Womack - Seeing the Whole - Mapping the Extended Value Stream

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mapping the value stream

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Dan Jones

Jim Womack

<rforeword by John Shook

Seeing the WholeMapping the Extended Value Stream

By Dan Jones and Jim Womack

Forevvord by John Shook

The Lean Enterprise InstituteCambridge, MA USAlean.org

Version 1.1February 2003

With gratitude to Dan Jones's colleagues at the Lean Enterprise Research Ccnter, Cardiff L.lniversity,in particular Nick Rich, Dave Brunt, Dave Simons and Matthias Holweg, who helped pioneer extendedvalue-stream mapping.

And with further gratitude to our reviewers, editors and designers (who bear no responsibil i ty forthe remaining faults): Jose Ferro, Bruce Henderson, Dave LaHore, Graham Loewy, Dave Logozzo,Bob Morgan, Guy Parsons, Atisa Sioshansi, Peter Tassi, Jeff liimmer, Helen Zak, Maria Elena Stophe 1and Thomas Skehan of OffPiste De sign.

And with special gratitude, as always, to John Shook.

@ Copyright 20OZ The Lean Enterprise Inst i tute, Inc.Onc Cambridge Center, Cambridgc, NIA02142 N{A tlSATel: 617 -87 1 -2900 o F-ax: 617 -87 | -2999 . lean.org

ISBN 0-96678,+3-5-9All r ights rcserved.Design by Oi ' f-Piste Design, Inc.Printed in thc LISAMay 2008

Whenever there is a product for a customer, there is a value stream.The challenge lies in seeing it.

Mike Rother & John Shook, Learning to See

When you have learned to see value streams in individual facilities,it's time to see and then to optimize entire value streams,

from raw materials to customer.

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FOREWORD

When the first item in the Lean Tool Kit, Learning to See, was launched in June of 1998,we at LEI began to hear from managers in many industries that "this is rhe tool we havebeen looking for." Readers quickly realized that the grear power of Learning to See lies infocusing attention on the value stream for inclividual product families within plants. Ratherthan concentrating on isolated processes along the value srream or aggregated activitiesserving many value streams, readers could suddenly see how to optimize the flow of eachproduct from receiving to shipping. This insight was breathtaking for many managerscaught up in narrow techniques or looking at only one activity in a complex system.

As more and more people heard aboutLearning to See and began to practice value srreammapping' we began to hear of additional needs. "How can we introduce continuous flow atthe process level within facilities?" And, "How can we expand the scope of value streammapping beyond individual facilities to the extended value stream from raw materials tothe end customer?" Many readers suspected that if there was vast mwda within the wallsof each facility rhere was even more mwda between facilities and firms.

We had been thinking about this issue long before June of 1998. Indeed, the ini t ia l our l ineof Learning to See devoted equal attention to mapping the extended value srream. However.we knew that extended mapping is more challenging than facility-level mapping and we soonconcluded that we would need several publications. In addition, we realized that managerswould do well to hone their skills by "learning to see" within a limited area before venrurinsforth to "see the whole".

We therefore included a diagram in Learning to See illustrating different levels of mapping.We've recently addressed the process level with Mike Rother and Rick Harris' CreatingContinuous Flow.In Seeing the-Whole we tackle rhe higher, extended levels.

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Why is an extended map harder to draw? It's not because the fundamental concept is

different. At every level of mapping, we are simply observing and writing down every step

in information processing and physical transformation for individual product families. We

observe the flow of customer desires moving up the value stream, in the form of orders or

schedules, and then observe the progress of products moving downstream in response to

this information, from raw materials to finished items.

Extended mapping is harder because we need to map across plant, divisional, and company

boundaries. In addition, we must pay careful attention to the variability in order and materials

flows. Finally, we need to think about untangling, simplifying, and "right sizing" complex

logistics and informarion systems, large facilities, and high-scale processing technologies

serving many value streams and operated by many firms.

Conducting extended mapping requires the cooperation of many departments and divisions

within firms and between firms. These entities rarely think about the total flow of individual

products and ofren hide information from each other while pushing in opposite directions.

In addition, extended mapping requires that line managers devote hard-to-spare time to

direct observarion of each product family's value stream. Failing this, higher-level mapping

easily becomes a staff exercise (or a consulting project) yielding only another report that's

soon forgotten.

These additional dimensions of extended mapping truly are challenges. However, we have had

considerable success in overcoming them, including recent instances during the prepararion

of this workbook. We now are certain that change-agent managers can meet these challenges

and we know that time already devoted to learning to see at the process and the facility levels

will prove invaluable as you expand your field of view.

As with Learning to See, we hope users of Seeing the'Whole will tell us how to improve

this tool and will be willing to share their experiences with the lean community. Numerous

user suggestions, based on hands-on experience with value stream mapping at the facility

level, have permitted us to improve Learning to See several times since its first publication.

We look forward ro an intense and continuing dialogue with the lean community on Seeing

the'Whole as well. Please send your comments and suggestions ta [email protected].

John Shook

Senior Advisor, Lean Enterprise Institute

Ann Arbor, MI, USA

March 2002

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CONTENTS

Foreword by John Shook

Int roduct ion: Changing Your Focal P lane

Part l : Gett ing Started

Part l l : The Gurrent State Map

Part l l l : What Makes an Extended Value Stream Lean?

Part lV: Future State 1

Part V: Future State 2

Part Vl: The ldeal State

Part Vll: Achieving Future States

Gonclus ion

Appendix

Appendix

Appendix

Value Strearn

Facil i ty-Level

Facil i ty-Lewel

Mapping lcons

Gurrent Stite Maps

Future State Maps

About the Authors

INTRODUCTION

Ghanging Your Focal Plane

For years now we have loved to "take a walk" along the entire value stream for a

given product, looking for value and waste. We've done chis for dozens of products

in many industries and followed streams across the world. We presented our first

example in Lean Thinking (1996) when we drew the path of a humble cola can.

