The Quality Group. All Rights Reserved

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1 Online Student Guide The Quality Group. All Rights Reserved 1

2 Table of Contents LEARNING OBJECTIVES... 4 INTRODUCTION... 4 LEAN VALUE STREAM... 4 CALCULATING TAKT TIME... 5 TAKT TIME OVERVIEW... 5 TAKT TIME CASE STUDY... 6 TAKT TIME CALCULATION... 6 LEAN METHODOLOGY TIME MEASUREMENT METRICS... 7 LEAN METHODOLOGY TIME MEASUREMENT METRICS... 7 HOW TO CALCULATE CYCLE TIME... 8 STEPS TO CALCULATE CYCLE TIME... 8 TOTAL CYCLE TIME... 9 CALCULATING TOTAL CYCLE TIME... 9 HOW TO CALCULATE LEAD TIME VALUE STREAM MAP VALUE STREAM MAPPING SYMBOLS ANALYZE CURRENT STATE VALUE STREAM MAP CALCULATE TAKT TIME INVESTIGATING THE OPERATION ANALYZE THE CURRENT STATE VALUE STREAM MAP PRODUCE TO TAKT AND REMOVE WASTE THE PULL SYSTEM A SIMPLE KANBAN PULL EXAMPLE ANOTHER SIMPLE KANBAN PULL EXAMPLE PULL SEQUENCE - SUPPLY CHAIN ENABLE FLOW AND IMPLEMENT PULL FLOW AND PULL FUTURE STATE VALUE STREAM MAP FUTURE STATE VALUE STREAM MAP FUTURE STATE VALUE STREAM MAP - OFFICE ENVIRONMENT OFFICE ENVIRONMENT - TAKT TIME OFFICE WASTE AND FLOW FUTURE STATE VALUE STREAM MAP - OFFICE ENVIRONMENT APPENDIX VALUE STREAM MAP SYMBOLS

3 2012 by The Quality Group. All rights reserved. Version 5.0 January, 2012 Terms of Use This guide can only be used by those with a paid license to the corresponding course in the e- Learning curriculum produced and distributed by The Quality Group. No part of this Student Guide may be altered, reproduced, stored, or transmitted in any form by any means without the prior written permission of The Quality Group. Trademarks All terms mentioned in this guide that are known to be trademarks or service marks have been appropriately capitalized. Comments Please address any questions or comments to your distributor or to The Quality Group at info@thequalitygroup.net. 3

4 Learning Objectives Upon completion of this course, student will be able to: Define a Future State Value Stream Map and describe its purpose Define and calculate Takt Time, and discuss its role in Value Stream Mapping Demonstrate how to analyze a Current State Value Stream Map to create a Future State Value Stream Map Discuss how to enable flow and develop Pull Introduction The Value Stream of a product or service can be broken down into the following three parts: the flow of materials from suppliers to customers, including both internal and external customers; the transformation of materials into products and services; and the flow of information that supports the material flow and its transformation. Lean Value Stream A Lean Value Stream links all processes, from the customer back through the initial step, in a continuous chain. This enhances and promotes a smooth product flow through the processes, without detours or loops. The goal of a Lean Value Stream is to produce the product or complete the process in the shortest Lead Time, at the highest quality and at the lowest cost possible, in order to deliver the highest level of customer satisfaction. Value Stream Mapping is an essential planning tool used to identify improvements that will result in a Lean Value Stream. The first step in Value Stream Mapping is to create the Current State Value Stream Map, which shows the Value Stream of a particular product or service. Once the Current State Value Stream Map has been created, the next step is to analyze the current process and flow to develop a clear vision of the desired future state. In order for an organization to complete its Lean transformation process, it must understand the desired end goal. To create the Future State Value Stream Map, the team begins by analyzing the Current State Value Stream Map to identify areas for improvement. 4

