VSM - 2

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Value Stream Mapping Jack’s Taxes Training ExampleSolectron

2

Planning forAction

PreparationCurrent

StateFutureState

Preparation

Current State

Future State

Planning

Agreeing on what process to study, how to map it, who will participate, and logistics.

Agreeing on a well understood map of the current situation.

Agreeing on a shared vision of a Lean future state.

Agreeing on how to implement the future state plan

Value-Stream Map Phases

3

Typical Steps forCurrent State Mapping

1. Document customer information

2. Identify main processes (in order)

3. Select data attributes

4. Perform Value-Stream walk-through and fill in data boxes, including “inventory” and resident technology

5. Establish how each station/process knows what to work on next (how they prioritize) and identify information flows.

6. Calculate waiting time vs. processing time, First Pass Yield, and/or other Value-Stream summary measures

Planning forAction

PreparationCurrent

StateFutureState

4

I nformation to

process

Customer P&L

Split mat' l &

labor revenues

Calculate

allocations

Format J E's

f or upload to

Oracle

Validate

accounts vs.

COMDEF

Upload to

Oracle

Final

Review

Make

corrections

Release fi nal

fi gures to

Corp.

Tool manual manual manual manual manual Oracle Oracle Oracle

Processing time 60 60 120 240 60 300 30 60 3010 JVs last day 210 cost centers100 INVAs last day 30 drivers

<30% MSCC&TC

Total assys Feb: 884 <5% total cost

D D to D+1 D+2 to D+3 D+3 D+3 D+3 D+3 D+3 D+3 to D+4Fri Fri - Mon Tues-Wed Wed Wed Wed Wed Wed Wed-Thurs

Total

Wait Time minutes 0 500 2000 500 120 0 0 540 0 0 3660

Processing minutes 60 60 120 240 60 300 30 60 30 960

61 hours wait time16 hours processing time

done on D+3 to D+4

Summary:

Day of Close

Complexity factors and/or Quality data

RMAs in last day requiring analysis & account reclass

Time of system running all sites at the same time

Manual key entry of 40,000 lines

Manual validation and correction

Assemblies price broken by Labor & Material components

Site Controller& Regional Finance

Corp. FinanceOperations Reporting

Sq. meters by project

Freight spend by project

SID ending inventory

Revenue by project

Feedback

Approval

Scrap report

Info on reclass betwn projects

New accounts & cost ctrs

Step 1

Step 2

Step 3

Planning forAction

PreparationCurrent

StateFutureState

Customer information here

Selected Data

Attributes

Value-Stream Map Phases – Current State (Steps 1 – 3)

Line up the processes here

5

Common Data Attributes

Process Time (PT)

Wait (Queue) Time (WT)

% Complete and Accurate information (FTQ)

- Available Time

- Setup Time

- Typical Batch Size (Inventory)

- Number of People Involved

- Reliability (System Downtime)

- Rework/revisions (e.g. design changes)

- Queue - Amount of paperwork in queue

Planning forAction

PreparationCurrent

StateFutureState

6

I nformation to

process

Customer P&L

Split mat' l &

labor revenues

Calculate

allocations

Format J E's

f or upload to

Oracle

Validate

accounts vs.

COMDEF

Upload to

Oracle

Final

Review

Make

corrections

Release fi nal

fi gures to

Corp.

Tool manual manual manual manual manual Oracle Oracle Oracle

Processing time 60 60 120 240 60 300 30 60 3010 JVs last day 210 cost centers100 INVAs last day 30 drivers

<30% MSCC&TC

Total assys Feb: 884 <5% total cost

D D to D+1 D+2 to D+3 D+3 D+3 D+3 D+3 D+3 D+3 to D+4Fri Fri - Mon Tues-Wed Wed Wed Wed Wed Wed Wed-Thurs

Total

Wait Time minutes 0 500 2000 500 120 0 0 540 0 0 3660

Processing minutes 60 60 120 240 60 300 30 60 30 960

61 hours wait time16 hours processing time

done on D+3 to D+4

Summary:

Day of Close

Complexity factors and/or Quality data

RMAs in last day requiring analysis & account reclass

Time of system running all sites at the same time

Manual key entry of 40,000 lines

Manual validation and correction

Assemblies price broken by Labor & Material components

Site Controller& Regional Finance

Corp. FinanceOperations Reporting

Sq. meters by project

Freight spend by project

SID ending inventory

Revenue by project

Feedback

Approval

Scrap report

Info on reclass betwn projects

New accounts & cost ctrs

Planning forAction

PreparationCurrent

StateFutureState

Step 6

Step 4

4. Record the data elements for each process step here

6. Capture the wait & process times, First Time Quality, &

summary metrics here

5. Identify what triggers that the process step can start and

how information flows

Step 5

Value-Stream Map Phases – Current State (Steps 4 – 6)

7

VSM Icons

Movement by Push

Electronic Information Flow

Weekly ScheduleWorker

In Box (Queue)

INExternal Schedule

or Event

Conversation Information Flow

Data Box

P/T

W/T

Quality

Supermarket Withdrawal (Pull)

First-In First-Out

FlowChangeover

Kaizen Lightning

Burst

Iterations

Movement of “physical” property

Reminder post-card

Customer

Technology Used

Monitoring

MRP

Process Box

F I F OXOXO

Leveling—Mix and/or

Volume

8

Jack is a Licensed Accountant and maintains a practice in personal, self-employed and small business income tax preparation. Jack would like to take on more corporate clients because of the higher margins. However, during the tax season, self-employed returns require long hours because of the frequent waits, delays and errors. If Jack can improve the process for self-employed clients, he could take on more work during that time of year.

Generally, the sequence of events begins for each client sometime in late January with Jack’s assistant, John, (1) sending a reminder to submit their records as soon as possible. Then, sometime before the first of April, the client must bring in all necessary forms and receipts. Regular clients drop off or send their box of receipts and tax forms from various income sources. Jack (2) sorts the receipts and documents, finding that most of the time, there is something missing. He notifies clients asking for missing documents. His next step is to (3) prepare worksheets for the client in the TS tax system. Once Jack starts filling out the worksheets, he frequently needs to (4) confirm deductions such as what expenses qualify as business-related and details regarding retirement or insurance deductions.

Once Jack has completed the worksheet, his assistant John actually (5) prepares the IRS forms. For self-employed clients, John waits until Thursday when he prints all returns that have accumulated during the week from the TS tax system. Of course, (6) Jack must review and sign each return. Finally, John completes the process by packaging and (7) mailing the IRS forms with the necessary attachments to each client.

Jack’s Taxes

9

Data Set

(1) Send Reminder: JohnP/T = 10 minFTQ = 100%

(2) Sort receipts & documents: JackP/T = 30 minW/T = 1 week in inbox before sortingFTQ = 10%

(3) Prepare Worksheet: JackTechnology used: TSP/T = 60 minW/T= 4 week wait to prepare worksheetFTQ = 95%

(4) Confirm deductions: JackP/T = 10 minW/T = 1 week to complete confirmationsFTQ = 50%

(5) Prepare IRS tax forms: JohnTechnology used: TSP/T = 15 minW/T = 1 week in inbox before form prep. FTQ = 98%

(6) Review and sign forms: JackP/T = 15 minW/T = 1 day avg. in inbox before signingFTQ = 100%

(7) Collate and mail forms to client: JohnP/T = 10 minW/T = 1 day accumulation before collation and mailingFTQ = 100%

Tax Season: 8 weeks / 40 Self-Employed Clients

• P/T = Process Time• W/T = Wait Time• FTQ = First Time Quality• TS = Tax Software

KEY

10

Draw Current State Map

Don’t Solve it…….Just Draw It!!

