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What Are Value Streams?
A Value Stream is the set of all actions (both value added and non
value added) required to bring a specific product or service from
raw material through to the customer.
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Types of Value Streams
Whenever there is a product (or service) for a customer,
 there is a value stream. The challenge lies in seeing it.”
 enterprise value streams:
 Raw Materials to Customer - Manufacturing
 Concept to Launch - Engineering
 Order to Cash - Administrative Functions
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Identifying the Value Stream
The starting point is to learn to distinguish value creation
from waste in your whole value stream
By putting on waste glasses!
By choosing a product family
By assembling the team and taking a walk together up the
value stream
And drawing a map of what you find!
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Value Stream Mapping
Helps you visualize more than the single process level
Links the material and information flows
Provides a common language
Provides a blueprint for implementation
More useful than quantitative tools
Ties together lean concepts and techniques
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Value Stream Mapping
Follow a “product” or “service” from beginning to end, and
draw a visual representation of every process in the material
& information flow.
Then, draw (using icons) a “future state” map of how value
should flow.
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The Current State
Typical Steps to Complete a Current State Drawing
Document customer information
Complete a quick walk through to identify the main processes
(i.e., how many process boxes)
Fill in data boxes, draw inventory triangles, and count
inventory
Document supplier information.
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Establish information flow: how does each process know what
to make next?
Identify where material is being pushed
Quantify production lead time vs. processing time
Where and how large are the inventories in the physical flow?
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Hint: Carefully distinguish buffer stocks, safety stocks, and
shipping stocks. Then determine “standard inventory” for
current system design and capabilities.
How reliable is each transport link (on-time delivery
percentage) and how many expediting trips per year are
needed?
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Note: By multiplying quality data from by on-time delivery data
you can calculate the “fulfillment level” each facility as
perceived by the next downstream customer. The is a key
measure from a total value stream perspective.
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Typical Results
 80 – 90% of total steps are waste from standpoint of end
customer.
 99.9% of throughput time is wasted time.
 Demand becomes more and more erratic as it moves
upstream, imposing major inventory, capacity, and
management costs at every level.
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 Quality becomes worse and worse as we move upstream,
imposing major costs downstream.
 Most managers and many production associates expend
the majority of their efforts on hand-offs, work-arounds,
and logistical complexity.
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The Future State
Completed in a day with the same team
Focused on:
 Creating a flexible, reactive system that quickly adapts to
changing customer needs
 Eliminating waste
 Creating flow
 Producing on demand
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 Activities aligned with our business strategy
 Efforts focused on NET improvements for the company
 Metrics supportive of fundamental change
 Simple, constant communication of our plans and
achievements as an enterprise
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Implementing Change
Don’t Wait!
You need a plan!
 Tie it to your business objectives.
 Make a VS Plan: What to do by when.
 Establish an appropriate review frequency.
 Conduct VS Reviews walking the flow
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Typical Results
Throughput time falls from 44 days to 6 (87%)
Wasted steps fall from 65 to 27 (60%)
Transport distance falls from 5300 miles to 1100 miles
Demand amplification is reduced from 20% to 5%
Inventories shrink by 90% percent
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Defects are reduced to the same rate at the start of the process
as at the end
Throughput time shrinks to within customer wait time,
meaning all production is to confirmed order
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Roadblocks
75 years of bad habits
 Financial focus with limited cost understanding
 A lack of system thinking and incentives
 Metrics supporting a 75 year old model
 Limited customer focus
 Absence of effective operating strategies
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Traditional approaches do not focus on the value stream
 Create “perfect competition” at the next level of supply
upstream, by attracting many bidders.
 Improve bargaining power through scale economies in raw
materials buys as well.
 Turn up the competitive pressure with reverse auctions
where possible.
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 Demand continuing price reductions in multi-year
contracts whatever happens to volume.
 Note the lack of process analysis of the value stream!
 “Market will insure lowest costs & highest efficiency!”
Margin squeezing rather than true cost reduction.
Persistent shortfalls in quality and delivery reliability.
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Low-ball bidding and the engineering change game.
Collapse of “partnership” and “trust” in economic downturns
(2001!), replaced by “survival of the fittest”.
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Wrong Ways to Address Roadblocks
Programs of the month (band aids)
 Meetings, meetings, meetings, meetings
 Silo optimization