Value Stream Mapping

Value Stream Mapping

Quality Focus Paper

February 17

th, 2009

By

Hector A Rodriguez

Keller School of Management

Value Stream

Mapping By Hector A. Rodriguez

GM 588, Managing Quality

Professor Doron Zilbershtein

A Quality Focus Paper

2009

Héctor Rodríguez

Email: [email protected]

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)

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manufacturing methods have been replaced by results-oriented lean production systems that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.

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)

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) :

• 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

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

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.

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.

Scoping the

Value Stream

Current State

Drawing

Future State

Drawing

Planning and

Implementation

Determine the Value Stream to be

improved

Understanding how things currently operate.

This is the foundation for the future state

Designing a lean flow

The goal of mapping !

Check points 30,60,90 days, validate

plan

Post-

Implementation

Review

• 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:

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.

Fig

ure

No. 2

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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.

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)

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.

SymbolsSymbols

:Push System

Info flow - electronic

Weekly

Agenda

Operator

In Box

(wait)

INMRP

Waiting Time

Info flow – Conversation (phone)

Info Box

P/T

W/T

FTQ

Supermarket

XOXOMix leveling

Pull system

F I F O

First-In

First-Out

change

Improvement

Kaizen

iterations

Physical Communication/mail

Customer

Process Box

ERP /Systems

SymbolsSymbols

:Push System

Info flow - electronicInfo flow - electronicInfo flow - electronic

Weekly

Agenda

Weekly

Agenda

OperatorOperator

In Box

(wait)

IN

In Box

(wait)

ININMRP

Waiting TimeWaiting Time

Info flow – Conversation (phone)Info flow – Conversation (phone)

Info Box

P/T

W/T

FTQ

Info BoxInfo Box

P/T

W/T

FTQ

SupermarketSupermarket

XOXOMix leveling

XOXOMix leveling

Pull systemPull system

F I F O

First-In

First-OutF I F OF I F O

First-In

First-Out

change

Improvement

Kaizen

iterationsiterations

Physical Communication/mail

CustomerCustomerCustomer

Process Box

ERP /Systems

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.

Table No. 1

Metric SPQRC

Actual Estimate From scoping

Actual Estimate on current state map

Objective for the Future State Real future state (90 days alter

implementation)

Process Time 12M 12M 1W

12M 3W

Lead Time 17M 1D 15M 1W

17M 2W

15M 1W

First Time Quality 8 % 10%

37.13%

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

( Col/Ven/Ecu), rework and potential

problems for assembly occurs. Engineering

Change Notifications ( ECN) are not

reliable, especially when release by a

different engineering center from the

assembly plant.

Engineering Centers has different release

processes

Standardize the key processes of the

Engineering Centers:

• Criteria for Part Number release

• Creating and Assembly Breakdown

List loading to the engineering systems

• Engineering Change Notifications (

ECN) formats and loading

Part Number proliferation ( temporal and

definite numbers)

No uniformity in part Lumber creation

criteria, does not follow the corporation

guidelines and practices for part number

creation

Align with corporative procedures for part

number creation

Rework when technical information for

design release is from other GM

Engineering Centers

Confidentiality and Property agreements,

Technical License agreements with

different sources with exclusive designs (

Black boxes, grey boxes designs)

Work confidentiality and property agreements

parallel to the approval of projects (CSO).

Negotiate technical agreements clause in the

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.

Table No. 3

Metric SPQRC

Actual Estimate From scoping

Actual Estimate on current state map

Objective for the Future State Real future state (90 days alter

implementation)

Process Time 12M 12M 1W

12M 3W 9 M 3 W

Lead Time 17M 1D 15M 1W

17M 2W

15M 1W 13 M 2 W

First Time Quality 8 % 10%

37.13%

42.24% 90%

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

• 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

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 SPQRC

Actual Estimate From scoping

Actual Estimate on current state map

Objective for the Future State

Real future state (90 days alter

implementation)

GMT900

Process Time 12M 2 W 12M 1W

11M 3W 9 M 3 W 9 M

Lead Time 17M 1W

15M 1W

17M 2W

15M 1W 13 M 2 W 14 M

First Time Quality 8 % 10%

37.13% 42.24%

90% 84%

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.

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.

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

http://www.leaninstituut.nl/publications/industryweek_webcast_slides.pdf

[6] Dr. Hugh L. McManus - 2005.

Product Development Value Stream Mapping (PDVSM) Manual -

Lean Advance Initiative , MIT

http://lean.mit.edu/index.php?option=com_docman&task=cat_view&gid=94&Itemid=1&mosms

g=You+are+trying