value stream mapping: how to visualize work & align leadership for organizational transformation

Value Stream Mapping: How to Visualize Work & Align Leadership for

Organizational Transformation

WebinarOctober 3, 2013

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Coach / Facilitator / Consultant / Trainer: Lead Lean transformations & develop people across all industries.

Teacher: University of California, San Diego

Author & Speaker:

Karen Martin, PresidentThe Karen Martin Group, Inc.

www.ksmartin.com

3

Preorder now! 2013 Shingo Prize winner!

© 2013 The Karen Martin Group, Inc. 4

Upcoming Webinars• TENTATIVE ‐ Improvement Facilitation & Coaching: An Open Forum– Tuesday, October 29, 2013 – 11:00 am‐12:15 pm PT– https://www2.gotomeeting.com/register/999232762

• Plan‐Do‐Study‐Adjust: A Deep Dive– Tuesday, December 3, 2013 – 11:00 am‐12:15 pm PT– https://www2.gotomeeting.com/register/893454842

• Hoshin Kanri: Creating a Strategy Deployment Plan That Gets Results– Thursday, December 5, 2013 – 11:00 am‐12:15 pm PT– https://www2.gotomeeting.com/register/943880106


After the webinar…

• All recordings are available on:– www.vimeo.com/karenmartingroup– www.youtube.com/karenmartingroup– www.slideshare.net/karenmartingroup– www.ksmartin.com/webinars

• The materials are available on– www.slideshare.net/karenmartingroup

Value Stream Defined

Value Stream: All of the activities required totransform a customer request into a good or service.

6

Value Stream

Process ProcessProcess

CustomerRequest

CustomerReceipt

First defined in The Machine That Changed the World, James Womack, Daniel Jones, & Daniel Roos, 1990.

© 2013 The Karen Martin Group, Inc.

Value Stream Mapping’s Roots

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Mike Rother & John Shook, 1999 Beau Keyte & Drew Locher, 2004

Whenever there is a product for a customer, there is a value stream.

The challenge lies in seeing it.

— Mike Rother & John Shook, Learning to See


“The new bible for value stream mapping and improving organizational performance."

Art Byrne, former CEO, The Wiremold Company and author, The Lean Turnaround

“Value Stream Mapping is an outstanding guide for practitioners engaged in the challenging work of improving the horizontal flow of value across organizations.”

John Shook, Chairman & CEO, The Lean Enterprise Institute and author, Learning to See

Jeffrey Liker, best‐selling author, The Toyota Way

“Karen and Mike have put value stream mapping in its proper perspective as a methodology for seeing waste, sharing a future state vision, and building meaningful actions that are carried out with passion and purpose.”

Our Journey…

www.ksmartin.com/VSM


Book Structure• Introduction• Chapter 1 – Value Stream Management• Chapter 2 – Setting the Stage and Enabling Success• Chapter 3 – Understanding the Current State• Chapter 4 – Designing the Future State• Chapter 5 – Developing the Transformation Plan• Chapter 6 – Achieving Transformation• Appendices – Sample maps

– Outpatient Imaging– Purchasing– Repair Services– Shelving Systems– Software Development


Value Stream Mapping is for…

• Organizations who are unfamiliar with value stream mapping.

• Organizations who have adopted value stream mapping but would like to reap greater rewards.

• Organizations who are mis‐using value stream mapping.

…leaders, practitioners, and consultants.


Function FunctionFunctionFunction

Core Value Stream

Support Value Stream

Support Value Stream

Traditional vs. Value Stream Thinking


Why Value Stream Mapping?


Value Stream:Strategy Before Tactics

Where am I? Where do I want

to go?

I‐80 option I‐40 option I‐70 option

Which route should I take?

? ??

