Lean Value Stream Mapping An Overview & Teaser

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1 Welcome to Lean Value Stream Mapping An Overview & Teaser Clinic B ASQ Orange Empire Monthly Dinner Meeting April 11, 2016 Frank G. Adler, Ph.D. Principal & Managing Partner Operational Excellence Consulting, LLC 1 April 2016 v 1.0 M.S. Mathematics & Physics, Freie University of Berlin Germany Ph.D. Operations Research & Industrial Economics, Helsinki University of Technology Finland Frank G Adler Nokia Mobile Phones Specialist, Global Operations & Supply Chain Development - Finland Manager, Operations & Quality Development - Fort Worth, TX Director, Lean Six Sigma & Quality Americas - Irving, TX General Manager, Mexico Operations - Reynosa, Mexico General Manager, US Operations - Fort Worth, TX Magellan Navigation Vice President, WW Quality & Customer Support - San Dimas, CA Angelica Corporation Corporate Director, West Coast - Operations, Logistics & Services Operational Excellence Consulting (OEC) April 2016 v 1.0

2 General Objectives & Key Learning Points Agenda: 1. Discuss the Five Lean Management Principles and The Seven Lean Wastes. 2. Review some of the key benefits and objectives of Value Stream Mapping. 3. Discuss an effective step-by-step approach to Value Stream Mapping. 3 April 2016 v 1.0 Lean Management Lean Thinking One of the most noteworthy accomplishments in keeping the price of Ford products low is the gradual shortening of the production cycle. The longer an article is in the process of manufacture and the more it is moved about, the greater is its ultimate cost. Henry Ford, All we are doing is looking at the time line, from the moment the customer gives us an order to the point when we collect the cash. We are reducing the time line by reducing the non-value added activities. Taiichi Ohno, April 2016 v 1.0

3 Lean Management Three Types of Process Activities Customer are willing to pay the organization for these activities, e.g. assembly. Customer is not willing to pay for these activities and they should be eliminated, e.g. rework. Value- Added Non- Value Added Customers are not willing to pay for these activities, but the organizations deems these activities as necessary, e.g. preventive maintenance. Business- Value Added Many process have less than 20% valueadded activities. 5 April 2016 v 1.0 Lean Management Value-Added Work Three criteria for Adding Value 1. Customer wants you to do it (or will pay for it) 2. The material / information is being processed or transformed into final products or services 3. It is done right the first time Key Lean Objectives: Reduce Lead Time Eliminate or Reduce Non-Value-Added Activities 6 April 2016 v 1.0

4 Lean Management The 7 Lean Wastes or Muda Waste Typical Manufacturing Definitions Translation to Services Examples Transportation An activity that moves materials or products more than is required. Handoffs or reviews, interoffice movement of materials, offsite storage transport Inventory Motion Waiting Over Production Over Processing Defects / Rework Product in storage or waiting for further actions to be carried out. All parts not immediately needed. Unnecessary movement of people, examples being long distances between workstations, doublehandling of materials, poor tool placement. People or product waiting for processes to finish or materials/tools to arrive. All inventory build up or delay between value adding steps for any product. Producing product that has not been ordered. This is the worst offender of all as it includes some elements of all of the other wastes. Activities carried out on materials/products which do not add value (more commonly referred to as Over processing) Making products that are not suitable for sale, or require reprocessing to bring them up to standard Requirements, Documents, WIP, Assets sitting on the shelf (e.g. laptops, air cards, people), excess s Unnecessary travel, hunting for information or people, manual workflow Employee idle time, waiting on responses, approvals, or service, delays in processing (including client). All time between one value adding step and the next. Duplicative data entry, making extra copies, producing data or reports that aren t needed, starting projects that won t be moved forward. Unnecessary extra steps, transactional activities, or approvals. Excessive reporting, unproductive meetings, expediting, firefighting, changing priorities Client billing errors, defective client-server systems, incorrect data entry, incomplete requirements 7 April 2016 v 1.0 Lean Management Value vs. Non-Value Added Work Process Start A Typical Process or Process Step Process End Work Time Wait Time Walking Time It is not uncommon, when analyzing a process or process step, to recognize that 60 to 70% of the total work time is actual non-value added work waiting, transportation, walking, and unnecessary motions. Organizations often focus on the value added activities to further improve productivity and efficiency, ignoring the often huge opportunities if they would focus on eliminating non-value added activities. 8 April 2016 v 1.0

