VALUE STREAM MAPPING AS A LEAN MANAGEMENT TOOL

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1 VALUE STREAM MAPPING AS A LEAN MANAGEMENT TOOL Gregory A. Harris, P.E., University of Alabama in Huntsville Anthony Donatelli, University of Alabama in Huntsville Abstract This paper presents the use of Value Stream Mapping as the primary tool to facilitate the transformation of an organization from a traditional manufacturer to a Lean Enterprise. Value Stream Mapping is a planning tool for establishing the targets of the ideal process and is the roadmap to the improvements desired. Finally, cases where Value Stream Mapping has been used to achieve the desired results in quality, cost and delivery are presented with lessons learned from these implementations. Conclusions are that Value Stream Mapping is the tool of choice to facilitate organizational change. Introduction The Plant Manager looks out over the vast operations taking place on the production floor, his eyes then sweep the burgeoning administrative area that seems to be growing constantly and he wonders, how? How can it be that Engineering has worked project after project this year and the organization still cannot produce enough product, and what they do produce costs so much that the slight profit margins made in previous years have completely disappeared? This Plant Manager has just realized what many mangers have discovered. Even though his organization has embraced process improvement, the results have been less than satisfying. Improving processes through problem solving itself is not systematic process improvement.(adams, et. al, 1998 ) Managers are often very good at dealing with the daily problems associated with running their operations, fire fighting. What they do not do as well is stepping back from the problems (the trees) long enough to systematically establish plans to improve systems (the forest) that will make the task of running their operations less onerous and labor intensive. If the implementation of improvement efforts is on a project by project basis and management is not involved or is disconnected from the improvement effort, can the organization truly be transformed? The real question to be answered is how is the development of a vision for the organization and management to a strategic plan translated into implementation at the plant management level? By employing Value Stream Mapping, one of the Lean Enterprise transformation tools, the manager can guide the improvement process in his organization to reach the Future State goals of improved Quality, Cost and Delivery, ultimately establishing an operation that provides Customer Satisfaction. The Value Stream Mapping Planning Tool Value Stream Mapping is the foundational tool used by companies that are on the cutting edge of transformation from traditional organizations to the Lean Enterprise. At Toyota, the method called Value Stream Mapping is known as Material and Information Flow Mapping and is used to show current and ideal states in the process of developing implementation plans for lean manufacturing systems. (Rother and Shook, 1999). This tool was developed to manage the kaizen (a focused, quick improvement event) process at Toyota. Using Value Stream Mapping, the Lean Enterprise performs an evaluation of operations, whether production related or non-manufacturing, to determine where the cycle time and cost savings can be found. This eliminates guessing at the best opportunities to apply limited resources to maximize returns financially and organizationally. Looking at operations from the Value Stream point of view, the total system is brought to a higher level of efficiency through the elimination of non-value added waste. The Value Stream Map serves as a starting point to allow management, engineers, suppliers and customers to recognize and develop an achievable plan to eliminate waste. The result of Value Stream Mapping is a Future State that serves as the vision for the future of the value stream. The Value Stream Mapping activity allows the organization to back out of the trees for a period of time to ponder and evaluate the system as a whole. This activity identifies the Value Stream in the operation and constructs a Current State Map (Exhibit 1.) that identifies the physical material flow and the information that currently supports that flow. Through the exercise, the Value Stream Mapping team will recognize waste and identify some sources throughout the stream. Once the waste and issues with the current state have been identified and discussed, the team will construct a Future State map that will, if implemented, reach all of the required performance targets. Typically this is a quantum leap in operational efficiency and performance, not slight incremental improvements. The changes that are required to achieve the future state performance are chronicled by

2 looping or chunking kaizen events and projects into smaller pieces that can be managed and accomplished, usually without affecting upstream or downstream operations. The Transforming Organization Maintaining the status quo is not an option for a functioning organization. Today an organization is either continuously improving or it is falling behind. Value Stream Mapping provides the roadmap to continuous improvement. What does an organization look like that has adopted continuous improvement as a way of life? Typically it will be an organization with an energized workforce. People like to work there. They feel as if they are appreciated and a valuable part of the success of the organization. The continuously improving organization will be embracing change. Change is looked upon as good and everyone is involved in making improvements. It will have teams forming around problems to develop solutions that improve the quality, cost and delivery of the product to the customer. The organization will be customer focused. They know what the customer is asking the organization to provide as a product or a service because the customer, and suppliers are viewed as an integral part of their operation. The continuously improving organization will have a vision for the future and will attempt to ensure that all actions correlate to that vision. The organization will have adopted the idea that all wastes are worth eliminating because they know that many incremental improvements will get them to the desired result as well as major breakthroughs. The transformation process from a traditional organization to a Lean Enterprise will be a focused journey with people dedicated to the future state of the organization. What does the organization look like that is in need of transformation? The opposite of that described above. Turnover is high. Employees are disgruntled. Union talk is taking place because the workers do not feel like management listens to them. Bureaucracy reigns. Ideas seem to fall into a black hole. No one is interested in what the customer wants. Lead times are long, costs are high and quality is poor. The ability of the organization to respond to market changes is inhibited by the inability to make quick, informed decisions. Establishing a vision. Since the continuously improving organization is one that is working toward a vision of the future, how does the manager go about the task of establishing that vision? One of the first actions must be to determine what Value Streams exist in the operations. This is not limited just to product families. It is any product that uses the same resources in much the same way to achieve similar levels of completion. Once these Value Streams are identified, the Current State Map of the processes can be drawn. If the Current State is developed by following the path of production from order to shipping, many of the issues causing problems will be glossed over because the team will be gathering information on how the process is supposed to be working, not what is actually happening on the floor. It is extremely important that what is really going on be captured in the map. For this reason, the team starts at the end of the process and work its way back upstream asking questions such as