Planning forAction

PreparationCurrent

StateFutureState

11

Typical Steps forCurrent State Mapping

1. Document customer information

2. Identify main processes (in order)

3. Select data attributes

4. Perform Value-Stream walk-through and fill in data boxes, including “inventory” and resident technology

5. Establish how each station/process knows what to work on next (how they prioritize) and identify information flows.

6. Calculate waiting time vs. processing time, First Pass Yield, and/or other Value-Stream summary measures

Planning forAction

PreparationCurrent

StateFutureState

12

Jack60 min

4 weeks95%

John10 min

100%

Jack30 min1 week

10%

IN

40 clients

Sort receipts

& documents

Confirmdeductions

Mail forms

Tax forms to client by 4/10Receipts & documents

IN

Notify of m

issing documents

Cla

rify

dedu

ctio

nsC

orrections

Reminder post-card

P/T

W/T

FTQ

PrepareIRS forms

TS

Review & sign forms

IN

Send reminder

Prepareworksheet

TS

Client

Jack10 min1 week

50%

John15 min1 week

98%

Jack15 min1 day100%

John10 min1 day100%

Total Waiting Time = 7 weeks + 2 days

Total Processing Time = 150 min

Missing docu

ments

FTQ=4.7%

10 min 30 min 60 min 10 min 15 min 15 min 10 min

1week

4week

1week

1week

1day

1day

Jack’s Taxes - Current State

13

Analyze the Current State to identify waste that might be eliminated

Planning forAction

PreparationCurrent

StateFutureState

14

10% FTQ for Sort receipts & documents Why?

Misplaced documentsMissing Documents New Client

1 Document all potential root causes

When using “5 Whys?” ask the following . . .

• Do you think this is the root cause?• Should we ask why again?• Does it matter any more?

Why?

Jack’s requirements not communicated

Customer did not submit

Why?

3 “Drill down” by asking “why” on most likely root causes

2 Ask if any causes are more likely the root than another

unlikelyunlikely

Know when to stop

Using “5 Whys” to Identify Root Causesin the Current State

15

Now think about ways that you could eliminate the waste. Draw your ‘solutions’ on the Current State map.

Planning forAction

PreparationCurrent

StateFutureState

16

Designing the Future StateSpecific Questions to AskWhat does the Customer want?• Quality• Timing/Frequency• Features

How can you make the work flow more smoothly? • Eliminate rework• Eliminate repetitive work

How are resources applied?• Are resources adequate?• Are resources capable?

• Is quality produced at each step?• Is quality defined and measured?

• Are resources available?• Waiting at times and too busy at other times?• Unavailable due to working on other (the wrong?) jobs?

Planning forAction

PreparationCurrent

StateFutureState

• Eliminate delays• Consolidate work

17

Planning forAction

PreparationCurrent

StateFutureState

What are the customer requirements?

18

IN

40 clients

Sort receipts

& documents

Confirmdeductions

Mail forms

Forms to client

Receipts & documents

IN

Notify of m

issing documents

Cla

rify

dedu

ctio

ns

Corrections

Reminder post-card

P/T

W/T

FTQ

PrepareIRS forms

TS

Review & sign forms

IN

Send reminder

Prepareworksheet

TS

Client

John10 min

100%

Jack60 min

4 weeks95%

Jack10 min1 week

50%

John15 min1 week

98%

Jack15 min1 day100%

John10 min1 day100%

Jack30 min1 week

10%

Customer Demands:• Tax Forms completed accurately• Finished before filing time

Takt Time = Available time / Customer Demand

= 40 days / 40 Clients = 1 per day

Missing docu

ments


1week

4week

1week

1week

1day

1day


Total Processing Time = 150 min FTQ=4.7%

Jack’s Taxes Current State

19

How will you make work flow smoothly?

Planning forAction

PreparationCurrent

StateFutureState

20

IN

40 clients

Sort receipts

& documents

Confirmdeductions

Mail forms

Forms to client


IN

Notify of m

issing documents

Cla

rify

dedu

ctio

nsC

orrections

Reminder post-card

PrepareIRS forms

TS

Review & sign forms

IN

Send reminder

Prepareworksheet

TS

Client

Jack60 min

4 weeks95%

Jack10 min1 week

50%

John15 min1 week

98%

Jack15 min1 day100%

John10 min1 day100%

Jack30 min1 week

10%

COMBINE PROCESSES

Customer Demands:•Tax Forms completed accurately•Finished before filling time



John

Missing docu

ments


1week

4week

1week

1week

1day

1day

Total Waiting Time = 7 weeks + 2 daysTotal Processing Time = 150 min FTQ=4.7%


P/T

W/T

FTQ

John10 min

100%

21

Planning forAction

PreparationCurrent

StateFutureState

How will you trigger or sequence work?