5 It will observe how many process steps are in the flow, where inventory is held, how product flows between operations, and how the process is scheduled. This examination will start to reveal areas to investigate further. Calculating Takt Time After the team has completed its initial analysis of the Current State Value Stream Map, the next step is to calculate Takt Time for the current process. Takt Time measures how often the product must be produced, based on customer demand and the time available for processing. We will discuss Takt Time in more detail soon. Next, the team examines the Current State Value Stream Map to identify barriers to flow. Removing barriers to flow is a critical step in envisioning the future state. Barriers to flow come in many forms, but some of the most common are processes that do not produce to Takt, stoppages, and inventory buildup between steps. To enable flow, all processes must be synchronized to produce at the required Takt Time. Quality problems also cause many flow issues. For example, they can prevent a process from producing to Takt; require more processing time to produce the needed amount of product; necessitate an increase in inventory to ensure that acceptable product is available; and increase inspection cost and time. Value Stream Maps help uncover quality issues by identifying the symptoms of inventory, long Cycle Times, and added inspection steps. The team s final step in the creation of its Future State Value Stream Map is to develop Pull systems between any steps where product cannot flow continuously. Pull systems help synchronize and control inventory levels, and they trigger production in the supplying processes. When developing Pull systems, the team determines the operation within the Value Stream where production needs to be scheduled. It then allows continuous flow and Pull systems to dictate the schedule of the remaining operations. Later in this module, we will provide a step- by- step demonstration of this Value Stream Mapping process. Takt Time Overview Before we continue, let s take a closer look at the definition of Takt Time, its calculation, and the important role it plays in developing an effective Future State Value Stream Map. Takt Time is German for musical meter or beat. In Lean methodology, it represents the rhythm or pulse of customer demand. A very important metric in Lean methodology, Takt Time is the rate or pace at which materials, information, components, assemblies, and finished product or services must be provided in order to satisfy customer demand. 5

6 Before the team can develop its Future State Value Stream Map, it must calculate Takt Time to determine whether the current process meets customer demand requirements. Takt Time is a very simple calculation. It is the daily available production time divided by the average daily customer demand for product (remember, daily available production time is overall total time less any lost time, such as breaks, lunch, or planned equipment downtime). Daily Available Production Time Takt Time = Daily Average Customer Demand for Product Takt Time Case Study Now, we will walk through a case study example to calculate Takt Time and demonstrate its role in Value Stream Mapping. Our case study will focus on a well known pharmaceutical plastic bottle supplier. The business facts of our case study are as follows: the facility supplies plastic bottles for drug prescriptions; the customer requires an average of 10,500 plastic bottles per day; the facility operates on two 8- hour shifts; all employees take a 30- minute lunch and two 15- minute breaks each shift; shift Changeover utilizes 30 minutes between the two shifts; the facility has a plastic bottle molding capacity of 850 bottles per hour. Takt Time Calculation In this case study, the question asked by the VP of Operations is, Can we supply the number of bottles utilizing the current number of shifts operating? We can answer this question using the case study data we ve been provided. First, we know the facility operates daily for two shifts of 8 hours each, or 16 total hours. With this data, we can calculate Daily Available Production Time as follows: 16 total hours minus one hour for lunch and one hour for break times, minus a.5- hour shift Changeover. This leaves us with 13.5 hours of Daily Available Production Time, or 810 minutes. We also know that Average Customer Demand is 10,500 plastic bottles per day. We now have the data needed to calculate Takt Time. Notice that as we developed this data, we made sure to keep both Available Production Time and Average Customer Demand in per day units of 6

