MODULE 125 Lean Thinking / Lean Tools I. Section 3.1 Unit Introduction 29. Section 3.2 Unit Objectives 29

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1 MODULE 125 Lean Thinking / Lean Tools I Value Stream Mapping Contents Section 3.1 Unit Introduction 29 Section 3.2 Unit Objectives 29 Section 3.3 Introduction to Value Stream Mapping 29 Section 3.4 Why VSM 30 Section 3.5 Selecting the Product Family 38 Section 3.6 Mapping the Current State VSM 40 Section 3.7 Developing the Ideal State VSM 49 Section 3.8 Mapping the Future State VSM 49 Section 3.9 Achieving the Future State VSM 57 Section 3.10 Unit Review 58 Section 3.11 SAQs 58 Section 3.12 SAQ Suggested Answers 58 Section 3.13 References 58 27

2 UNIT 3 Value Stream Mapping 28

3 MODULE 125 Lean Thinking / Lean Tools I Value Stream Mapping Section 3.1 Unit Introduction This unit provides an introduction to Value Stream Mapping, identifies and explains the advantages of VSM and outlines the reasons why it plays such an important role in the implementation of any Lean strategy. The unit provides an overview of VSM and then takes the student through the various steps involved in performing VSM. It identifies and explains the necessary steps from initially identifying the product family through the construction of a Current State Map, creating an Ideal State, generating a Future State Map and finally developing an implementation plan to achieve the future state. Section 3.2 Unit Objectives When you have successfully completed this unit you will be able to: Describe why VSM is such an important Lean Tool Describe and explain the key benefits of VSM Explain the key steps and requirements for completing Current, Ideal and Future State Value Stream Maps Describe and plan a VSM event Develop a future state VSM implementation plan Section 3.3 Introduction to Value Stream Mapping (VSM) Introduction Defining Value and the Value Stream were introduced and identified as the first 2 principles in Unit 1 of his module. A value stream is essentially the sum of all the steps that must be performed in the defined sequence to create and deliver value to the customer. The complete value stream includes all the steps required to recognise demand and to plan (information) as well as to process (execute). The value stream includes all process steps; value-added and non value-added. If there is a product or a process for a customer, then there is a value stream. Mapping the Value Stream is a critically important step in any Lean transformation and when the tool is rigorously applied it provides a powerful and effective link between Lean strategy and execution. 29

4 UNIT 3 Value Stream Mapping Many Lean tools exist to support an organisation s lean transformation. However VSM is particularly important, as it provides a mechanism to identify where waste exists and to define the shape of the desired Lean value stream, thus facilitating the deployment of resources and effort into improvements that will have a significant beneficial impact on the value stream. Without VSM, lean activities and improvements often fail to focus on the critical issues and areas needed to deliver overall system improvement, creating islands of excellence without actually improving the overall value stream. Such efforts will often improve one small part of the value stream and can improve the flow through that portion of the stream, but the value flow often comes to a stop in a swamp of inventory and detours ahead of downstream processes. The end result can often fail to deliver any overall cost savings, provide no improvement in customer service or quality and result in limited or no sustainability. VSM therefore plays a key part in ensuring that improvements impact the whole value stream rather than deliver isolated, if sometimes dramatic local improvements. Section 3.4 Why Value Stream Mapping (VSM) Introduction VSM is primarily concerned with mapping the movement of information and materials through the value stream. VSM follows a product s production path from beginning to end, and draws a visual representation of every process in the material & information flows. Mapping the value stream allows us to look at our business from a different perspective, or with fresh eyes. There are a number of specific benefits which result from VSM, these being: It helps us visualise more than just the process level - lets us see from door-to-door (and beyond) It allows us to see the sources of waste It shows linkage, or lack thereof, between the flow of information and the flow of material - VSM is the only tool to include critical information flow and much of lean depends on how information flow is handled It provides a common language and assists in clearly communicating future state ideas It helps target improvement projects on the right opportunities that will make a real difference to performance and flow VSM facilitates the selection of appropriate tools as needed to achieve future state vision It provides a blueprint for implementation. Would you build a new house without a blueprint? It ties together various lean concepts and techniques 30

