Value Stream Mapping Read the Course Project overview on pp. 16-17 of

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JWI 550 (1208) Page 1 of 10

JWI 550: Operational Excellence

Week Two Lecture Notes

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MAPPING AND ANALYZING VALUE STREAMS What It Means The mapping and analysis of value streams is an undertaking focused on gaining insight into the current state of workflow. It includes creating diagrams that show the various steps a product or service undergoes from request to delivery. The format of the maps should not be overly complex, and they do not require any specialized software to create. Their purpose is to help management and workers “see” the flow of work tasks that are often difficult to visualize, and to analyze that flow from a customer-centric perspective that is explicitly focused on adding value. Why It Matters

• It aligns stakeholders around a common understanding of the starting point before any operational change initiatives are undertaken.

• It focuses on value as the critical metric of operational excellence and competitive advantage, and it identifies steps where no value is added and/or waste occurs.

• It requires the team to apply quantifiable performance metrics to the current state so that improvement efforts can be measured and validated.

“Before you can lead your team to a better future, you must build consensus

about the current state of affairs – what’s working and what isn’t working – and why

the change is needed.”

Jack Welch

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THE CHALLENGE AND OPPORTUNITY FOR MANAGERS

Complete the following sentence: Change is _______________.

A. Exciting B. Scary C. Difficult D. Never-ending E. All of the Above

You likely picked “All of the Above.” You could have also added a bunch of other words to the list as well: Dangerous? Fun? Expensive? Confusing? Stressful? Uncertain? Necessary? Imagine you are a new manager, or a manager taking over a new team or a new set of responsibilities. What an exciting opportunity! If you have a good boss, you know what is expected of you and how the success of your team will be measured. Your transition may be smooth as you take charge of a well-oiled machine that is operating in tip-top form, or you may be stepping into dysfunctional chaos. The most likely scenario is somewhere between those two extremes. But you’re ready for the challenge. You’ve been doing your homework, and you’ve got ideas for improvement – lots of ideas. And they’re good ideas. You want to make changes, and you want to do it now! You gather the team and start to share your ideas about what’s not working and why, and how you’ve got a plan to fix it. As you lay out your “manifesto,” it’s met with a mixture of silence, eye rolls, and perhaps even outright hostility. If your organization practices candor, and team members know they can speak openly and honestly, you’re likely to hear people say, “You have no idea what we actually do here,” or, “It’s not our fault that performance isn’t what we want it to be; it’s the fault of [insert name of other team, unreasonable deadlines, outdated equipment, etc.].” There is often a disconnect between well-meaning managers and front-line workers, even when those managers have risen through the ranks and bring with them a high level of functional expertise. So, who’s right? You? Them? Neither? Your chances of leading a successful change initiative to achieve operational excellence increases dramatically if you, your team, and your fellow change agents can agree on the starting point. If you don’t understand the way everything currently operates, and if stakeholders can’t clearly visualize the real flow of work – including where value is added and where it is not – you will find yourself in a constant battle to convince others that the “improvements” you want to make are the right ones. Further, you will rob yourself of the benefits of getting every brain in the game, especially the brains of those who are closest to the work and who know it best.

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YOUR STARTING POINT

1. If you asked members of your team to explain how a certain output is produced, how similar

would their explanations be? Why?

2. If your boss asked you where you and your team contribute the most value to the

products/services the organization delivers to its customers, how would you respond?

3. If your boss asked about where you and your team introduce the most waste in the products/services the organization delivers to its customers, how would you respond?

4. If you were asked to quantify your answers to either of the previous two questions, could you?

5. How much does your team agree about the strengths and opportunities in the value streams for which they are responsible? If you don’t know, how can you find out?

6. How does the culture of your organization support the willingness and ability of managers and front-line workers to assess how their value streams perform and to discuss their insights openly?

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JWI 550 (1208) Page 5 of 10

MAPPING THE CURRENT STATE

But I Want to Make Changes Now! Let’s be honest. If you’ve held a job and experienced frustration with some of the ways work gets done, you’ve probably started to formulate ideas about how work could be improved. Some of those ideas may be great. However, there are at least two realities you must acknowledge:

1. Your ideas may not have fully accounted for the complexity of the work flow in the value stream and, therefore, may end up fixing the “wrong problem.”

