© bma inc. 2009. all rights reserved. the value stream managing by value stream

© BMA Inc. 2009. All rights reserved.

The Value Stream

Managing by value stream


Value stream management

Organize by Value Stream

Planning theValue Streams

Controlling theValue Streams

Improving theValue Streams

Managing theValue Stream

Teams


What is a value stream?

“All of the actions, both value creating and non-value creating, required to bring a product from concept to launch and from order to cash collection. These include actions to process information from the customer and actions to transform the product on its way to the customer.”


Why do we focus on the value stream?

• Where the value is created.

• Identify value and waste.

• Focus on creating value for the customer.

• Identify flow and obstacles to flow.

• “See” the issues and make improvement.

• Create value, growth, & profit.


Why do we organize by value stream?• Focus on creating customer value.• Accountability.• Departments can be “optimized” but we

need to optimize the flow through the value stream.

• Develop lean thinking managers & specialists.“As you get the kinks out of your physical

production, order-taking, and product development, it will become obvious that reorganizing by value stream is the best way to sustain your achievement.”Lean Thinking, Womack & Jones


Kinds of value streams

Current Customers

New Customers

CurrentProducts

NewProducts

OrderFulfillment

Acquiring NewCustomers

CustomerDevelopment

New ProductDevelopment


Steps in value stream definition

1. Identify product families with similar production flow.

2. Staple yourself to a customer order.

3. Identify and minimize “monuments”.

4. For design or configure-to-order products include the design/configuration in the production flow.

5. Create a production flow matrix– Product families on the Y-

axis– Machines or work centers

on the X-axis6. Make sure the value

streams you select include significant business.

7. Move forward and backwards through the value streams– Value added services– Purchasing and Sales &

Marketing– Administrative tasks


Product-process matrix

Orig Order Re

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AA6 X X X X X X

AA6-12 X X X X X X X X X X X X

AA6-14 X X X X X X X X X X X X

AB19 X X X X X X X X X X X X X X X X X

AB21 X X X X X X X

AB21-2 X X X X X X X X X X X X

AB33 X X X X X X

AB39 X X X X X X X

Center A X X X X X X X X X

Center B X X X X X X

Center F X X X X X X X

Bi-Center X X X X X X X X X X X X

M12-XX X X X X X X

M12-Custom X X X X X X

M13 X X X X X X X X X

M13-Custom X X X X X X X

Res-Active A12 X X X X X X X

Res-Acrive A13 X X X X X X X X X X X X

Res-Active BB2 X X X X X X

Res-Active BB7 X X X X X X X

Qual-Tite X X X X X X X X X

Qual-Tite Custom X X X X X X

Wilson 99 X X X X X X X X X

Wilson 101 X X X X X X


Product-process matrixsorted for value streams

Orig Order Re

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AA6-12 X X X - - - X - - - X X X X - - - - - X X X X

AB19 X X X X X X X X X X X - - - X X X X X X - - -

AA6-14 X X X X X X X X - - X - - - X - X - - X - - -

AB21-2 X X X X X X X X - - X - - - X - X - - X - - -

Bi-Center X X X X X X X X - - X - - - X - X - - X - - -

Res-Acrive A13 X X X X X X X X - - X - - - X - X - - X - - -

Center A X X - X - - X X - - X - - - X - X - - X - - -

M13 X X - X - - X X - - X - - - X - X - - X - - -

Qual-Tite X X - X - - X X - - X - - - X - X - - X - - -

Wilson 99 X X - X - - X X - - X - - - X - X - - X - - -

AB21 X X X - X - X - - - X - - - - - - - - X - - -

AB39 X X X - X - X - - - X - - - - - - - - X - - -

Center F X X X - X - X - - - X - - - - - - - - X - - -

Res-Active A12 X X X - X - X - - - X - - - - - - - - X - - -

Res-Active BB7 X X X - X - X - - - X - - - - - - - - X - - -

M12-Custom X X X - X - X - - - - - - - - - - - - X - - -

M13-Custom X X X X - - X - - - X - - - - - - - - X - - -

AA6 X X X X - - X - - - - - - - - - - - - X - - -

AB33 X X X X - - X - - - - - - - - - - - - X - - -

Center B X X X X - - X - - - - - - - - - - - - X - - -

M12-XX X X X X - - X - - - - - - - - - - - - X - - -

Res-Active BB2 X X X X - - X - - - - - - - - - - - - X - - -

Qual-Tite Custom X X X X - - X - - - - - - - - - - - - X - - -

Wilson 101 X X X X X X


Criteria for value streams• Family of products with similar production

flow.• Include all the people & processes that

support the value stream production process.• The value stream team a reasonable size• Minimize monuments

– Machine/departments shared by more than one value stream

• Extend value stream as close to the customer as possible and as close to the suppliers.


