Value Stream Mapping Ganesh Botcha, Ajoy Chatterjee 17 Aug ‘15

Agenda #TopicSpeakerMinutes 1What is ValueGanesh B2 2What is Value StreamGanesh B3 3Value Stream MappingGanesh B5 4PurposeGanesh B5 5MeasurementsGanesh B5 6SDLC ProcessGanesh B5 7Little’s Law and Visualization Ajoy C5 8Waste and sub-optimizationAjoy C4 9VSM MetricsAjoy C4 10VSM Event and ParticipantsAjoy C3 11How does VSM Look LikeAjoy C3 12Guiding PrincipleAjoy C2 13Considerations for Future StateAjoy C4 14Q&A10

"There is only one boss: the customer. And he can fire everybody in the company, from the chairman on down, simply by spending his money somewhere else." Samuel M. Walton Wal-Mart Stores, Inc. Chairman & Chief Executive Officer

“Value” is something that the customer would be willing to pay for. “Value” varies from customer to customer.  Examples of Value  Features/Specifications  Availability when needed/Timely Delivery  Price/Cost  Customer Service/Support  Politeness  Relationship Use “Value” as your starting point Align business to customer demands What is Value? OR Photo Source: Wikimedia Commons

What is Value Stream?  Value Stream is the set of all actions performed to bring a Product or Service into the hands of customer along which the information or material flows.  Some of the Value Streams  Portfolio Management  Identifying, prioritizing, authorizing business cases, governance and compliance to achieve strategic business objectives  Projects and Programs Management  Initiation, planning, execution, monitoring and control and closure processes  Software Development Life Cycle  Requirements, Design, Development, Testing, Deployment processes  Operations Support Management  Production Support, Upgrades, Incident Management, etc.,  Service Management  Catalog, SLAs, Capability, Availability Management, etc.,

Value Stream Mapping (VSM)  Value stream mapping visually maps the flow of materials and information through all processes until the Product or Service reaches the Customer.  It is a tool that helps us to visually see and understand the flow of material and information as a product or service makes its way through the value stream. The steps are laid out from left to right and top to bottom, with specific shapes used to denote the process components.  Identifies Value and Waste  Used to analyze the current state and design the future state  At Toyota, it is known as "material and information flow mapping"

Purpose of VSM Current State Future State Purpose of value stream mapping is to identify the Waste (lead time/wait time, duplicates, non value added, and improper sequence of activities) in the current state so that they can later be improved or eliminated in future.

VSM Measurements Takt Time Available Production Time / Number of Units the Customers need (Demand) Cycle Time Lead Time Rate at which the organization needs to produce in order to meet its customers’ demands Time it takes to complete an activity or process Time elapsed from work is made available until it’s completed and passed on to next person or department in the chain Taktzeit or Meter Also, Process Time Cycle Time and Lead Time are not the same.

SDLC Example Unit Test Cases Acceptance Test System Test Integration Test Unit Test Business Requirements System Requirements Component Design Program Specs Code Integration Test Cases UA Test Cases System Test Cases 3 weeks 4 weeks 3 weeks 2 weeks 1 week 2 weeks 1 week 3 weeks 4 weeks 1 week 2 weeks 12 weeks 1 week Cycle Time = 42 weeks, Wait Time = 10 weeks Lead Time = 42 weeks + 10 weeks = 52 weeks

Deep Dive into Business Requirements Process Types of Requirements ● Business Requirements Why the product is needed and its benefits for both customers and the business ● User Functional Requirements The tasks or business processes a user will be able to perform with this product ● Non-Functional Requirements, Quality attributes such as Reliability, Performance, Availability, Maintainability, etc., Business Requirements Process Schedule Meetings Elicit Requirements Document BRD Review Requirements Identify Stakeholders Baseline Requirements 1 Day 2 Days 1 Day 4 Days 3 Days 1 Day 2 Days Cycle Time = 12 Days, Wait Time = 8 Days Lead Time = 12 Days + 8 Days = 20 Days (4 weeks) Deep Dive into Suppliers, Inputs, Process Steps, Outputs, Customers, Responsible Roles, How long it takes for the Responsible persons to perform their activities (Cycle Time), How long those persons wait before starting their activity, Reasons for waiting (Wait Time), Lead Time, etc., and identify the improvements needed for future state.