5 Unit 2 introduced muda and the 7 wastes. VSM will highlight where many of these wastes exist within the Value stream, including items such as: Overproduction: producing 6 8 weeks prior to downstream consumption Defects: defects detected downstream or at customer site Unnecessary Inventory: producing more than what was ordered Unnecessary processing: rework Unnecessary transportation: significant movement of material between process steps Waiting: operators waiting Unnecessary motion: operators walking around area looking for tools, material, gauges, etc To keep your customers happy you must offer a good demand response by delivering their order on time and of good quality, within budget. If you have difficulty working within the time and cost constraints the customers may bring their business elsewhere. To grow and profit in today s ever-demanding marketplace, you need to incorporate a good work methodology for continuing and improving the system that gives the customer what they want. Value Stream Mapping (VSM) helps you to understand and improve your system. What does the Customer Value? To remain competitive, you must know where the value lies for your customer. Lean thinking focuses the system on the customer. The system must provide in the most efficient manner possible what the end customer is willing to pay for. To build a loyal and lasting relationship with your customer, every part of the organisation must know and understand their purpose from the customer's point of view. - What do you currently do for the customer? - What should you do for the customer? VSM helps you to truly evaluate and assess these questions. You must provide your customer with a good value proposition. A value proposition offers: 1 Time 2 Quality 3 Cost MODULE 125 Lean Thinking / Lean Tools I VSM is a tool that will enable you to produce an action plan. When implemented successfully it will result in an improved value proposition. Can you improve the value proposition you currently offer your customer? Identifying a Value Stream Where there is value from your customer's point of view there is a value stream. The challenge lies in identifying it. 31

6 UNIT 3 Value Stream Mapping A value stream is all the actions (both value added and non-value added) currently required to bring a product through the main flows essential to produce that product or service. By taking a value stream perspective you will examine the entire system from raw material to customer end product or service fulfillment. Real-life Example Stonebridge is a company that specialises in precision machining and welding. It produces parts for the oceanographic and defence industries. Using lean manufacturing with VSM, Stonebridge identified waste in their end-to-end system. Minimising these wastes using VSM led to a number of improvements. Value Stream at Single Plant Level VSM aids in efficient production system design based on the end-to-end system flow of a product family. By drawing a VSM you will follow a product's production path from beginning to end. Taking a value stream perspective means examining the entire system from raw material to customer end product or service fulfillment. You will work to improve the end-to-end system, not just individual processes. When you start VSM, you will begin by examining one product at single plant level. Once you are confident with VSM, you can move towards mapping at different levels. VSM forces you to interact with the workplace, examining and understanding your demand response. The act of physically going through the process provides a unique experience in understanding the demand response. It will provide you with an understanding of what actually occurs in the workplace rather than what you think may be occurring. Most managers are surprised by the results. There is no substitute for direct observation. 32

7 Material and Information Flow To have a good value proposition, information and material flows must work together. A VSM examines both the information and material flow of a product. Information flow is the exchange of information received from a customer in relation to an order e.g. production, or shipping schedule. Material flow is the movement of physical items through the entire value stream e.g. assembly to shipping. Material and information flow must be examined in conjunction with one another to get the most out of your value stream. VSM makes the complexity of the information flow visible and shows how the material flow responds to it. Examining the information flow through VSM allows you to see if you are producing to meet the customer demand (build to order) or building to schedule. Examples of information flow include production and shipping schedule, as well as customer and supplier forecasts and orders. Examining the material flow through VSM helps us to understand the physical movement of material from receiving, through to production, to the shipment or delivery of finished goods or services. Examples of material flow are molding to assembly, assembly to shipping, etc. The Stages of VSM Figure 3.1 below shows the steps in creating a Value Stream Map. To create a VSM you must follow these steps: 1 Select a product family to examine 2 Draw a current state map and analyse problems in the value stream 3 Define your Ideal state: where you want to be 4 Draw a future state map MODULE 125 Lean Thinking / Lean Tools I 5 Create an action plan and implement Select a Product Family - Identify the unit of analysis. Current State Map Gathering data on your material and information flows on the work floor. Define Ideal State - Think about where you want to go in an ideal situation. i.e. building the perfect system. Future State Map - Draw a future state that uses the principles of flow and pull. Action Plan - Create an action plan to implement the future state map you have created FIGURE 3.1 The Steps in Creating the Value Stream Map 33

8 The ideal state provides you with your destination. Now you know where you are starting and where you are going and are ready to take the next step. Once you have reached your target future state, it now becomes your current state, from which the next future state VSM should be developed, taking you closer to your ideal through continuous improvement. A Value Stream Map provides the following: A visual tool to show you how value flows to the customer in your organisation A 2D representation of your value stream map A clear summary statement which helps you to communicate a shared vision Measurable goals A continuous Improvement Plan UNIT 3 Value Stream Mapping A system blueprint for how the value proposition can be improved for the customer Understanding of how much production time is value and non-value Leadership Support Without management's full commitment, VSM will not succeed. You will not gain the benefits already discussed and as a consequence will waste time, money and resources. To support VSM, leadership must ensure that improvements are aligned with the business strategy and must also lead: By example By being knowledgeable By questioning By understanding the fundamentals By supporting Adaptability of VSM VSM is a tool that can be applied to all areas of your business administration, I.T, manufacturing, etc. The principles and goals will always remain the same. You must improve the value proposition for the end recipient. 34