Here’s a typical value stream• These are steps included in

the value stream– Sales & Marketing*– Customer Service*– Purchasing – Materials handling – Parts fabrication – Machining – Anodizing – Assembly – Shipping – Maintenance – Production engineering – Quality assurance – Cost accounting

• Most value streams contain monuments. Machines or processes that are shared by more than one value stream.

– Short term: Work around them– Long term: Eliminate

monuments & “right size” the equipment

• In the early stages of value stream management you may find there are not enough people with the right skills

– Short term: Have them work in more than one value stream

– Long term: Cross-train people to do different kinds of tasks.


There are some people or departments outside the value streams

Examples:– Plant or division manager– Financial accounting– Human resources– Information systems– Facilities management

These people support the value streams but are not part of them.


There are very few “perfect” value streams.

• A perfect (order fulfillment) value stream– Includes everyone from sales & marketing through to

operations, distribution, purchasing, and all the people that are required to support this operation.

– There are no monuments.– Everyone in the value stream is dedicated to that

one value stream.– The sales & marketing people are actively involved in

the value stream operations.– New product development is actively involved in the

value stream operations.– The value stream manager has complete control of

every aspect of the value stream operation.

There are very few perfect value streams.Many companies restrict their value stream to production operations

only.


When there are discontinuities in the value streams…

• We must have effective methods for bringing together the “true” value stream for planning, problem resolution, new products, and for routine management.

• Methods to bring the “true” value stream together– Incorporating marketing into the value stream– The Chief Engineer approach– Box Score meeting– Sales, Operations, & Financial Planning– Target Costing


Bringing the “true” value stream together

• Incorporating Marketing into the Value Stream– Establish the marketing

people by product families that match to the product families within the value streams

– Include the marketing people organizationally as members of the production value streams.

• The Chief Engineer Approach– Assign “chief engineers” who

are responsible for the entire flow of a product family from design through production, purchasing materials, manufacturing, and marketing the product family.

– Chief engineer has no direct authority but has a lot of power.

– Chief engineer has no employees but reports to the President.

– Chief engineers work together to create ideal flows.


Bringing the “true” value stream together

• Box Score Meeting– Weekly management

review of the value stream box scores.

– Sales, marketing, new products, etc. attend the meetings.

– Opportunity to work cooperatively to grow the business, solve problems, create more value, eliminate waste, etc..

• Sales, Operations, & Financial Planning– Done by value streams.– Starts with demand forecasts

and finishes with supplier forecasts.

– Requires the active involvement of all the parties from purchasing through production, distribution, and sales/marketing.

– Establishing the game plan each month.


What if we can not achieve the “perfect” value stream?• Many lean organizations can not practically

achieve “perfect” lean value streams.– Customer & marketing issues may clash with product flow– Production processes may not flow perfectly

• Don’t wait for perfection.– The lean approach is to move ahead with the best you can

do now. – 60% is good enough– As you move ahead you will learn how to do it better

• Provide methods to make sure the “true” value streams work together cross-functionally


Key questions:• What business organization best supports

our value streams?• How well do different organizational

methods support these Lean Objectives?

– Departmental organization– Departmental matrixed with “dotted line” to the Value

Stream– Value Stream organization matrixed with dotted line to

Departmental Managers– Value stream organization with specialist coaches

supporting the value streams.– Value Stream organization


Example of value stream organization assessment

WHAT DO WE WANT TO ACHIEVE FROM OUR "LEAN ORGANIZATION"?

Imp

ort

ance

Departmental Organization

Departmental, Matrixed to

Value Stream

Value Stream Organization, Matrixed to Department Managers

Value Stream Organization

with Specialist "Coaches"

Value Stream Organization

Create Value for the Customer 1 1 3 5

Continuously Improve Flow & Pull 1 1 3 5

Empower the People and Create a Culture of Continuous Improvement

1 5 3 1

Creating a Team-Based Organization 1 3 5

Become a Leading Incubator for corporate product development

1 3 5 1

Improvement On-Time Delivery to the Customer. 100% On-Time to Customer Request Date

1 3 5

Significantly Grow the Business Consistently in the Future without growing the Overhead Costs

1 3 5

0 0 10 23 27 0


Working in Value StreamsParker Hannifin Quick Coupling Division

Minneapolis, MN (5 locations)

Power Curbers Inc.Salisbury, NC

Watlow Controls Winona, MN


Value stream management

Organize by Value Stream

Planning theValue Streams

Controlling theValue Streams

Improving theValue Streams

Managing theValue Stream

Teams

© bma inc. 2009. all rights reserved. the value stream managing by value stream

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