...
And then repeat…

33
Current State Value Stream Map
Outpatient Imaging Services
Pre-register
Patient

Customer Demand:
15 patients perDay
(Takt...
Future State Value Stream Map
Outpatient Imaging Services
Standard
Work

Work
Balance

Customer Demand:
15 patients perDay...
Outpatient Imaging
Value Stream Improvement Results
Current
State

Improved
State

%
Improvement

LT

32.5 hrs

11.3 hrs

...
Current State Value Stream Map
Purchasing — Non-repetitive purchases less than $5,000
Supplies Purchasing - Current State ...
Future State Value Stream Map
Purchasing — Non-repetitive purchases less than $5,000
Supplies Purchasing - Future State VS...
Purchasing Process
Projected Results
Current
State

Projected
Future State

%
Improvement

28.4 days

12.3 days

56.7%

65...
Value Stream Mapping:
As Much Art as Science

© 2014 The Karen Martin Group, Inc.

40
Available Now!

To order from Amazon: www.bitly.com/VSMbk
For more information: www.ksmartin.com/VSM
© 2014 The Karen Mart...
For Further Questions
Karen Martin, President
7770 Regents Road #635
San Diego, CA 92122
858.677.6799
ksm@ksmartin.com
Blo...
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Value Stream Transformation: Achieving Excellence through Leadership Alignment and Holistic Design

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To purchase the book: http://bit.ly/VSMbk

These are slides from a talk given on 1/8/14 in San Diego, California at SME Connect's Operations Roundtable.

Too many organizations today suffer from silo-centric behavior and intra-organizational conflict. And yet most don’t understand what’s holding them back from achieving outstanding performance. This is where Karen Martin’s new book Value Stream Mapping comes into play.

Value stream mapping can unleash the full potential of an organization and deliver greater customer value, increased profit margins, and create fulfilling work environments.

In this talk, Karen discussed how to:

• Prepare and engage your leadership team in the transformation process
• Gain a deep understanding about your current work systems and the related barriers to delivering value
• Design a future state that enables outstanding performance on all fronts
• Adopt a new design and lay the foundation for continued improvement

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Value Stream Transformation: Achieving Excellence through Leadership Alignment and Holistic Design