This simple product with only three parts (barrel, top, and "pop-top") traveled 319

days through nine facilities owned by six companies in four countries to progress

from ore in the ground into the hands of the customer. Yet during this long march

only three hours of value creating activities were performed and the great majority

of the steps - storing, picking, packing, shipping, unpacking, binning, checking,

reworking, and endless movements of information to manage the system's complexity- created no value at all.

Looking at the whole has always seemed natural to us and doing so will always

suggest ways to slash costs while dramatically improving responsiveness and qualiry.

Yet most managers we have encountered on our value stream walks want to stand

in one place and look at only one point - their machine, their department, their

plant, their firm. Often, the machine, the department, the plant, and the firm are

performing well on traditional measures - high labor and machine utilization, low

defects, on-time shipments - and the managers are pleased wich their achievements.

However, when we get managers to change their focal plane from their assets and

their organization to look at the product itself and what is actually happening on its

long journey, they immediately realize that the performance of the entire value

stream is abysmally sub-optimal. Indeed, most wonder how they have worked for

years in traditionally compartmentalized operations and somehow failed to notice

the waste everywhere. Then they wonder what they can do about the mess.

And that is the big challenge. Managers find it easy and fun ro draw extendedcurrent state maps. And this is a critical first step because it raises consciousness.But providing a management tool that permits the waste to be removed permanentlyby achieving successive future states has been much harder. It was only when wefirst saw Mike Rother and John Shook drawing future srate value srream maps arthe facility level and coupling these maps to an action plan for implementation thatwe begin to see how we might guide groups of managers - for all extended valuestreams are shared across many departments and firms - toward similar resultsfor entire streams.

In this breakthrough guide we presenr our method. It proposes a progressionthrough two "future states" to an "ideal state" after the current state is jointly

identified and agreed. The first future state will be relatively easy and creates rhesetting for the second. The second future state is considerably harder and reachingthe ideal state will require a major commitment by all the firms touching the product.Yet we believe that the savings in time and effort and the improvements in qualiryat every step will encourage reams to keep going once they learn how to jointly

optimize the shared stream.

Eventually, with some creative thinking about process and information technologies,we believe that most value streams can be compressed and smoothed to a pointwhere a large fraction of the original steps and practically all of the throughput timeare eliminated. This will be a true revolution and the value stream team gettingthere first will have an overwhelming competitive advantage. More important inmost cases, the team getting started first and making the quickest progress alongthe path will have a continuing comperitive advantage.

The key is to summon your courage, form your cross-department and cross-companyteam, and change your focal plane to focus on the product. Then learn to see rhewhole and . . . get going to take out the waste! We wi l l be urging you on and wait ingto hear about your problems and successes.

Dan Jones and Jim WomackRoss-on-Wye, Herefordshire, L.lKand Brookline, MA, USAMarch 2002

What is Extended Value Stream Mapping?An extended vah-re stream is simply all of the actions - both value-creating and

wasteful - required to bring a product from raw materials into the arms of the

customer. T'he relevant actions to be mapped consist of two flows: (a) orders travcling

upstream from the customer (clr from the sales department when forecasts substitute

for confirmed orders) and (b) products coming down the value stream from raw materials

to cLrstomer. Tbgether these const i tute a closed circui t c l f demand and response.

Value stredm mapping is the simple process of directly obseruing the flows of

information and materials as they now occLtr, summarizing them uisually, and

then enuisioning a future state with mwch better performance.

Maps of the extended value stream can be drawn fcrr products currently in production

or for future products being planned. 'I 'he only difference is that the "current state"

map for a product in product ion shows condit ions as thcy cxist today whi le thc

"current state" map for a ncw product shclws the "business as usual" approach to

making the product compared with al ternat ive "future states" and " ideal states"

with less waste and greater responsiveness.

Select ing a Product FamilyThe whole point of value stream mapping is to disaggregate operat ional issues ro

the level of specific products, where they can be more easily acted on by managcrs.

Tir do this you need to start at the furthest point downstream (toward the customer)

to be mapped and to dcfine product families at that point. Typically a product family

wi l l include a group of product var iants passing through simi lar processing stcps and

using common equipment just pr ior to shipment to the customer. F-or example:

o In a power tools business, a product family might be medium-sizcd electr ic

dr i l ls ut i l iz ing a common chassis and passing through a common assembly cel l

as the last manufactur ing step, evcn though the f in ished product has many

different fcatures and customer labels. Alternativelv the mapping team might

define the product family as the motor going into the medium drills and map

back upstream from that point.

o In the auto industry, a product family might be a car platform (e.g., Ford Explorer

and lVlercury N4ountaineer) produced in an assembly plant. Alternatively it might

be a major component suppl ied to auto assemblers - ls1's say an nl lglnxgel -

using a common design architecture and assembled in a cel l , but with varying

power outputs and with different attachment points for different vehicles.

PART I: GETTING STARTED

. In the aerospace industry, a product family might be an entire airframe(e.g., the Boeing 737 or Airbus A320). Alternatively, it might be a major sub-

assembly, for example the vertical tail. The sub-assembly may have many

variants for different buyers of the completed aircraft. F or example the tail

structure might incorporate different aerials and fairings for navigation and

communication equipment. And the products within rhe family chosen for

mapping might differ slightly in dimensions. For example, the basic rail

design might be slightly longer for use on a srretched airframe. However,

the vertical tail clearly constitutes a product family because all variants

follow the same manufacturing path and have no commonality with tails

for other aircraft, even if they are made in other areas of the same facilities

by the same firm utilizing parts from the same suppliers.

Note rhat the same product family may be supplied to a number of different

end customers and have cosmetic differences causing the casual observer to

overlook product commonaliry. Nevertheless from the standpoint of the firm or

facility at the downsrream end of rhe map, the product is clearly a family.

Note also from the chart below that firms along similar value streams often

have complex relations with each other. Delta supplies similar components to

both Summa and Zenith; Omega fabricates similar parts for Delta and

Azimuth; and Ill inois Steel supplies materials to Theta and Zeta as well as

Omega. Extended mapping cuts through this clutcer to focus on jusr one

stream in order to think of improvements thar can eventually apply to all streams.

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Firms a long s imi lar va lue st reams of ten have complex re lat ions wi th each other .

