Lean Tools, Training, and Systems

Value Stream or Value Chain

What is a Value Stream?

In Michael Porter's 1985 book Competitive Advantage: Creating and Sustaining Superior Performance, he defined a value chain as a chain of activities that a firm operating in a specific industry performs in order to deliver a valuable product or service for the market.

In the 1996 book Lean Thinking, by James Womack and Dan Jones, the definition of a value stream is:

The set of actions required to bring a product or service through the three critical management tasks of any business:

Problem solving (e.g. design)
Information management (e.g. order processing)
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...

segments

Segments of a Value Stream

1. Concept to Launch

Examples:

Customer quotes (for customized deliverables)

Custom development

New product development — design engineering

Manufacturing engineering

Engineering Change Orders

Training to get you started.
Tools you won't outgrow.

2. Source Information & Materials to Finished Deliverable

Examples:

Sales order entry and invoicing

Customer quotes (for configurable options)

Sales & marketing

Purchasing

Receiving

Patient intake

Inventory storage and retrieval

Prototypes

Production

Rework

Order fulfillment

Packaging

Shipping

Delivery

Physical returns

Repairs

Field service

Resource use

Waste management
(solid, liquid, gas, hazardous...)

3. Order to Cash

Examples:

Accounts receivable processing & collection

Credit approval

Accounts payable processing and payment

Return Authorizations and refunds

Period end financial processing

Use a value stream map
to answer the question

"Where should we focus our attention?"

4. End of Life Cycle

Some responsible companies that 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".

Examples:

Recycling

Reuse

Landfill impacts

End of life hazardous wastes

Other Value-Enabling Support Value Streams

Absolutely every type of multi-step process can be conceptualized as a value stream.

Other examples include: Hire to Retire, IT Support, Budgeting, etc.

options

Optional ways to handle segments
in your Value Stream Map

1) Value Stream Loops

Segments within a value stream map

are called Value Stream Loops.

It is common to draw a dashed line around the portion of the value stream map that comprises the loop(s) that you want to differentiate.

Your Systems2win value stream mapping template provides a special shape that makes it extremely easy to draw a box around segment of a value stream map.

If you need to draw a free form shape, (that's not a perfect square or circle)...

just follow our online instructions for how to do that.

Once you learn how to use Excel as a drawing tool, then drawing a value stream loop is truly child's play.

per

2) Separate Value Stream Map per Segment

Segments shared by multiple value streams

usually have their own value stream map and/or swim lane functional flowchart.

For example, it would be extremely inefficient to attempt to duplicate a shared process like 'Sales Order Processing' on 30 different value stream maps.

The easiest way to handle shared segments

is to simply exclude them as being outside of the (starting and ending process) Boundaries defined in your Value Stream Team Charter.

If you want to include that segment within your Value Stream Analysis Totals then if you know how to use Excel's standard cell linking features,

to instantly update the values in another workbook whenever those value change in the source workbook

(in our example, instantly updating all 30 of your related value streams
every time anything changes in your shared Sales Order Processing value stream)

and you know how to use Systems2win's special features for Paths and Scenarios,

to instantly switch between different possible scenarios — using a single value stream map

then you can quickly analyze your Value Stream Totals with or without the extended value stream segments by simply switching between Scenarios.

tiers

3) Multi-layer Value Stream Map

aka Multi-tiered, Multiple Tiers, Multi-Stream Map, or Layered Value Stream Map

Segments immediately before and after the main value stream

can optionally be shown on the same map in the optional Pre and Post-Production tiers

Simply click the 'Hide/Show Rows' button

Excel Ribbon bar > Systems2win tab > Hide / Show Rows

to show the tier of Pre-Production Processes

(above the tier of Critical Path Processes)

and/or the tier of Post-Production Processes

(below the Value Stream Analysis section near the bottom)

Pre and Post-Production Tiers

Multi-layer Value Stream Mapping Template

Multi-layer Value Stream Map - using your Value Stream Mapping template

How to use the Pre and Post-Production Process tiers

The flow of "the thing being transformed" always flows from left to right.

Remember, every column containing a Process Box is always paired with the column to it's right, and some shapes (like the FIFO shape) have arrows pointing to the right.

You're going to confuse your audience if you draw your Pre-Production tier with the flow going backwards.

To include or exclude the Pre or Post-Production tier from Value Stream Totals Analysis

simply select TRUE or FALSE from the dropdown list in the field just above the section row headers.

To hide or unhide rows

If you're going to use either the Pre or Post-Production tier on your value stream map,

then in the Hide Rows column, you can delete the word 'TRUE' for any rows that you will usually want unhidden, so that you can use the 'Pre Post' button to quickly hide or show your desired rows, and then if and when you want to hide the entire tier, you can simply use Excel's normal Hide Rows feature.

extra

Extra Credit

for those who want to understand more

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.

(By "Area", we mean the 4 major categories of Value Stream Segments — defined above.)

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

for several value streams to share common segments
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, work instructions, etc.

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

a Process Flow Box on a value stream map
and the various drill-down-to-detail documents within that Process Flow 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, Sales Order Processing...) 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 yet taken the time to define the relationships.

Return to training for Value Stream Mapping, and Value Stream Analysis