2. Others may not share your assessment of the current state and may have a different sense of urgency or explanation for the cause of any shortcomings.

As such, your colleagues may be disinterested in making any change. Worse, they may actively undermine your change initiatives.

“Gaining a deep understanding of current state value stream performance is a vital step in designing and making improvement. After all, how can you improve work flow if you don’t understand how the work is being performed today? All too often, well-intentioned people rush to ‘solutions,’ resulting in short-term fixes and the risk of making matters even worse. Lacking clarity about the current state or operating with incomplete facts, assumptions, and incorrect information contributes to persistent and recurring problems.”

Value Stream Mapping, p. 51

In our readings last week, the authors introduced the Value Stream Mapping Charter and explained the importance of aligning and “socializing” the mapping team’s initiatives. It is critical that the journey toward operational excellence begin with agreement on where you are now. “When the current state value stream map is socialized across the organization and people come together and agree that, yes, this is how we currently operate, the map has begun to achieve a larger purpose: consensus building to accelerate improvement” (p. 51). Improvement design and implementation meets less resistance “when it’s based on what is actually occurring, as opposed to differing perceptions of or opinions about what is occurring” (p. 52). Walking the Value Stream (aka “Going to the Gemba”) It may sound obvious, but if you want to learn how about how work gets done, you have to go to the people who actually do the work.

“A critical step in creating the current state map is physically walking the value stream, also known as ‘going to the gemba.’ Gemba is a Japanese term that means ‘the real place, where work is actually done.’ By going to the gemba, the team is able to observe the work, talk to the workers in their environment, and learn about obstacles to flow firsthand, thereby grasping the

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current condition more fully. People are typically more comfortable talking with others in their own environment; being asked to come to a conference room to help a leadership-heavy team evaluate work flow can evoke understandable anxiety and make them feel like they are on a witness stand. It is much more effective to go to them.”

Value Stream Mapping, p. 56

The authors advise, “…only by going to the gemba can you appreciate the physical separation and isolation that may exist between upstream supplier and downstream customer, and observe whether visual management exists” (p. 57).

“Since…the team is primarily composed of leaders, going to the gemba is an effective way to involve those who best understand what is actually happening within the value stream: the workers themselves. This inclusion pays significant dividends by spreading organizational learning, demonstrating leadership engagement, gaining consensus, and showing respect. It carries other benefits as well. Walking the value stream begins to replace less effective leadership habits of making decisions from offices with ‘go and see’ behaviors, which builds stronger relationships between leadership and the front lines and results in higher quality decisions.”

Value Stream Mapping, p. 58 5 Steps to Mapping the Current State Martin and Osterling identify five distinct steps in documenting the current state. These can be found beginning on page 61 of Value Stream Mapping. The summary below is not intended to be comprehensive, but will highlight key activities and their rationale:

1. First Walk:

The team obtains the most basic information needed to understand the current state. “[The] specific steps needed to generate output are irrelevant at this point. Again, this is what differentiates a value stream map from a process map. A process map would include all of the individual actions (steps) required to enter an order, quote a project, administer medication, perform validation testing, or make an arrest, whereas the value stream map looks at the high- level activities that transform a request into some sort of deliverable. Remember, too, that the purpose of value stream mapping is to design a strategic improvement plan that will be executed over a period of time; it’s not designed to address problems at a detailed level.”

Value Stream Mapping, p. 61

2. Map Layout:

The team agrees on the process blocks that will form the value stream. “[Aim] for 5 to 15 serial process blocks. If you end up with fewer than five process blocks on your

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JWI 550 (1208) Page 7 of 10

map, you may not have enough detail to make substantive decisions about the future state. Having more than 15 serial process blocks is an indication that either your scope’s too broad for a single mapping activity or, more commonly, you are likely inching your way toward a process- level map and may get tangled up in the tactical weeds rather staying at a strategic level.”