  1. Value Stream Transformation: Achieving Excellence through Leadership Alignment and Holistic Design CONNECT January 8, 2014
  2. Why Value Stream Mapping? Why Now? © 2014 The Karen Martin Group, Inc. To order from Amazon: www.bitly.com/VSMbk For more information: www.ksmartin.com/VSM 2
  3. Value Stream Mapping’s Roots • • • • • Value Value Stream Flow Pull Perfection 1996 © 2014 The Karen Martin Group, Inc. 3
  4. Value Stream Defined Value Stream: All of the activities required to transform a customer request into a good or service. Process Customer Request Process Process Customer Receipt First defined in The Machine That Changed the World, James Womack, Daniel Jones, & Daniel Roos, 1990. © 2014 The Karen Martin Group, Inc. 4
  5. Silo-Centric vs. Value Stream Thinking Function Function Function Function Support Value Stream Value stream segment Core Value Stream Value stream segment Support Value Stream © 2014 The Karen Martin Group, Inc. 5
  6. Value Stream Mapping’s Roots Mike Rother & John Shook 1999 Beau Keyte & Drew Locher 2004 Whenever there is a product for a customer, there is a value stream. The challenge lies in seeing it. © 2014 The Karen Martin Group, Inc. — Mike Rother & John Shook, Learning to See 6
  7. Value Stream Mapping: Common Failings • • • • • • • Using the mapping process solely as a work design exercise Using the map to make tactical improvements Creating maps but taking no action Mapping with an inappropriate team—or no team at all Creating value stream maps during a kaizen event Creating maps with no metrics Mapping without a team charter or not socializing it © 2014 The Karen Martin Group, Inc. 7
  8. Value Stream Thinking: Strategy Before Tactics Where am I? Where do I want to go? Which route should I take? I-80 option © 2014 The Karen Martin Group, Inc. ? ? ? I-40 option I-70 option 8
  9. Value Stream Mapping Benefit: Reaching Leadership Consensus © 2014 The Karen Martin Group, Inc. 9
  10. Value Stream Mapping enables a mapping team to get ABOVE the work © 2014 The Karen Martin Group, Inc. 10
  11. VSM Promotes Systems Thinking Individual Efficiency = Sub-optimization System Efficiency = Optimal Value Stream Performance © 2014 The Karen Martin Group, Inc. 11
  12. Work: Degrees of Granularity Macro Perspective • • • Value Stream Define strategic direction (“what”) Heavy leadership involvement Value Stream Mapping Process Process Micro Perspective Process • • Step © 2014 The Karen Martin Group, Inc. Step Step • Identify the tactical “how” Heavy frontline involvement Metrics-Based Process Mapping 12
  13. Work: Degrees of Granularity Order Fulfillment Value Stream Order Fulfillment Strategic Value-stream Perspective Quote Tactical Process-level Perspective © 2014 The Karen Martin Group, Inc. Design Produce Fabricate Assemble Ship 13
  14. Value Stream Mapping: Visualize your Entire Operation on a Single Sheet of Paper © 2014 The Karen Martin Group, Inc. 14
  15. Basic Value Stream Map: 3 Sections ABC Technology, Inc. Current State Value Stream Map Name of Value Stream Being Mapped Demand Rate = XX / Year Name of Value Stream Champion Mapping Date 1 Customer 1 Information Flow IT-1 IT-2 3 2 4 5 6 Process 1 Work Flow 1 items Process 3 Process 4 Process 5 Function A 2 Process 2 Function B Function C Function D Function E 5 11 Timeline LT = 0.5 days PT = 5 mins. %C&A = 75% 480 mins. 240 mins. 10 mins. 3 LT = 1 days PT = 10 mins. %C&A = 50% 5 mins. 45 items 3 LT = 5 days PT = 120 mins. %C&A = 85% 10 items 7 4 LT = 2 days PT = 30 mins. %C&A = 99% LT = 1 days PT = 15 mins. %C&A = 95% 5 days 2 days 480 mins. 120 mins. 30 mins. 15 mins. Total LT = 9.5 days Total PT = 180 mins. Activ ity Ratio = 3.9% Rolled %C&A = 30.0% © 2014 The Karen Martin Group, Inc. 15
  16. Basic Value Stream Map: Future State 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 1 Customer IT interface Standard work Error proof IT-1 Crosstrain Modified approvals 2 Process 1 3 Crosstrain Process 2 Function A 1 items IT-2 5 Process 3 Function C 5 items LT = 1 days PT = 10 mins. %C&A = 99% 4 Standard work Function E 10 items 3 LT = 2 days PT = 120 mins. %C&A = 95% 4 LT = 0.5 days PT = 30 mins. %C&A = 95% 1 days © 2014 The Karen Martin Group, Inc. 2 days 0.5 days Total LT = 3.5 days 10 mins. 120 mins. 30 mins. Total PT = 160 mins. Activity Ratio = 9.5% Rolled %C&A = 89.3% 16