9 MODULE 125 Lean Thinking / Lean Tools I VSM Example Darchem Insulation Systems Darchem Insulation Systems produce a range of technical insulation solutions for the Automotive and Aerospace sectors. The company decided to implement Value Stream Mapping to improve the flow for one product family. The management at Darchem had experienced some success in using lean techniques. They discovered that VSM could be used to get a clearer understanding of what happened to the product as it passed through the value stream - and where improvements could be made. The management team brought together a team to undertake value stream mapping. The team started by walking the entire process to make sure they understood it. Instead of starting at goods-in, where materials are delivered, the team started at the dispatch end of the process. This way they were able to start with the processes that are linked most directly to the customers' needs. Darchem s first map did not attempt to describe everything on the shop floor. The aim was to walk the system and find out what really happens - as if a piece of material were tagged - the aim was to follow the experience of a part as it flowed through the facility. The team's ability to create a future state depends on going to where the action is and understanding what really happens. Within the selected product value stream there were 8 main processes: 1 Partmark 2 Metal Cutting 3 Insulation Cutting 4 Assembly 5 Spot Weld 6 Fit Eyelets 7 Inspect 8 Dispatch Darchem decided to record related processes as process categories such as cut and press for example and assembly instead of recording each process. The current state map shows more than simply the processes involved. 35

10 UNIT 3 Value Stream Mapping It shows: How stock builds up How long materials wait between each process The amount of wasted time The way information flow controls the system What did the current state map show to the VSM team? The team were surprised at the results. The map showed that lead time was 23 days, whereas the actual time it took to produce one item was only 59 minutes. This meant that for 22 days and 23 hours the product was not being worked on. The map also showed: There was overproduction which caused a bottleneck with some processes being under utilised waiting for jobs to reach a certain stage in production... and then being swamped! Production was being driven by schedules that were often inaccurate. The team constructed a future state map to show how they would like things to work in the value stream. In the future state map they designed a system to allow the products to flow smoothly and rapidly through the factory. They also introduced methods to allow the customer requirements to control production. The company are now in the process of implementing all of these actions within their product value stream. They have already gained many benefits: Reduced inventory on shop floor Improved delivery performance to their customer Greatly improved flow of materials The company are delighted with the improvements made to date and further efforts are now underway to use Value Stream Mapping in other parts of their business. Management Reflection If you are going to adopt lean manufacturing as a way forward it has to become a normal way of operating... a way of life. Our next step is to pass on some of the skills and experience we have acquired through Mapping the Value Stream to other parts of the operating business We have the aim of eventually cascading knowledge through the entire enterprise. The mapping shows there are very many more opportunities for us. The exact way we have done things may not provide an expedient model for other parts of the business. 36

11 MODULE 125 Lean Thinking / Lean Tools I However, the VSM approach is extremely flexible and offers a graphical representation of the way we really do things. Alan Sheffield, General Manager Darchem Insulation Systems, Gloucester, United Kingdom Conclusion VSM provides a framework to balance a customer value proposition against your system's capability. Where there is a value proposition for a customer there is a value stream. The challenge lies in identifying it and increasing the system capability. VSM is a systematic approach that allows people to plan how they will implement the improvements that make it easier to meet your customers' demands. Value Stream Mapping: Encourages awareness of the value proposition Identifies opportunities for improvement in the value stream Facilitates visualising more than just the single-process level, i.e. assembly, welding etc Provides a plan for implementing improvements By following well-defined steps and using dedicated resources, Value Stream Mapping (VSM) can get the most from your value stream. VSM is successful as it uses proven mapping tools. VSM is also a cost effective tool as the resources required can be located in your current workplace. It is essential to the success of VSM that the cross functional team works together to produce the current and future state maps. The team will learn to look on the process with a common understanding and to achieve agreement on what areas to improve and why. The whole team must understand how the individual process flows contribute to the overall value stream. You must nominate an individual to be responsible for a product family and lead VSM from door to door. If no one is given responsibility for the value stream map as it crosses departments, VSM will not be implemented, resulting in waste of time and resources, and leaving parts of the flow unaccountable and left to chance. For VSM to succeed your work colleagues must understand that they will benefit from workplace improvements. Once the VSM project is identified, employees on the work floor must be informed as to what is happening and how it will benefit them, for example, there will be less rework. Set aside time for training. The workplace culture must be changed so that VSM and Lean become an everyday improvement. The only equipment required to draw a VSM is pen and paper for mapping and flip charts and markers for discussion. The map is drawn by hand using a pencil. Erasing and fine-tuning the map will help you to understand and improve the flow. You may also find it beneficial to begin mapping on Post-It Notes as you can easily rearrange them as the group discusses problem areas. 37

