Revisiting the Value Stream

As companies continue to look for ways to make their operations more effective, there needs to be a clear understanding of the concept of a value stream. A value stream is simply the sum of all of the activities that need to occur to produce and deliver goods and services to a customer. This generally encompasses everything from receipt of a customer order to shipment of a product or completion of a service.

Over the years, I have discussed the importance of using a mapping tool to analyze a company’s value stream and identify opportunities for improvement. These improvements come from eliminating waste such as unnecessary or unproductive processes, excessive movement of product, producing or ordering in excess of what is really needed, and more. Ultimately, value stream mapping is used to create lean processes that drive faster throughput. 

Certainly, a company can map any portion of its value stream, including critical processes (i.e., quoting, design, procurement, repair) or specific products it sells. However, there are benefits to mapping a company’s entire value stream and seeing the big picture. This means including everything that is done to produce and deliver all products and services. Although this may seem like a daunting task, it is the only way to understand the interrelationship between products, identify overall resource requirements, point out fluctuations in quality, and recognize variations in customer requirements and expectations. Let’s explore this further.

Understand the interrelationship between products. Every company has a mix of products it sells to customers. Often this mix follows the “80/20 rule” where 20 percent of the products account for 80 percent of the sales volume. Most would agree that, in such a scenario, management and support efforts need to be directed to the vital 20 percent of products. Yet, the other 80 percent cannot be ignored, as they, too, require time and effort, and often compete for the same materials, machines, equipment, tooling and people.

An entire value stream map can be quite revealing, especially in those situations where companies find themselves dealing with issues in areas they do not expect. Such a revelation may not occur in a value stream map that focuses solely on high-sales-volume products. 

Identify overall resource requirements. When companies map individual products in isolation, they develop a good understanding of resource requirements for those products once improvements have been implemented. However, they don’t necessarily know the impact that such improvements may have on other products. A company may be able to introduce standard tooling to reduce machine change-over times for a specific product, but what if those standard tools cannot be used for other products that require the same equipment? What may be a real gain for one product might lead to a drop in productivity on other products which could actually negate the perceived gain altogether. Value stream mapping everything can produce a very different picture of resource requirements than mapping just a limited number of products.

Point out variations in quality. When addressing the entire value stream, a company can get a much better picture of its overall quality performance. There may be products that have records of zero defects because processes have been improved to the point that variability is non-existent. Unfortunately, there may be other products without that high level of quality. Perhaps some products made infrequently in low volumes have not been afforded the same attention and do not have the same high-yield rate. The problem is that these products will impact the overall rate of quality. After all, a non-conformance for an order with just a few parts is still a non-conformance and needs to be addressed.

Recognize variations in customer requirements or expectations. Often, different customers have different requirements and expectations regarding their orders. It is only through analyzing the entire value stream that such variations will be recognized. Every company has experienced the “unusual” order with excessive documentation requirements. This type of order can have a drastic impact on the organization, as more time may be spent processing the documentation than processing the parts themselves. There also may be expedited lead times for certain customers (for a variety of reasons) that can be disruptive and actually impact the delivery of other orders in process. It is important to know the depth and breadth of orders received from these types of customers so accommodations can be made. 

Although everyone can benefit from some type of value stream analysis, addressing the entire value stream will reveal more opportunities for continuous improvement.