What is value stream mapping, and why is it important?
Knowing which parts of your company’s production or delivery process are wasteful or inefficient is difficult. Figuring out how to improve them can be even harder. This is a significant problem with serious repercussions — just as one example, it’s estimated that 20% of every dollar is wasted in the manufacturing sector. This kind of waste can impact business outcomes, so finding a solution is a high priority for many organizations.
Value stream mapping (VSM) is a key technique within Lean and Six Sigma methodologies for visualizing the flow of information and material goods from customer order to delivery. It’s an effective tool companies can use to see and understand problem areas clearly — and pinpoint exactly what to fix. Learning how to create and analyze a value stream map can help you streamline your business processes to maximize value for your customers.
This article will cover:
- What is value stream mapping?
- History of value stream mapping
- Examples in different industries
- Purpose and benefits
- Value stream mapping — your step-by-step guide
- Value stream mapping best practices
- How to get started with value stream mapping
What is value stream mapping (VSM)?
Value stream mapping, also known as value stream analysis or lean process mapping, is a tool used to implement process improvement by identifying waste and reducing process cycle times. VSM is one of the most important tools for Lean Six Sigma (LSS), a leading process optimization approach.
The goal of VSM is to visualize the flow of delivering a product or service to your customer in order to see areas for improvement clearly. There are three essential steps:
- Create a current state map showing your process in its present form — from order to delivery — for a product or service.
- Analyze the current state map and discover ways to improve your process.
- Create a future state map —- showing the areas for improvement.
If you break down the term value stream mapping into its individual parts, it’s easy to understand its meaning and purpose. First, value refers to what a customer is willing to pay for. A value stream is the flow of information or material from design to delivery in response to a customer’s order. Where there’s no flow, there’s no value.
A value stream map is a drawing, diagram, sketch, or visualization that outlines the key steps in delivering a product or a service to a customer. It can illustrate inventory management, waiting times, and other key factors in the process. Therefore, value stream mapping is the act of using the map to identify waste, reduce production time, and implement improvements to the delivery process.
Value stream mapping vs. process mapping
Value stream mapping and process mapping sound similar, but there are a few important differences around the purpose and use of each.
Value stream mapping provides a more general overview of the value delivery of an organization and can be used for planning purposes. Process mapping has a more tactical implementation — it yields detailed insights into individual processes, giving teams and organizations the ability to optimize or reengineer their existing operations.
Value stream mapping (VSM) is a Lean Six Sigma (LSS) method for visualizing and analyzing the current state of the entire process of creating a product or service and delivering it to the customer.
History of value stream mapping
Value stream mapping has been around for a while. Charles E. Knoeppel’s 1918 book Installing Efficiency Methods shows examples of diagrams illustrating how materials and information flow through systems. In the 1950s, the Toyota Production System made these methods famous. By the 1990s, optimized and lean production methods were making their way through many industries and across the globe.
Methods and approaches to value stream mapping have continued to evolve since, with important contributions such as Learning to See by Mike Rother and John Shook, and Creating Mixed Model Value Streams by Kevin J. Duggan. Contributors to the field have continued to share further optimization techniques and principles as the field has matured.
Examples of value stream mapping in different industries
While value stream mapping started in manufacturing, many more industries have adopted it since those early days. Non-manufacturing industries use VSM to understand and optimize their workflows.
For example, the healthcare industry uses VSM to eliminate waste and improve service quality for patients and workers. Tech and software industries use VSM in similar ways to ensure the high quality of products and services to both internal and external customers. Office administrators use VSM to make sure processes are lean, aligned, and effectively meeting business needs.
Purpose and benefits of value stream mapping
The purpose of VSM is to find and eliminate waste so you can maximize value. VSM focuses on the customer experience — what brings value to the customer — and identifies and eliminates time and energy that bring no value to the customer.
There are many benefits to value stream mapping. Among them:
- It’s inexpensive and easy to learn, so there are few upfront investment costs.
- You can view your entire production and delivery process in one visual snapshot.
- It empowers efficiency upgrades, helping you find problem areas in your process and fix them.
- It has versatile applications — the lessons learned on one product or service can be applied to other products by using the same process.
- It’s collaborative and builds teamwork and communication.
- It’s customer-focused in the sense that it improves the end product for the customer.
Value stream mapping — your step-by-step guide
The following steps outline the basics of the value stream mapping process. These steps will help you put together a strategy to optimize your approach.
Step 1. Assemble your team and hold an event
First and foremost, put together a VSM process team and make sure you have the right people included. Involve high-level employees from every department — around 10 total, if possible. Include relevant vendors as well. And put someone in charge who has a sound understanding of and experience with VSM.
