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Value Stream Mapping


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Implementation of VSM at GM Engineering Center in Venezuela

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Value Stream Mapping

  1. 1. 2009 Value Focus Paper Stream Value Stream Mapping Quality Mapping By Hector A. Rodriguez February 17th, 2009 GM 588, Managing Quality Professor Doron Zilbershtein By A Quality Focus Paper Hector A Rodriguez Keller School of Management Héctor Rodríguez Email:
  2. 2. 1. ABSTRACT The purpose of this paper is to describe the implementation of Value Stream Mapping (VSM) as a powerful tool for quality and process improvement. A VSM workshop will be applied to the value stream, called: “product development” at three GM engineering centers in South America. As part of the GM global strategy to joint efforts and share the worldwide knowledge base, in 2003: GM Venezuela, GM Colombia and GM Ecuador were all integrated as one operation called GM Andean Region. All three countries have manufacturing facilities, and all three countries have had independent product engineering operations for many years. These three units were integrated into one business operation to improve their performance, to increase market share, to speed product launching, to expand the market offer to satisfy the customer across the region. One of the biggest challenges of this unification was to standardize processes, procedures and strategies across different departments in all three countries. We all have the same CEO for the Andean Region, and each assembly facility had a Chief Operation Manager. The CEO’s strategic guidelines clearly stated to consolidate the three engineering centers into one Andean Engineering Center, so resources and efforts from the three countries were maximize. The objectives of the VSM workshop to this value stream were: Improve and reduce the time for engineering release , validation and • parts/components approval for production Standardizing the Andean Engineering operations with those of the corporation, to • be aligned for global programs development. To improve and standardize the validation plan to have faster product launches • To increase the effectiveness of the engineering value stream from an approximate • 30% to a 90%, First Time Quality ( FTQ)
  3. 3. 2. INTRODUCTION U.S. companies have always been enamored with strategies to reduce waste, create competitive advantage, increase throughput, and gain market share. Mass production manufacturing methods have been replaced by results-oriented lean production systems that focus on waste elimination throughout the enterprise. The concepts, definitions, and methodologies of lean have been present in American industry for decades. Probably the most well-known example of lean is Toyota, when it developed its Toyota Production System (TPS) after World War II. For over 20 years before anyone knew it, Toyota pursued the TPS primarily to eliminate waste and reduce costs in its production system — it was the obvious solution to manage the constraints of space, people, and limited resources. But the reality is that many of the basic concepts of lean have been applied in business for the past 100 years. (Burton & Steven, 2003). There are five key principles for lean that has been identified: (1) specify value, (2) create the value stream, (3) flow, (4) pull, and (5) perfection. (Womack & Jones- 2003). However it is know that only 80% of the companies have tried or say they have implemented lean practices, while only 20% has really implemented lean as business philosophy, hence giving substance results to the efforts they are putting to get leaner. (Burton & Steven, 2003). Value Stream Mapping ( VSM) is a lean tool, utilized to clear and slim down process flow in value stream, to eliminate waste in processes to make them faster, more efficient and effective. VSM is a tool within the Six Sigma philosophy, and as such it contributes to create leaner processes, hence leaner organizations.