Work: Degrees of Granularity

Value Stream

Process Process Process

Step StepStep

Micro Perspective

• Identify the tactical “how”

• Heavy frontline involvement

• Metrics‐Based Process Mapping

Macro Perspective

• Define strategic direction (“what”)

• Heavy leadership involvement

• Value Stream Mapping



Metrics‐Based Process Mapping:Improving Tactically; Defining Standard Work

0

10

156-1

0Activity PT LT %C&A Activity PT LT %C&A Activity PT LT %C&A Activity PT LT %C&A Activity PT LT %C&A

1 Fax PO to Sales Rep 0 0 45%

2

Review PO; clarify with

customer as needed

20 2 90% Fax PO to warehouse 10 4 90%

5

6

Check inventory levels; notify

Sales Rep re: status

5 4 95% Fax PO to Sales Rep 5 0.33 90%

0 20 10 5 50 2 4 4 0.33

45% 90% 90% 95% 90%0 20 10 5 5

Rolled %C&ACritical Path LT

Total PT

Critical Path PT

5431 2

Mary Townsend

Hours Worked per Day Sally DampierOccurrences per Year Sam Parks

Current State Metrics-Based Process Map

Dave Morgan25-Jun-088 Facilitator

Process Details

Michael Prichard

Order FulfillmentProcess NameSpecific Conditions Domestic orders through sales force

37,500

Date Mapped

Sean Michaels

Sales Rep

Ryan AustinDiane O'SheaMapping Team

LT Units

Function / Department

PT Units

Step # ►

Customer

Finance

Warehouse / Shipping

Seconds

Minutes

Hours

Days

Seconds

Minutes

Hours

Days

Excel documentation tool available on the CD that accompanies Metrics‐Based Process Mapping (Martin & Osterling, 2012, Productivity Press), www.ksmartin.com/MBPM


Value Stream Mapping Benefit:Seeing the Whole

60,000 foot view; Rooftop view

VSM Enables Systems Thinking

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Individual Efficiency = Sub‐optimization

System Efficiency = Optimal Value Stream

Performance

18

Value Stream Maps Serve as Visual “Storyboards”

Makes the disconnects and obstacles to flow visible at a macro level

Shows the linkage between material and information flow


Effective Way to Visualize Relationships between IT Systems and the Operation

19© 2013 The Karen Martin Group, Inc.


Value Stream Mapping Benefit:Reaching Leadership Consensus


Value Stream Mapping Benefits

• Visual unification tool• Connection to the customer• Holistic systems‐thinking methodology• Simplification tool• Practical means to drive continuous improvement

• Effective means to orient new hires

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Value Stream Maps: Effective for New Hire Orientation

You are here



Value Stream Mapping: Common Failings

• Using the mapping process solely as a work design exercise

• Using the map to make tactical improvements• Creating maps but taking no action• Mapping with an inappropriate team—or no team at all• Creating value stream maps during a kaizen event• Creating maps with no metrics• Mapping without a team charter or not socializing it


Value Stream Mapping

Strategy Deployment (Hoshin Kanri)

or A3

Projects, Kaizen Events,

Kata

Components of a Value Stream Map



Common value stream mapping icons


Key Metrics: Time

• Process time (PT)– The time it takes to actually perform the work, if one is able to work on it uninterrupted

– Includes task‐specific doing, talking, and thinking– aka “touch time,” work time, cycle time

• Lead time (LT)– The elapsed time from the time work is made available until it’s completed and passed on to the next person or department in the chain

– aka throughput time, turnaround time, elapsed time– Includes Process Time, not merely waiting time.


Process time versus lead time across the value stream


Key Metrics: Quality

• %Complete and Accurate (%C&A)– % of incoming work that’s “usable as is”; the downstream customer can perform task without having to “CAC”:

• Correct information or material that was supplied• Add information that should have been supplied• Clarify information that should have or could have been clearer

– Determined by the person receiving the input; metric goes on the output block.

– Measured by the immediate downstream customer and all subsequent downstream customers.

– Similar to first pass yield in manufacturing.

Components of a Value Stream Map

Summary metrics



Summary Metrics: Time

• Activity Ratio (AR)– The percentage of time anything is being done to the work passing through the system (whether value‐adding or non‐value‐adding)

– AR = (∑PT ÷ ∑LT) × 100– 100 – AR = % Time Work is Idle– Common current state finding = 1‐10% (across value stream)– Could also calculate %VA to show proportion of value‐adding time (often significantly lower than AR).


