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© BMA Inc. 2009. All rights reserved.
Value stream management
Organize by Value Stream
Planning theValue Streams
Controlling theValue Streams
Improving theValue Streams
Managing theValue Stream
Teams
© BMA Inc. 2009. All rights reserved.
What is a value stream?
“All of the actions, both value creating and non-value creating, required to bring a product from concept to launch and from order to cash collection. These include actions to process information from the customer and actions to transform the product on its way to the customer.”
© BMA Inc. 2009. All rights reserved.
Why do we focus on the value stream?
• Where the value is created.
• Identify value and waste.
• Focus on creating value for the customer.
• Identify flow and obstacles to flow.
• “See” the issues and make improvement.
• Create value, growth, & profit.
© BMA Inc. 2009. All rights reserved.
Why do we organize by value stream?• Focus on creating customer value.• Accountability.• Departments can be “optimized” but we
need to optimize the flow through the value stream.
• Develop lean thinking managers & specialists.“As you get the kinks out of your physical
production, order-taking, and product development, it will become obvious that reorganizing by value stream is the best way to sustain your achievement.”Lean Thinking, Womack & Jones
© BMA Inc. 2009. All rights reserved.
Kinds of value streams
Current Customers
New Customers
CurrentProducts
NewProducts
OrderFulfillment
Acquiring NewCustomers
CustomerDevelopment
New ProductDevelopment
© BMA Inc. 2009. All rights reserved.
Steps in value stream definition
1. Identify product families with similar production flow.
2. Staple yourself to a customer order.
3. Identify and minimize “monuments”.
4. For design or configure-to-order products include the design/configuration in the production flow.
5. Create a production flow matrix– Product families on the Y-
axis– Machines or work centers
on the X-axis6. Make sure the value
streams you select include significant business.
7. Move forward and backwards through the value streams– Value added services– Purchasing and Sales &
Marketing– Administrative tasks
© BMA Inc. 2009. All rights reserved.
Product-process matrix
Orig Order Re
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La
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5 A
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SP
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Pre
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Pla
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libra
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Ca
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& In
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Ins
talla
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_S
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Ad
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AA6 X X X X X X
AA6-12 X X X X X X X X X X X X
AA6-14 X X X X X X X X X X X X
AB19 X X X X X X X X X X X X X X X X X
AB21 X X X X X X X
AB21-2 X X X X X X X X X X X X
AB33 X X X X X X
AB39 X X X X X X X
Center A X X X X X X X X X
Center B X X X X X X
Center F X X X X X X X
Bi-Center X X X X X X X X X X X X
M12-XX X X X X X X
M12-Custom X X X X X X
M13 X X X X X X X X X
M13-Custom X X X X X X X
Res-Active A12 X X X X X X X
Res-Acrive A13 X X X X X X X X X X X X
Res-Active BB2 X X X X X X
Res-Active BB7 X X X X X X X
Qual-Tite X X X X X X X X X
Qual-Tite Custom X X X X X X
Wilson 99 X X X X X X X X X
Wilson 101 X X X X X X
© BMA Inc. 2009. All rights reserved.
Product-process matrixsorted for value streams
Orig Order Re
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ive
ca
sti
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/fo
rgin
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Init
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ns
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on
La
the
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5 A
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s 1
2
Pro
filin
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5 A
xe
s 1
4
He
at
Tre
atm
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t
La
the
B
La
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D
5 A
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s 9
SP
C
Pre
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Po
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Su
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Pla
tin
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Pa
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Pa
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Fu
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Ca
libra
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Ca
libra
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Sh
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& In
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Ins
talla
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On
_S
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Do
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Ad
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AA6-12 X X X - - - X - - - X X X X - - - - - X X X X
AB19 X X X X X X X X X X X - - - X X X X X X - - -
AA6-14 X X X X X X X X - - X - - - X - X - - X - - -
AB21-2 X X X X X X X X - - X - - - X - X - - X - - -
Bi-Center X X X X X X X X - - X - - - X - X - - X - - -
Res-Acrive A13 X X X X X X X X - - X - - - X - X - - X - - -
Center A X X - X - - X X - - X - - - X - X - - X - - -
M13 X X - X - - X X - - X - - - X - X - - X - - -
Qual-Tite X X - X - - X X - - X - - - X - X - - X - - -
Wilson 99 X X - X - - X X - - X - - - X - X - - X - - -
AB21 X X X - X - X - - - X - - - - - - - - X - - -
AB39 X X X - X - X - - - X - - - - - - - - X - - -
Center F X X X - X - X - - - X - - - - - - - - X - - -
Res-Active A12 X X X - X - X - - - X - - - - - - - - X - - -
Res-Active BB7 X X X - X - X - - - X - - - - - - - - X - - -
M12-Custom X X X - X - X - - - - - - - - - - - - X - - -
M13-Custom X X X X - - X - - - X - - - - - - - - X - - -
AA6 X X X X - - X - - - - - - - - - - - - X - - -
AB33 X X X X - - X - - - - - - - - - - - - X - - -
Center B X X X X - - X - - - - - - - - - - - - X - - -
M12-XX X X X X - - X - - - - - - - - - - - - X - - -
Res-Active BB2 X X X X - - X - - - - - - - - - - - - X - - -
Qual-Tite Custom X X X X - - X - - - - - - - - - - - - X - - -
Wilson 101 X X X X X X
© BMA Inc. 2009. All rights reserved.