  17. Basic Value Stream Future State Performance Metrics Current State Projected Future State Projected % Improvement 9.5 days 3.5 days 63.2% 180 minutes 160 minutes 11.1% Activity Ratio 3.9% 9.5% 143.6% Rolled % Complete & Accurate 30.0% 89.3% 197.7% Metric Total Lead Time Total Process Time User defined User defined © 2014 The Karen Martin Group, Inc. 17
  18. Value Stream Mapping Executing Transformation Plan © 2014 The Karen Martin Group, Inc. Making Specific Improvements 18
  19. Value Stream Mapping Activity Phases and Timing Repeat Prepare 4 Weeks Prior to Mapping © 2014 The Karen Martin Group, Inc. Understand Current State Design Future State Develop Transformation Plan Three Consecutive Days Execute Transformation Plan Following Mapping 19
  20. Charter: Critical planning, communication, and consensus-building tool Value Stream Mapping Charter Scope Accountable Parties Logistics Executive Allen Ward Sponsor Value Stream Capital equipment Specific Engineer to order, requires both hardware & Conditions software customization Event Dates July 24-26, 2013 & Times 8:00 am - 5:00 pm Value Stream Nancy Little Champion Demand Rate 1,000 per year Base-camp Surf's Up - Room A Location Facilitator Dave Parks Trigger Customer submits RFQ First Step Sales reviews the RFQ Logistics Dave Parks Coordinator Last Step Production ships product Boundaries & No new software; only minor changes to existing IT Limitations systems; no additional staff; no budget changes Briefing Attendees ** required *optional Improvement Time Future state design is fully realized by Frame December 31, 2013. Meals Continential breakfast & lunch Provided ** Allen W (COO), Joe M (CIO), Sal T (VP Sales) * Bruce R (VP Ops), Carlos P (HR), Su T (CFO), Bill M (VP CS) Current State Problems & Business Needs Briefing July 24, 25, & 26 Dates & 4:00-5:00 pm Times Mapping Team 1 Desire to stay ahead of the competition & deepen customer loyalty. Function / Title Name 2 Forecasted growth of 15% for next fiscal year. 1 Sales, Director 3 Unclear & incorrect information flowing through value stream. 2 IT, Director Diana Marie 4 Lead time for RFQ turnaround = 2 weeks; PO to software dev = 5 weeks 3 Finance, Controller Dave Gerald 5 (Competition's RFQ LT is 1 wk and PO to delivery is 4 wks) 4 Scrum Master Ryan Austin 5 Engineering, Vice President Nancy Little 1 Reduce RFQ lead time by a minimum of 50%. 6 Manufacturing, Director Ambreen Motiwala 2 Reduce PO to software development lead time by a minimum of 50%. 7 Customer Service, Manager Danny Tran 3 Improve quality of information flowing throughout value stream. 8 Customer (contract manufacturer) JR Hunt 4 Contact Information Sean Michaels 9 Goals & Measurable Target Conditions 5 10 Benefits to Customers & Business On-Call Support 1 Faster delivery; less hassle; less cost. Function Name 2 Better working relationships between sales, estimating & engineering. 3 Freed capacity to absorb additional business w/o increasing staff. 2 Production Supervisor 4 Contact Information 1 Planning / Purchasing, Planner Lourdes Dwyer 3 5 Tom St. James 4 Relevant Data Agreement 1 Sales effectiveness: RFQ conversion rate. Executive Sponsor Value Stream Champion Facilitator 2 Financial: Estimate-to-actual cost comparison. 3 Operational: LT in segments (RFQ to quote; PO to development). Signature: Signature: Signature: 4 Date: Date: Date: © 2014 The Karen Martin Group, Inc. 20