12 Do not use a computer to draw a VSM. The time it takes to hand-draw each process will give you time to fully understand material and information flow. The timeframe for creating a VSM will vary for each product. For a straightforward value stream, you should be able to create a VSM within a week. However, the more complicated context and scale of VSM gets, the longer it will take. Summary: Cross functional implementation team Full manager and team commitment Pen and Paper approach UNIT 3 Value Stream Mapping A good form of visual communication Provides for clear and concise communications between management and shop floor teams Section 3.5 Selecting the Product Family The first step is to select the product or product family that is to have its value stream mapped. Product Families Value Stream Mapping (VSM) is a time efficient tool that is best used to examine Product Families. Mapping at process level (process mapping) for each individual product would take too long. The first step in the VSM process is selecting a product family to value stream. Each value stream map must be concentrated on one product family. A product family is a group of products that pass through similar processing steps and over common equipment. Product family analysis is about breaking down the full product range into groups that can be managed together or share a significant amount of the value stream. There are no strict guidelines for grouping product families. The cross functional team must set and record their own guidelines in defining a product family. This will give the VSM team guidelines for grouping products into product families. There is no cut-off point in grouping products. You can only work to what the cross functional team agrees is the closest match. A Product Family Matrix is a table that can help you in identifying your product families. It is a table of products and processes which can help to define your product families by observing the common processes. Products that you considered totally different may have similar process steps, (see Figure 3.2 on the following page). If this is the case, then they can be grouped into product families, even if they are not related from a marketing viewpoint. The key is to think in terms of shared processes. 38

13 To create a product family matrix: 1 Draw a table MODULE 125 Lean Thinking / Lean Tools I 2 Divide the vertical axis into rows representing products 3 List the top level processes on the horizontal axis 4 Place a mark in a process box if that part of the process is used in creating the product 5 Look for common process steps that apply to several products FIGURE 3.2 A Product Family Matrix Next, you must select the product family to work with. A product family can be selected for a variety of reasons. There is no hard and fast rule for selecting a product family for VSM. Once the product families are defined, the cross-functional team can select the product family to value stream map that will most benefit the company. Summary Selecting a Product to Value Stream Map: Identify Products Identify Processes 39

14 Draw Product Family Matrix Compare Process Similarities Select Product to VSM UNIT 3 Value Stream Mapping Section 3.6 Mapping the Current State (VSM) Introduction By collecting data and drawing a Current State (CS) VSM, you can show how the system is currently operating. Collecting and analysing data from the information and material flow will aid you in improving the value proposition you offer the customer. A current state map starts by drawing the material flow and then by drawing the information flow. A current state map is drawn using a set of icons on a single sheet of A3 paper, and can be done initially as a brown paper exercise for larger value streams. Common icons used of VSM are shown below in Figure 3.3. FIGURE 3.3 Icons for Value Stream Mapping 1 Mapping the Material (Physical) Flow The customer is your main concern. Mapping always starts by drawing the customer symbol and recording customer order details. The customer is represented as a factory/outside source icon. It is typically drawn in the top right corner. Underneath the factory icon the customer order details are recorded, including demand quantities, delivery frequencies, delivery quantities, etc. Your current system will have a number of processes that need to be recorded. A process box is used to show an area of continuous flow. When the continuous flow 40

15 MODULE 125 Lean Thinking / Lean Tools I stops, another process starts. In examining the processes that are linked, you should start with the one closest to the customer and work backwards. Material flow should drawn from right to left at the bottom half of the map in order of processing steps, not according to the physical layout of the plant. Each process has attributes (data and information) that should be recorded. Process information is recorded in the process box. The information that you choose to record will vary according to each process. Process data is recorded in a data box. The data box is drawn directly under the process box. The data box will record the metrics associated with the process area. It is important to collect process data to enhance your knowledge of the material flow. It allows you to see how the process responds to the customer requirements. Direct observation will allow you to see and understand the result in the context of how you saw it being obtained. You should use actual observed information where possible, and not data stored in files as file information is often inaccurate or out of date. Examples of Process Data: Cycle Time The most important piece of process data to collect. Cycle time is the time that elapses between one part coming off the process to the next part coming off. Changeover Time The time it takes to switch from producing one good product type to another good product type. Uptime Available machine working time when a machine is fully functional and available. First Past Yield Primary measure of defects. Counts percentage of times work is done right first time. If it is not done right first time, you end up with rework or scrap. Cost E.g. labour, scrap. This needs to be done with care as it is only the processing steps that are costed and not inventory. Batch Size Unit of product or commodity that is processed in one go. 1 Value Stream mapping icons are explained further in Appendix A of Learning to See, by Mike Rother & John Shook (see reading list). 41