Product Famil ies f rom Summa's Perspect iwe

Because the product family is defined from the vantage point of the final srep mapped, theconcept is essentially "fractal". That is, you can define product families from many startingpoints and map backward up value streams of varying lengths. For example, whar appears ro

be a product family for an armature manufacturer (large armatures for alternators) is simply

one of many component parts for an alternator producer (who might define a product family

as large alternators). And the large alternator is just one component among many from thestandpoint of the auto assembler who defines product families in terms of vehicle platforms.

As you select your start point and move back upstream, it is best for your first map to followthe path of a single family and a single component in the product. This is because the firstobiectiue of extended mapping is to achieue a breakthrougb in shared consciousness ofwaste and to identify systematic opportwnities for eliminating the waste.It is highly likely

that the wastes identified by following one component back upstream will occur in roughlv

equal measure in every component going into the finished product. The alternative approachof mapping the value stream of every component going into the product is time consumingand costly and we have found that it overwhelms managers with too much data.

In subsequent rounds of mapping - if the collaborators in the mapping process find ways

to work together and achieve useful results - additional maps can be created for many orall of the components and parts going into a finished product. But to ger srarred, keep itsimple and focus first on achieving a breakthrough in raising your team's consciousness!

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Determining a Manageable Field of VievvThe ideal map would truly show the whole. 1'hat is, it would srart with rhe end cusromerwho uses or consumes the product. The map would then fol low the product al l the wayup the value stream to molecules in the ground (or in the rccycl ing bin), showing al l thcwasted actions and information loss en route. However, just as trying to map all of aproduct's parts back upstream is overwhelming, trying to see roo far with your currentvision may be fruitless. We advisc novice mappers that a lor can be learncd by lookingone or two facilities and firms upstrcam from wherever you start. This is the minimumscope o f cx tendcd mrpp ing .

Single Facil ity Field of Vievv - Learning to See

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Even at this minimum scope, note that thc scale of maps changes dramatical ly between

Learning to See (facility-level maps) and Seeing the Whole. The facility boxes that are the

primary units of analysis in this breakthrough guide are the same size as the individual process

boxes ("stamping", "welding", "assembly") in Learning to See. Vast expanses of people and

equipment within facilities have been shrunk into tiny boxes so we can see the big picture!

In this guide, we will draw maps with an intermediate field of view, starting at the distribution

center for the completed product and proceeding upstream to raw materials (e.g., rolls of steel).

For thosc with more ambition and with full cooperation from upstream facilities and firms,

i t is both possible and desirable to start near the end customer and work far back upstream

toward raw matcrials.

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Choosingt a Leader and a Value Strearn TeamWe hope that you are experienced with facility-level mapping as describe rl in Learningto See and have appointed value stream managers for all of the value streams withinyour facilities. We are convinced that this is critical to gain the full benefit of mappingat the facility level. What's more, the knowledge of facility-level value stream managerswill be invaluable for quickly drawing accurate maps of the extended value srream.

However, by their nature, extended maps cross facilities and firms. Suppose managers arein place for the segments of the stream within each facility. Who has the responsibilityfor directly managing the total stream across firms, to connect the maps and lead theimprovement process? The reality in most cases will be "no one". So there is a need fora new type of manager who we will call the "Product Line Manager" (pLM).

The Product Line Manager

This individual in the most downstream firm needs to be much more rhan a technicianconcerned with one facility. Indeed, for optimal results the Product Line Manager needsto be a business manager. This means "business" in the sense of taking responsibi l i tyfor making money and growing market share with the product family in question. Andit means "manager" in the sense of looking concretely at the precise actions that needto be taken all along the value stream to remove wasre and cost while improving qualityand responsiveness.

The most successful firms we have encountered using these techniques have ProcluctLine Managers who think about product marketing and engineering as well as productionand purchasing. With all the elements of marketing, design, producrion, and supply chainunder his or her oversight, this individual is in a unique position to judge the performanceof the many functions touching the product. Indeed, as we will see in a moment, acontinuing assessment of functional performance along with precise prescriptions forimprovement is one of the most important benefits of product line management.

However, we do not usually recommend what is sometimes called a "product team"structure in which all of the engineering, operarions, purchasing, and marketingemployees supporting the product are put on a dedicated team. Doing this causes alarge amount of organizational disruption during the transition and this structure stil ldoes not address the behavior of upstream partner firms. Whai's more, it is really notnecessary in most cases if the P[,M takes an energetic approach to the job.

Perhaps che best known example of what we are talking about in the

manufacturing world today is the Chief Engineer for a car platform

at Toyota (a job position also called the shusa). This individual is

widely known by everyone in the company and takes responsibility

for the success of the product in terms of return on investment and

market share. Yet the Chief Engineer, like our proposed PLM, actually

has no direct authority over marketing (which is done by a large

marketing department), over engineering (which is done by the

various parts of the large engineering department), over production(which is done by the operations department), and over suppliers(who are managed by the purchasing department, and the production

control and logistics department.) Instead the Chief Engineer, working

with a tiny group of assistants, is the one person who can "see the

whole" and think about the necessary contributions from every

functional activity and every upstream firm to create and deliver

a successful product as judged by the end cusromer.

The PLM in the most downstream firm will be even more effective

if there are similar individuals in each of the upsrream firms so that

for any product a quick evaluation can be conducted by a small

group composed of one PLM per firm.

But this is not likely to be the case. Indeed, in today's world very

few firms have true PLMs. (One of our concerns in preparing rhis

breakthrough guide has been that the very managers mosr able ro

benefit from it don't currently exist in many firms!) Thus to get

started, someone from one of the functional areas in the most

downstream firm will probably need ro take the lead and aim to

achieve a breakthrough in consciousness. This individual probably

will have little formal authority for overseeing rhe value stream and

will therefore need to lead by example and by raising hopes about

possible joint gains.

We can't guarantee that anyone anl.where along a value stream can

succeed in raising every participant's consciousness to transform the ''.

entire stream. We can guarantee that anyone anywhere can raise the

important issues and make construcrive change a possibility where ir

was previously impossible ... if they have the courage to acr.