7 measure. When entering data into the Takt Time formula, it is critical that the units of measure are the same. Next, if we follow our formula, we simply divide 810 minutes per day by 10,500 bottles demanded. This gives us an actual Takt Time customer demand of minutes allowed per bottle, or a requirement of per hour (we calculated this by dividing 60 minutes per hour by our Takt demand). If our customer demands bottles per hour, and we have 13.5 hours of available production time per day, we can produce 10,506 bottles per day (we calculated this by multiplying by 13.5). By producing 10,506 bottles per day, the facility can meet the customer s average daily demand of 10,500 bottles. However, the facility s ability to produce just six bottles over customer demand is cutting it very close. If anything goes wrong during the two shifts, the customer demand will not be met. With this knowledge, the VP of Operations should develop a contingency plan for the facility to make sure it meets customer demand. This case study shows how important it is for a team to understand Takt Time as it develops its Future State Value Stream Map. Lean Methodology Time Measurement Metrics Lean Methodology Time Measurement Metrics You have just learned how to calculate Takt Time, and you understand the important role it plays in developing the Future State Value Stream Map. Next, we will review three additional time measurement metrics used in Value Stream Mapping. They are Cycle Time, Total Cycle Time, and Lead Time. As we walk through our review, keep in mind that these three metrics must not be confused with Takt Time; they are very different. Cycle Time is the actual time interval between start and finish of a specific task or operation within a process. Total Cycle Time is the total time interval between start and finish of all operations required to produce a product or service. Lead Time is the total time required from receipt of an order until the ordered product or service is delivered to the customer. For a customer placing an order, Lead Time is very important. 7

8 How to Calculate Cycle Time As you just learned, Cycle Time is the actual time interval between start and finish of a specific task or operation within an overall process. An example of Cycle Time is the actual time it takes to attach a wheel to a car assembly. When calculating an operation s Cycle Time, it is recommended that the team measure the time it takes to complete five to ten cycles. It should also consider taking additional Cycle Time measurements, at random, to verify accuracy over time. When measuring Cycle Time, the team should try to stand out of direct view of any operators involved, because operators often speed up when they know they are being observed. Steps to Calculate Cycle Time Cycle Time is calculated by following a series of steps. The first step is to get an accurate time measurement device, such as a stop watch. Using this measurement device, the team starts time measurement with the very first movement within the operation. An example would be when a die actually starts to move during a molding process. It is important to note that it does not matter if the operation produces multiple units, such as a die that molds 20 bottles during one complete cycle; the Cycle Time is still the time it takes to complete the single molding cycle, not 20 bottles. Next, the team measures the total time to produce 5 to 10 units. If it measures ten units, for example, it would end the time measurement when the 11th unit cycle starts. In our die example, this would be when the die just starts to move again at the start of the 11th unit. The team then records the overall time to produce 10 units. 8

9 Finally, it divides that total time by 10 to obtain an average Cycle Time for the operation. Now let s calculate a specific example. In this example, the total time to produce 10 units of production was recorded at 28.7 seconds. To calculate the actual individual Cycle Time average, we simply divide 28.7 by 10. The result is 2.87 seconds per cycle. In other words, Cycle Time is 2.87 seconds. Total Cycle Time Recall that Total Cycle Time is the total time interval between start and finish of all operations required to produce a product or service. An example of Total Cycle Time is the time it takes to manufacture one vehicle, from the time the frame starts to be placed on the assembly line until the completed car is running and rolls off the assembly line on its own power. Total Cycle Time is determined by tracking and timing a single unit through the entire operation process through completion. As with Cycle Time, to obtain the very best data, the team should take multiple observations to develop an accurate average time. Calculating Total Cycle Time Total Cycle Time is the sum of all individual operation Cycle Times, plus any delays, waiting, inventory idle time, and staging time losses. In this diagram, the Total Cycle Time is 2.66 hours. However, if you look carefully, you will notice that the individual Value Added operations only add up to 31 seconds! This is where Value Added and Non- Value Added times become very visible. As a customer, would you be willing to pay for all this lost time and delay? Probably not. Therefore, as the team develops its Future State Value Stream Map, it must make sure these times are documented. 9