16 UNIT 3 Value Stream Mapping The current state map must also record the Inventory which exists between each process. Inventory is the quantity of work units/parts observed in the system between the end of one process and the start of the next. Inventory is symbolised by a (warning) triangle with an I in it. Transportation details from the supplier and to the customer are also part of the material flow, and therefore must be recorded. A truck icon is drawn to show the transportation of either incoming raw materials or outgoing finished products. The frequency of delivery should also be recorded on the current state map. The supplier is typically drawn, using an outside source icon, in the top left corner. Supplier data and the amount of inventory received should be recorded. By recording the material flow you can tell if you are working to a pull or push system. Pull Producing only to customer demand i.e. the process in the sequence closest to the customer takes the material flow from the process before it. Push Batches of material are moved to the next process without demand e.g. palettes of material are sitting in front of a process. A black and white striped arrow is used to identify push. Mapping the Information Flow The material flow cannot operate on its own. Without information from the customer and production scheduling, the material flow will lose its meaning. Information flow always starts when the customer transfers an order to your company. The next step in VSM is to map the information flow. Information flow is drawn from right to left, top to bottom and dominates the top half of the map. Arrows are used to show how the information is transferred. Each arrow represents one piece of information. Information transferred manually, e.g. telephone, letter, is represented by a straight line. Information transferred electronically, e.g. , fax, is represented by a jagged arrow. Production control is a conduit for information. It provides the scheduling information. It takes the customer's order (input) and transfers it to an output for suppliers and production. The current state map must show how information is transmitted from production control. Arrows are used to show that the production control centre dictates what is produced by each process. The frequency of the schedule is included in the process control box e.g. Materials Requirements Planning (MRP). Assessing the Non-value Activities Once the information and material flow are drawn on the Current State VSM, you need to assess the amount of wasted time in your process. A time line will help you assess this. The time line is an indented line. It is drawn at the bottom of the page, under the map. The time line summarises the current condition of your value stream and compares the inventory/queue time and the process times. The difference between the two is the amount of time spent on waste in the production process. 42

17 The time line represents two levels of your current state: Inventory Lead Time This is plotted on the top level of the time line. Inventory Lead Time = Amount of Inventory /Equivalent customer Daily Demand Add all inventory lead times to get the total inventory lead time. Processing Time This is the cycle time observed in the workplace for each process in the value stream, expressed in the appropriate time unit. You can compare the time spent on value and non-value added activities by subtracting the processing time from the total inventory lead time. 2 Conclusion The current state map is now complete. You have recorded all information and data on the material and information flow and inventory, and you have drawn a time line. You can show how the work floor is currently operating and will be able to recognise areas where there is no continuous flow and non-value adding actions. A current state map provides a starting point to realise future improvements. Summary What is a Current State Map? Draw Customer symbol and include data Draw material flow in order of processing steps Record location and quantity of inventory Detail and map information flow Time and record the cycle time for each process Show PUSH or PULL movements Draw Time Line MODULE 125 Lean Thinking / Lean Tools I Create a Current State Map using a Worked Example Using the case study material, you are going to construct a current state map for The HomeTech Company. By following the case study data and drawing the HomeTech current state map, you will be able to assess the difference in product lead time and processing times for the CCTV camera product family. HomeTech's cross functional team have agreed to create a current state map for their CCTV camera product family. As this is HomeTech's first attempt at value streaming, they have agreed to map at single plant level. HomeTech have explained the benefits of Value Stream Mapping (VSM) to their co-workers and have gone on to the work floor with stopwatches and pen and paper. 2 The Current State mapping process is also explored in a worked example in Part II of Learning to See, by Rother & Shook (pages 16-33). 43

18 As a member of the HomeTech cross functional team, you have been nominated to draw the current state map as the team discusses the data. Your customer, Modern Estates Ltd, requires a total of 18,000 CCTV cameras (12,600 indoor, 5,400 outdoor) per month. The cameras must be delivered in packs of 10 on a daily basis. The VSM team recorded that the CCTV Camera product family travelled through 7 different processes, starting with injection moulding and ending with dispatch. The processes are: Injection Moulding PCB Assembly PCB Test Sub Assembly Final Assembly Test Dispatch The VSM team also recorded the data for each process. The data for the Injection Moulding process is: Cycle time (C/T) 10 seconds Changeover time (C/O) 55 minutes Uptime 90% Operators 1 While recording the data, the team have also recorded the inventory that accumulates between each process. The accumulated inventory between Injection Moulding and PCB assembly is: 1 batch of Indoor cameras 1 batch of Outdoor cameras Batch size is 4000 UNIT 3 Value Stream Mapping 44