Value Stream Mapping, p. 63

3. Second Walk:

This time, the walk is to gain a deeper understanding and identify barriers to flow. This typically includes three metrics.

a. Process Time – the time it takes people to complete the process tasks to transform an input into an output for one unit of work.

b. Lead Time – the elapsed time from the moment work is made available to an individual, work team, or department until it has been completed and made available to the next person or team in the value stream.

c. Percent Complete and Accurate (%C&A) – the percentage of work that is “usable as is” when delivered to the downstream customer.

4. Map Details:

A number of details will be added to the basic map from additional information obtained during the second walk.

5. Timeline and Map Summary:

As explained previously, a map without metrics is largely useless. The data collected must document the degree of flow present, the speed at which the organization delivers goods or services to the customer, and the amount of work effort involved across the value stream. Which metrics are most critical may vary somewhat by specific application, but Martin and Osterling identify six they frequently use:

a. Total Lead Time – the total time it takes to deliver on a customer request

b. Total Process Time – the total work effort required by all functions on the timeline-critical path of the value stream

c. Activity Ratio – the degree of flow in the value stream

d. Rolled Percent Complete and Accurate – the compounded effect of the quality of output across the value stream

e. Total Labor Process Time – the collective work effort required by all functions involved in the value stream, which is used to calculate capacity gains due to reduced process time in the future state design

f. Total Labor Effort – the total human effort (annualized) required to perform the work within the scope of the value stream being mapped

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JWI 550 (1208) Page 8 of 10

Wow! That Was a Lot of Work It can be tempting to skip mapping the current state since, so far, it has produced exactly zero improvements. But the operational excellence journey begins with an honest and accurate picture of what is really going on – not what people think is going on, or wish was going on. Remember, this is not about fault-finding or assigning blame to workers. It is about painting an accurate picture of what is really happening.

“In summary, creating the current state value stream map should be viewed as a discovery activity… the mapping team’s role is to unearth the truth about the current state design, its performance, and the barriers that prevent flow or otherwise hinder performance … [Value] stream maps serve as visual storyboards that not only clarify how work gets done, but also reveal problems. Your current state map should reflect as closely as possible how a customer request is transformed into a good or service and delivered to the customer.” “This degree of collective understanding helps reduce resistance to future state design decisions. While the current state briefing is often sobering, it’s a helpful psychological space from which to accept the need for change and generate innovative future state thinking…”

Value Stream Mapping, pp. 97-98

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SUCCEEDING BEYOND THE COURSE

As you read the materials and participate in class activities, stay focused on the key learning outcomes for the week and how they can be applied to your job.

• Learn how to create a value stream map Our readings over the last two weeks have explained what a value stream map is and the role that value stream mapping plays in achieving operational excellence. Use the framework to reflect on your own workflow. Address the concepts of value stream mapping as you discuss workflow with others on your team. Help them focus on the bigger questions of how and when customer value is impacted from request to delivery.

• Apply value stream mapping to map end-to-end processes There is no better way to understand the tools than to start using them. You have an assignment coming up next week based on mapping an actual value stream in your work. Now is the time to solidify your choice for the value stream you will select. Start small – not so small that the process is insignificant, but small enough that you can gain meaningful insights into a well- defined end-to-end process. Attempting to map overly complex, multi-layered processes will introduce too many inputs and handoffs and will be counterproductive as you learn to use the tools.

• Analyze a value stream for improvement opportunities After you have mapped your value stream, identify areas where it could be improved. Use your assignment as a starting point to begin a dialogue with your team. They won’t likely understand all of the technical analysis you did if you just present the numbers, so don’t lead with that. Instead, use the data to tell a “story” that makes sense to non-technical stakeholders. The ability to present complex data in a meaningful way is an important skill that all leaders must develop.

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JWI 550 (1208) Page 10 of 10

ACTION PLAN To apply what I have learned this week in my course to my job, I will…

Action Item(s) Resources and Tools Needed (from this course and in my workplace) Timeline and Milestones Success Metrics