  21. Charter: Critical planning, communication, and consensus-building tool Value Stream Mapping Charter Scope Accountable Parties Logistics Executive Allen Ward Sponsor Value Stream Capital equipment Specific Engineer to order, requires both hardware & Conditions software customization Event Dates July 24-26, 2013 & Times 8:00 am - 5:00 pm Value Stream Nancy Little Champion Demand Rate 1,000 per year Base-camp Surf's Up - Room A Location Facilitator Dave Parks Trigger Customer submits RFQ First Step Sales reviews the RFQ Logistics Dave Parks Coordinator Last Step Production ships product Boundaries & No new software; only minor changes to existing IT Limitations systems; no additional staff; no budget changes Briefing Attendees ** required *optional Improvement Time Future state design is fully realized by Frame December 31, 2013. Meals Continential breakfast & lunch Provided ** Allen W (COO), Joe M (CIO), Sal T (VP Sales) * Bruce R (VP Ops), Carlos P (HR), Su T (CFO), Bill M (VP CS) Current State Problems & Business Needs Briefing July 24, 25, & 26 Dates & 4:00-5:00 pm Times Mapping Team 1 Desire to stay ahead of the competition & deepen customer loyalty. Function / Title Name 2 Forecasted growth of 15% for next fiscal year. 1 Sales, Director 3 Unclear & incorrect information flowing through value stream. 2 IT, Director Diana Marie 4 Lead time for RFQ turnaround = 2 weeks; PO to software dev = 5 weeks 3 Finance, Controller Dave Gerald 5 (Competition's RFQ LT is 1 wk and PO to delivery is 4 wks) 4 Scrum Master Ryan Austin 5 Engineering, Vice President Nancy Little 1 Reduce RFQ lead time by a minimum of 50%. 6 Manufacturing, Director Ambreen Motiwala 2 Reduce PO to software development lead time by a minimum of 50%. 7 Customer Service, Manager Danny Tran 3 Improve quality of information flowing throughout value stream. 8 Customer (contract manufacturer) JR Hunt 4 Contact Information Sean Michaels 9 Goals & Measurable Target Conditions 5 10 Benefits to Customers & Business On-Call Support 1 Faster delivery; less hassle; less cost. Function Name 2 Better working relationships between sales, estimating & engineering. 3 Freed capacity to absorb additional business w/o increasing staff. 2 Production Supervisor 4 Contact Information 1 Planning / Purchasing, Planner Lourdes Dwyer 3 5 Tom St. James 4 Relevant Data Agreement 1 Sales effectiveness: RFQ conversion rate. Executive Sponsor Value Stream Champion Facilitator 2 Financial: Estimate-to-actual cost comparison. 3 Operational: LT in segments (RFQ to quote; PO to development). Signature: Signature: Signature: 4 Date: Date: Date: © 2014 The Karen Martin Group, Inc. 21
  22. Charter: Critical planning, communication, and consensus-building tool Value Stream Mapping Charter Scope Accountable Parties Logistics Executive Allen Ward Sponsor Value Stream Capital equipment Specific Engineer to order, requires both hardware & Conditions software customization Event Dates July 24-26, 2013 & Times 8:00 am - 5:00 pm Value Stream Nancy Little Champion Demand Rate 1,000 per year Base-camp Surf's Up - Room A Location Facilitator Dave Parks Trigger Customer submits RFQ First Step Sales reviews the RFQ Logistics Dave Parks Coordinator Last Step Production ships product Boundaries & No new software; only minor changes to existing IT Limitations systems; no additional staff; no budget changes Briefing Attendees ** required *optional Improvement Time Future state design is fully realized by Frame December 31, 2013. Meals Continential breakfast & lunch Provided ** Allen W (COO), Joe M (CIO), Sal T (VP Sales) * Bruce R (VP Ops), Carlos P (HR), Su T (CFO), Bill M (VP CS) Current State Problems & Business Needs Briefing July 24, 25, & 26 Dates & 4:00-5:00 pm Times Mapping Team 1 Desire to stay ahead of the competition & deepen customer loyalty. Function / Title Name 2 Forecasted growth of 15% for next fiscal year. 1 Sales, Director 3 Unclear & incorrect information flowing through value stream. 2 IT, Director Diana Marie 4 Lead time for RFQ turnaround = 2 weeks; PO to software dev = 5 weeks 3 Finance, Controller Dave Gerald 5 (Competition's RFQ LT is 1 wk and PO to delivery is 4 wks) 4 Scrum Master Ryan Austin 5 Engineering, Vice President Nancy Little 1 Reduce RFQ lead time by a minimum of 50%. 6 Manufacturing, Director Ambreen Motiwala 2 Reduce PO to software development lead time by a minimum of 50%. 