19 MODULE 125 Lean Thinking / Lean Tools I Process and inventory data for the remaining process steps are shown in the table below: (Note: That inventory data is for inventory found AFTER the identified process step.) PROCESSING DA TA INVENTORY DATA Processes Cycle C h a n g e o v e r Operators Uptime Indoor Outdoor Batch Time Time Injection 10 Sec 55 mins 1 Op 90% 1 Batch 1 Batch 4,000 Moulding PCB Assay 15 Sec 30 mins 1 Op 90% 2 Batches 1 Batch 1,000 PCB Test 25 Sec 1 Op 95% 1 Batch 1 Batch 1,000 Sub Assay 50 Sec 2 Ops 100% 4 Batches 2 Batches 500 Final Assay 25 Sec 1 Op 100% 1 Batch 2 Batches 500 Test 70 Sec 5 mins 3 Ops 100% 250 Packs 150 Packs 10 Dispatch 30 Sec 1 Op 100% 225 Sec / 3.75 Min You now have the all the necessary data to map the material flow on the Current State Map. See picture of Material Flow VSM from Lean tools training VSM Module 3 Topic on the following page. You must now record the information flow. HomeTech Company gets a delivery from their suppliers, Pronto Components, once a week by truck. Production control is the central receiver and provider of information. It receives customer order information. This is delivered by as a 60-day forecast. In turn, production control delivers an order to its supplier, Pronto Components. HomeTech sends a 30, 60, 90 day forecast electronically to the Materials Requirements Planning (MRP) system through . It also raises a purchase order (P.O.) and sends it electronically to Pronto Components. The HomeTech Company uses an MRP system. This generates a daily schedule, the details of which are printed and given to the head operator at each individual process. However, the dispatch process receives its daily schedule directly from Production Control. At HomeTech Company, the team have realised that each of the processes is producing to a schedule, so the transfer of work in progress from one process to the next is controlled by the production scheduler and not the customer demand. They have determined that they have a push system working between each process. Now that HomeTech have the system (material and information flow) details for the CCTV camera product family, they can use the data to assess the amount of waste time in the process. To do this, a time line must be drawn. 45

20 UNIT 3 Value Stream Mapping FIGURE 3.4 Material Flow VSM 46

21 MODULE 125 Lean Thinking / Lean Tools I Next, the HomeTech team must record the process cycle times and the equivalent inventory lead times on the time line. The cycle time is recorded on the lower part of the time line. The equivalent number of days inventory can be calculated from the data already obtained. For example to calculate the inventory lead time equivalent of inventory between injection moulding and PCB assembly... Customer demand is 18,000 units per month. The inventory is 1 batch of indoor and 1 batch of outdoor cameras. Batch size is There are 5 working days in each week and 4 weeks in each month. Customer demand = 18,000 units per month = 900 per day. Inventory = 1 batch of indoor & 1 batch of outdoor cameras. Batch size = 4000 Thus two batches = 8000 units of inventory (cameras). Inventory Lead Time = 8000/900 = 8.8 days of inventory We now have all the necessary information to complete the Current State Map and to compare the current inventory lead time to the total processing time. See picture of full CS VSM on the following page from Lean tools training VSM Module 3 Topic The HomeTech VSM team are surprised by the big difference in production lead time versus production cycle time. They believe there are a lot of opportunities to investigate where there are value added and non-value added actions. From this they realise that a lot of production time is spent on activities that are nonvalue add for the customer. They will have to change this to remain competitive. Drawing and analysing the current state map has provided a starting point for HomeTech to move towards future improvements. 47

22 UNIT 3 Value Stream Mapping FIGURE 3.5 CS VSM 48

23 Section 3.7 Developing the Ideal State VSM Before beginning to create the future state VSM it is useful to understand what your longer-term aims are. This is achieved by imagining how your ideal value stream would operate and envisioning what key performance measures your organisation hopes to achieve such as lead time, delivery performance, quality levels, etc. This will provide the organisation with context and purpose to develop a new system and change the culture. In the ideal state: MODULE 125 Lean Thinking / Lean Tools I Single product/service would move in a continuous flow from raw materials to the final customer with no delays, queuing or rework. Every process would make only what their next customer wants and would be able to deliver the product when they want it. Real processes seldom reach the ideal state. However, the ideal state will provide you with a picture to help create and implement a future state. A future state map bridges the gulf between the current and ideal states. It provides attainable goals in the near term, progressing your workflow in manageable steps, incorporating the realities of technical limits, budgets and time. Section 3.8 Mapping the Future State VSM Introduction By analysing your current state map and identifying any problems which occur in your current value stream, you can identify areas where improvements must take place. The next improved state is known as a future state. By developing a future state map and working towards it, you will be improving the value proposition you offer your customer. The future state map is a creative process. How you challenge yourself and meet the challenge is up to you and your team. You are basing innovation on Lean principles. It is unlikely that any two people would create a future state map in the same way. Discussion and common agreement between your Value Stream Mapping (VSM) team is essential to the success of your future state map implementation. 49