  4. 4. 3. LITERATURE REVIEW Before we understand Value Stream Mapping as tool, we need to explain the most important concepts within the Lean Thinking : Process, Lean, Value Stream, Waste and Value Stream Mapping. Process is as series of steps that must be performed properly in the proper sequence to create value for a customer. (Womack, 2005). Its been said that the process thinking at Toyota is “ Brilliant process management is our strategy” , “ We get brilliant results from average people managing brilliant process”, “ We observe that our competitors often get average ( or worse) results from brilliant people managing broken processes”. (GM VSM Coach Clinic, 2005). Every business is a collection of processes, and every business shares processes with other business, including customers. So, everyone is aware of the process as it works today, but there is always a need to seek for a “perfect process”. The perfect process would be that one in which value is perfectly specified, to support the customer. So, we need to focus on the process by which value is created (value stream). In the search for a perfect process, every step needs to be: completely valuable (no muda: Obsession of Ford & Ohno); perfectly capable (gives a good result every time: the starting point of Six Sigma); perfectly available (works when it needs to work: the starting point of TPM), exactly adequate (no bottlenecks: TOC and TPS), and consistently flexible (able to shift rapidly from one product to the next, and scalable: TPS). Also every step should be connected by: continuous flow (so that one step leads immediately to the next: A core concern of Henry Ford, as transformed by TPS) ; noiseless pull (so that steps are only performed at the need of the customer: A core concern of TPS) and maximal leveling (so that only true demand is transmitted: A core concern of TPS in the form of heijunka). (Womack, 2005)
  5. 5. Lean deals with the elimination and reduction of many types of non-value added activities, often referred to as waste. The driving force for waste elimination is improved customer value and increased profitability in the products and services offered by the organization. Whether we are from a Six Sigma or TQM or TPM or TOC or BPR or TPS background, we are all in search of the perfect process. Our differences, including differences within the TPS community, are how we frame the problem and how we decide what to do in what order. (That is: We sometimes differ on the best process for achieving the perfect process!) ( Womack, 2005) Lean thinking in summary: The right purpose supported by the perfect process supported by everyone who touches the process. (Womack -2005) Value Stream is a set of all the specific actions required to bring an specific product ( whether a good or a service, or, increasingly, a combination of the two) through the three critical management tasks of any business: the problem solving task running from concept to detailed design and engineering to production launch, the information management task running from other-taking through detailed scheduling to delivery, and the physical transformation task proceeding from raw material to finish product in the hand of the customer (Womack & Jones, 2003) Many companies usually don’t try to identify the value stream of a product which always exposes a wide variety of waste or Muda, as called in Japan. The seven types of waste were identified by Taiichi Ohno as part of the TPS. Waste is any element of production, processing, or distribution that adds no value to the final product: waste only adds cost and time. There have been 7 types of waste (Muda) and two main contributors Mura and Muri (GM VSM Coach Clinic, 2005) :
  6. 6. Correction/Defects: rework, work done because of errors in the previous process. • Overproduction: making more then is necessary or making things faster than is • necessary, working ahead: the worst form of waste since it causes all other types of waste Transportation/Motion: unnecessary people motions, travel, walking, searching • Material Movement: unnecessary handoffs, transfers, filling, distances of material • and information Waiting: people waiting for machines, information or people. Information waiting • on people or machines Inventory: information or material waiting in queue • Processing: redundant or unnecessary mental or physical work, work that is giving • the customer more the he/she is willing to pay for Unevenness (Mura): a flow of information or product processes that are not regular • or constant causing many of the other types of waste, the lack of consistency in schedules, products and info. Unreasonableness (Muri) : pushing a machine or people beyond their capabilities • or what is considered reasonable: overburden In summary a value stream involves all the steps, both value added and non value added, required to complete a product or service from beginning to end. Value Stream Mapping is then a visual representation of a value stream; it is more of a pencil and paper tool, to engage people’s awareness of a system process. Value Stream Mapping helps people reveal waste and problems within the flow; it also helps establish a common language to document processes and to integrate the team understanding the importance and effects of each step in the value stream. Finally, Value Stream Mapping is a