To be successful, the mapping leader needs to be someone who can gain the respect

of upstream partners by conducting a rigorous and fair process. Logical candidates are

from purchasing, production control, logistics, operations, or a process improvement

function like quality or process engineering. Any of these can work. However,

assigning a buyer from purchasing to be a mapping leader can lead to problems if

upstream participants believe that the real purpose of mapping will be to uncover

waste at suppliers, followed by demands for immediate price reductions. 'Ihus a

purchasing funct ion wi l l probably need to assign mapping leadership to someone

from its supplier development group if all participants are to be convinced that the

process is fair, balanced, and aimed at win-win-win outcomes.

The value stream team needs to include representatives of all the firms and facilities

that share ownership and management of the stream. Ideally, it would also include

the relevant departments within each firm - sales, operations, production control

and logist ics, purchasing, manufactur ing engineering, information management, and

product engineering. However, this can make the team too large to walk the value

stream together, which is often a cr i t ical learning experience. ' fhus we general ly

recommend a smal l team with a minimum of one representat ive per company.

The team can query the functions supporting the value stream as necessary to fil l

in missing information.

The Wrong Role for Consultants and $taffsAn unders tandab le inc l ina t ion in any f i rm w i th busy l ine managers-and this surely includes pract ical ly al l f i rms-is to delegate thetask of creat ing value stream maps to outside consultants or tointernal staff groups, typical ly in operat ions planning or processimprovement departments. However, in our experience this ismisguided. The f indings of the consultant or staff expert arerarely credible to the managers who need to take act ion and theconsciousness raising experience of walking the value streamtogether-discovering the waste and joint ly agreeing to a cross-f i rm act ion plan-simply never happens. A beaut i ful report isproduced by the consultant or staff team-and in our experiencethe beauty and precision of the maps is general ly inversely -proport ional to their usefulness-but the f indings are then f i lddaway and soon forgotten.

Remember: Only managers taking clear responsibi l i ty can f ixthe mess. So the same managers ought to draw the maps.

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Taking a WalkOnce designated, the leader and the team need to take a walk together

along the value stream, draw the current state map, and then ask, "Which

steps create value?, Which steps are waste?, Why is order flow so erratic?,

Why is quality so erratic?, Why are deliveries so erratic?, How can value

be enhanced for the end-customer?"

Once the map is drawn so that the current state of an existing value

stream is known precisely, it 's time to create the first of two "future

state" maps that remove wasted steps while stabilizing processes and

simplifying information flows. Future State 1 achieves the luture state

shown in Learning to See within each facility touching the product.

This means introducing continuous flow (as described in Creating

Continwows Flow) wherever possible and instituting smooth, leveled

pull between the areas of continuous flow.

Future State 2 then introduces smooth, leveled pull with

frequent replenishment loops between every facility

touching the product. In the process, most

warehouses are eliminated, or converted

to cross dock operations.

An Ideal State may then co-locate

at one site all of the activities required

to proceed from raw materials to finished

goods, in the process eliminating practically

all transport links and needs for information

management.

You may or may not find this particular sequence

appropriate for your own value streams. In particular, if

you are mapping a new value stream for an entirely new product

you will probably want to skip directly from the current (business-

as-usual) state to an ideal state. We follow the three-step.sequence,

beginning with Future State 1, in this breakthrough guide because

we bel ieve that this is l ikely to be the most typical approach.


Tvvo Final Benef i ts

A Diagnost ic for Funct ions

As teams draw their current state value stream maps, they are likely to make a surprisingdiscovery. Most problems identified along the value srream will trace direcrly to theperformance of various functions - information technology, production control, logistics,product engineering, operations, purchasing. What's more, weaknesses in functionalperformance discovered in the sample value stream will almost certainly be presentin every other value stream the firms touch. In our experience, the functions want tosupport the value stream for each product. But they have a hard time seeing theconnection between their activities and the needs of the product.

Thus an important benefit of the mapping process - in addition to a breakthroughin consciousness about the magnitude of waste and the enormous opportunities forimprovement - can be to give much clearer guidance to each function about its rolein supporting value streams. A real bonus can be achieued if the improued functionalperformance can then be applied to all ualue stredms within the participating firms.

A Diagnost ic for Relat ions Betrrueen FirmsAs teams start mapping, they are likely to make yet another discovery. Today we all uselanguage stressing partnership and cooperation between firms sharing value srreams.However, mapping teams in most cases will discover an enormous gap between thesehigh-level principles of collaboration and the day-to-day reality down ar the level ofeach value stream. If the value stream map shows widespread confusion and counter-productive actions between firms at the value stream level, it will be obvious that"partnership" at the top isn't translating into competitiveness at the bottom.

Fortunately, value stream mapping provides a clear and consistent language for firmsto start an intelligent conversation with each other about the root causes of their sharedcost, quality, reliability, responsiveness, and communications problems. (Indeed, webelieve a relentless, fine-grained focus on improving each value srream, rather thanhigh-level agreement on principles, is what has given Toyota its edge in creating theworld's leanest supply base.) A real bonus can be achieued if the practical lessons ofsbared ualue stream management can then be applied by each'firm to its relationswith its other customers and swppliers.

The Current State Map

With the basic principles of extended mapping in hand, it 's time to accompany a valuestream team creating a map of the current state for a specific product family. This mapwill characterize the value stream as it is today.

We've chosen to focus on a high-volume automotive component offered with a small number

of options - a windshield wiper consisting of a blade holding the actual wiping edge and the

arm attaching the blade to the vehicle. This product is similar in complexity and variery tothe steering column bracket used to il lustrate Learning to See.

We've decided to map only an intermediate portion of a total value srream, which runs itsentirety from the end user (you in your car) at the downsrream end to raw marerials (iron

ore in the earth) at the upstream end. The portion we will map srarts at Alpha Morors, rhefinal assembler of the finished vehicle, toward the customer end of the value stream. Wethen proceed back up the stream through che facilities of Beta Wipers and Gamma Stampingto the shipping dock at Michigan Steel, a raw materials service center. The five-member

team, from the four firms sharing this portion of the value stream, will be led by the head ofsupplier development in the purchasing department at Alpha Motors and includes rhe product

line manager and the assembly plant manager at Beta Wipers, the value stream manager forthis product family at Gamma Stamping, and the sales manager at Michigan Steel.