Summary Metrics: Quality

• Rolled Percent Complete & Accurate (Rolled %C&A)– The percent of value stream output that passes through the process “clean,” with no “hiccups,” no rework required.

– Rolled %C&A = (%C&A x %C&A x %C&A…) x 100– Example: (0.80 x 0.50 x 0.99 x 0.75) x 100 = 29.7%– Common current state finding = 0‐15%

Summary Metrics: Labor Requirements

• Total PT– Sum of all activities, not just critical path

• Labor Requirements

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Total PT (in hrs) X # occurrences/year# FTEsAvailable work hrs/year

=

* FTE = Full‐time Equivalent (2 half time employees = 1 FTE)

Freed Capacity

= Current State FTEs – Future State FTEs



Common current state findings


Customer

1

Process 3

Function E

LT = 0.5 daysPT = 30 mins.%C&A = 95%

4

4

10 mins.1 days

120 mins.2 days

30 mins.0.5 days Total LT = 3.5 days

Total PT = 160 mins.Activity Ratio = 9.5%Rolled %C&A = 89.3%

Process 2

Function C

LT = 2 daysPT = 120 mins.%C&A = 95%

3

3

ABC Technology, Inc.Future State Value Stream Map

Name of Value Stream Being MappedDemand Rate = XX / Year

Name of Value Stream ChampionMapping Date

IT-1 IT-2

5 items

Process 1

Function A


5

2

1 items 10 items

Standard work

Modified approvals

IT interface

Cross-train

Cross-train

Standard workError

proof


Time & Quality Value Stream Performance Metrics

Metric Current State ProjectedFuture State

Projected% Improvement

Total Lead Time 9.5 days 3.5 days 63.2%

Total Process Time 180 minutes 160 minutes 11.1%

Activity Ratio 3.9% 9.5% 143.6%

Rolled % Complete & Accurate 30.0% 89.3% 197.7%

Other

Other


Acceptable branching on a Value Stream Map

Process 5

Function E

5

Process 2

Function B

2

Process 4

Function D

4

Process 1

Function A

1

Process 3

Function A

3

50%

50%


Parallel steps on the timeline

Process 4

Function E


5 mins.2 days

20 mins.0.5 days

5 mins.3 days

25 mins.2 days Total LT = 7.5 days

Total PT = 55 mins.Activity Ratio = 1.5%

Process 2b

Function B


Process 3b

Function D

LT = 1.5 daysPT = 15 mins.%C&A = 99%

45 items

Process 1

Function A


Process 2a

Function A

LT = 0.5 daysPT = 20 mins.%C&A = 50%

Process 3a

Function C


10 items

Rolled %C&A = 9.1%


Multiple timelines

Customer

1

Performrepair

Service

LT = 3 daysPT = 4 hrs.%C&A = 99%

24

5

Prepsite

Foreman

LT = 1 daysPT = 1 hrs.%C&A = 80%

2

4

Scheduleservice

Customer service


11

3

Createquote

Sales


4

2

60 mins.1 days

240 mins.3 days

30 mins.1 days Total LT = 5 days

Total PT = 330 mins.Activity Ratio = 13.7%Rolled %C&A = 78.4%

Approverepair

Inspector

LT = 1 daysPT = 0.5 hrs.%C&A = 99%

3

6

Scheduler Excel

Prepare Understand Current State

DesignFuture State

Develop Transformation

Plan

Execute Transformation

Plan

Three Consecutive Days4 Weeks Prior to Mapping

3 to 6 Months After Mapping

Repeat

Value Stream Mapping ActivityPhases and Timing



12 13 24 35 4

51 62 73 84 95 10

12 13 24 35 4

1234 Date: Date:

Name

Name

FacilitatorValue Stream Champion

Contact Information

Contact Information

Demand Rate

Trigger

How many times is this done per wk, qtr, mo, or yr?