3 How do you know what to do at this operation? and Where do you get the product to perform your operation? Often the answers to these questions are quite different than what was expected. When the information is gathered and the map completed, the team will discuss the issues and problems identified during the information gathering process and will bring into the discussion any additional information about issues or problems. The additional information may include Customer Satisfaction data, defect rates, quality problems, employee turnover, and accident data to mention a few. Now that all of the information about what is wrong with the process is out on the table, the process of making corrections can begin in earnest. This is where the visioning begins. The first step is to develop the Design Guidelines to be used in establishing the Future State of the Value Stream. What level of output is desired? What are the advancements in each area of the operation to be achieved? Is there a new method in which an operation should be performed? What is the desired level of manpower? Within what lead time will the system need to respond? These are just some of the questions that must be answered if the Future State design activity is to achieve the breakthrough results the process is capable of producing. The team is urged to think out of the box. The Future State (Exhibit 2.) of the operation is mapped out, in accordance with the Design Guidelines, with the physical flow of the material or product determined first. When this activity is taking place the underlying question to all processes is how do we want the operation to work? This should exclude any of the activities going on in the Current State if any aspect of those activities is deemed unacceptable. The cataloging and categorizing of any improvements that will be required to achieve the Future State design should begin. After the physical flow of product is finalized, the information that will be required to sustain the activity is overlaid on the map. The sequence of these steps is critical. Much too often organizations will try to solve a problem with the purchase and implementation of new software without determining what information is needed at each operation and how that information needs to be presented to the operation. Matching the information required to the physical flow of product is one of the huge benefits of Value Stream Mapping. As the team completes the Future State Map a critical analysis of the design must take place. The question to be answered is Does the design shown on the Future State Map provide the desired result? If the answer to the question is yes and consensus is achieved within the team, the Future State Map is ready to go forward. Following the development of the Future State Map the process improvements necessary to make the Future State of the value stream a reality are drawn on the map in the proper locations and grouped together by area into loops that can be accomplished without seriously affecting the upstream and downstream operations. The process improvements, drawn as

4 bursts on the map, may represent a Kaizen (or continuous improvement) Event that would take place over a period of three to five days or a long-term project that will require multiple resources and planning between stakeholders. The bursts are grouped together by drawing loops around them on the map. These Kaizen Events or Projects are then listed onto a Value Stream Plan categorized by loop that will be used to manage the improvement activities. The Value Stream Plan (Exhibit 3) must contain the information to manage the activities: The Product Business Objective of the activity, The VS Loop the activity is grouped with, The Value Stream Objectives, A Measurable Goal, The Implementation Schedule, The Person In Charge of the activity, Any Related Departments, The Review Schedule, and A Signature Approval Block With the information listed above the manager will have the ability to keep the process improvement activities moving forward. The changes that will be described on a Future State Map can look overwhelming to a manager. How can such dramatic changes be accomplished? The answer is in the use and analysis of the Value Stream Plan. By chunking the overall process improvement activity into loops that can be accomplished with the resources available, or by bringing in some outside services, the overwhelming change becomes much more digestible to the organization and maintainable by the manager. Team synergy. One of the benefits of the Value Stream Mapping exercise is the team attitude that takes over the diverse group assembled to perform the activity. Since people from all aspects of the value stream are involved seemingly simple events start bringing the team together and creating bonds that were not there prior to the exercise. The fact that all people involved start using the same terminology to describe what is going on in the process is tremendously valuable in improving communications between groups performing different aspects of the operations. Having someone from Sales in the same room as the Production Operator and Quality Inspector who are dealing with the problems of meeting customer demand, brings to light the frustrations of not being able to perform the required tasks in a timely, efficient manner under compressed customer schedules. Another benefit takes place when the team starts to list the issues and problems with the current system. All of a sudden the team members realize that they are not the only one s dealing with the inefficiencies and wastes in the current operations. When the problems are listed team members begin to realize that the person they had been angry with for not performing their job was actually dealing with a system that is full of inefficiencies and wastes, derailing the best efforts of the employee to perform his/her required tasks in a timely manner. Through the Value Stream exercise the team begins to build synergy that develops into a cooperatively designed Future State of the Value Stream that addresses the concerns and problems the team listed for the Current State system. Exhibit 3