  7. 7. tool that will provide a blueprint for constant improvement and apply waste elimination to achieve improvement in flow. So, why is VSM so unique? and what are its benefits? : Visualizes the process flow from a systems perspective • Focuses on the customer and the customer’s requirements • Includes information flow and product movement linked to process flow • Summarized the timeline as it relates to delivery to the customer-metrics ( • process time, waiting time, lead time, first time quality) Documents performance characteristics of both the Value Stream and the • individual process steps. Visibility of progress and quality • 4. REAL LIFE APPLICATION VSM WORKSHOP FOR A PRODUCT DEVELOPMENT VALUE STREAM There is one specific area that has seen the benefits of implementing Value Stream Mapping, Product Development (PD), by detecting waste and improving factors like time and effectiveness, bringing products faster and with better quality to the market. The Product Development Value Stream Mapping (PDVSM) first implemented by Toyota, has helped look at the PD as a continuing flow. VSM was first implemented in manufacturing, but when transferred to the PD processes different challenges were present. First in manufacturing the process is related mainly to product flow, while in PD is about data flow ; timelines are different, in manufacturing second and minutes are important, while in PD the timeframe is more related to months and weeks ; Manufacturing is mainly focus on physical and tangible outcomes, while PD is more focus on knowledge work; the flow in
  8. 8. the manufacturing environment is more lineal, while in PD is multidirectional; reason why PD need more large and diverse group of technical expertise. (Morgan & Liker, 2006) . Engineering is different from manufacturing. Value may be defined, and will almost certainly be measured, differently. The value stream consists of flows of information and knowledge that are less easily tracked than the material flows of the factory. Uncertainties must be handled and eliminated as part of this process, and hence coupled or iterative processes may be required. Many engineering processes handle “mixed model lines;” they work on jobs of varying size and complexity. These factors complicate the job of value stream mapping. (McManus, 2005). As part of the academic objective we are going to present a case how VSM was used to improve the design and engineering processes at one of the GM business units. The purpose is to demonstrate how VSM aids to reduce time, cost and improve efficiency in the product development process. VSM Steps VSM is divided into four different phases: scoping, current state drawing, future state drawing and planning/implementation. VSM is not an easy tool to implement, a lot of commitment, training and working hours are necessary to have positive outcomes. Figure no.1 shows the different steps undertaken in a VSM implementation project.
  9. 9. Determine the Value Stream to be Scoping the improved Value Stream Current State Understanding how things currently operate. Drawing This is the foundation for the future state Designing a lean flow Future State Drawing The goal of mapping ! Planning and Implementation Post- Implementation Check points 30,60,90 days, validate Review plan Figure no. 1 Scoping: this step consist of idea generation, project selection and validation as a value stream process. Not all ideas and processes can be evaluated from the VSM perspective, so the scoping steps helps ensure that the project involves a value stream, a process with inputs and outputs that involve many steps to complete. A scoping document needs to be completed before considering implementing a VSM workshop. The scoping document will lead through the following questions and help form the team (McManus, 2005): Project sponsor: who is wanting and interested to support and improvement of a • relevant process to the organization Process owner: the leader responsible for the process outcomes. •
  10. 10. Workshop coach: a facilitator to lead the different teams through the VSM phases. • Project description and objective ( purpose of VSM), why are we doing the • workshop Expected results/Deliverables – What improvements do we want to achieve? • Root Cause of the problem ( current state), What is causing the issues described in • the project description? Who is the customer • Customer requirements • List of participants: as to who supplies info to the process, who operates the process, • and who is the final customer of the process. A Leadership panel will need to be setup to evaluate the recommendations and • proposals and also to lead the team throughout the workshop Data needed for the workshop such as process time, lead time, first time quality, • costs and others. How should we measure this metrics. One tool utilized to help structure a good scoping is SIPOC: Suppliers, Inputs, Process, Outputs, Customer. It is a process oriented tool that asks the team to consider the process in the context of suppliers, who provide inputs in the form of data, knowledge, resources, etc. Also the SIPOC helps identify certain outputs for which there are customers who have a variety of expectations, wants, and requirements. Let’s take a look at the SIPOC for our Product Engineering Project in Figure no.2. The process suppliers, inputs, process, outputs and customers have been identified as well as some preliminary issues to attend during the workshop. A preliminary process flow has been drawn to understand the flow of events and to prepare for the next step of drawing the current map. Several issues have been detected from the scoping:
  11. 11. Before the process Project technology transfer delays • Lack of technology to process information • Late definition of option list • Confidentiality and Ownership agreements delays • Prototypes delays • Inside the process Later purchase orders • Lack of technical meeting reviews • Customer issues with current process Later requirements from manufacturing • Limited technology in supplier base • Lack of standardization in engineering processes • Delay in validation of parts and approvals for production • Delays in material part list distribution • Delays in sample for developments. •
  12. 12. Figure No. 2 Source: VSM Workshop GMV: Engineering Release, Validation and Part Approval , SIPOC, 2005
  13. 13. Current State: This next step allows defining the current situation, to draw the current map of the value stream, in order to later discover waste. The current map drawing will permit to visualize the value stream very easily, it will help document the customer information and needs for every step of the process. So, question like : who is the customer? What do they need? When do they need it? Will be easily drawn in this map and will help team members to educate themselves about the value stream. One important point of the current state is that it will help identify the key processes within the value stream. In addition, the data attributes need be defined, at least the following criteria should be considered: Process Time ( P/T ) : time to actually conduct the work of the process step • Waiting Time ( W/T) : • o During the process step: time when the process is not yet complete, but is not being worked on o Between process steps: time between processes steps when the task is not being worked on Lead Time ( L/T): Process Time + Waiting Time • First Time Quality ( FTQ): the percentage of the time that the task is able to be completed, • accurately, the first time it is worked on. For the current state, a “value stream walk” will help fill the information for every step of the processes, it needs to document every step pretending one is at work; documenting and discovering the items being produce. Also must establish how each process knows what to process next and document the information flow. After the current state map is drawn, calculate the process time, waiting time, lead time and first time quality for the value stream under analysis.
  14. 14. Symbols In order to draw the current state map we should use the VSM symbols, we implement different symbols to express process attributes and characteristics that will help us visualize waste, and to correct potential flow problems. Figure No. 3 shows some of the most common symbols on VSM workshops and their meaning. (GM VSM Coach Clinic, 2005) Symbols Process Box Customer MRP IN In Box ERP /Systems (wait) Waiting Time Info flow - electronic P/T Info flow – Conversation (phone) W/T FTQ Operator Weekly Info Box Agenda Physical Communication/mail Supermarket iterations Pull system :Push System First-In Improvement First-Out FIFO Mix leveling Kaizen XOXO change Figure No. 3 For our Product Engineering project we have drawn our current state (figure No. 4) , linking every step from the beginning: Definition of Vehicle Product Specifications (VDS) to the end: PPPAP. We have measured our initial metric estimates, and validate them in the current state map. The estimated results were drawn from the scoping phase, while the current state give us a more precise understanding of process time, waiting time, lead time and FTQ.
  15. 15. Figure No. 4 Source: VSM Workshop GMV: Engineering Release, validation and Parts Approval. Current Map Table No. 1 shows the metrics measured and controlled over the implementation of the VSM workshop. After completing the actual estimate for the current map, we discovered the times were very similar to what was estimated on the scoping, however the FTQ was higher that expected, but still very low ; around 40%, which means the value stream under study has an effectiveness of 40% quality the first time. This indicate we have a lot of opportunity to get rid of waste, and eliminate unnecessary activities, resources, steps that will help improve the value stream. It table no. 1 we show the estimates for two different business units, the numbers for the first line represents the results for Venezuela Engineering Center and the second line for Colombia-Ecuador engineering centers.