5 Lean Management The Five Lean Principles Define Value - Specify value from the Customer perspective. Map Value Stream - Identify the value stream for each product or service and challenge all of the non-value adding steps (wastes) currently necessary to create and deliver this product or service. Add nothing than value. Create Flow - Make the product or service creation and delivery process flow through the remaining value-added steps. Establish Pull Introduce pull between all process steps where continuous flow is possible. Pursuit Perfection Manage toward perfection so that the number of steps and the amount of time and information needed to create and deliver this product or service is optimized. 9 April 2016 v 1.0 Value Stream Mapping Definition & Benefits A Value Stream represents the sequence of activities required to design, produce, and deliver a product or service to a Customer, this includes the flow of material and information. Value Stream Mapping is a Lean Management technique used to analyze the flow of materials and information currently required to bring a product or service to a Customer. A sophisticated flow charting method that uses symbols, metrics, and arrows to help visualize processes and track performance. This method helps determine which steps add value and which do not. Three Types of Value Streams Full Value Stream - A good or service is requested by and delivered to an external Customer Support Value Stream - Examples include annual budgeting process; recruiting, hiring, and onboarding process; and performance review process Value Stream Segment - In general a part of a Full Value Stream, e.g. product design, new product introduction, and service delivery. 10 April 2016 v 1.0

6 Value Stream Mapping From Function to Process Leadership Team Value Stream #1 Customer Requirements = INPUTS F U N C T I O N 1 F U N C T I O N 2 F U N C T I O N 3 F U N C T I O N Value Stream #2 Value Stream #3 Value Stream #4 4 F U N C T I O N 5 F U N C T I O N 6 Customer Satisfaction = OUTPUTS The Focus is on the Customer & Value Creation 11 April 2016 v 1.0 Value Stream Mapping The Development Process 1. Develop a Charter & Establish the Team 2. Document Current State Kick-off 3. Document Current State First Value Stream Walk 4. Document Current State Map Layout 5. Document Current State Second Value Stream Walk 6. Document Current State Map Details 7. Document Current State Information Flow 8. Document Current State Map Summary 9. Document Current State Analyze Current State 10. Design Future State 11. Create Transformation Plan 12. Manage Execution 12 April 2016 v 1.0

7 Value Stream Mapping The Development Process 1. Develop a Charter & Establish the Team 2. Document Current State Kick-off 3. Document Current State First Value Stream Walk 4. Document Current State Map Layout 5. Document Current State Second Value Stream Walk 6. Document Current State Map Details 7. Document Current State Information Flow 8. Document Current State Map Summary 9. Document Current State Analyze Current State 10. Design Future State 11. Create Transformation Plan 12. Manage Execution 13 April 2016 v 1.0 Value Stream Mapping Develop a Charter The charter serves as planning, communication, alignment, and consensus building tool. Key element of a Value Stream Mapping Charter include: Scope Value Stream Specific Conditions Demand Rate Trigger First Step & Last Step Boundaries & Limitations Improvement Time Frame Current State Issues & Business Needs Measurable Target Conditions Benefits to External Customers & Benefits to Business Accountable Parties Logistics 14 April 2016 v 1.0