7 Customer Service, Manager Danny Tran 3 Improve quality of information flowing throughout value stream. 8 Customer (contract manufacturer) JR Hunt 4 Contact Information Sean Michaels 9 Goals & Measurable Target Conditions 5 10 Benefits to Customers & Business On-Call Support 1 Faster delivery; less hassle; less cost. Function Name 2 Better working relationships between sales, estimating & engineering. 3 Freed capacity to absorb additional business w/o increasing staff. 2 Production Supervisor 4 Contact Information 1 Planning / Purchasing, Planner Lourdes Dwyer 3 5 Tom St. James 4 Relevant Data Agreement 1 Sales effectiveness: RFQ conversion rate. Executive Sponsor Value Stream Champion Facilitator 2 Financial: Estimate-to-actual cost comparison. 3 Operational: LT in segments (RFQ to quote; PO to development). Signature: Signature: Signature: 4 Date: Date: Date: © 2014 The Karen Martin Group, Inc. 22
  23. Charter: Critical planning, communication, and consensus-building tool Value Stream Mapping Charter Scope Accountable Parties Logistics Executive Allen Ward Sponsor Value Stream Capital equipment Specific Engineer to order, requires both hardware & Conditions software customization Event Dates July 24-26, 2013 & Times 8:00 am - 5:00 pm Value Stream Nancy Little Champion Demand Rate 1,000 per year Base-camp Surf's Up - Room A Location Facilitator Dave Parks Trigger Customer submits RFQ First Step Sales reviews the RFQ Logistics Dave Parks Coordinator Last Step Production ships product Boundaries & No new software; only minor changes to existing IT Limitations systems; no additional staff; no budget changes Briefing Attendees ** required *optional Improvement Time Future state design is fully realized by Frame December 31, 2013. Meals Continential breakfast & lunch Provided ** Allen W (COO), Joe M (CIO), Sal T (VP Sales) * Bruce R (VP Ops), Carlos P (HR), Su T (CFO), Bill M (VP CS) Current State Problems & Business Needs Briefing July 24, 25, & 26 Dates & 4:00-5:00 pm Times Mapping Team 1 Desire to stay ahead of the competition & deepen customer loyalty. Function / Title Name 2 Forecasted growth of 15% for next fiscal year. 1 Sales, Director 3 Unclear & incorrect information flowing through value stream. 2 IT, Director Diana Marie 4 Lead time for RFQ turnaround = 2 weeks; PO to software dev = 5 weeks 3 Finance, Controller Dave Gerald 5 (Competition's RFQ LT is 1 wk and PO to delivery is 4 wks) 4 Scrum Master Ryan Austin 5 Engineering, Vice President Nancy Little 1 Reduce RFQ lead time by a minimum of 50%. 6 Manufacturing, Director Ambreen Motiwala 2 Reduce PO to software development lead time by a minimum of 50%. 7 Customer Service, Manager Danny Tran 3 Improve quality of information flowing throughout value stream. 8 Customer (contract manufacturer) JR Hunt 4 Contact Information Sean Michaels 9 Goals & Measurable Target Conditions 5 10 Benefits to Customers & Business On-Call Support 1 Faster delivery; less hassle; less cost. Function Name 2 Better working relationships between sales, estimating & engineering. 3 Freed capacity to absorb additional business w/o increasing staff. 2 Production Supervisor 4 Contact Information 1 Planning / Purchasing, Planner Lourdes Dwyer 3 5 Tom St. James 4 Relevant Data Agreement 1 Sales effectiveness: RFQ conversion rate. Executive Sponsor Value Stream Champion Facilitator 2 Financial: Estimate-to-actual cost comparison. 3 Operational: LT in segments (RFQ to quote; PO to development). Signature: Signature: Signature: 4 Date: Date: Date: © 2014 The Karen Martin Group, Inc. 23
  24. Value Stream Scoping Diagram Defining Specific Conditions Catalog Configure to order Custom hardware Engineer to order Custom software New Product Development Both Capital Equipment Golden State Equipment, Inc. Catalog Spares & subassemblies Engineer to order © 2014 The Karen Martin Group, Inc. 24
  25. Where should the “fenceposts” be? Function Activity Marketing 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 © 2014 The Karen Martin Group, Inc. Generates sales leads Conducts 90-day follow-up 25