Windshield W-per Valrre Strearn TearnInformat ion

f low

Michigan Steel

f s.r" . Manager

+I

Materialf low

Gamma Stampers

Value StreamManage r

Beta Wipers

f Produc tL ineI Manaoer

f , ,"n.*t*un",

Alpha Motors

Head o f Supp l i e rDevelopment(Team Leader)

PART II: THE CURRENT STATE MAP 1 1

Windshield Wiper Assernbly ancl Fabrication path

$

. ,

\B

f.--

brackets

st i f fener and wiping edge

windshield wiper Assembly and Fabricat ionA. Rolled steel stamped into blade spineB. Four brackets attached to blade spineG' Wiping edge attached to blade spine and brackets assemblyD. Blade assembly attached to armE. Assembled wiper attached to automobile

Steps

Before we start mapping, let's look at an exploded view of this product showing the parts

going into the wiper and its fit-point on the end product. Note that we will only map the

circled area in this initial map. This is to keep the map simple and to concentrate initially

on raising everyone's consciousness of the extended value stream.

T

. - - -

a rm components

PART II: THE CURRENT STATE MAP 13

our windshield wiper comes in two specifications - high trim and standard(HT and sr) - and in two sizes - small and large (s and L) - to fittwo different vehicles (A and B). The right-hand and left-hand wipersare identical on the vehicles in this example. The trim levels differ onlyin the paint - a matte-black finish for the standard trim vehicles and aglossy-black finish for the high trim models. The designs for the twomodels differ only in the size of rhe parrs, not in their number or basicdesign. This means that the wipers are inrerchangeable from a finalassembly standpoint because they use the same fit points and requirethe same installation time. The wipers clearly form a product familybecause all of the actions occurring upstream - component assembly,painting, and stamping - are in the same process sequence in thesame firms and use the same processing equipment with a few tooland fixture changes.

with the product family clearly identified, the first step for the team is to"take a walk" along the entire length of the value srream to be mapped,recording the facilities visited, the transport links, every action performedon the product' all information management actions, and the timerequired. we always suggesr starting at che customer end because thecustomer is the point - indeed, the only point - of these material flows.No product should be advancing that the customer doesn't wanr andnothing should be happening that rhe cusromer doesn'r consider of value!

For the wiper example, the list of actions on the product is shown in thefollowing list. Note rhat we have numbered all of the steps (73) in theleft hand margin of the list and compared these with value creatingsteps (8) in the first column on the right. We have also recorded the totalelapsed time (total product cycle time) which sums the time required toconducr all of the sreps on a product (44.3 days) and compared this timewith the actual value crearing t ime (54.7 minures), which is the sum ofonly the value creating steps.

Physical Act ions Required to

Total Steps

Raw Materials Supplier:Michigan Steel, Dearborn Heights, Ml

1. Load coi ls for twice weekly direct ship

Transport Link 12. Direct ship ( truck), Tonawanda, NY (500 miles)

Second-Tier Supplier:Gamma Stamping, Tonawanda, New York

3 . U n l o a d c o i l s4. Receive & create ticket5. Store coi ls6. Convey coi l to Stamping Press 17 . Mount on co i l ro l le r and feed press

8. S tamp in i t ia l ( f la t ) shape9. Accumulate stamped parts during run

10. Convey parts bin to storage11. S tore par ts12. Convey parts in bin to Stamping Press #213. Load parts in magazine, auto feed to press

14. S tamp f ina l (curved) shape15. Accumula te par ts dur ing run16. Convey parts to storage area17. Store parts

18. Convey parts to paint shop19. Rack parts on moving conveyor, c lean,

d ip , pa in t & bake20. Remove parts, inspect, sort & accumulate in bin21. Convey parts to storage22. Store parts pr ior to shipment23. Load parts for twice weekly direct ship

Transport Link 2

ValueCreatingSteps

24. Direct ship ( truck) to Harl ingen, TX (1500 ols-Slrfi

First-I' ier Supplier Warehouse: Sl*wt(.First-lrer Supplier Warehouse: /rq$' .,;Kar-. b

T:tH,ffis, Har,insen. rX

/r"gqo;.f..1*$26. Formally receive \? V\F' . cnr$)lo'"27. Store Parts

D- ' ' n ' ' i ! -

28. Retr ieve and load truck for dai ly direct ship


Greate a Windshield Wiper

TotalTime

1 0 m

8h

1 0 m1 0 m14d1 0 m5m1 s4h1 0 m48h1 0 m1 0 m1 0 s4h1 0 m48h1 0 m1 3 0 m

2 h1 0 m48h1 0 m

96h

1 0 m1 0 m48h1 0 m

ValueCreateTime

52m

1s

10s

Total Steps

Transport Link 329. Direct ship ( truck) to Reynosa, Mexico

(100 mi les w i th queue a t border check po in t )

First'l ier Supplier Assembly Plant:Beta Wipers, Reynosa, Mexico30. Formal ly receive and move to storage area31. Store in receiving storage area32. Convey from storage area to first assembly step33. Store at f i rst assembly step34. Insert fastener cl ip and secure with pin35. Accumulate parts in f i rst assembly step36. Convey parts to second assembly step37. Store at second assembly step38. C lasp w iper b lade assembly to sub assembl ies39. Accumulate parts in second assembly step40. Convey parts to third assembly step41. Store at third assembly step42. Inser t w ip ing edge in b lade assembly43. Accumulate parts from third assembly step44. Convey parts to inspect ion, test & pack step45. Store parts at inspect ion & test46. Conduct inspection, test & pack in protective sleeve47. Accumulate parts at pack48. Convey parts to shipping dock49. Store await ing shipment50. Load truck for dai ly direct ship

Transport Link 451. Sh ip by t ruck to Har l ingen, TX

(100 mi les w i th queue a t border check po in t )

