Value Stream Mapping

Value Stream Mapping
  • Also known as Material and Information Flow Analysis and Value Stream Analysis.

    A Value Stream Map (VSM) is a high-level visual representation of a business process. It helps to understand the flow of value through the process as perceived by the customer. The primary goal is to identify and eliminate waste and make the process as close to Lean as possible. Although it is often associated with manufacturing, it can also be applied in product development and service environments such as healthcare, hospitality and logistics.

    A value stream map is considered an improvement tool rather than just a definition of how the process operates or should operate. It is a dynamic tool and should be updated continually as the process improved. It tends to display more information than a typical process map or flowchart. However, a value stream map does not track all possible paths and decisions a process can take. It should focus only on the high-level flow of value from start to finish.

    A typical value stream map for manufacturing
    A typical value stream map for manufacturing

    A value stream map helps identify opportunities for reducing waste and improving performance by making the non-value added activities more easy to identify. It can effectively communicate where to focus the continuous improvement efforts to deliver more value. It enables to see where problems and inconsistencies lie within processes such as non-value-added activities, delays, bottlenecks, and excessive inventory levels. This in turn will provide the opportunity to discuss and plan improvement actions before any product or service is delivered to the customer.

    So What is a Value Stream?

    A value stream is the set of activities required to convert raw materials to finished products in the hands of the customer. It spans from the event the materials are received from the supplier until the finished products are delivered to the customer. It includes other functions such as order-taking, order communication and detailed scheduling. Examining the value stream helps identifying waste and non-value-added activities, and this is the aim for using a value stream map.

    Material and Information Flows

    A value stream map analyzes both material and information flows. A material flow is where products flow through the stream and normally includes processing, handling, transport and storage. For simplicity, you don’t need to map the flow of every product, but the production of a single product or single product family. Focus on products with high volumes or high business impact.

    A product family matrix is often useful for choosing the product that should be mapped.

    Product family matrix

    What makes the value stream map unique is the representation of information flow along with the material flow. An information flow is important to the effective control of the material flow and the execution of the process in general. Information flows may include forecasting, ordering, scheduling, approving, reporting, replenishing, communicating, evaluating, and whatever necessary to support the process.

    Current and Future States

    Value stream mapping begins by defining the current state as it is today. This allows to identify waste and areas where improvement can be made in the existing operation. Once the current state is mapped and waste areas are identified, move your focus on designing the future state of how the process should operate.

    A future state is the ideal state or blueprint that you want to achieve toward implementing a more Lean operation. Thus, it should be based on Lean principles such as flow, pull and perfection to create a more streamlined production flow. It is important, however, to define what is meant by the ‘future’ before developing the future state.

    Current and Future States

    An implementation plan should then be developed to get to the future state taking into consideration the gap between where we are and where we want to be. An action plan should be developed along with milestones, review periods and responsibilities. Remember that this is a project that needs to be owned, tracked and monitored throughout its life cycle.

    When the future state becomes a reality, it becomes the new current state and the process will start all over again, and this is the essence of continuous improvement!

    VSM Symbols

    Value stream mapping uses a set of symbols to denote the various details. The type of symbols used usually depends on the industry and the type of work. There are symbols that are used pretty much universally. You may however design your own symbols to indicate your specific details. Keep in mind that they should be simple and understandable by everyone.

    The following are the basic symbols that are applicable in most situations.

    Data Boxes

    Data boxes are optionally used to list key information related to processes, transportation, inventory, key customers, and key suppliers. They help later when creating the value stream timeline and the value stream summary box, and when comparing between the different workstations or processes. The following are some of the data and metrics that can be listed under Supplier, Process, Customer, Transportation, and Inventory data boxes:

    Supplier data box
    • Number of suppliers
    • Demand rate (items/day)
    • Packaging size requirement
    • Actual and required lead times
    • Error rates
    • Supplier shift pattern
    • The different types of materials
    • Shipping frequency
    Process data box
    • Cycle times (C/T)
    • Changeover times (C/O)
    • Net available times (NAT)
    • Defect or scrap rates
    • Machine uptime rates
    • Production rates or EPE
    • Processing times
    • Setup times
    • Workers per workstation
    • Batch sizes
    • Maximum capacities
    • Number of product variations
    Customer data box
    • Number of customers
    • Demand rate (items/day)
    • Packaging size requirement
    • Actual and required lead times
    • Error rates
    • Customer shift pattern
    • Product mix
    • Shipping frequency
    Transport data box
    • Distance traveled
    • Transportation time
    • Transportation frequency
    • Number of product types
    Inventory data box
    • Inventory type
    • Amount of inventory
    • Queue or delay time
    • Number of product types

    Value Stream Timeline

    In order to get the most of value stream mapping exercise, it has to be summarized in a single metric, and this metric needs to be improved continually. Many organizations use the Value-Added Ratio (VAR) metric to measure the performance of their end-to-end process.

    VAR = Total Value-Added Time (Processing Time) / Total Lead Time

    A value stream timeline is used to facilitate the calculation of VAR. The timeline is the sum of time spent at all stages represented in ‘hills’ and ‘valleys’. The hills represent the waiting non-value-added time whereas the valleys represent the processing value-added time. Remember that not all processing time is value-added. The results are often summarized at the right of the timeline in a summary box. Other metrics can be added to the summary box as required.

    Conducting a VSM Exercise

    1. Establish the team and include people working in the process.
    2. Clearly explain the purpose for creating the value stream map.
    3. Identify and agree on the product family and the value stream.
    4. Physically walk the flow starting from the customer and working backwards.
    5. Capture all relevant data and performance information as you walk.
    6. Walk the information flow and collect examples of relevant records.
    7. With your team, use a flipchart or whiteboard to draw the current state.
    8. Map the material flow including processes, inventory, delays and transportation.
    9. Map the information flow and the secondary processes.
    10. Add the value stream timeline and calculate value stream summary metrics.
    11. Look for the non-value-added activities, delays and other form of waste.
    12. Visualize the ideal state and develop the future state map.
    13. Plan and implement actions to achieve the future state.

    Example – Manufacturing

    The following is an example of a value stream map that was created for a specific product family in a manufacturing facility. This current state value stream map was created based on a real team exercise.

    Click to enlarge

    Example – Non-Manufacturing

    This is an example of a value stream map for a non-manufacturing process (equipment installation).

    There are many software applications and online services that allow the creation of value stream maps. For example, you can generate value stream maps using Minitab Workspace. One of the simplest ways is to use this template.

    Other Formats

    If you want to use the following three documents in your training courses, the PPTX versions are available to buy from our Shop page.

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