  26. Who should be on the team, serve on-call, and attend daily briefings? © 2014 The Karen Martin Group, Inc. 26
  27. Charter: Critical planning, communication, and consensus-building tool Value Stream Mapping Charter Scope Accountable Parties Logistics Executive Allen Ward Sponsor Value Stream Capital equipment Specific Engineer to order, requires both hardware & Conditions software customization Event Dates July 24-26, 2013 & Times 8:00 am - 5:00 pm Value Stream Nancy Little Champion Demand Rate 1,000 per year Base-camp Surf's Up - Room A Location Facilitator Dave Parks Trigger Customer submits RFQ First Step Sales reviews the RFQ Logistics Dave Parks Coordinator Last Step Production ships product Boundaries & No new software; only minor changes to existing IT Limitations systems; no additional staff; no budget changes Briefing Attendees ** required *optional Improvement Time Future state design is fully realized by Frame December 31, 2013. Meals Continential breakfast & lunch Provided ** Allen W (COO), Joe M (CIO), Sal T (VP Sales) * Bruce R (VP Ops), Carlos P (HR), Su T (CFO), Bill M (VP CS) Current State Problems & Business Needs Briefing July 24, 25, & 26 Dates & 4:00-5:00 pm Times Mapping Team 1 Desire to stay ahead of the competition & deepen customer loyalty. Function / Title Name 2 Forecasted growth of 15% for next fiscal year. 1 Sales, Director 3 Unclear & incorrect information flowing through value stream. 2 IT, Director Diana Marie 4 Lead time for RFQ turnaround = 2 weeks; PO to software dev = 5 weeks 3 Finance, Controller Dave Gerald 5 (Competition's RFQ LT is 1 wk and PO to delivery is 4 wks) 4 Scrum Master Ryan Austin 5 Engineering, Vice President Nancy Little 1 Reduce RFQ lead time by a minimum of 50%. 6 Manufacturing, Director Ambreen Motiwala 2 Reduce PO to software development lead time by a minimum of 50%. 7 Customer Service, Manager Danny Tran 3 Improve quality of information flowing throughout value stream. 8 Customer (contract manufacturer) JR Hunt 4 Contact Information Sean Michaels 9 Goals & Measurable Target Conditions 5 10 Benefits to Customers & Business On-Call Support 1 Faster delivery; less hassle; less cost. Function Name 2 Better working relationships between sales, estimating & engineering. 3 Freed capacity to absorb additional business w/o increasing staff. 2 Production Supervisor 4 Contact Information 1 Planning / Purchasing, Planner Lourdes Dwyer 3 5 Tom St. James 4 Relevant Data Agreement 1 Sales effectiveness: RFQ conversion rate. Executive Sponsor Value Stream Champion Facilitator 2 Financial: Estimate-to-actual cost comparison. 3 Operational: LT in segments (RFQ to quote; PO to development). Signature: Signature: Signature: 4 Date: Date: Date: © 2014 The Karen Martin Group, Inc. 27
  28. Create the Current State Map Prepare 1. 2. 3. 4. 5. Understand Current State Design Future State Develop Transformation Plan Execute Transformation Plan Value stream walk #1 Layout the map Value stream walk #2 Add map details Add timeline; calculate summary metrics 28
  29. Effective Way to Visualize Relationships between IT Systems and the Operation © 2014 The Karen Martin Group, Inc. 29
  30. Create the Future State Map Prepare Understand Current State Design Future State Develop Transformation Plan Execute Transformation Plan 1. Define the “right work” 2. Make the right work flow 3. Manage the right work 30
  31. How will you realize the future state? Prepare Understand Current State Develop Transformation Plan Design Future State Execute Transformation Plan Value Stream Transformation Plan Value Stream Executive Sponsor Value Stream Champion Value Stream Mapping Facilitator Date Created FS VSM Block # 2 Measurable Target Scheduled Review Dates Outpatient Imaging Allen Ward 1-Nov-12 Paul Scanner 21-Nov-12 Dave Parks 13-Dec-12 10/18/2012 10-Jan-13 Proposed Countermeasure Exec. Method* Owner Planned Timeline for Execution 1 2 3 4 5 6 7 8 9 10 11 12 Status Improve quality of referral to 85% Implement standard work for referral process KE Sean Michaels 100% Reduce