1. Value Stream Management
Principles of Lean

2. 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)
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3. 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)
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4. 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.
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5. 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
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6. 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
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7. 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
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8. 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
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9. 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).
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10. 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.
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