  16. 16. Table No. 1 Metric Actual Estimate Actual Estimate on Objective for the Future State Real future state SPQRC From scoping current state map (90 days alter implementation) 12M 1W Process Time 12M 12M 3W 17M 2W 17M 1D Lead Time 15M 1W 15M 1W 37.13% 8% First Time Quality 10% 42.24% M= months, W= weeks, D= days. First line results for GM Venezuela, Second Line results for GM Colombia/Ecuador Future State: this state will help identify waste and draw a desire map for a leaner value stream. Once having the current state we need to ask ourselves: what seems to be broken? What problem exists in the system? This will help us identify waste and get rid of it. The purpose of this state is to develop a future state map which eliminates the current state problems, which will reflect a lean design and eliminates waste as well as the underlying problems identify in the current state. Before stepping into the results of the future state map, let’s review some of the problems discussed on the Product Engineering project. The following table summarizes some of the problems identified in the current state map and their root causes, as well as, proposals for solution according to the future map design. 27 problems in total where identified in the current map and they can be summarized the following three categories: Table No. 2 Waste / Problem Identified Root Cause Improvement Idea / Solution Engineering release is done in different sites Engineering Centers has different release Standardize the key processes of the ( Col/Ven/Ecu), rework and potential processes Engineering Centers: problems for assembly occurs. Engineering • Criteria for Part Number release Change Notifications ( ECN) are not • Creating and Assembly Breakdown reliable, especially when release by a List loading to the engineering systems different engineering center from the • Engineering Change Notifications ( assembly plant. ECN) formats and loading
  17. 17. Part Number proliferation ( temporal and No uniformity in part Lumber creation Align with corporative procedures for part definite numbers) criteria, does not follow the corporation number creation guidelines and practices for part number creation Rework when technical information for Confidentiality and Property agreements, Work confidentiality and property agreements design release is from other GM Technical License agreements with parallel to the approval of projects (CSO). Engineering Centers different sources with exclusive designs ( Negotiate technical agreements clause in the Black boxes, grey boxes designs) contracts, to support and facilitate technological transfer from suppliers and sources to GM. The future map in figure No. 5, looks leaner, not as chaotic as the current map, expressing that waste have been identified and removed. Figure No. 5 Source: VSM Workshop GMV: Engineering Release, Validation and Part Approval, Future State, 2005 As part of the future state mapping we have redesigned the flow of the process in order to achieve improvements that will be part of the target future state. The metrics that we have been measuring in the scoping and current state map, will also be revised according to the future map, and they will be set as new targets. From our application, in table No. 3 we show our new target values.
  18. 18. Table No. 3 Metric Actual Estimate Actual Estimate on Objective for the Future State Real future state SPQRC From scoping current state map (90 days alter implementation) 12M 1W 9M3W Process Time 12M 12M 3W 17M 2W 17M 1D 13 M 2 W Lead Time 15M 1W 15M 1W 37.13% 8% 90% First Time Quality 10% 42.24% Look the new process flow has helped plan for better targets. Process time and lead time will be reduced by almost 3 months. This will permit to launch products faster. Also if we look at the intended first time quality , the plan is to increment from and average 40% of FTQ to 83% FTQ , eliminating much of the rework done during engineering designing and validation phases. After a future map is been developed, a plan needs to be created with specific objectives and action steps to achieve the future state: Reduce Cost and waste, improve first time quality, simplify and document the process, standardize the process, improve response time. Finally implement the plan to achieve the future state. Implementation: In this last state we need to define the objectives: a new outcome or new condition that needs to be achieved. So, as a group, need to review the changes to move from current state to future state. Then need to define the action steps to achieve the objectives. Set SMART targets (specific, measured, agreed, realistic, timed), for each action step with measurable impact and scheduling, assigning responsibility for each action step to a workshop participant, assign support and secure buy in for each objective. In order to complete the action steps we used a Business Plan Deployment, a scorecard containing the following: Goals: supports the attainment of the vision and mission • Objective: the change from the current state to the future state •