8 Value Stream Mapping Establish the Team Value Stream Mapping teams must include leaders who can influence and authorize change along the value stream to be improved. Executive Sponsor An individual who oversees the entire value stream. May or may not participate in the event. Value Stream Champion / Owner An individual who oversees a significant part of the value stream and is accountable for the performance of the entire value stream. Event Facilitator An individual neither overseeing nor working in the value stream, serving as teacher, timekeeper, skilled change agent, provocateur,. Logistics Coordinator An individual responsible for booking the room, ordering lunches, organizing supplies,. Briefing Attendees Individuals (no more than 5 to 7) participating in the daily briefing sessions to ensure common understanding of the current state, and alignment of the organization around the future state value stream map and transformation plan. Mapping Team Members Individuals (no more than 10) from all key functions across the value stream participating in the event full-time. 15 April 2016 v 1.0 Value Stream Mapping The Development Process 1. Develop a Charter & Establish the Team 2. Document Current State Kick-off 3. Document Current State First Value Stream Walk 4. Document Current State Map Layout 5. Document Current State Second Value Stream Walk 6. Document Current State Map Details 7. Document Current State Information Flow 8. Document Current State Map Summary 9. Document Current State Analyze Current State 10. Design Future State 11. Create Transformation Plan 12. Manage Execution 16 April 2016 v 1.0

9 Value Stream Mapping First Value Stream Walk A critical step in creating a current state value stream map Going to the Gemba. The First Value Stream Walk focuses on obtaining basic information: The processing steps & activities that form the value stream The sequence of these processing steps & activities The functions performing each processing step & activity The key inputs and outputs of each processing step & activity Talk with the people that perform the processing steps & activities to get first a high-level understanding of what is being done to transform an input to an output. This is the time for learning, not judging. Everyone participates in the interviewing process and takes notes. 17 April 2016 v 1.0 Value Stream Mapping The Development Process 1. Develop a Charter & Establish the Team 2. Document Current State Kick-off 3. Document Current State First Value Stream Walk 4. Document Current State Map Layout 5. Document Current State Second Value Stream Walk 6. Document Current State Map Details 7. Document Current State Information Flow 8. Document Current State Map Summary 9. Document Current State Analyze Current State 10. Design Future State 11. Create Transformation Plan 12. Manage Execution 18 April 2016 v 1.0

10 Value Stream Mapping Map Layout The objective is to build a rudimentary view of the value stream. Customers & Customer Requirements (TOP 3 5) Suppliers & Supplier Constraints (TOP 3 5) Processing Steps Verb-Plus-Noun (5 15 Steps) Function(s) performing each processing step Sequence & Numbering of all Processing Steps Value Stream Mapping is as much art as it is science as long as the art doesn t interfere with the science! 19 April 2016 v 1.0 Value Stream Mapping Process Icons 20 April 2016 v 1.0

11 Value Stream Mapping May Layout Example Supplier Customer Process 1 Process 2 Process 3 Process 4 Function A Function B Function D Function E April 2016 v 1.0 Value Stream Mapping The Development Process 1. Develop a Charter & Establish the Team 2. Document Current State Kick-off 3. Document Current State First Value Stream Walk 4. Document Current State Map Layout 5. Document Current State Second Value Stream Walk 6. Document Current State Map Details 7. Document Current State Information Flow 8. Document Current State Map Summary 9. Document Current State Analyze Current State 10. Design Future State 11. Create Transformation Plan 12. Manage Execution 22 April 2016 v 1.0

12 Value Stream Mapping Second Value Stream Walk The Second Value Stream Walk focuses on gaining a deeper understanding about how the value stream currently performs and identify significant barriers to flow: Assess value stream performance in terms of TIME Takt Time, Lead Time, Cycle Time, Processing Time, Available Time, Changeover Time, Assess value stream performance in terms of QUALITY % Complete & Accurate (%C&A) Assess value stream performance in terms of RESOURCES # of People Assess value stream performance in terms of INVENTORY Raw Materials, Work-in-Process (WIP), Finished Goods Assess Process Efficiency, e.g. Conversion Rates of RFPs, and Work Triggers Identify Barriers to Flow!!! Collect or verify your own data!! 23 April 2016 v 1.0 Value Stream Mapping Making Work Flow Create Flow - Make the product or service creation and delivery process flow through the remaining value adding processing steps. Ideally, the work item passing through the value stream never stops. It moves effortlessly from person to person, work team/station to work team/station, department to department, without hang-ups, hiccups, or (unnecessary) delays. Ask yourself What is preventing the lead time from being the same as the processing time for each and every processing step or activity? 24 April 2016 v 1.0