10 How to Calculate Lead Time Lead Time is the total time that is required from receipt of an order until the ordered product or service is delivered to the customer. To provide its customers with accurate completion and delivery dates, it is critical for a business to understand the Lead Time required to produce and deliver a product or service. A frequent customer complaint is the failure of a business to complete and deliver the product or service by the date originally given. Take a look at this simplified diagram. As you can see, adding order receipt, order processing, and shipping time results in a Lead Time of 4.1 days, as compared to the Total Cycle Time of just 2.66 hours. This example clearly illustrates the importance of Lead Time. Without a clear understanding of the Lead Time required to produce a product or service, a business runs the risk of unsatisfied customers. Value Stream Map Value Stream Mapping Symbols Please go to the Appendix of this student guideto view symbols of the Values Stream Map 10

11 Analyze Current State Value Stream Map Now that you are familiar with some of the key metrics and symbols used in Value Stream Mapping, we will demonstrate how to create the Future State Value Stream Map. Earlier in this module, you learned that the Future State Value Stream Map is created by analyzing the Current State Value Stream Map to identify areas for improvement. To demonstrate, we will analyze the Current State Value Stream Map shown here. In this example, the company produces one product that is available in two colors, red and blue. The customer orders products daily and consumes 140 cartons of red and 160 cartons of blue each month. When we examine the map, we see that Production Control sends daily customer orders to Shipping, where the required items are pulled from finished goods inventory and shipped daily. The production process has four operations, each of which receives a monthly production schedule from production control. The items produced are all the same until the fourth operation, where they are painted either red or blue. Looking at the left side of the map, we see that the primary raw material is shipped monthly from the Supplier, based on a monthly order from Production Control. Now let s take a look at some of the indicators of waste and areas for improvement. Examining the map, we see that the production Lead Time is 53 days, but the Value Adding processing time is just under 14 minutes. This information indicates that Lead Time may be an area where waste exists. To investigate further, we begin by identifying the major contributors to the production Lead Time. In this case, the two inventory locations that have a large impact are incoming raw material stores and the work in process (WIP) following Operation 1. This is one of the first areas we identify for investigation and improvement. Now let s move our focus to Operation 3. It has the longest Cycle Time of all the operations, and several days of WIP are waiting to be processed. The WIP that is waiting for Operation 3 deserves investigation, as this could indicate that Operation 3 is a production bottleneck. Sometimes bottlenecks are unavoidable, and are caused by processes that simply take longer than the others, but many times they are indications of issues such as inefficiencies or quality losses. To know for sure, we will need to investigate Operation 3. 11

12 Calculate Takt Time Now that we have completed our initial analysis of the Current State Value Stream Map, and we have identified areas for investigation and improvement, the next step is to calculate Takt Time and compare it to the operation Cycle Times. In this example, everyone in the company works one eight- hour shift, with one 30- minute lunch break and two 15- minute coffee breaks. We recall, from our examination of the Current State Value Stream Map, that each operation has one operator. This means that each operation has 25,200 seconds available for processing each day. We have now determined the first piece of data required for the Takt Time calculation. As you can see 300 cartons equals 1,500 pieces. With this information, we derived the 75- piece per day demand by dividing the piece monthly requirement by an average of 20 workdays per month. Notice also that we broke down the units of customer demand from cartons per month to pieces per day. It is important to translate customer requirements into units that are relevant to the operation. In this case, for example, each operation does not produce cartons of product; each operation produces pieces. This translation ensures that each operation understands how many items it needs to produce. The customer demand is 300 cartons per month, or 75 pieces per day. This is the second piece of data required for the Takt Time calculation. Now that we have the necessary data, we simply plug it into the Takt Time formula. 25,200 seconds per day divided by 75 pieces per day gives us a Takt Time of 336 seconds per piece. This means that to keep up with the pace dictated by customer demand, each operation needs to produce one piece every 336 seconds. When we create a chart that shows Takt Time and Cycle Time for each operation, it becomes apparent that Operation 3, at a 440 second cycle time, cannot produce to Takt in one shift per day. Overtime is required to keep up with customer demand. Investigating the Operation We just determined that currently, Operation 3 cannot produce to Takt. The best way to investigate Operation 3 is to observe the work area and talk to the operators. Upon performing this go and see investigation, we find that Operation 3 has been running one to two hours longer each day to keep up with demand. 12