22

Missing docu

ments

IN

40 clients

Sort receipts

& documents

Confirmdeductions

Mail forms

Forms to client


IN

Notify of m

issing documents

Cla

rify

dedu

ctio

nsC

orrections

Reminder post-card

PrepareIRS forms

TS

Review & sign forms

IN

Send reminder

Prepareworksheet

TS

Client

Jack60 min

4 weeks95%

Jack10 min1 week

50%

John15 min1 week

98%

Jack15 min1 day100%

John10 min1 day100%

Jack30 min1 week

10%

COMBINE PROCESSES

Customer Demands:• Tax Forms completed accurately• Finished before filling time



Checklist & Accordion File

Com

plet

e A

ccor

dion

File

John


1week

4week

1week

1week

1day

1day




P/T

W/T

FTQ

John10 min

100%

23

How will you organize work between interruptions in flow?

Planning forAction

PreparationCurrent

StateFutureState

24

Missing docu

ments

IN

40 clients

Sort receipts

& documents

Confirmdeductions

Mail forms

Forms to client


Notify of m

issing documents

Cla

rify

dedu

ctio

nsC

orrections

Reminder post-card

P/T

W/T

FTQ

PrepareIRS forms

TS

Review & sign forms

Send reminder

Prepareworksheet

TS

Client

John10 min

100%

Jack60 min

4 weeks95%

Jack10 min1 week

50%

John15 min1 week

98%

Jack15 min1 day100%

John10 min1 day100%

Jack30 min1 week

10%

COMBINE PROCESSES




Com

plet

e A

ccor

dion

File

John

FIFO FIFO


1week

4week

1week

1week

1day

1day





25

Can you establish a rhythm to pace the workand eliminate problems?

Planning forAction

PreparationCurrent

StateFutureState

26



Missing docu

ments

IN

40 clients

Sort receipts

& documents

Confirmdeductions

Mail forms

Forms to clientReceipts & documents

Notify of m

issing documents

Cla

rify

dedu

ctio

nsC

orrections

Reminder post-card

P/T

W/T

FTQ

PrepareIRS forms

TS

Review & sign forms

Send reminder

Prepareworksheet

TS

Client

John10 min

100%

Jack60 min

4 weeks95%

Jack10 min1 week

50%

John15 min1 week

98%

Jack15 min1 day100%

John10 min1 day100%

Jack30 min1 week

10%

COMBINE PROCESSES




Com

plet

e A

ccor

dion

File

John

FIFO FIFO

XOXO

Total Lead Time = 2 days


FTQ ~ 100%


1week

4week

1week

1week

1day

1day



27

What process improvements are necessary to achieve the Future State Value-Stream?