24 UNIT 3 Value Stream Mapping Analysing your Current State Analysing your current state map will help you to identify the opportunities to design a value stream to better serve your customers. As you develop your future state concepts, you must be able to answer the following questions in roughly this order. Based on your answers, mark the future state ideas directly on your current state map in red pencil and change it before you reach a version you are happy with. Once you have worked out your future state thoughts in this way, you can begin to draw a future state map. As the VSM team analyses the current state map, you will see areas that can be improved. For the value stream to meet customer demand, each problem on the current state map must be resolved. Flow and Pull must be improved. The VSM team must set a goal that will be reproduced on the future state map. Additional icons are used when constructing a future state VSM. These icons are shown below (see Figure 3.6 on the following page) and represent Lean alternatives to the push type icons normally included in Current State Maps. 3 FIGURE 3.6 Pull Icons 50

25 LEAN Guidelines for Future State VSM MODULE 125 Lean Thinking / Lean Tools I Takt Time 4 Your goal is to have your value stream driven by customer orders. As the customer is your main concern and is the reason you are doing value stream mapping, you must look at the issues relating to customer demand. By focusing on customer demand you are trying to improve the value proposition you offer your customer. First you must understand your customers' needs. What do they want and when do they want it? The design of the future state map is based on the desire to meet your customer requirements. To meet customer requirements you must get your value stream to produce to takt time. Takt time is the first step towards meeting customer demand. It helps us to produce what the customer wants ON TIME. The purpose of takt time is to precisely match production with demand. Takt Time is calculated using the following formula: Takt time = Effective work time per shift Customer requirements per shift The period for which takt time is calculated can be weekly, monthly, quarterly, etc, depending on variation in customer requirements. The calculated takt time is written under the customer icon on the future state map. Continuous Flow Through your future state map, you are planning to implement continuous flow, or single piece flow. This means that each individual piece of work keeps moving i.e. being continuously worked on with no queues and waiting. It will not always be possible to go directly to single piece flow. In this case you should aim for the smallest possible batch sizes. This will provide flexibility to meet customer needs and to maximise continuous flow in your value stream. The process box is used to represent continuous flow. In your future state map, each process box should describe an area of flow e.g. two or more process boxes could be combined into one process box. It is not always possible to establish continuous flow straight away in your value stream. As you implement your future state map, you will need to ensure that customer demand is always met and production works to pull rather than to a schedule (push). Therefore as a precaution you may need to have a limited amount of buffer stock (a finished goods or other supermarket) to help you meet customer needs. You decide the amount of inventory to keep there, e.g. one day's worth. You may need to experiment with levels as you implement your future state. Your goal is to keep this stock to a minimum. Remember inventory is waste and you are working to remove it! By creating and implementing a future state map you can examine how operators and machines can be better utilised. Updated process data is recorded in a data box for that process. You may need to provide training for operators to be flexible in the processes they can perform. You might also need to examine how machines can be better maintained and used. Kaizen bursts can be used to indicate, on the future state map, where projects need to be undertaken to develop staff skills, to improve machine reliability and availability, etc. 3 See also Appendix A of Learning to See, by Rother & Shook 4 Takt time will be dealt with in greater detail in Unit 5 - Section

26 When designing your future state map, you will recognise lines which can be balanced by better utilising the operators. Line balancing is the process by which you evenly distribute the work element within a value stream in order to achieve a smoother flow and meet takt time and demands. Kanban/Pull How will each process know how much to make? Between each process there will need to be a signalling system or kanban. The signal tells people when to produce goods. The signal could be a card system, empty container or markings on the floor. When the kanban is empty, you must refill it. A production kanban triggers the production of parts. A withdrawal kanban instructs the operator to refill it when it is empty. You will need to show the type of kanban on your future state map. Initially, continuous flow will not be possible in all areas of the value stream. To overcome this you must introduce a supermarket pull system. This will control production between the processes that cannot be tied together in continuous flow. A supermarket is positioned between the two processes. When a unit is required it is taken from the supermarket. A withdrawal triggers the movement kanban cards from the supermarket to the supplier process, informing that the unit must be replenished. Implementing a future state will take time. Therefore, a finished goods supermarket is used. It stores a set level of goods and replenishes them as required. A finished goods supermarket allows you to: Meet customer demand immediately Create flow UNIT 3 Value Stream Mapping Pull based on real time customer demand You will also need to consider how your suppliers respond to your needs. Is it possible to create a KANBAN system for your suppliers so that they can deliver only what you need, when you want it and in the quantities you need? Suppliers can still have a forecast of your needs but regular deliveries can be controlled through pull systems. Scheduling to Your Pacemaker Process By using supermarket pull systems, you will need to schedule only one point in your door-to-door system. This point is called the pacemaker process and sets the pace for all other processes. The pacemaker should be located as close to to the point of shipment to your customer and is usually set at the production process that is controlled by the outside customer order i.e. the process closest to the customer. With the orders arriving to the pacemaker in a levelled format, the next stage is to ensure that the orders are released to the pacemaker in an even manner. This ensures there is an even spread of work throughout the day. This is achieved through a Heijunka box (load-levelling box) that is used to space the orders out. Kanbans are placed into the Heijunka box in the desired mix sequence by product type. The produce is spaced out to a certain pitch that allows for the completion of the customer order to the required Takt. Levelling Production To meet continuous flow you must level production. Levelling production means evenly distributing over a shift or a day the work required to fulfil customer demand. For example, instead of assembling all type A products in the morning and all type B 52