13 While in the work area, we also discover that the Cycle Time for this operation includes an inspection point that takes about 20% of the Total Cycle Time to complete, and it results in approximately 25% scrap. This scrap rate means that to keep up with customer orders, Operations 1, 2, and 3 all have to produce 25% more than customer demand, or 100 pieces per day. Improving the quality of Operation 3 will reduce a lot of waste due to overproduction. In addition, our Lean team will focus on error proofing the operation so the inspection time can be reduced or eliminated. On the Future State Value Stream Map, we will mark Operation 3 with two Kaizen bursts to represent the quality improvement and Poka- Yoke efforts. As you see here, marking the Value Stream Map in this manner helps visually communicate the planned improvement efforts. Analyze the Current State Value Stream Map Next, we turn our attention to Operation 1 and the inventory surrounding it. Talking to the operators reveals that Operation 1 only runs the parts once a month, when it receives the monthly schedule from Production Control. Operators only run the operation monthly because the equipment requires a long Changeover Time, and they want to maximize the setup by running as many parts as possible while the machine is set up. Performing a quick calculation, we find that each monthly run requires about 9.5 hours of processing time and a 2- hour Changeover Time, or a total of 11.5 hours per month. If this process were to run the daily production need of 100 pieces (remember the quality loss at Operation 3), run time would be about 30 minutes. A weekly run, even after quality improvement at Operation 3, would take just under 2 hours. Considering that Changeover Time is 2 hours, it is easy to understand why it seems advantageous to run more parts at a time. This analysis shows us that Changeover Reduction is needed so that Operation 1 can efficiently run smaller batch sizes. Smaller batches will reduce the inventory following the operation. This improvement will also increase the frequency of deliveries from the Supplier to weekly, rather than monthly, which will reduce the amount of incoming raw material inventory. Produce to Takt and Remove Waste Now let s take a look at the Value Stream Map after improvements for raw material delivery, Operation 1, and Operation 3. The quality improvement at Operation 3 reduced the Cycle Time by more than 30%. This reduced the WIP inventory between Operations 2 and 3 to a maximum of five days. 13

14 Changeover Reduction at Operation 1 enabled weekly batches rather than monthly, which reduced the WIP between Operations 1 and 2 to a maximum of five days. In addition, changing the order cycle and raw material delivery from the Supplier resulted in a maximum of five days of raw material inventory. Overall, every process now produces to Takt! These initial steps have reduced the production Lead Time by more than one month and the processing time by 17%. This operation is on the right track, but we re not done yet! The Pull System Before we go any further in our Value Stream Analysis, let s review how a simplified Pull System operates. Many Kanban systems use Kanban cards or bins to signal the need to replenish consumed materials. In Lean, this system is referred to as a supermarket basket Pull signal system. It gets its name because of its similarity to a regular supermarket process. When you go to the market, you select the items you need, place them in your shopping basket, and purchase them. The supermarket then replaces each item you purchased and restocks its shelves to be ready for the next customer. A Simple Kanban Pull Example Here we have a very simple animated Kanban replenishment illustration involving drums of some form of liquid. Although drums are shown here, they could just as well be red or blue assemblies, finished product, purchase orders or items from the shelf of a supermarket. In this example, the customer, or next operation, Pulls the drums as needed. When the animation sequence begins, and you observe the movement of drums, note that our example even includes rotation of stock in the finished goods area to comply with a FIFO, or first in first out, inventory control. When Pull activity stops, the Kanban staging location is empty. 14