Planning forAction

PreparationCurrent

StateFutureState

28



Missing docu

ments

IN

40 clients

Sort receipts

& documents

Confirmdeductions

Mail forms

Forms to client


Notify of m

issing documents

Cla

rify

dedu

ctio

ns

Corrections

Reminder post-card

P/T

W/T

FTQ

PrepareIRS forms

TS

Review & sign forms

Send reminder

Prepareworksheet

TS

Client

John10 min

100%

Jack60 min

4 weeks95%

Jack10 min1 week

50%

John15 min1 week

98%

Jack15 min1 day100%

John10 min1 day100%

Jack30 min1 week

10%

COMBINE PROCESSES




Com

plet

e A

ccor

dion

File

John

FIFO FIFO

XOXO

Data entryworksheet

training

Reduce process time to 75 min

Standardize Work

Checklist and accordion file

process

Total Lead Time = 2 days


FTQ ~ 100%



29

IN

40 clients

Mail forms

Forms to client

Complete Acc

ordion File

Checklist &

Accordion File

P/T

W/TFTQ

Check & sign forms

Send reminder

Data entry+

print formsTS

Client

John10 min

100%

Jack15 min1 day100%

John75 min

100%

John10 min1 day100%

max 1 day max 1 day

XOXO

1 per day Over 8 weeks

Total Waiting Time = 2 days




Customer Demands:• Tax Forms completed accurately• Finished before filing time

FIFO FIFO

Data entryworksheet

training

Reduce process time to 75 min

Standardize Work

Checklist and accordion file

process

FTQ ~ 100%

10 min 75 min 15 min 10 min

1day

1day

Jack’s Taxes Future State

30

Summary of Results: Potential Impact

• Reduced PT 40 mins (27%) – Jack could add 11 additional self employed clients without adding work hours! Increased revenue, no more time.

• FTQ increased (4.7% to ~ 100%). Improved area of greatest opportunity.

• Turn-around time is now well within customer expectations (7 weeks down to 2 days). Able to respond to customer needs faster.

• Moved 70 mins of Jack’s “high priced time” over to John. Jack can now concentrate on more complicated returns or on obtaining more higher revenue generating corporate clients.

• Reduced personal overtime – Jack does not stay late signing returns anymore.

• This new Future State now becomes the next Current State (continuous improvement). Next Jack could investigate further leveling the work he receives in, filing electronically, …

31

Planning For Action

Planning forAction

PreparationCurrent

StateFutureState

Now that you’ve got a Future State –

• Ensure you have Management buy-off

• Create a specific implementation plan

• Identify group(s) for piloting improvements (where practical)

• Quantify and Measure

• How much will it cost?

• How much will it save?

32

Implementation Plan Example

Planning forAction

PreparationCurrent

StateFutureState

Last Review Date: 10-Dec-04Review Frequency (days): 7Next Project Review Date: 12/17/2004

Project Sponsor: Mr. or Ms. Executive/Manager Overall Status (% Complete): 14%Project Date: 8 Dec 2004 - 10 Dec 2004

Supporting Objective

Team Sign off Status

1. Select a sample of prior year returns to use for training.

John 1 day COMPLETED

2. Train John on these steps Jack 1 week STARTED

3.Verify time savings Jack 2 weeks STARTED

1. Determine number of categories and purchase accordion files

John 1 day NOT STARTED

2. Draft Checklist and Communications to clients Jack 2 weeks NOT STARTED

3. Determine how clients will be notified of new process i.e. send without warning, call ahead of sending, etc.

Jack 1 week NOT STARTED

4. Contact clients and discuss changes John 2 weeks NOT STARTED

Implementation Plan: Jack's Taxes

Timeline

A.Combine prepare worksheet, confirm deductions, and prepare IRS forms.

Resp: Jack

Support:

Dec-04 Jan-05 Feb-05

B. Trigger/Sequence Work: Establish Checklist and Accordion File

Resp: Jack

Support:

Obtain higher margins via more corporate clients; retain current customer base.

Project Goal:

TARGETImplementation Objective Methods/Action Steps OWNER

33

Next Steps

1. Identify opportunities that could benefit froma Value-Stream Mapping analysis

2. Get people into the VSM training

3. Complete some VSM activities

4. Post results to MySolectron

Success generates enthusiasm and more successes!

Planning forAction

PreparationCurrent

StateFutureState

34

Potential Areas to Map

ˆ Close process

ˆ Weekly/bi-weekly P&L process

ˆ Forecast/rack-up process

ˆ Reserve review process (E&O, A/R, etc)

ˆ Credit limit process

ˆ Discrepancy process for A/P

ˆ Inter-company process

ˆ A/R collections

ˆ Statutory/legal external reporting process w/ KPMG

ˆ Fixed assets process

ˆ Finance approval process

ˆ NPI invoicing process

35

PROPOSED VSM OPPORTUNITIES

List IdeasIdeas for VSM

Value-Stream MappingFacilitator

Process

OwnerExpected Due

Date

1

2

3

4

5

6

7

8

9

VSM - 2

Documents

lean future state

current state mapping1

current situation

valuestream walkthrough

time minutes

time hours processing

project step

document customer information