Value Stream Mapping: How to Identify and Reduce Waste. Learn more about our business Process Improvement Services at bswllc.com/bpi

1. Value Stream Mapping:
How to Identify and Reduce Waste
© 2016 All Rights Reserved
Brown Smith Wallace LLP

2. A key concept of lean methodology
is determining the ‘value’ of each
major process step. Value is defined
as any step that transforms a product
or service and that the customer is
willing to pay for. All other steps are
defined as ‘non-value-added’ and
are forms of waste to be reduced or
eliminated.
By this definition, the value-added
time of a typical process is often
below 10% or even 1%. That seems
too low to be true, but remember that
value is determined by the customer.
Think about it from your own personal
perspective: when you purchase
an item, you want it to meet your
expectations for function, quality,
price and delivery time. You really don’t
care about the internal processes of
the manufacturer, such as how many
departments or factories they have,
or how much inventory they maintain
between each process step.
In lean theory, when you order an
item, the manufacturer builds it and
ships it to you. In practice, this is done
by having the production schedule
synchronized to customer orders
instead of maximizing the machine
utilization at each process step. That
traditional approach creates a lot of
in-process inventory that is actually a
form of waste. It also leads to other
problems and, therefore, should be
minimized to the extent possible.
Value stream mapping is a tool that
can help you identify and reduce
waste in any business process such
as in manufacturing, distribution, and
even office and service environments.
WHAT IS THE VALUE?
The value-added time of a typical
process is often below 10%.
The following pages include examples of value
stream maps. You can see that the majority of
the time is non-value-added, which is where
the largest opportunities exist for process
improvement and cost reduction initiatives.
1

3. Example 1:
Business Loan Approval Process
This value stream map shows a business loan approval process and includes the steps at each
local branch and at the corporate office.
The total process for each loan has 1.78 hours of value-added time out of a total process time
of 24 days (576 hours), which is well below 1%.
The cycle time of each step is the average time for each loan in hours. The steps with big
differences between cycle time and value-added time will have large work-in-process inventory
queues and should be targeted for improvements in throughput.
The goal is to have each step be capable of meeting the customer request rate at the branches
and at the corporate office.
2
Image source: asq.org

4. Example 2:
Distribution Order Fulfillment Loop
In this distribution example, the total lead time (LT) per order is 2.9 hours (172 minutes), while
the sum of the value-added steps for process time (PT) is 22 minutes.
The value-added time (called Activity Ratio here) is only 12.8%.
Using the average quality at each step (%C&A), only 81% of orders get through the process
completely and accurately filled. That means almost 20% of orders have defects, which is
another form of waste, and the time to resolve those issues is also non-value added time.
3

5. Example 3:
Manufacturing Production Process
This manufacturing example shows the steps of the production process with cycle times and
several other metrics listed. The value-added time is shown directly below each production
step. The time between those steps is the non-value-added time in this process.
The total cycle time, called Lead Time, is 5+10+7+4+4+4 days for a total of 34 days. This is the
sum of the waiting time for each part between all the manufacturing steps.
The manufacturing steps are the value-added steps, which make up only 130 seconds out of
34 days—well under 0.1%.
The quantities of in-process inventory are shown below the ‘I’ symbols and, in this case, are
4 to 10 times higher than the customer demand rate.
In this process, the focus should be on reducing the work-in-process inventory to more closely
match the daily customer demand rate.
4
Image source: strategosinc.com

6. Learn more about our Business Process Improvement
services at bswllc.com/bpi
Watch the Business Process Improvement episode in our
Brown Boarding Business Video Series
at bswllc.com/bpi-video
Contact:
Todd Snover
Lean Six Sigma Black Belt, PMP
Business Process & Systems Group
TSnover@bswllc.com
314.983.1244
314.983.1200 | bswllc.com | info@bswllc.com
St. Louis, MO | St. Charles, MO | Glen Carbon, IL
Brown Smith Wallace is a Missouri Limited Liability Partnership
© 2016 All Rights Reserved
Whether your company is experiencing a growth spurt or facing more competition in the
marketplace, there are many reasons to reevaluate your company’s business processes.
Business process improvement helps organizations redesign their existing business
processes to improve efficiency and flexibility.
Our approach to process improvement and technology implementation addresses your
organization’s needs and the scope of resources required to bring the greatest value to
your organization.