15 Another Simple Kanban Pull Example This illustration starts with an empty Kanban staging area. In this example, the staging area is simply a square marked on the floor, where a full drum has been consumed. The empty Kanban square is a Pull signal for the supplier or stockroom to deliver a new drum. After the delivery of the new drum, the replenishment activity stops until demand is triggered by the customer, or next operation, consuming the product. Pull Sequence - Supply Chain Here is a demonstration of how the Pull system would work for supply of materials to the start of a process. This kind of inventory Pull system can significantly reduce inventory carrying cost for both the customer and the materials supplier. Enable Flow and Implement Pull Now that you understand how a simplified Pull system works, let s pick up where we left off in our demonstration of how to create a Future State Value Stream Map. At this point, every process is capable of producing to Takt, and a lot of waste in the forms of inventory, overproduction, inspection, and defects have been eliminated. Now we will turn our focus to product flow and Pull systems. The first question to consider is whether the operation will continue to build to stock as it does today, or shift to make- to- order. The two factors we must consider are whether the product is custom, and the length of the product Lead Time. If products are customized for each order, make- to- order is a much better choice. In this example, the primary benefit of making to order is the ability to eliminate finished goods inventory. Additionally, although the product is not custom, the customer does not always order the same number of red and blue parts each day, which results in excess inventory to cover these variations. 15

16 Operation 4 has a relatively fast Lead Time, and is also the operation that paints the items red or blue. This operation can receive the customer order and produce the exact product needed that day, in about three hours. Product can be shipped to the customer the same day, eliminating the need for finished goods inventory. Operation 4 is now the pacemaker operation, or the operation in which the product is scheduled due to customer demand. Ideally, the pacemaker operation should be further upstream, but in this operation the product Lead Time is too long to meet the customer s daily ordering requirement. While this may be an area for future improvement, for now Operation 4 is our best choice for the pacemaker. Working backwards through the process, let s examine where product can flow smoothly and where Pull systems need to be implemented. Product must be available when the pacemaker, Operation 4, demands it. Currently Operation 4 Pulls items from WIP inventory. An alternative to WIP inventory stores is a supermarket Pull system. As Operation 4 withdraws items from the supermarket, a signal is sent to the upstream process to replenish the exact amount just withdrawn. In this way, the supermarket, with its Pull signals, prevents overproduction by upstream processes and eliminates the need for production scheduling. But should the signal go to Operation 1, 2, or 3? Operation 1 is on a weekly schedule, so it is not a good candidate to receive the signal from Operation 4. candidates. Operations 2 and 3 are both The Value Stream Map tells us that these are currently two separate operations, with more inventory waiting in between the processes. The people who work in these areas suggest the two operations be combined into one work cell. Previously, this was not possible because of the lengthy Cycle Time of Operation 3. However, the quality improvements now make this combination possible. 16

17 Flow and Pull To finish up our Value Stream analysis, let s evaluate the flow of material around Operation 1. Currently there are inventory stores both before and after Operation 1. Static inventory stores are undesirable in a Lean operation for many reasons. A key reason is that carrying inventory is expensive. Inventory requires warehouse area and floor space; it increases the cost of rework and obsolescence; and it dramatically increases material handling. When we first began our Value Stream analysis, each operation required that materials be brought from stores to the operation, and then returned to stores after the operation. We have already seen how reducing inventory levels around Operation 1 reduced the overall Lead Time. Now let s improve even more. Replacing the inventory stores with supermarkets that are located on the floor, near the operation, will reduce material handling. It will also allow the amount of material on hand to be controlled by customer demand. Operation 2 will Pull from a supermarket, and for its weekly production run, Operation 1 will replenish only what had been consumed the previous week. In turn, the raw material supplier will deliver to a supermarket. As Operation 1 consumes the raw material, Kanban cards will be collected in the Kanban post. Production Control will retrieve the cards weekly from the post and order only the amount of raw material required to replenish the supermarket. As this example demonstrates, supermarket Pull systems give operations more control over the amount of inventory in process by tying replenishment to the customer orders. 17