First-Tier Suppl ier Cross-Dock:Beta Wipers, Harlingen, TX52. Un load t ruck53. Cross-Dock54. Store await ing ful l t ruck55. Re load t ruck fo r da i l y sh ip

Transport Link 556. Ship via mult i -pick-up route ( truck) El Paso, TX

{600 mi les)

ValueCreatingSteps

l

TotalTime

6h

1 0 m48h1 0 m8h1 0 s4h1 0 m8h1 0 s4h1 0 mBh1 0 s4h1 0 m8h20s4h1 0 m12h1 0 m

6h

1 0 m1 0 m12h1 O m

96h

ValueCreateTime

10s

10s

10s

Total Steps

Car Company Cross-Dock:Alpha Motors, El Paso, TX57. Un load t ruck58. Cross-Dock59. Store await ing ful l t ruck60. Re load t ruck fo r da i l y d i rec t sh ip

Transport Link 661. Direct ship to West Orange, NJ by truck

(2000 mi les)

Car Company's State Street Assembly Plant:Alpha Motors, West Orange, NJ62. Formal ly receive63. Convey to storage area64. Store await ing need65. Convey to ki t t ing area66. Transfer to assembly bins67. Store in assembly bins await ing need68. Assemble w iper b lade in ho lder to a rm69. Attach wiper arm with blade to vehicle70, Line off vehicle and test71 . S tore f in ished veh ic les72. Load train for dai ly direct ship

Transport Link 773. Sh ip to C leve land D is t r ibu t ion Center by t ra in

(500 mi les)

Summar1y of Physical Actions

Total

ValueGreatingSteps

ValueGreating

73 I

44.3Days 54.7 Min.

1 2 h

TotalTime

1 0 m1 0 m12h1 0 m

96h

ValueCreateTime

1 m1 m

1 0 m1 0 m48h1 0 m1 0 m2 h1 m1 m1 0 m1 2 h2 h

Steps

Time

Distance 53OO Miles overT TraneportLinke


Learning to See Value

As we write down the actions, the ability to distinguish value-creating sreps fromcurrently necessary but wasteful steps and value-creating time from currentlynecessary but wasted time is critically important. The enormous gap between totaltime and value-creating time and between total actions and value-creating actionsis the opportunity the value stream team must seize.

Given the importance of telling the difference between value and waste, it is notsurprising that we often encounter readers and audiences who are anxious abouttheir ability to categorize actions correctly. Actually, it is very simple. Put yourselfin the position of the consumer and ask if you would pay less for the producr or beless satisfied with it if a given step and irs necessary time were left out.

In the case of attaching the wipers to the vehicle in the Alpha assembly plant, theanswer is clear. Consumers do not expect to receive their vehicles with the wipersin the front seat, accompanied by a polite note stating, "Some assembly required".The final attachment step clearly creates value for the customer. So do the sevenact ions of stamping the metal arms, paint ing them, and sub-assembling them priorto attachment on the vehicle.

By contrast, look at the many movements of the product within each plant betweenprocess steps, the long transport links between plants, the warehousing and cross-docking activities along the value stream, the numerous testing and inspectionsteps, and the repeated packing and unpacking of the product. Would you, as aconsumer' be less satisfied with your vehicle if these currently necessary activitiescould somehow be left out? Of course nor. And would you be happier if the carcompany could get you the model you want with the trim level you wanr quickerbecause these steps were left out? Of course you would. Indeed, the more thesesteps cause a delay in receiving exactly the product you want, the less you probablyare willing to pay for it. Far from creating value, these shipping, packing, inspecting,and warehousing actions actually destroy it!

Dravving a Useful MapThe long list of steps, categorized by waste and value, is highly provocarive becauseit helps the team realize the enormous opporrunity for savings.. What's more, rheratios of value-creating time to total time (54.7 minutes out of 6S,792 or 0.08%) andof value-creating steps to total steps (8 out of 73 or ll%) and the amount of transportdistance (5300 miles) are quite typical for discrete manufacrured products in theworld today. Our example is the norm, not the exception, and similar ratios arelikely to emerge from any maps you draw.

1 8

First Vievv of the Gurrent State MapShowing the Gustorner

However, for this information to be useful we need to simplify it and put it in a form

managers can act on. The best way to do this is to group and summarize the data by each

of the facilities and transport links the product encounters. Again, the place ro starr is with

the customer, at the most downstream end of the map. In this case, the customer is the

Alpha Motors Distribution Center, which interacts with car dealers to get end consumers

the products they want. We'll represent this organization with a facility icon placed on rhe

right side of the map. Underneath this icon we'll draw a data box recording the customer

requirement for size and frequency of shipmenr.

Note that this faci l i ty is a cross-docking operat ion where vehicles are sorted and sent

onward as quickly as possible to several regional storage areas across North America.

From there they go to auto retailers and then into the hands of the customer. Thus our

intermediate-view map stops considerably short of the total value stream map thar ir may

be useful to draw at some point in the future.

- zLzL -1I Atpha II Dietribution II Center I

Cleveland, OH

ar6oEi--]| 640^ || 4265r I| 214Hr I| 32ob I| 213er I| 1o7Hr I


a-L-14lVichiganSteetl

ferviceco. IDearborn Heights,

I betaWipere II

Agsembty I

Reynosa,Mexico

lbetaWipers II Warehouse I

l r r I| . t l

Harl ingen,TX

4--14I Gamma I

I stampins

Ifonawanda,NY

To get from raw materials to the Alpha Distribution Center, the procluct flows throughseven assembly, fabrication, warehousing, and cross-dock facilities. These are:

o Alpha Motors' State street Assembly Plant in west orange, New Jerseyo Alpha Motors' Cross-Dock, for many components from many suppliers, in El Paso,'Ibxaso Beta Wipers' Cross-Dock, for parts sent from several planrs ro many customers,

in Harlingen, Texaso Beta Wipers' Component Assembly Plant in Reynosa, Mexicoo Beta Wipers' Parts Warehouse in Harlingen, Texaso Gamma stamping's stamping and Painting plant in Tonawanda, New yorko Michigan Steel's Service Center in Dearborn Heights, Michiean

Gurrent State Map Shovving Al l Fac i l i t ies

We have created two new facility icons not seen in Learning to See. One is a cross-dockicon for facilities where products are not stored but instead moved immediately from anincoming vehicle to an outbound shipping lane. The other is a warehouse icon for facilitieswhere incoming goods are sorted and stored before shipment to their next point of use.(The icons used in this workbook are displayed on the inside back cover and explained inAppendix A.) You may want or need to create other icons, of course, in particular foractivities not encountered in our example. Just make sure that everyonc working on theextended map Llses the same icons.