lead time between scheduling and preregistration step to 45 minutes Cross-train and co-locate work teams Proj Dianne Marie 75% 4 Only one check in per patient Collect copays in Imaging KE Ryan Austin 50% 4 Reduce wait time in waiting area by 50% Balance work / level demand KE Dianne Marie 50% 6 Eliminate 6 hour lead time associated with transcription step Implement voice recognition technology Proj Dave Gerald 50% 7 Eliminate redundant data entry Auto populate between PACS and Meditech Proj Dave Gerald 25% 5 Visually managed inventory; no outages or expired items 5S CT supplies area; implement kanban KE Michael O'Shea 100% 6 Reduce imaging LT to one hour Value-stream specific radiologists Proj Martha Allen 25% 8 Reduce report delivery LT to 30 minutes Increase % of physicians receiving electronic delivery Proj Martha Allen 0% 7 Reduce LT at image review to 1 day Visual metrics and indicators JDI Dave Gerald 100% 3,4 Agreement Executive Sponsor Value Stream Champion Value Stream Mapping Facilitator Signature: Signature: Signature: Date: Date: Date: * Execution Method = JDI (Just-do-it), KE (Kaizen Event), or Proj (Project) 31
  32. Where the rubber meets the road… Prepare Understand Current State Design Future State Develop Transformation Plan Execute Transformation Plan • Accountability rests with executive sponsor • Monthly status meetings • Adjust plan as new discoveries are made 32
  33. And then repeat… 33
  34. Current State Value Stream Map Outpatient Imaging Services Pre-register Patient Customer Demand: 15 patients perDay (Takt Time 1920seconds) 8 hours per day Schedule Appointment Referring Physician Hospital 4 3 5 Lead Time = 24 days 2 6 Lead Time = 990 mins. Cycle Time = 30 mins. Lead Time = 990 mins. % C&A = 100 % Demand = 15 per day 1 Lead Time = 12 mins. Cycle Time = 11 mins. Lead Time = 12 mins. % C&A = 98 % % C&A = 65 % CT=Cycle Time LT=Lead Time %C&A=% Complete & Accurate Symposium E Pay Excel ADS Internet Meditech Fax Order Solutions Waiting Room Management System PACS Auto Fax 50% Us Mail 25% MD Mailbox 25% Rework Loop via Fax 25% of the time Check-in Patient (Admitting) Prep Patient (Tech) Check-in Patient (Imaging) Complete Exam (Tech) Transmit Images (Tech) Read/Dictate Exam (Radiologist) Transcribe Report (MDI) Review Draft/Sign (Radiologist) Print Reports (Imaging) Send Reports (Imaging) 5 mins. 5 5 5 mins. Cycle Time = 2 mins. % C&A = 90 % 0.0833 hrs. 3 0.0833 hrs. 2 mins. 6 Cycle Time = 1 mins. % C&A = 98 % 45 mins. 2 0.75 hrs. 1 mins. 7 30 mins. Cycle Time = 10 mins. % C&A = 100 % 2 0.5 hrs. 10 mins. 8 5 mins. Cycle Time = 15 mins. % C&A = 90 % 2 0.0833 hrs. 15 mins. 9 248 mins. Cycle Time = 3 mins. % C&A = 100 % 2 10 4.13 hrs. 3 mins. 365 mins. Cycle Time = 15 mins. % C&A = 95 % 6 11 6.08 hrs. 15 mins. 960 mins. Cycle Time = 5 mins. % C&A = 75 % 2 12 16 hrs. 5 mins. 110 mins. Cycle Time = 1 mins. % C&A = 95 % 2 1.83 hrs. 1 mins. 13 120 mins. Cycle Time = 1 mins. % C&A = 99 % 6 2 hrs. 1 mins. 14 Cycle Time = 3 mins. % C&A = 90 % LT = 32.5 hrs. 3 mins. CT = 56 mins. CT/LT Ratio = 2.87% Rolled First Pass yield = 29%
  35. Future State Value Stream Map Outpatient Imaging Services Standard Work Work Balance Customer Demand: 15 patients perDay (Takt Time1920 seconds) 8 hours per day Co-locate Schedule appt Pre-register Referring Physician Hospital 3 Lead Time = 15 days 2 6 Demand = 15 per day 1 Lead Time = 45 mins. Cycle Time = 11 mins. Lead Time = 45 mins. % C&A = 98 % % C&A = 85 % Risk Reduction (Joint Commision) Symposium E Pay Excel Internet Waiting Room Management System Work Balancing Standard Work 3 35 mins. 4 Cycle Time = 1 mins. % C&A = 98 % 0.0833 hrs. 2 Complete Exam (Tech) 5 20 mins. Cycle Time = 10 mins. % C&A = 100 % 0.583 hrs. 1 mins. 2 Transmit Images (Tech) 6 5 mins. Cycle Time = 10 mins. % C&A = 90 % 0.333 hrs. 10 mins. Visual Workplace Set-up Reduction Prep Patient (Tech) Check-in Patient (Imaging) Fax Order Solutions PACS Auto Fax 80% Us Mail 15% MD Mailbox 5% 5S Value Stream Alignment Pull System (Supplies Kanban) Remove Check in and Reduce