27 products in the afternoon, assembly would alternate between smaller batches of A & B. If you do not level production some cells will fall behind in production or will be waiting for work. Drawing a Future State Map Once you have analysed your current state map by using the key questions for future state design and recognising the areas that need improvement, you can start to draw a future state map. A future state map is drawn using paper and pencil as with the current state map. It uses the same format and layout as the current state map, i.e. information flow is at the top and material flow is at the bottom of the map. Create a Future State Map using a Worked Example Using the HomeTech case study material, you are going to construct a future state map for CCTV Camera product family value stream. As a member of the value stream mapping (VSM) team, you will analyse the current state map and draw a future state map. NOTE: It is unlikely that any two people would create a future state map in the same way. There are no definite correct answers in this topic, issues are resolved through team discussion. To draw a successful future state map, the VSM team must first analyse their current state map. Examine the HomeTech current state map to identify and highlight the areas of waste for: Overproduction Inventory Waiting Movement Defects MODULE 125 Lean Thinking / Lean Tools I There is waste of: Overproduction Inventory Waiting Movement Defects Everywhere there is inventory Everywhere there is inventory Injection moulding has 90% uptime, therefore there is 10% downtime and this means waiting Moving between departments from PCB assembly to PCB test HomeTech has not included First Past Yield (or rework) in the current state map 53

28 Analysing the current state map had forced the VSM team to recognise the various areas of waste that occur in their system. They can now begin to draw a future state map, where they can create a system to reach continuous flow. The customer, production control and supplier date remained the same as in the current state map. To create a future state that is implemented successfully, the VSM team must know their customers' needs. First they must calculate the takt time. Takt Time UNIT 3 Value Stream Mapping The HomeTech production time is 8 hour shifts with two 15 minute breaks. They work 20 days per month. The customer requirements per shift are units per month. The takt time must first be calculated in seconds and recorded on the future state map. Next, the team needed to determine where they could work towards continuous flow, utilising the current factory layout. The team agreed that they could change the layout of the process areas and introduce flow in: Injection Mould PCB Assembly, Test Sub-Assembly, Final assembly and Test Dispatch Seven processes have now been reduced to four. By combining PCB assembly and test, it is estimated that the: Cycle time of 15 seconds can be achieved for both assembly and test The changeover time can be reduced to 0 The uptime can be increased to 100% Only 0.5 operators are required. 54

29 At PCB assembly & test, you want to highlight that work must be done to decrease the test cycle time to under 15 seconds and the changeover time to 0%. Using kaizen lightning bursts indicate the required changes on your future state map. The future VSM has been improved over the current VSM but it is still a Push system. To ensure that they can meet the customer requirements while implementing the future state map, the VSM team has agreed to place a supermarket of indoor and outdoor cameras between PCB assembly & Test process and Assembly and Test. Initially, the batch size will be 1 day. The team decides to introduce a kanban system to replace the daily schedule to each process. Each process will have a batch kanban with pull activated from the preceding process. The withdrawal will be activated from the process which precedes it - assembly & test. Initially the batch size will be 1 day. Customer demand, which comes from the daily call off, is the trigger to pull product through the plant. This eliminates the need to schedule to each process. As all the processes are working to a kanban system, the daily call off is sent only to Dispatch. The team are now ready to complete the future state map for indoor and outdoor CCTV cameras. The estimated processing times for the four processes are: Injection mould: 10 seconds PCB assembly & test: 15 seconds Assembly & test: 100 seconds Dispatch: 30 seconds Next the team must calculate the total inventory lead time. Inventory waits for: MODULE 125 Lean Thinking / Lean Tools I 3 days after delivery from the supplier before it reaches the first process 1 day between Injection Mould process and PCB Assembly & Test 1 day between PCB Assembly & Test process and Assembly & Test process 2 days between Assembly & Test process and Dispatch Include this information on the time line and calculate the total inventory lead time. See picture of Material Flow VSM from Lean tools training VSM Module 4 Topic on the following page You have successfully created a future state map for HomeTech. Both the total lead time and total processing time have been drastically reduced from the current state map times. 5 5 The Future State mapping process is also explored in a worked example in Part IV of Learning to See, by Rother & Shook (pages 58-81). 55