5 Cases Rubber Products Manufacturer #1 The company had been in business for 25+ years. The team members average time with the company was more than 9 years with the longest employed team member having 25 years and the shortest length of employment being a little over 1 year. After some initial training of the 8 participants on Value Stream Mapping, the team began the process of mapping the Current State from Shipping to Order Entry. After walking the floor and gathering the basic information, the team started to draw the Current State. After the first two Process Boxes were drawn, an argument ensued that took up most of the afternoon. After working together for many years team members were at odds about how the process actually worked. Team members disagreed with each other over such things as the flow of the product, the operations that took place in the area, the amount of work required to accomplish the process operations, and any other issues that had more than one side and allowed argument. The Quality Manager finally stood up from the table, knocking his chair onto the floor, and yelled Why are you making us try to do this backwards?!! It was obvious that the team members knew how things were supposed to be happening on the production floor but when confronted with what was actually happening, they became aware of the main problem. Although each person knew what they were supposed to be doing, they did not understand the system as a whole and how what they did fit into the grand scheme. The team took a break for three days while they went out on the floor and discovered what was actually going on. Upon the resumption of the Value Stream Mapping activity, the team had made an amazing evolution. The team members had a new appreciation for what each other had been dealing with in trying to push product through the existing system. Not only did they grow to appreciate each other, they had a new outlook on how the product being produced through the Value Stream could be improved in quality and costs. The activity of designing the Future State of the operation went smoothly and the end result was a quantum leap ahead in rubber product production. The team enthusiastically embraced the thought of moving forward with kaizen events to implement the vision of the future. Rubber Products Manufacturer #2 The initial interaction with this company was through a Lean 101 hands on Simulation of Lean Manufacturing Principles. The next step for the company was to perform a Value Stream Map of a department that manufactured a steel reinforced rubber encapsulated product for large dump trucks. The team was small in this exercise, only composed of 5 people from different parts of the organization. During the Value Stream Mapping activity a new understanding, and appreciation, for the efforts of each component in the process was achieved by all team members. The Future State of the operation was developed with full cooperation of all team members. This organization had recently been taken by surprise at the untimely death of the General Manager just before the Value Stream Mapping exercise. The Value Stream was lead by the Engineering Manager who had stepped in to lead during the search for a new General Manager. After the team completed the Future State Map, they took the initiative to start implementation of the changes. With the Value Stream Plan as a guide the team was able to implement many of the changes in a short time, making significant productivity improvements by reducing change over time, reducing defects and increasing the production volume through the department. Lessons Learned The lessons to be taken away from these examples are two-fold. First, no matter how long someone has been involved in the manufacturing process, do not assume that they understand the system completely. Intermittent interaction between different functions within the organization does not allow enough deep interchange to ensure that exchange of correct knowledge is taking place. The exchange of this type of production knowledge must be intentional and regular. Second, the result of the Value Stream Mapping activity, the Value Stream Plan, is a tool that can be employed at many different levels of the organization to aid in the efficient implementation of the desired Future State design. The tool cannot, however, replace initiative and desire to accomplish change in an organization. Conclusions Value Stream Mapping is the tool a manager can use to drive the continuous improvement activities in the organization to a successful conclusion. To transform an organization into a Lean Enterprise it is necessary to have a vision, something to guide the activities of many continuous improvement teams as they implement changes using the lean enterprise tools. The Value Stream Mapping planning tool is what solidifies the vision. The Value Stream Plan is the tool that makes that vision understandable and achievable. Using the Value Stream Map as a guide and the Value Stream Plan to manage resources, continuous improvement is focused and concentrated to achieve maximum gains from resources available, achieving success for the Lean Enterprise.

6 Acknowledgements This work was supported in part by the Department of Commerce Manufacturing Extension Partnership through the Alabama Technology Network, Inc. References Rother, Mike, and John Shook, Learning to See, version 1.2, The Lean Enterprise Institute (1999) Adams, Mel, Bernard J. Schroer, Michael Kinney and Christoph Disch, CAR Working Paper #98-01, University of Alabama in Huntsville, (1998) National Institute of Standards and Technology Manufacturing Extension Partnership, Value Stream Mapping, Student Guide, Developed by Rother & Co., Government Printing Office (1998) About the Authors Gregory A. Harris is the Director of the Region 1 Center of the Alabama Technology Network located at the University of Alabama in Huntsville. Mr. Harris has over 19 years of experience as an industrial engineer, quality engineer, operations manager, and plant manger at Lindy Industries, SGS Consulting Engineers, United Technologies, The Federal Reserve Bank, Convex Computer Corporation and Texas Instruments, Inc. He is a Certified NIST Lean Manufacturing Trainer. Gregory holds a Bachelors Degree in Industrial Engineering from Auburn University and a Master s Degree in Business Administration from St. Edward s University and is currently pursuing a Ph.D. in ISEEM at the University of Alabama in Huntsville. Mr. Harris is a Registered Professional Engineer. Anthony Donatelli is a Project Engineer for the Region 1 Center of the Alabama Technology Network located at the University of Alabama in Huntsville. Mr. Donatelli has BS in Industrial and Systems Engineering and is currently pursuing an MS in Engineering Management from UAH. He has experience in value stream mapping, simulation, production control, line balancing and standardization, facility layout, and as a lean manufacturing trainer.