ZLzL-1| ,"llr,lf""^ |I Center I

Cleveland,OH

1160 | orv I| 640A I| 426er I| 214Hr I

I zzoo I| 213er I| rc7Hr I

I betaWipers II Cross-Oock I-=lhlI + lHarl ingen,fX

West Orange,NJEl?aeo,TX


RM 56 h.wtP 41h.F G 1 2 h

2Shi f ts

5Oavs

E?E = 1 Dav

Defects =4OO ppm

You will soon discover that you can't successfully gather and summarize rhe informarionneeded for improving the value stream without drawing detailed currenr state in-facilityvalue stream maps for products as they move through manufacruring facilities. This is whymastery of the material in Learning to See is a prerequisite for macro-mapping.

We've drawn current scate facility-level maps for the three manufacturing facilities alongthis value stream - Gamma Stamping, Beta Wipers Assembly, and Alpha Motors Assembly- in Appendix B of this workbook, and you'll want to append yorir facility-level maps royour current state macro map as well. Note that the data box under each facility containsdata on inventories (Raw Materials, Work-In-Progress, Finished Goods), rhe amount ofproductive time (the number of shifts per day and the number of working days per week),the frequency of the production cycle (showing how ofren every part is made, such as

I oetaWipers II

Assembty I

Reynosa,Mexico

trn;Ww;1I Warehciuee I

In IHarlingen,TX

I Gamma II stampins Il l

Tonawanda,NY

t--RMaa6r'.-lI wrPl1o h. II FG O\. It a th r rb " - lI s;"v.-I E?E=ro"vt.]a- Dd".t -1

| =2oooppm I

Current State Mapand Data Boxes

Shovving All Facil i t ies

RM 50 h.wt?2h.F G 1 4 h .2?hi f ts

SDavs

E ? E = 1 D a y

Defects =5 P ? ^

"EPE = 1 Day" meaning "every part every day"), and the defect level (in parrs per million)as reported by the customer at the next downstream facility (or by the customer's inspectorat the point of shipment in the case of the Alpha Morors Assembly Plant.)

We have not drawn facility-level maps for the Alpha and Beta cross-docks and for the Betaparts warehouse. This is partly to keep the size of this guide manageable and also because wewill endeavor to eliminate these facilities altogether as we move through progressive fururestates. If your value streams will require large distribution warehoutes in any imaginablefuture for example for service parts - or cross-docks, you should also draw mapsof these facilities as a guide to improving their performance. Exactly which facilities meritin-facility maps and in what detail will always be a matter of judgmenr, so be prepared toadjust your approach as your experience accumulates and you encounter different siruations.

/ L -L -1| ,"il?,lf"", II Center I

Cleveland,OH

l%otD"v--]| 640^ || 42651 || 214Hr I| 3 2 o B I| 2135f I| 1o7Hr I

I oetawipers II Cross-Dock I| .'---+ a

lsl1 - lHarl ingen,TX

WeslOran6e,NJEl?aso,TX

PART II: THE CURRENT STATE MAP

The Oual i ty Screen

As we look at the data in the facility boxes, we nore a trencl worthy of further crarnination.At Alpha Motors Assembly the defect rate for wipers installed on rhe vehicle - def'ectsdiscovered by a representat ive from Alpha's Distr ibut ion Divis ion in a f inal inspect ion justpr ior to shipment - is 5 per mi l l ion. (Since Alpha is assembling 250,000 vehicles per yearwith two wipers per vchiclc, this means that two to three wipers per ycar arc rejccted atfinal inspection, usually for scratches in the finish.) Yer when we look at defects emergingfrom Beta Wipers Assembly (as judgcd by Alpha), we note that there are 400 def'ccrs permillion and when we look at defects emcrging from (]amma Stamping (as judged bv Beta)we note that there are 2000 defectivc parts per million. F'inally, when wc look at defcctsarriving ar Gamma from N,lichigan Steel the figure soars ro 10,000 pcr million.

In br ief , c lual i ty is worse at every step up the value stream, a common phenomenon inpractically every industry today. This means that to achieve 5 clefects per million (approachingthe Six Sigma level of 3.4 dcfects per mi l l ion), the prodr,rct is f lowing through a scr ies ofqual i tv screens in each faci l i ty, cach of which results in scrap and inspect ion cost. The slopeof this cluality gradient can surely bc reduced in firturc srares ancl it is importanr to norecarefully the current slope to aid our thinking on how to do this. We therefore recommenddrawing a Qual i ty Screen (as shown below) on the ( lurrent State map. In this case we haveplaced the diagram in a convenient spot in the rower r ight-hand corner.

O.rrality Screen

de

2000

r500

1000

500

0

MICHIGANTO GAMMA

ppmfects

GAMMATO BETA

BETA ALPHA TOTO ALPHA ALPHA PC

24

Mapping the Transport Links' fhe

next step, oncc the facilitv-level maps are drawn and the data have been summarized,in faci l i ty boxes, is to add the transport l inks between the faci l i t ies. Tb do this, you mayneed boat, train, and airplane icons, in addition to the truck icon frctm Learning to See.

In this example, we wi l l use the airplane icon with a dotted l ine for shipments expeditedby air and a truck icon with the same stylc of dotted line fr-rr those expedited by truck. Thcnumbers in the regular shipping icon (a truck or a train) show the f iequency of shipments(e.g., "1 x day" : on€ shipmcnt per day) whi le the number in the expedit ing icon shorvsthe number of cost ly expedited shipments in the past year (e.g.,"2 x year" : rwicc a year).

