Segments of a Value Stream

In the book Lean Thinking, a value stream is defined as the set of actions required to bring a product or service through the three critical management tasks of any business:

1. Problem solving (e.g. design)
2. Information management (e.g. order processing)
3. Physical transformation (e.g. making a physical product, or delivering a service)

Others have organized the segments of a value stream in other ways, such as...

1. Concept to Launch
   Examples:
   1. Customer quotes (for highly customized deliverables)
   2. Custom development
   3. New product development - design engineering
   4. Manufacturing engineering
   5. Engineering Change Orders
2. Source Information & Materials to Finished Deliverable
   Examples:
   1. Sales order entry and invoicing
   2. Customer quotes (for configurable options)
   3. Sales & marketing
   4. Purchasing
   5. Receiving
   6. Patient intake (in a Lean Healthcare environment)
   7. Inventory storage and retrieval
   8. Prototypes
   9. Production
   10. Rework
   11. Order fulfillment
   12. Packaging
   13. Shipping
   14. Delivery
   15. Physical returns
   16. Repairs
   17. Field service
   18. Resource use and waste management (solid, liquid, gas, hazardous...)
3. Order to Cash
   Examples:
   1. Accounts receivable processing & collection
   2. Credit approval
   3. Accounts payable processing and payment
   4. Return Authorizations and refunds
   5. Period end financial processing

Another value stream is "hire to retire".

And responsible companies that are beginning to embrace the expanded teachings of Lean to Green also consider the area of the value stream that has traditionally been ignored as "someone else's problem".

4. End of Life Cycle
   Examples:
   1. Recycling
   2. Reuse
   3. Landfill impacts
   4. End of life hazardous wastes

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Suggested Reading

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How To Tips

One of the first things to do when value stream mapping or flowcharting is to define the first and last steps of the segment of the value stream that you will then map, analyze, improve, and control.

It is helpful to understand that Lean Office often focuses on segments within the first and third areas found within every value stream, while Lean Manufacturing and Lean Healthcare tend to focus on segments within the central second area of the value stream.

While there is always only one value stream per Product Family, it is not uncommon:

1. for several value streams to share common segments
2. to have multiple value stream maps for a single value stream, perhaps:
   1. a cross-company supply chain VSM
   2. a traditional value stream map with a high-level perspective
      perhaps with some Process Boxes that might drill down to...
   3. several more detailed VSM's - each focusing on different segments
      perhaps with some Process Boxes that might drill down to other non-VSM lean tools -
      such as flowchart, standard work, spaghetti diagram, standard procedures, job instructions, etc.

In the Source to Deliverable segments (defined above) - there is often a one-to-one correlation between:

• a Process Box on a value stream map
• and the various drill-down-to-detail documents within that Process Box

In the other segments, it is not uncommon for the drill-down-to-detail documents to be common to many value streams
(or even every value stream in the business; think Accounts Payable, month-end close...)
so it is more common to find detailed documents that are not specifically linked to any higher value stream map.
It is still helpful, however, to understand that every process is part of one or more value streams - whether or not anyone has taken the time to define the relationships.