18 Future State Value Stream Map Future State Value Stream Map Now, let s examine the Future State Value Stream Map we ve created. To begin, let s review the improvements that have been made. First, scheduling has been reduced to only one production step, operation 4. This improvement allows product to flow through the rest of the steps continuously or by Pull systems. Production Lead Time, which has been reduced from 53 days to 11 days, is another significant improvement. Thanks to improvement activities that reduced defects and combined operations 2 and 3 into a work cell, Value Adding processing time has been reduced by almost 25%. A closer look at the new combined Operation 2 and 3, however, shows a potential problem. The Cycle Time for the combined operation is 485 seconds, which is more than the Takt time of 336 seconds. Did the combination of these two operations create an inability to produce to Takt? Taking a closer look at our map, we see that the new combined operation now has two operators, rather than one. This increases the available daily time of our combined operation to 50,400 seconds per day. Future State Value Stream Map - Office Environment We have just walked through a demonstration of how to create a Future State Value Stream Map for a production process, in a manufacturing environment. Now we will do the same for a transactional process, in an office environment. In this demonstration, we will create a Future State Value Stream Map for a company that does invoice processing. In this example, the company requires its suppliers to send paper invoices by mail. The resulting Takt Time will now be different for the combined operation. A quick recalculation shows a new Takt Time of 672 seconds per piece. Considering that Operations 2 and 3 are now combined, we see that the new operation is capable of producing to Takt after all. 18

19 Once a week, all the invoices that have been received are manually entered into the system by a data entry clerk. Each entered invoice is put in the system work queue for the purchasing agent responsible for that supplier. The purchasing agent then manually matches the invoice to the related purchase order (or P.O.). Once the invoice is matched to the P.O., the original requester of the goods or services is required to confirm that payment can be released. After the requester has marked the invoice as OK to Pay, the invoice is released for check, print, and mail, which is performed in a weekly batch run. Next, we will examine how this current process can be improved. Office Environment - Takt Time Just as we did for the manufacturing process, we must calculate the Takt Time for the operation. The Value Stream Map on the previous slide shows that customer demand is 100 paid invoices per week. In this example, each of the four departments (or operations) has 30 available working hours per person, per week. However, when we examine the Value Stream Map, we see that there is a different number of people working in each department, which results in different availability times for each operation. In this case, we must calculate Takt Time for each individual operation. Looking at the Takt Time data on the map, it would seem that each operation can easily produce to Takt. However, these numbers are somewhat misleading because the people in these departments are not dedicated to these operations; they have many other tasks to do as well. Therefore, to better represent available time, we will estimate that each person allots only 15% of their working time to invoice processing, and recalculate Takt Time. When we recalculate Takt with the new available time estimate, we see that each operation can still produce to Takt. To illustrate how we calculated the new Takt Time, let s examine the Invoice Entry operation. The original time available was 3600 minutes per day. However, if we utilize only 15% for invoice entry, the available time drops to 540 minutes, with an equivalent drop in Takt Time from 36 minutes per invoice to 5.4 minutes per invoice, as shown in the Value Stream data box. The changes are similar for the remaining process steps. Office Waste and Flow Now we will examine the Current State Value Stream Map to look for waste. Often it is difficult to see waste in an office environment because the inventory is held electronically, in approval queues or other automated processes. A Value Stream Map, however, enables the team to see inventory and identify where the product is waiting to be processed. Looking at our example, it is now apparent that invoices are piling up before the Ok to Pay step, even though that operation has plenty of available time. This is an area our team should target for improvement. 19

