Presented by: Beau Keyte, LEI Faculty APICS Greater Jacksonville Seminar December 5, 2002 Value Stream Mapping and Management

Agenda 1.How We Got Here 2.Value Stream Mapping 3.Value Stream Management

The lean transformation should provide: Growth with improved margins Growth with minimal capital Growth without more employees

What are our main stumbling blocks? 75 years of bad habits Financial focus with limited cost understanding A lack of system thinking and incentives Metrics supporting a 75 year old model Limited customer focus Absence of effective operating strategies

How have we elected to address these stumbling blocks? Programs of the month (band aids) Meetings, meetings, meetings, meetings Silo optimization

What’s the impact of “silo” improvements? “Plant to plant” key players Purchasing Transportation Material Control Slide courtesy of HLS, Inc.

If we could just start over…..with Activities aligned with our business strategy Efforts focused on NET improvements for the company Metrics supportive of fundamental change Simple, constant communication of our plans and achievements as an enterprise

Why not take the value stream perspective? “Whenever there is a product (or service) for a customer, there is a value stream. The challenge lies in seeing it.” 3 enterprise value streams: Raw Materials to Customer - Manufacturing Concept to Launch - Engineering Order to Cash - Administrative Functions

A Value Stream is the set of all actions (both value added and non value added) required to bring a specific product or service from raw material through to the customer.

Value Stream Improvement vs. Process Improvement Raw Material Finished Product Stamping Process Welding Process Assembly Cell Process Customer Value Stream

Value Stream Mapping Follow a “product” or “service” from beginning to end, and draw a visual representation of every process in the material & information flow. Then, draw (using icons) a “future state” map of how value should flow.

Value Stream Map

Levels of a Value Stream process level single plant (door to door) multiple plantsacross companies Start Here

Value Stream Managers Each Value Stream needs a Value Stream Manager The conductor of implementation: Focused on system wins Reports to the top dog Process 1Process 2Process 3 “Customer” The Value Stream Manager Kaizen

Using the Value Stream Mapping Tool Understanding how things currently operate. Our Baseline! Product/Service “Family” plan and implementation Designing a lean flow. Our Vision! current state drawing future state drawing The goal of mapping!

Current State Mapping Completed in a day Performed by a cross functional team of middle managers responsible for implementing new ideas Resulting in a picture (and team observations) of what we “see” when following the product

Future State Mapping Completed in a day with the same team Focused on: Creating a flexible, reactive system that quickly adapts to changing customer needs Eliminating waste Creating flow Producing on demand

Current State Value Stream Map

Future State Value Stream Map

Don’t Wait! You need a plan! Tie it to your business objectives. Make a VS Plan: What to do by when. Establish an appropriate review frequency. Conduct VS Reviews walking the flow. Planning and Implementing

Remember the other two value streams? Administrative activities are often a major percentage of the total throughput time Goal: 400% improvement in productivity over 10 years Modest opportunities on the plant floor; Untapped opportunities off the plant floor

Enterprise Perspective Engineer to Order Configure to Order Capital equipment manufacturers Small companies (<500 employees) Service Firms

We might begin in… Processes directly impacting the part production Engineering Quoting Or, in value streams with direct customer contact Order entry Invoicing

Helps you visualize more than the single process level Links the material and information flows Provides a common language Provides a blueprint for implementation More useful than quantitative tools Ties together lean concepts and techniques Value Stream Mapping

Value Stream Management The map is just a picture of ideas! The fundamental change is in how we choose to manage the value stream as an integrated system of decisions and tasks.

Value Stream Management Use your strategic plan as a guide Find the gaps in necessary performance Improve value streams to meet the performance Create new metrics to support new ways of thinking and acting Understand true product family costs Manage operations by the value stream data Always have a future state

Critical Success Factors Management must understand, embrace, and lead the organization into lean thinking Value stream managers must be empowered and enabled to manage implementations Improvements must be planned in detail with the cross functional Kaizen teams Successes must be translated to the bottom line and/or market share

Continuously improving fundamentally flawed processes will yield limited results. Simply automating existing manual processes can also yield limited results. Seriously challenging old practices will provide the dramatic results desired. Putting it to Work!