Formally start the Kaizen — Japanese for “good change” — kickoff. This is the initial event of VSM, and it should ideally last about three days. The aim of this kickoff is to get everyone on the same page in regard to the value of the project and the changes that need to be made. It ensures that ideas for change are voiced by everyone involved in the relevant processes. This event is where you will do the value stream mapping exercise, lay the groundwork for the optimization activities ahead, and build consensus and motivation around the effort.
Step 2. Identify a product
The next part of VSM is to choose a product family (or “process family”). This is a group of products sharing the same steps in the production process. A product family matrix will help your team determine the product family. In order to keep the effort customer-focused, ask what process improvement will mean the most to the customer.
Next, choose one — and only one — representative product from the product family. Choosing one single product makes it easier to follow and observe the production process. Ask what product is a good representation of how you make and deliver other products in your product family and explain that the lessons learned can be applied to the entire product family later.
Step 3. Collect data — “walk the flow”
With members from all teams involved, identify all the steps in the process. “Walk the flow” step by step. Talk to frontline people on the ground who do the work so they can clear up any misconceptions and explain where they see problems.
Take very clear notes about your assets (for example, the raw materials, inventory quantities, reliability of equipment, or number of operators), your process (such as the flow of information, processing time, changeover time, queues, dependencies, or inspections), and any problem areas (like delays, interruptions, unreliable vendors, safety hazards, duplicate work, or unnecessary steps).
Step 4. Create a current state map
Creating a current state map doesn’t need to be complicated — it can be a pencil-and-paper sketch. Feel free to use or create symbols specific to your industry. But your map should have some basic components:
- Information flow (on top)
- Material flow (below), including the data boxes
- Lead-time ladder (at the very bottom)
Pizza delivery is a simple example of a workflow that lends itself to VSM. The information flow is the exchange of both customer requirements and information that come together during the pizza order, the material flow is the creation and delivery of the pizza, and the lead-time ladder frames the timelines for the whole process.
Step 5. Analyze your current state map and identify waste
Once you have a current state map, it’s time to identify types of waste. The acronym DOWNTIME stands for the types of waste you’re looking for — defects, overproduction, waits/delays, non-utilized talent, unnecessary transportation, inventory excess, motion that’s causing waste, and excess processing. Going back to the example of pizza production and delivery:
- Defects would be mistakes in the pizza — burns, order errors, bad ingredients
- Overproduction would be too many pizzas made for the amount of customer demand
- Waits or delays could result from understaffing, undertraining, and other supply chain stresses that result in customer dissatisfaction
- Non-utilized talent might be that the best cooks are doing administrative tasks, or vice versa
- Transportation that’s unnecessary could be too many transportation steps in a catering job
- Inventory excess might mean over-ordering ingredients without proper storage capacity
- Motion that’s causing waste could be an inefficient way of making or boxing the pizzas
- Excess processing would be unnecessary steps in any process from order taking to creation to delivery
Step 6. Create a future state map
Now it’s time to create a future state map to better identify paths for process improvement. Look at the waste you’ve identified, and then ask yourself these questions to narrow in on solutions:
- Can all processes keep taking time?
- Where can you implement one-piece flow (working on one piece at a time rather than in batches) to help keep the flow moving?
- Where can you implement FIFO (using inventory on a first-in, first-out basis) to avoid stagnant inventory?
- Where can you use supermarkets (having just the right inventory ready for the job at hand) to reduce inventory wait times?
- Where can you streamline communication flow?
- What other areas of improvement can you see?
Make sure to note places where you can make improvements with the Kaizen burst symbol.
Step 7. Implement an action plan and measure your progress
Once you have a future state map, it’s time to get started with an action plan. Your action plan details how to implement the solutions in your future state map. It helps to create an ideal state map — however impossible it may seem — of what you would ideally like your process to look like.
Your action plan should have Kaizen events, which consist of two or three intense days to fix processes. These Kaizen events added together over time lead to big change. Each new future state map should look more like your ideal state map.
Value stream mapping best practices
Following best practices around your VSM activities will ensure the best experiences as you optimize processes and outcomes. Here are some important guidelines to keep top of mind:
- Make sure you have the necessary time, people, and resources before you start.
- Walk the process in reverse — start from the end product delivery and trace your way back to the order to get a better sense of the flow.
- Focus on one single product, not an entire product family.
- Always analyze from the customer’s point of view — with the customer in mind.
- Don’t let the process of value stream mapping make you inefficient.
Getting started with value stream mapping
Value stream mapping is enormously beneficial for organizations looking to improve business outcomes through leaner production processes. It will help you accurately see and identify areas for improvement and then create a realistic and effective plan for optimization.
When you’re ready to get started with value stream mapping, get your team together and plan your first meeting — the Kaizen kickoff. Remember, your value stream map doesn’t have to be fancy. You can use pen and paper or a whiteboard — whatever is simple and increases the chances of getting started. Then find the right tool to help.
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