What initiates the process?

Value Stream Mapping CharterScope Accountable Parties Logistics

Required: typically VP or C-level

If needed—often director or manager levelSpecific Conditions What circumstances are included and excluded?

(e.g., type of customer, geographic location, etc.)Value Stream

Champion

Value stream being improved Executive SponsorValue Stream

Event Dates & Times

3 days typically; consecutive is best; 6 hrs per day minimum; 7 or 8 hrs is best

Required: skilled, objective person leading the activity

Base-camp LocationFacilitator

Current State Problems & Business Needs Mapping Team

Boundaries & Limitations

Improvement Time Frame

What is the team NOT authorized to change?

Typically 3-6 months

Last Step Activity on the last process blockLogistics

Coordinator Not always needed

Aids in consensus building and organizational learning. Typically the last hour of the day.

First Step Activity on the first process block

Briefing Dates &

Times

Meals Provided

Briefing Attendees

** required *optional

List the the people that are required to attend the briefings (**) and those whose attendance is optional (*).

Measurable Target Condition

What's driving the need for improvement? FunctionLeadership-heavy

Increase <defined metric> from X to X (XX% improvement).Reduce <defined metric> from X to X (XX% improvement).

How will internal and/or external customers benefit as a result of Functionimprovements to the value stream? SMEs that may not be needed full time

Always a nice touch; keeps the team from wandering

On-site, ample wall space, quiet/private location

Benefits to Customers On-Call Support

Signature:Date:

Benefits to Business Agreement

as a result of improvements to the value stream?Executive SponsorWhat other direct and/pr indirect benefits will the business realize

Signature: Signature:

Download at www.ksmartin.com/VSM


12 13 24 35 4

51 62 73 84 95 10

12 13 24 35 4

1234 Date: Date:

Name

NameLourdes Dwyer

Diana MarieDave GeraldRyan Austin

FacilitatorValue Stream Champion

Sean MichaelsContact Information

Contact Information

Demand Rate

Trigger

1,000 per yearCustomer submits RFQ

Value Stream Mapping CharterScope Accountable Parties Logistics

Allen Ward

Nancy LittleSpecific Conditions Engineer to order, requires both hardware & software

Value Stream Champion

Capital equipment Executive SponsorValue Stream

Event Dates & Times

July 24-26, 2013

Dave Parks Base-camp LocationFacilitator

Current State Problems & Business Needs Mapping Team

Boundaries & Limitations

Improvement Time Frame

No new software; only minor changes to existing IT systems; no additional staff; no budget changes

Future state design is fully realized by December 31, 2013.

Last Step Production ships productLogistics

Coordinator Dave Parks

July 24, 25, & 264:00-5:00 pm

First Step Sales reviews the RFQ

Briefing Dates &

Times

Meals Provided

Briefing Attendees

** required *optional

** Joe M (CIO), Sal T (VP Sales)* Bruce R (VP Ops), Carlos P (HR), Su T (CFO), Bill M (VP CS)

Scrum Master

Goals & Measurable Target Conditions Engineering, Vice President

Unclear & incorrect information flowing through value stream. IT, DirectorLead time for RFQ turnaround = 2 weeks; PO to SW dev = 5 weeks Finance, Controller

Desire to stay ahead of the competition & deepen customer loyalty. Function / TitleForecasted growth of 15% for next fiscal year. Sales, Director

Reduce PO to SW dev by a minimum of 50%. Customer Service, ManagerAmbreen MotiwalaDanny Tran

Michael O'SheaReduce RFQ lead time by a minimum of 50%. Manufacturing, Director

Higher confidence in Golden State's products and staff. Production Supervisor

Faster delivery. FunctionLess hassle (back and forth re: RFQ, design and code). Planning / Purchasing, Planner

Continential breakfast & lunch

Surf's Up - A

Tom St. James

Benefits to Customers On-Call Support

JR HuntImprove quality of information flowing throughout value stream. Customer (contract manufacturer)

Freed capacity to absorb additional business w/o increasing staff. Signature:Date:

Benefits to Business Agreement

Better working relationships between sales, estimating & engineering.