13 Value Stream Mapping Barriers to Flow Barriers to Flow include: 1. Quality Issues 2. Shared Resources & Inaccessible Staff 3. Task-switching 4. Large Batch Sizes Raw Material Purchasing, Order Processing, 5. System and Equipment Downtime & Performance Issues 6. Prioritization Rules 7. Searching & Waiting for Parts, Information, Requirements, 8. Long Set-up & Changeover Times 9. Poor Work Area Layout Excessive Motion & Transportation April 2016 v 1.0 Value Stream Mapping The Development Process 1. Develop a Charter & Establish the Team 2. Document Current State Kick-off 3. Document Current State First Value Stream Walk 4. Document Current State Map Layout 5. Document Current State Second Value Stream Walk 6. Document Current State Map Details 7. Document Current State Information Flow 8. Document Current State Map Summary 9. Document Current State Analyze Current State 10. Design Future State 11. Create Transformation Plan 12. Manage Execution 26 April 2016 v 1.0

14 Value Stream Mapping Map Details The objective is to add now the information obtained from the second value stream walk to our value stream map. Add performance in terms of TIME Takt Time, Lead Time, Cycle Time, Processing Time, Available Time, Changeover Time, Add performance in terms of QUALITY % Complete & Accurate (%C&A) Add performance in terms of INVENTORY Raw Materials, Work-in- Process (WIP), Finished Goods Add RESOURCES # of People Add Barriers to Flow!!! 27 April 2016 v 1.0 Value Stream Mapping Material Icons 28 April 2016 v 1.0

15 Value Stream Mapping May Details Example Supplier Customer 75 Items Process 1 Process 2 Process 3 Process 4 Function A Function B Function D Function E LT = 16 Hours LT = 8 Hours LT = 12 Hours LT = 16 Hours PT = 5 Minutes 45 Items PT = 10 Minutes 65 Items PT = 15 Minutes 75 Items PT = 25 Minutes %C&A = 90% %C&A = 75% %C&A = 99% %C&A = 90% 29 April 2016 v 1.0 Value Stream Mapping The Development Process 1. Develop a Charter & Establish the Team 2. Document Current State Kick-off 3. Document Current State First Value Stream Walk 4. Document Current State Map Layout 5. Document Current State Second Value Stream Walk 6. Document Current State Map Details 7. Document Current State Information Flow 8. Document Current State Map Summary 9. Document Current State Analyze Current State 10. Design Future State 11. Create Transformation Plan 12. Manage Execution 30 April 2016 v 1.0

16 Value Stream Mapping Information Flow The objective is to visually demonstrate the technology-related disconnects, voids, and redundancies that exist in many value streams. Identify all IT systems and applications in use across the value stream Connect IT systems and processing steps with arrows Arrow head indicates the direction of the information flow Lightning bolt-type arrows indicate automated information flow from one IT system to another, e.g. auto-upload Identify over-processing, errors, and operational complexity caused by system disconnects, gaps, and redundancies 31 April 2016 v 1.0 Value Stream Mapping Information Icons 32 April 2016 v 1.0

17 Value Stream Mapping Information Icons 33 April 2016 v 1.0 Value Stream Mapping Information Flow Example Supplier Customer IT - 1 IT - 2 IT Items Process 1 Process 2 Process 3 Process 4 Function A Function B Function D Function E LT = 16 Hours LT = 8 Hours LT = 12 Hours LT = 16 Hours PT = 5 Minutes 45 Items PT = 10 Minutes 65 Items PT = 15 Minutes 75 Items PT = 25 Minutes %C&A = 90% %C&A = 75% %C&A = 99% %C&A = 90% 34 April 2016 v 1.0