20 Next, we will examine the Invoice Entry and Print/Mail steps. Because these operations run only weekly, invoices may wait for up to a week before continuing through the process. Because this creates a backup of work, our team will focus on changing these operations to run daily. As we continue to analyze the Current Value Stream, we notice that when a step is completed, the work sits in an electronic system queue until the next step. This is a Push system, with poor notification that the item is ready for processing. This is yet another area we will target for improvement. Our team will consider how to allow invoices to flow better through the system. Future State Value Stream Map - Office Environment Recall that during our analysis, we found that invoices were piling up before the OK to Pay operation. To address this issue, the teams involved in the Invoice Match and OK to Pay steps examined the current process in detail in a virtual workplace design effort. They decided that the best way to remove the barrier to invoice flow through the steps would be to combine the operations in a virtual workplace. To do this, they scheduled a standing daily meeting, at which everyone with invoices ready to process gets together to match and approve the invoices in the queue. The daily run of invoice entry enabled a FIFO (first in, first out) type of scheduling for this operation. At every daily meeting, the team clears all invoices that are ready for processing. This daily rhythm continues through to the Print/Mail operation. As an added benefit, this team leveraged the virtual workplace. In the past, they found errors in the remit to addresses and other information. These errors had prevented them from executing the process and lengthened the Print/Mail Cycle Time. To address this issue, they decided to send a representative to the virtual workplace each day to review the invoice details with the team and resolve any issues immediately, before invoice processing was delayed. These seemingly simple efforts resulted in significant improvements. Lead Time was reduced from 12 days to 3, for a total of 9 days; and processing time improved by 16%. 20

21 Appendix Value Stream Map Symbols Material Flow Icons Represents Notes Factory Outside Sources Shows customers, suppliers, and outside manufacturing processes Assembly Process One box equals an area of flow. Also used for departments. All processes must be labeled. C/T = 45sec C/O = 30min 3 Shifts 2% Scrap Data box Records information regarding a manufacturing process, department, customer, or any other pertinent information. ### pieces (#day) Inventory Quantity and time should be noted. (Days of Inventory) Queue Time should be noted. Incoming documents Movement of material by PUSH Material that is produced and moved forward before it is needed. Based on a schedule. Movement of Finished Goods to Customer 21

22 Buffer or Safety Stock Inventory used to protect against stock outs. Quantity must be noted. Supermarket Controlled inventory of parts used to schedule production for upstream processes Withdrawal Pull of materials, usually from a supermarket. Max. ## pieces FIFO Transfer of controlled quantities Device to ensure FIFO (First- In- First- Out) flow of material between processes. Maximum should be noted. Warehouse Mon. +Wed Truck Shipment Note frequency of shipments Train Shipment Note frequency of shipments Tractor/Forklift Note frequency of shipments/movements 22

23 Plane Shipment Note frequency of shipments Hand Carrier Note frequency of movements Milk Run Delivery/ pickup occurring at frequent/ scheduled intervals Expedited Transport Information Flow Icons Represents Manual Information Flow Notes Example: Production or shipping schedule. Electronic Information Flow Example: EDI (electronic data interchange) E- kanban Production Kanban (dotted line indicates process kanban path) The one- per- customer kanban. Card or device that tells a process how many of what can be produced and gives permission to do so. 23

24 Withdrawal Kanban (dotted line indicates process kanban path) Signal Kanban Kanban Post Card or device that instructs the material handler to get and transfer parts (i.e. from a supermarket to the Consuming process) Signals when a reorder point is reached and another batch needs to be produced. Used where supplying process must produce in batches because of changeovers. Where kanban cards are collected and held for transport. Kanban Arriving in Batches Sequenced Pull Ball Gives instructions to process to produce a specific product type & quantity Go See Product Scheduling Adjusting schedules based on checking inventory levels Control Center Often a computerized system (ex: MRP) Phone Information via phone 24

25 Fax Information via Fax Information via Mail Information via mail Weekly Schedule Information Describes an information flow (attached to an information icon/arrow) General Icons Represents Notes Operator Kaizen Lightening Burst Highlights improvement needs/ opportunity at specific processes that are critical to achieving the value stream vision 25