Criteria for value streams• Family of products with similar production
flow.• Include all the people & processes that
support the value stream production process.• The value stream team a reasonable size• Minimize monuments
– Machine/departments shared by more than one value stream
• Extend value stream as close to the customer as possible and as close to the suppliers.
© BMA Inc. 2009. All rights reserved.
Here’s a typical value stream• These are steps included in
the value stream– Sales & Marketing*– Customer Service*– Purchasing – Materials handling – Parts fabrication – Machining – Anodizing – Assembly – Shipping – Maintenance – Production engineering – Quality assurance – Cost accounting
• Most value streams contain monuments. Machines or processes that are shared by more than one value stream.
– Short term: Work around them– Long term: Eliminate
monuments & “right size” the equipment
• In the early stages of value stream management you may find there are not enough people with the right skills
– Short term: Have them work in more than one value stream
– Long term: Cross-train people to do different kinds of tasks.
© BMA Inc. 2009. All rights reserved.
There are some people or departments outside the value streams
Examples:– Plant or division manager– Financial accounting– Human resources– Information systems– Facilities management
These people support the value streams but are not part of them.
© BMA Inc. 2009. All rights reserved.
There are very few “perfect” value streams.
• A perfect (order fulfillment) value stream– Includes everyone from sales & marketing through to
operations, distribution, purchasing, and all the people that are required to support this operation.
– There are no monuments.– Everyone in the value stream is dedicated to that
one value stream.– The sales & marketing people are actively involved in
the value stream operations.– New product development is actively involved in the
value stream operations.– The value stream manager has complete control of
every aspect of the value stream operation.
There are very few perfect value streams.Many companies restrict their value stream to production operations
only.
© BMA Inc. 2009. All rights reserved.
When there are discontinuities in the value streams…
• We must have effective methods for bringing together the “true” value stream for planning, problem resolution, new products, and for routine management.
• Methods to bring the “true” value stream together– Incorporating marketing into the value stream– The Chief Engineer approach– Box Score meeting– Sales, Operations, & Financial Planning– Target Costing
© BMA Inc. 2009. All rights reserved.
Bringing the “true” value stream together
• Incorporating Marketing into the Value Stream– Establish the marketing
people by product families that match to the product families within the value streams
– Include the marketing people organizationally as members of the production value streams.
• The Chief Engineer Approach– Assign “chief engineers” who
are responsible for the entire flow of a product family from design through production, purchasing materials, manufacturing, and marketing the product family.
– Chief engineer has no direct authority but has a lot of power.
– Chief engineer has no employees but reports to the President.
– Chief engineers work together to create ideal flows.
© BMA Inc. 2009. All rights reserved.
Bringing the “true” value stream together
• Box Score Meeting– Weekly management
review of the value stream box scores.
– Sales, marketing, new products, etc. attend the meetings.
– Opportunity to work cooperatively to grow the business, solve problems, create more value, eliminate waste, etc..
• Sales, Operations, & Financial Planning– Done by value streams.– Starts with demand forecasts
and finishes with supplier forecasts.
– Requires the active involvement of all the parties from purchasing through production, distribution, and sales/marketing.
– Establishing the game plan each month.
© BMA Inc. 2009. All rights reserved.
What if we can not achieve the “perfect” value stream?• Many lean organizations can not practically
achieve “perfect” lean value streams.– Customer & marketing issues may clash with product flow– Production processes may not flow perfectly
• Don’t wait for perfection.– The lean approach is to move ahead with the best you can
do now. – 60% is good enough– As you move ahead you will learn how to do it better
• Provide methods to make sure the “true” value streams work together cross-functionally
© BMA Inc. 2009. All rights reserved.
Key questions:• What business organization best supports
our value streams?• How well do different organizational
methods support these Lean Objectives?
– Departmental organization– Departmental matrixed with “dotted line” to the Value
Stream– Value Stream organization matrixed with dotted line to
Departmental Managers– Value stream organization with specialist coaches
supporting the value streams.– Value Stream organization
© BMA Inc. 2009. All rights reserved.
Example of value stream organization assessment
WHAT DO WE WANT TO ACHIEVE FROM OUR "LEAN ORGANIZATION"?
Imp
ort
ance
Departmental Organization
Departmental, Matrixed to
Value Stream
Value Stream Organization, Matrixed to Department Managers
Value Stream Organization
with Specialist "Coaches"
Value Stream Organization
Create Value for the Customer 1 1 3 5
Continuously Improve Flow & Pull 1 1 3 5
Empower the People and Create a Culture of Continuous Improvement
1 5 3 1
Creating a Team-Based Organization 1 3 5
Become a Leading Incubator for corporate product development
1 3 5 1
Improvement On-Time Delivery to the Customer. 100% On-Time to Customer Request Date
1 3 5
Significantly Grow the Business Consistently in the Future without growing the Overhead Costs
1 3 5
0 0 10 23 27 0
© BMA Inc. 2009. All rights reserved.
Working in Value StreamsParker Hannifin Quick Coupling Division
Minneapolis, MN (5 locations)
Power Curbers Inc.Salisbury, NC
Watlow Controls Winona, MN