  19. 19. Method/Action Steps: the task that have to be done to accomplish the change • Responsible: who is responsible for the objective or action step • Target: a measure that will indicate that the objective/Action has been achieved. • Timeline: When the plan begins and when it will be completed • Support: Who must contribute or provide support • Reviews ( control point) : checks to make sure implementation is proceeding as planned and • having the impact intended. Summarizing the implementation state deliverables will be: A fully implemented plan which has improved quality, responsiveness, and cost of the Value • Stream A new value stream is the standard • A new Value Stream that has lean principles and elements in the process • A new process has an on-going visual process of monitoring ( performance metrics) • Post- Implementation Activities: after implementation is on going, a set of review dates are typically scheduled at 30, 60 and 90 days after the workshop. The purpose is to asses the implementation status to review the objectives and methods to the plan. To identify problems associated with implementation and ensure plans are in place to address the problems, and review countermeasures for those items not achieving the desired result. The plan needs to be check monthly, and make notations to the plan regarding delays, additions, changes. After the 90 days we validated the results of our new value stream, noticing that results from current state has change dramatically and improving the process flow in the Product Engineering Release, Validation and Approval of parts. In table No. 4 we show the 90 days results for our pilot program GMT900. The process time and lead times for the value stream were 9 months for process time and 14
  20. 20. months for total lead time, the FTQ was raised from and average 40% to an 84%. It is remarkable how the lead time ( process time + waiting time) for the whole value stream has dramatically decreased from an estimated 17 months to a 14 months, the value stream is now 3 months faster than the current situation, this permits to launch faster products to the market. More importantly the results show how a standardized process for the three GM engineering center was achieved, maximizing efforts and results to this value stream. Table No. 4 Metric Actual Estimate Actual Estimate on Objective for the Real future state SPQRC From scoping current state map Future State (90 days alter implementation) GMT900 12M 1W 9M 9M3W Process Time 12M 2 W 11M 3W 17M 2W 17M 1W 14 M 13 M 2 W Lead Time 15M 1W 15M 1W 37.13% 8% 84% 90% First Time Quality 10% 42.24% 5. CONCLUSION I have been a certified VSM coach for 3 years, and one of the most rewarding aspects of VSM is to see how this tool allows taking a snapshot of the current situation, and with guidance and leadership helps identify waste and eliminate it from the value stream. VSM is a powerful tool, that brings relevancy, a little complicated and time consuming, but worth it. It can be implemented in any field to detect wasteful activities. It helps draw a complete value stream, integrate and teach all the participants about their importance in the value chain, how each process affects the next one, and muda interrupts the flow of work. It is amazing how Japanese corporations like Toyota have been implementing this tool for years, while US companies improve their usage after 1996, applying many improvements ideas, and making leaner processes in many manufacturing and product development environment.
  21. 21. VSM is a tool that will aid to integrate teams, to better understand the flow of information and products, to set common goals to multi disciplinary teams, making the value stream outputs common to all the stakeholders On the other hand, VSM is a very complex tool, it requires hours of training and most importantly commitment from attendees, facilitators and processes owners. Some time is not easy to introduce this kind of tool to instill a lean philosophy in any organization; it will take hours of training before the concepts are understood by a large group of leaders, and the benefits it will bring against the investment of so many working hours. VSM is not a tool to be implemented by consultants or facilitators alone, it is an inside job; employees must come with their new and leaner ideas, process, improvements and action plans. Some times, this can be seen as more work instead of time investments, and some resistance to change is to be expected from teams. PDVSM, value stream mapping focus to product development , is a tool to improve the product development process, it helps reduce times of development, to short down design and development cycles, at detect waste in the engineering process. Engineering process development includes many trades of information, papers, reports, approvals, interaction between engineers, managers, suppliers, customers, among other stakeholders. So, potential for waste elimination is always existent in this kind of administrative work. We saw in our application how VSM helps reduce time of engineering process, and to improve the quality of work, and most importantly to standardize process among different engineering centers, confirming that VSM is a very powerful tool in the lean thinking arena; it brings relevancy to the value streams. I like this tool so much that I have considered implementing it in my new business as a process improvement consultant. While creating my new company, VSM will definitely be one of my most powerful tools to help organizations get leaner, better and faster.
  22. 22. REFERENCES [1] James P. Womack, Daniel T. Jones – 2003 Lean Thinking: Banish Waste and Create Wealth in Your Corporation [2] James M. Morgan, Jeffrey K. Liker – 2006 the Toyota Product Development System: Integrating People, Process, and Technology [3] Burton, Terence T.; Boeder, Steven M - 2003. Lean Extended Enterprise: Moving Beyond the Four Walls to Value Stream Excellence [4] Value Stream Mapping: Go Fast ! Coaches GM Clinic, May 2005 [5] James P Womack 2005 Frontiers of Lean Thinking: Where we are, Where we are going [6] Dr. Hugh L. McManus - 2005. Product Development Value Stream Mapping (PDVSM) Manual - Lean Advance Initiative , MIT g=You+are+trying