18 Value Stream Mapping The Development Process 1. Develop a Charter & Establish the Team 2. Document Current State Kick-off 3. Document Current State First Value Stream Walk 4. Document Current State Map Layout 5. Document Current State Second Value Stream Walk 6. Document Current State Map Details 7. Document Current State Information Flow 8. Document Current State Map Summary 9. Document Current State Analyze Current State 10. Design Future State 11. Create Transformation Plan 12. Manage Execution 35 April 2016 v 1.0 Value Stream Mapping Performance Indicators Process Efficiency Ratio (PE) PE = Total Value Added Time Total Lead Time 100% Process Activity Ratio (AR) AR = Rolled % Complete & Accurate where n is the number of processing steps. Total Labor Processing Time Total Processing Time Total Lead Time 100% Rolled %C&A = %C&A 1 %C&A 2 %C&A n The average time it takes to actually perform the entire process - from start to finish - if one is able to work on an item uninterrupted. 36 April 2016 v 1.0

19 Value Stream Mapping Other Icons 37 April 2016 v 1.0 Value Stream Mapping Map Summary Example Supplier Customer IT - 1 IT - 2 IT Items Process 1 Process 2 Process 3 Process 4 Total Lead Time = 32 Hours Function A Function B Function D Function E Total Processing Time = 55 Minutes Total Value-Added Time = TBD Process Activity Ratio = 2.86% LT = 16 Hours LT = 8 Hours LT = 12 Hours LT = 16 Hours Process Efficiency Ratio = TBD PT = 5 Minutes 45 Items PT = 10 Minutes 65 Items PT = 15 Minutes 75 Items PT = 25 Minutes Rolled %C&A = 60.1% %C&A = 90% %C&A = 75% %C&A = 99% %C&A = 90% Total Labor Processing Time = 55 Minutes 16 Hours 8 Hours 12 Hours 16 Hours 5 Minutes 10 Minutes 15 Minutes 25 Minutes 38 April 2016 v 1.0

20 Value Stream Mapping The Development Process 1. Develop a Charter & Establish the Team 2. Document Current State Kick-off 3. Document Current State First Value Stream Walk 4. Document Current State Map Layout 5. Document Current State Second Value Stream Walk 6. Document Current State Map Details 7. Document Current State Information Flow 8. Document Current State Map Summary 9. Document Current State Analyze Current State 10. Design Future State 11. Create Transformation Plan 12. Manage Execution 39 April 2016 v 1.0 Value Stream Mapping Focus of the Future State During the current state analysis and future state development activities, the team shifts now from fact-finding (current state) to the discovery, innovation and creativity phase (future state). In terms of priorities, the mapping team should follow the following general rule: 1. Remove unnecessary non-value adding activities 2. Reduce the work effort (or need) to perform necessary non-value adding 3. Find ways to convert todays necessary non-value adding to unnecessary non-value adding in tomorrow's environment 4. Reduce the work effort to perform value adding activities Creativity before Capital!!! 40 April 2016 v 1.0

21 Value Stream Mapping Common Findings Based on our experiences in leading and facilitating Value Stream Mapping events and activities, common non-value adding activities and improvement opportunities include: Loopbacks Unnecessary handoffs Rework due to errors and lack of clarity Batching Functions missing or getting involved too early or too late in the process Redundant activities High variation in how work is performed Push and overburden No documented standard work Excessive inspection (review, approval, audits, ) Overspecialization of staff Existing technology not fully leveraged Underutilization of skills Compliance overkill Delays due to juggling multiple responsibilities 41 April 2016 v 1.0 Value Stream Mapping Kaizen Events or Bursts Raw Material Supplier 250 ft rolls Tues. + Thurs. Kanban Scheduling TOP 1-3 CUTTING 6-weeks Forecast C.T. 1.5sec C.O 0 Up-Time 75% 2 shifts 25,200 sec avail. Production Planning X 3 PRINTING C.T. 2.5sec C.O 65min Up-Time 95% 2 shifts 25,200 sec avail X 4 BINDING C.T. 4.0sec C.O 25min Up-Time 55% 2 shifts 25,200 sec avail TOP 1-3 NVA 4.5 days 0.8 days 0.2 day 2.0 days MRP Weekly Schedule Days Forecast Daily Orders Daily Ship Schedule I I I I 3 Rolls 4.5 Days Uptime Improvements 4,500 R 1,500 G Standard Work Rapid Changeover 600 R 900 G Customer 7.5k pcs/day k red k green 25 pcs/box 1X Daily SHIPPING Staging 8,500 R 6,500 G Kanban Scheduling VA 60 s 25 s 45 s % PE = 0.07 % 42 April 2016 v 1.0

