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Northeast Shingo Prize Conference      September 25, 2012Worcester, MA      Learning to Share       Your Value StreamsJame...
Who Am I?• Founder and now Senior Advisor, LEI• Long-time gemba walker along many  value streams.• Looking for ways to max...
Who Are You?• Line managers? (Of departments,  functions, whole enterprises?)• Consultants?• Members of improvement teams?...
Some Simple Observations• All value is the result of a process – a  value stream – with many steps.• Value streams flow ho...
CEO (The Boss)                Vertical Orientation    Stamp/     Weld/       Paint/      Assemble/      Inspect/    Market...
The Paradox of Optimization• Each department, function, and firm tries  to optimize its portion of the value stream.• Inde...
Authority Versus Responsibility• Lots of vertical authority for departments,  functions, and enterprises.• No horizontal r...
Sum-Up of the “Current State”• Most managers face a “prisoner’s  dilemma”: They would like to optimize the value  stream ...
A Way to Get Started• Pick a value stream for a product family.• Form a team from every “vertical” the  value stream cross...
Current-State Value Stream Map                                 10   10
Future-State Value Stream Map                                11   11
Future States Require Change• To move one plant’s operations to the  Future State, many things had to happen  effecting de...
What About Extended Value Streams?• These cross the boundaries between  independent enterprises – raw materials  supplier,...
Current-State Extended Value Stream Map
16
What Will You Find?• A cross-function, cross-enterprise value  stream walk always shows enormous  opportunities for creati...
18     18
What Can You Do?• Have a discussion involving every firm  about the right thing to do for the value  stream to optimize va...
What Else Will You Need to Do?• Develop a role for value stream leaders  who will continually assess the state of  every s...
Final Thought• Do many (any) organizations practice  shared analysis of their value streams  today?• Formal analysis is ve...
Jim Womack Learning To Share Your Value Streams
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Jim Womack Learning To Share Your Value Streams

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During a keynote at the Northeast Shingo Prize Conference, Jim Womack, LEI founder, explains why businesses with shared processes face a “prisoner’s dilemma.”

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Transcript of "Jim Womack Learning To Share Your Value Streams"

  1. 1. Northeast Shingo Prize Conference September 25, 2012Worcester, MA Learning to Share Your Value StreamsJames P. Womack, Chairman, Lean Enterprise Institute
  2. 2. Who Am I?• Founder and now Senior Advisor, LEI• Long-time gemba walker along many value streams.• Looking for ways to maximize value while minimizing resource use and waste ( = lean.) 2
  3. 3. Who Are You?• Line managers? (Of departments, functions, whole enterprises?)• Consultants?• Members of improvement teams?  For the whole enterprise?  In operations?  In product development?  In purchasing?  In sales? 3
  4. 4. Some Simple Observations• All value is the result of a process – a value stream – with many steps.• Value streams flow horizontally across departments, functions & enterprises.• Value streams are shared, whether managers realize this or not.• Departments, functions & enterprises are organized vertically, facing the top of the organization chart. 4
  5. 5. CEO (The Boss) Vertical Orientation Stamp/ Weld/ Paint/ Assemble/ Inspect/ Market/ Engineer/ Purchase/ Manufacture/ Sell/ Raw Parts Assembler Distributor Retailer Material Supplier Supplier5
  6. 6. The Paradox of Optimization• Each department, function, and firm tries to optimize its portion of the value stream.• Indeed, senior managers often incentivize department and function managers to optimize their portion of the stream, with KPIs for each.• This often – usually – causes the whole stream (which is what the customer cares about) to be sub-optimized. 6
  7. 7. Authority Versus Responsibility• Lots of vertical authority for departments, functions, and enterprises.• No horizontal responsibility for optimizing the flow of value across organizations. The lack of responsibility is particularly pronounced for the end-to-end flow of value across independent organizations, where there can be no “boss”. 7
  8. 8. Sum-Up of the “Current State”• Most managers face a “prisoner’s dilemma”: They would like to optimize the value stream for the benefit of the customer and their enterprise. But they have no means to do so – they are locked in the “cell” on the org chart.• What can we do about this? 8
  9. 9. A Way to Get Started• Pick a value stream for a product family.• Form a team from every “vertical” the value stream crosses.• Make someone responsible for determining the current state and leading a discussion about a better future state.• Take a walk as a team.• Draw a map together. 9
  10. 10. Current-State Value Stream Map 10 10
  11. 11. Future-State Value Stream Map 11 11
  12. 12. Future States Require Change• To move one plant’s operations to the Future State, many things had to happen effecting departments, functions & firms: The supplier had to make frequent deliveries to kanban signals. The welding and assembly departments had to be combined and cellularized. Production control had to switch from push scheduling to pull replenishment. 12
  13. 13. What About Extended Value Streams?• These cross the boundaries between independent enterprises – raw materials supplier, parts maker, assembler, distributor, retailer, etc.• They are typical in the today’s world.• No one has – or can have – authority for the whole. 13
  14. 14. Current-State Extended Value Stream Map
  15. 15. 16
  16. 16. What Will You Find?• A cross-function, cross-enterprise value stream walk always shows enormous opportunities for creating more value with less resources and waste.• In the extended value stream example, activities in all of the firms will need to be reorganized.• Many activities will need to be relocated.• Some firms will need to be replaced. 17
  17. 17. 18 18
  18. 18. What Can You Do?• Have a discussion involving every firm about the right thing to do for the value stream to optimize value while minimizing resource use and waste.• See if it is possible for everyone involved to be made whole by winners compensating losers.• Ask what KPIs will be needed for each department, function, and firm to motivate behaviors optimizing the stream. 19
  19. 19. What Else Will You Need to Do?• Develop a role for value stream leaders who will continually assess the state of every stream by periodic walks to develop action plans for creative sharing. (A great job for improvement teams!)• Create a means for value stream leaders to compare methods and results.• Repeat value stream analysis, forever! 20
  20. 20. Final Thought• Do many (any) organizations practice shared analysis of their value streams today?• Formal analysis is very hard to find!• Someone must start somewhere.• How about you? How about now?• Sharing is not natural. But it is necessary to escape the prisoner’s dilemmas we all face everyday. 21
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