Executive SponsorHigher margins.


Service order

Existing customer

New construction

Repair

Warranty

Non‐warranty

Planned maintenance

Newcustomer

New construction

Repair

Warranty

Non‐warranty

Planned maintenance

Proper Scoping is Essential

Inclusion criteria:• Highest volume?• Highest margin?• Most painful?• Most supportive

leadership?


Patient care

Inpatient

Medical/Surgical

Intensive Care

Pediatric

Outpatient

Vaccine Clinic

Imaging

X‐Rays

CT Scans

MRI

Mammography

OB/GYNServices

Proper Scoping is Essential

Inclusion criteria:• Highest volume?• Highest margin?• Most painful?• Most supportive

leadership?



DesignFuture State


Plan


Plan



Repeat




Value Stream Mapping Activity Steps1. Kick‐off2. Understand the Current State

– Value stream walk #1 (determine process blocks; aim for 5‐15 blocks)– Layout the map (paper and Post‐its)– Value stream walk #2 (gather process metrics, WIP, and barriers to

flow)– Add details to map– BRIEFING

3. Design the Future State (40 questions)– “Define Right work”– Make right work flow– Manage the right work– BRIEFING

4. Develop the Transformation Plan– BRIEFING


Post‐it Note after Value Stream Walk #1


Post‐it Note after Value Stream Walk #2


How to document multiple downstream customers reporting different %C&As from the same supplier


DesignFuture State


Plan


Plan



Repeat




1 2 3 4 5 6 7 8 9 10 11 12

2 Improve quality of referral to 85% KE Sean Michaels 100%

3,4 Reduce lead time between scheduling and preregistration step to 45 minutes

Proj Dianne Marie 75%

4 Only one check in per patient KE Ryan Austin 50%

4 Reduce wait time in waiting area by 50% KE Dianne Marie 50%

6 Eliminate 6 hour lead time associated with transcription step

Proj Dave Gerald 50%

7 Eliminate redundant data entry Proj Dave Gerald 25%

5 Visually managed inventory; no outages or expired items

KE Michael O'Shea 100%

6 Reduce imaging LT to one hour Proj Martha Allen 25%

8 Reduce report delivery LT to 30 minutes Proj Martha Allen 0%

7 Reduce LT at image review to 1 day JDI Dave Gerald 100%

Value Stream Transformation PlanValue Stream

Value Stream ChampionValue Stream Mapping Facilitator

Allen Ward 1-Nov-12Executive SponsorScheduled Review Dates

21-Nov-12

Outpatient Imaging

Paul ScannerDave Parks 13-Dec-1210/18/2012 10-Jan-13Date Created

Value Stream Mapping Facilitator

Increase % of physicians receiving electronic delivery

Planned Timeline for ExecutionStatus

Signature:

Agreement


FS VSMBlock # Measurable Target Proposed Countermeasure

Implement standard work for referral process

Exec. Method* Owner

* Execution Method = JDI (Just-do-it), KE (Kaizen Event), or Proj (Project)

Cross-train and co-locate work teams

Value-stream specific radiologists

Implement voice recognition technology

Auto populate between PACS and Meditech

5S CT supplies area; implement kanban

Collect copays in Imaging

Balance work / level demand

Visual metrics and indicators

Date: Date:

Executive Sponsor Value Stream Champion

Date:


Value Stream Mapping:As Much Art as Science


Related Webinars• Metrics based process mapping

– www.ksmartin.com/MBPM

• Kaizen Events– www.ksmartin.com/TKEP

• A3– http://vimeo.com/33260580 (part 1)– http://vimeo.com/33407948 (part 2)

• Strategy deployment– http://vimeo.com/35748971– Upcoming webinar – Thursday, December 5 –www.ksmartin.com/webinars


Karen Martin, President7770 Regents Road #635San Diego, CA 92122

858.677.6799

[email protected]

For Further Questions

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