Value Stream Management Principles of Lean

Value Stream Management Value Stream Management is NOT just Lean Manufacturing! Value Stream = the set of all actions required to bring a product or service (or combination) through three critical business processes: Problem solving task—running from conception to commercialization of the product or service Information management task—forecasting, demand planning, order taking, master scheduling, etc. of the product or service Physical transformation—proceeding from materials or assemblies to final product Value Stream Management creates a Lean Enterprise (adapted from Lean Thinking-Womack and Jones) (slide name here) 2 .PPT

Key Principles of VSM Thinking Value Stream Management Specify value in the eyes of the customer. Identify the Value Stream for each product—this can be goods, information, services, critical business process, etc. Make value flow without interruptions. Reduce defects in products and deficiencies in processes. Let customers pull value. Pursue perfection. Drive out variation (short and long term). (adapted from Lean Thinking-Womack and Jones) (slide name here) 3 .PPT

VSM is used to win in the marketplace and drive business performance. The VSM Mission Value Stream Management Value Stream Management Creates: The safest system The shortest possible lead times The optimum level of inventory The highest practical customer order service levels The highest possible quality (low defect rate) The lowest possible waste (low cost) …throughout the entire supply chain VSM is used to win in the marketplace and drive business performance. (slide name here) 4 .PPT

What Does This Mean for Companies? Value Stream Management Cutting inventories by 90% Improving on-time delivery to >98% Reducing lead time from months to days Providing more and more value to customers, and getting paid for it Creating greater profitability and expanded customer acceptance of products Protecting jobs and establishing a rewarding work environment for employees (slide name here) 5 .PPT

How Can Companies Do This? Value Stream Management Synchronize Processes Internally Externally To the “beat” of the customer’s requirements Drive Out Waste Time Material Labor Space Motion Reduce and Manage Variation Improve Safety (slide name here) 6 .PPT

Value is created by the customer This is why a producer exists What Is Value? Value Stream Management VSM starts with defining value in terms of products and capabilities provided to the customer—at the right time and appropriate place. Value is created by the customer This is why a producer exists (slide name here) 7 .PPT

What is a Value Stream? Inputs Module Supplier Module Customer Module Value Stream Management Inputs Module Supplier Module Customer Module Process Module Outputs Module The Value Stream All the activities required to bring a product from conception to commercialization Includes detailed design, order taking, scheduling, processing, and delivery Understanding the value stream allows one to see value-added steps, non-value added steps, and non-value added but needed steps (slide name here) 8 .PPT

Defining Values of VSM Value Stream Management Value Added Activity: An activity that transforms or shapes material or information to meet customer requirements. Non-value Added Activity: Those activities that utilize time or resources, but do not add value to the customer’s requirement (but maybe to meet company requirements). (slide name here) 9 .PPT

The Eight Deadly Wastes (continued) Value Stream Management Overproduction—making or doing more than is required or earlier than needed. Waiting—for information, materials, people, maintenance, etc. Transport—moving people or goods around or between sites. Poor process design—too many/too few steps, non- standardization, inspection rather than prevention, etc. Inventory—raw materials, work-in-progress, finished goods, papers, electronic files, etc. Motion—inefficient layouts or poor ergonomics at work-stations or in offices. Defects—errors, scrap, rework, non-conformance. Underutilized personnel, resources, and creativity—ideas that are not listened to, skills that are not utilized. adapted from Taiichi Ohno How to Identify the Eight Wastes Overproduction—making or doing more than is required or earlier than needed What is the minimum quantity the customer needs? What is the minimum order quantity or lot size? Waiting—for information, materials, people, maintenance, etc. Any wait-time is waste. Look to eliminate or minimize by ensuring that items arrive only when they are truly needed. Transport—moving people or goods around or between sites Although some is necessary, this is also pure waste. Calculate the amount of travel distance and number of times items, materials, and WIP are moved per day (Spaghetti Diagram). Look to minimize distance or number of daily moves. Poor process design—too many/too few steps, non-standardization, inspection rather than prevention, etc. This is attacked through VA/NVA analysis. U-shaped cells and moving areas in close proximity. Standardize on a size (i.e. using same screw size for all assemblies). Design to eliminate inspection. Inventory—work-in-progress, papers, electronic files, etc. Calculate days of supply for all goods. Understand how long it takes to replenish each item (more frequent supplies means less inventory). Develop strategy for the amount of supply to keep. Monitor and measure. Motion—inefficient layouts at workstations; poor ergonomics in offices Motion requires detailed analysis of movements. Defects—errors, scrap, rework, non-conformance Any defect is waste. Use Pareto Analysis to identify key defect reasons. Need to understand causes of the errors—use cause-effect diagram. Look to eliminate all causes through mistake proofing. Underutilized personnel resources and creativity—ideas that are not listened to, skills that are not utilized Remember, that everyone can contribute. (slide name here) 10 .PPT