Little’s Law In a stable system, L = λ W L – Average number of customers in the store λ – average customer arrival rate W – average time a customer stays in the store Example, In a stable system, i.e. arrival rate and departure rate being same, if 20 customers arrive per hour and stays for 15 min on an average, we should find 5 customers at any given time Little’s Law makes the basis of queue management in Lean process WIP = T L WIP – average number of items/ activities/ process in progress or Work in Progress T – average departure rate, i.e. Throughput or inverse of Cycle Time L – average time an item/ activity/ process spends in the system or Lead Time

Visualizing the Chain Process Time Lead Time Work Made Available Work Passed to Next Step Lead Time = ∑ Process Time + ∑ Essential non-value added Time + ∑ Unnecessary non-value added Time + ∑ Waste/ Delay × Muda × Mura Type 1 Type 2 × Muri √ Kata √ Poka-yoke √ Kaizen Process n Process n +1 Process n - 1

Types of Waste

Sub-Optimization “Sub-optimization is when everyone is for himself. Optimization is when everyone is working to help the company" Edwards Deming Management Consultant and Author Similarity, not difference focused approach Collaboration Optimization of the Value Stream will increase performance of the system. Sub- optimization may lead to wastage Example: Chundan Vallam

VSM Metrics  Activity Ratio = ∑ Process Time / ∑ Lead Time  1 – Activity Ratio = Idle Ratio  % Complete and Accurate (%C&A)  Percentage of input in a process that is deemed usable as-is by the resources doing the work  Measured by the immediate downstream customer or process owner  Similar to first pass yield in manufacturing (=Output/Input)  Rolled First Pass Yield (RFPY) = ∑ (%C&A) n  Freed Capacity = Current State FTE – Future State FTE

VSM Event Who should participate Value Stream Mapping? Leaders and Process stakeholders up in the chain who can authorize an innovative change on current state Is it not a Team Activity? It is always a team activity. The team obtains current state metrics from the Gemba How long usually is a VSM event? Usually 3 days What is the future state definition? The state, 3-6 months down the line Define Product Family Document Current State Design Future State Create Implementation Plan Implement 3 days Repeat

VSM Roles Strategic Tactical Who What How Middle Management Executive Leadership What are the wastes and non- value added spends? What change has to happen? Value Stream Mapping Workforce How changes can be executed? Projects, Kaizen

How does it look like?

Some of the Symbols used in VSM

What is not a Value Stream Map  A VSM must have timelines, i.e. at least lead time and process time. If it does not have timelines, it is not a VSM  A map without any metric is not a VSM  If the map diagram has swim-lanes, it is not a VSM  A VSM is not an ‘Optimum Process Flow’ diagram  A VSM is not a Kanban board  A VSM does not comprise of Kaizen. It may be means to implement future state of a VSM

VSM Guiding Principles PERFECTION PULLFLOW VALUE STREAM VALUE Define the value from end customer’s standpoint Identify the value stream for each product family Make the product flow So the customer can pull As you manage toward perfection

Considerations for Future State Map  Eliminate steps/ handoffs  Combine steps  Create parallel paths  Alter sequence  Alter timing  Implement pull systems  Optimize batches  Improve quality  Reduce manual error monitoring/ automate  Create an organized workplace  Make handshaking seamless  Eliminate motion and transportation  Standardize work  Reduce/ Eliminate unnecessary NVA immediately  Co-locate functions  Create cells of cross-functional staffs  Balance work to meet Takt time

References Bibliography:  Learning to See by Mike Rother and John Shook, Lean Enterprise Institute, 2003  Value Stream Mapping by Karen Martin and Mike Osterling, McGraw-Hill, 2013  Lean Thinking by Jim Womack and Daniel Jones, Simon and Schuster, 2013 Others:  Value Streams as Release Trains in SAFe  How and why to create Value Stream Maps for software engineering projects mapsforswengineerprojects/  Using Value Stream Maps in Information Technology technology  Improving the Value of the IT Service Delivery Process process/  Best Practices for Using Value Stream Mapping as a Continuous Improvement Tool  Value Stream Mapping

Questions?