22 Value Stream Mapping Performance Targets Key Performance Indicator (KPI) Current State Projected Future State Projected % Improvement Total Lead Time 30 Days 10 Days 66.7% Total Cycle Time 480 Minutes 440 Minutes 8.3% Total Processing Time 125 Minutes 100 Minutes 20.0% Total value adding Time 60 Minutes 80 Minutes 33.3% Process Efficiency 0.42% 1.25% 312.5% Rolled Throughput Yield 82.3% 92.0% 9.7% User defined... Based on the decisions made during the Design Future State phase, the Value Stream Mapping Team should develop a transformation plan (next section) and calculate the projected future state performance metrics utilizing the performance matrix initially developed during the Document Current State phase (see above). 43 April 2016 v 1.0 Value Stream Mapping The Development Process 1. Develop a Charter & Establish the Team 2. Document Current State Kick-off 3. Document Current State First Value Stream Walk 4. Document Current State Map Layout 5. Document Current State Second Value Stream Walk 6. Document Current State Map Details 7. Document Current State Information Flow 8. Document Current State Map Summary 9. Document Current State Analyze Current State 10. Design Future State 11. Create Transformation Plan 12. Manage Execution 44 April 2016 v 1.0

23 Value Stream Mapping Transformation Plan Value Stream Transformation Plan Value Stream Name: Order Management (from order entry to order delivery) Scheduled Review Dates Value Stream Owner/Champion: Eva Martinez (Value Stream Manager) January 30, 2015 July 3, 2015 Executive Sponsor: Tim Ward (EVP Supply Chain & Operations Management) February 27, 2015 Value Stream Mapping Facilitator: Frank Adler (Operational Excellence Consulting) March 27, 2015 Date Created: November 17, 2014 May 1, 2015 Date Last Updated: January 21, 2015 May 29, 2015 Future State Execution Planned Timeline for Execution Value Stream Measurable Target Proposed Countermeasure Champion Project Leader Method Map Block # Reduce Changeover Time for Perfrom series of Kaizen events to 3 KE Tim Ward Jesse Altadonna Process X by 25% implement countermeasures Status (0-100%) Executive Sponsor Agreement Value Stream Owner/Champion Value Stream Mapping Faciltator Signature: Date: Signature: Date: Signature: Date: The final step after the transformation plan has been developed, is the briefing to get buy-in from all relevant leaders about the path forward, the time and resources required to properly execute the plan, as well as the organization s ability to absorb the planned changes. 45 April 2016 v 1.0 Value Stream Mapping The Development Process 1. Develop a Charter & Establish the Team 2. Document Current State Kick-off 3. Document Current State First Value Stream Walk 4. Document Current State Map Layout 5. Document Current State Second Value Stream Walk 6. Document Current State Map Details 7. Document Current State Information Flow 8. Document Current State Map Summary 9. Document Current State Analyze Current State 10. Design Future State 11. Create Transformation Plan 12. Manage Execution 46 April 2016 v 1.0

24 Value Stream Mapping Transformation Plan Execution Final approval of Transformation Plan within one week of final briefing session Executive Sponsor and Value Stream Champion/Owner lead the socializing of the Future State Map and the Transformation Plan Value Stream Champion/Owner drives overall implementation & change initiative, support work teams working on realizing the future state map, troubleshoots roadblocks & obstacles, and runs scheduled review meetings. Value Stream Champion/Owner also provides periodic updates to Executive Sponsor (more frequent than review meetings) Executive Sponsor remains fully engaged, attends review meetings, monitors transformation progress, goes to the gemba, address policies, resolve political issues, No Execution No Improvement!!! 47 April 2016 v 1.0 Thank You & Join Us Workshop: Lean Management - Value Stream Mapping Location: Brandman University Laguna Canyon Road Irvine, California Date: April 30, 2016 Time: 09:00 04: April 2016 v 1.0

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