System Access 5 mins. Meditech CT=Cycle Time LT=Lead Time %C&A=% Complete & Accurate 2 7 120 mins. 2 Review Draft/Sign (Radiologist) 420 mins. Cycle Time = 15 mins. % C&A = 95 % 2 hrs. 2 mins. 8 Batch Reductions Voice Recognition Read/Dictate Exam (Radiologist) Cycle Time = 2 mins. % C&A = 100 % 0.0833 hrs. 10 mins. Continuous Flow 2 Print Reports (Imaging) 9 2 mins. Cycle Time = 1 mins. % C&A = 95 % 7 hrs. 15 mins. Rework Loop via Fax 10% of the time 2 30 mins. Cycle Time = 1 mins. % C&A = 99 % 0.0333 hrs. 1 mins. 10 Send Reports (Imaging) 6 0.5 hrs. 1 mins. 11 Cycle Time = 3 mins. % C&A = 90 % LT = 11.3 hrs. 3 mins. CT = 43 mins. CT/LT Ratio = 6.32% Rolled First Pass yield = 40%
  36. Outpatient Imaging Value Stream Improvement Results Current State Improved State % Improvement LT 32.5 hrs 11.3 hrs 65% PT AR RFPY # Steps 56 mins 2.9% 29% 14 43 mins* 6.3% 40% 11 23% 117% 38% 21% 100% 25% 75% Metric Tech turnover (annual) * This reduction (freed capacity) enabled the client to collect $500K more in annual revenue without incurring additional labor or equipment expenses.
  37. Current State Value Stream Map Purchasing — Non-repetitive purchases less than $5,000 Supplies Purchasing - Current State VSM Inititate Req. 1 Originator 31 PT = 10 mins. C&A = 10% Supplies Hard Copy Form File File Maker Quicken Vendor Website Excel ERP Data Entry Review Budget 2 Review Req. Finance PT = 5 mins. C&A = 60% 0.25 days 4 hrs. PT = 5 mins. C&A = 95% 0.5 days 5 mins. 20 Reqs Review Requisition Review 5 Requisition PT = 5 mins. C&A = 90% 8 hrs. PT = 5 mins. C&A = 100% 1 days 5 mins. 7 10 Reqs 1 PT = 10 mins. C&A = 95% 4 hrs. PT = 15 mins. C&A = 98% 0.5 days 10 mins. Approve in ERP 24 hrs. PT = 5 mins. C&A = 90% 3 days 15 mins. Submit PO to Supplier 8 63 Reqs 9 10 External Supplier Corp Purchasing Manager 1 Admin Asst Financial Mgr 1 8 hrs. 1 days 5 mins. Enter Requisition Review 6 Requisition IS Manager 1 1 40 hrs. 5 days 5 mins. 4 Sys Engineer Supervisor 2 6 2 hrs. 3 Corp Purchasing 6 56 hrs. PT = 15 mins. C&A = 98% 7 days 5 mins. 80 hrs. PT = 20 mins. 10 days 15 mins. LT = 28.4 days PT = 65 mins. AR = 0.477% RFPY = 4.2% Customer Demand: 615 requisitions per y ear PT = Process Time LT = Lead Time C&A = % Complete & Accurate AR = Activ ity Ratio (PT/LT x 100) RFPY = Rolled First Pass Y ield
  38. Future State Value Stream Map Purchasing — Non-repetitive purchases less than $5,000 Supplies Purchasing - Future State VSM Additional IT access Enter Req. in ERP Integrate Form File with File Maker 1 Originator 31 PT=30 mins. C&A = 85% Supplies Requisition Checklist Vendor Websites File Maker Cross Training Approval Additional IT access 2 2 6 hrs. 0.75 days 5 mins. Place Order 3 4 5 External Supplier 6 PT=20 mins. 80 hrs. PT=20 mins. C&A = 98% 1 days 5 mins. Dedicated Buyers Corp Purchasing 8 hrs. PT=5 mins. C&A = 90% PT=5 mins. C&A = 95% 0.5 days Approve in ERP Dept. Manager 1 Supervisor 4 hrs. Use budget in place of Quicken Auto Notify Standard Work for review Review Req. ERP 10 days 20 mins. LT = 12.3 days PT = 30 mins. AR = 0.508% Customer Demand: 615 requistions per year PT = Process T ime LT = Lead T ime C&A = % Complete & Accurate AR = Activity Ratio (PT /LT x 100) RFPY = Rolled First Pass Yield RFPY = 71%
  39. Purchasing Process Projected Results Current State Projected Future State % Improvement 28.4 days 12.3 days 56.7% 65 mins 30 mins 53.8% Activity Ratio 0.48% 0.51% 6.3% Rolled %C&A 4.2% 71.0% 1,590% # Handoffs 10 5 50% # IT Systems 6 3 50% Metric Total Lead Time Total Process Time %C&A = Correct & accurate (Quality)
  40. Value Stream Mapping: As Much Art as Science © 2014 The Karen Martin Group, Inc. 40
  41. Available Now! To order from Amazon: www.bitly.com/VSMbk For more information: www.ksmartin.com/VSM © 2014 The Karen Martin Group, Inc. 41
  42. For Further Questions Karen Martin, President 7770 Regents Road #635 San Diego, CA 92122 858.677.6799 ksm@ksmartin.com Blog & newsletter: www.ksmartin.com/subscribe © 2014 The Karen Martin Group, Inc. 42

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