With these data in hand, we are ready to complete the physical flow portion of the map Lrydrawing in the normal product flows between facilities, using broad arrows. Notc that thcsearc striped, "push" arrows becausc products are mclving ahead at thc command of a centralizedinformation system and not necessari ly in accord with the immediate needs of the nextdownstream faci l i ty. l . lnder each of the transport l inks we record the distance in mi lcs, theshipping batch sizc, and the pe rcentage of defect ive del iver ics as reported bv thc cusromcr.

As thcse f lows are drarvn, the team shoLrld notc one addit ional point - the trcnd indef 'ect ive shipments: latc, ear ly, or incorrect ( the wrong product or in the wrong amount).As is alscl typical in most industries today, we note that the furthcr up the value stream afaci l i ty is, the morc l ikely i t is to make defect ive shipments. This si tuar ion is analogous tothe qual i ty gradient and equal ly worthy of improvement in future srares because ever_vdefect ive shipmcnt generatcs correct ion costs downstream and perturbs the schcdule. Fclreconomy of space wc have summarized this trend in the same box as thc qLral i tv data onthe Current State map, changing the label to the "Qual i ty and Del ivery Screen".

PPMDEFECTS

2000

1500

1000

500

BETA ALPHA TOTO ALPHA ALPHA PC

% DEFECTIVEDELIVERIES

1 0

MICHIGANTO GAMMA

GAMMATO BETA

O.ualitlz and Delirrerlz lScreen


The "Bottom Line"Finally, we can draw a time-and-steps line along the bottom of the map. Note thatthe first figure above each segment of this line is the total rime within each facilitvand along each transport link, while the figure in parentheses ro the right is thevalue creating time. The first number below each segment of the line shows thetotal actions (steps) taken on the product in each facility and transport link, withthe value creating actions shown to the right in parentheses. Note that informationneeded for each facility is contained in the .,steps,, and .,Time,, summary boxes atthe ends of the time-and-steps rines on the indivicluar facility maps.

- 2LzL -1luichisansieetlI

Sewiceco. I

Dearborn Heights, Ml

I Steel Coits I_N-

: \. l- 2"1_o l w e e k l I. u---*-

t \

ra;Llaf"a" lal

t . \

o o o o . o r > 4-/14I Gamma I

I stampins

ITonawanda,NY

ril-- 2LzL -1 |D rv+

3t"w4#+

r 1 , lI P,, l-lU-T

rrrrrrr+

1a

Reynosa,Mexicot.. . . ^

l - ' F f r ' o ' . . ,

RM 56 h.wt? 41h.F G 1 2 h

z 5 n t f t q

SDavs

E ? E = 1 D a v

Defects =4OO ppm

RM336h.wrP110h.FG4Ah.35hifts

5DavsE?E=3Davs

Defec.ts=zoooppm

o.3d. o.25d.

20.6d.(3131e.)4.6 d. (3o s.)

22(3)21(3)

Gurrent state shovving all Facil it ies, Transport Links,Defects & Delivery, and Time-and-Steps Line

zz't-21--1

| ,"flr,l&,", II Center I

Cleveland, OH

,rooio^v -1

| 640^ || 4265r I| 214Hr I| 32oB I| 2135r I| rc7Hr I

1/r//

//qfil

l xDay

2xYea r

4.O d.

o.5d. 1 o.5d.

4 4

1 2.O d. (12o s.)

11(2)

4.O d.

.PPM

DEFECTS

2000

1500

1000

s00

0

o.5d.

1

MICHIGAN GAMMATO GAMMA TO BETA

70 OEFECTIVEDELIVERIES

1 0

WeetOrange,NJ

RM 50 h.wt?2h.F G I A h

2ShitrsSDavs

E?E = lDav

Defects =S p p m

Ouality and Delivery Screen

defeds

,r,',r?*' t

BETA ALPHA TOTO ALPHA AIPHA PC

Mapping the lnformat ion Flow

The tcam has now completcd mapping the physical flow of the product but the valuc srreammap is onlv half done. This is for the simple reason that i f no clrstomcr signals a demandfor products from upstream, then nothing will flow. Or at least nothing shor-rld flow! Wethereforc need to go back to the upper right corner of our map and draw the flow of orderand prroduction informarion going back from rhe customcr.

Howevcr, as we do this we nccd to warn you that mapping the information flow is thehardest part of the task. ' l 'he

salcs, product ion control , and operat ions groups within mostcompanies tend to communicate poorly and a manager who fLrlly trnderstands rhe infrrrmationmanagement methods of all thrcc groups is a rarity. Whcn you add the complexity of goingacross several companies and through sales, product ion control , and operat ions deparrmenrswithin each company, i t 's not surpr is ing that very feu, l ine managers seem to have usefulknowledge of how infclrmation is managed on a macro-scalc.

Cliven this rcality, vou shor"rld start where orders enter the sysrem and follou' the ordcr flor,vfiom department to department and from information management system to infbrmationmanagement system, first through the most downstream firm and then upstream throughthe suppl ier f i rms. Bc sure to use a penci l as you skctch information f lows and kccp aneraser handy! What 's more, i f you can, requcst these data ahead of your vis i t because manyfaci l i t ies and IT departmcnts do not have them readi lv at hand.

To actual ly draw the information port ion of the extendcd map wc wi l l need an addit ionalicon for production control, which we have drawn in the shape of a compurer rerminal. Thefirst of these is for Alpha N,Iotors Sales Order Bank. At this point orders are aggregated andplaced in inventory (shown by order queue icons along the information flows). Thcv areheld trnt i l the weekly sales planning meeting that decides thc specif icar ion of thc ordersthat should be relcased into the system, given orders in hand from dcalers. These ordcrsare then released upstream to the following firms and departments:

o Alpha l\{otors Headquarters Production Control

o Alpha N,fotors Assembly Plant ProdLrction Control

o Alpha Nlotors Assembly Plant Ntlarerials Control

o Beta Wipers Headcluarters Product ion Control

. Bcta Wipers Assembly Plant Product ion Control

o Gamma Stamping Headquarters Product ion Control

r ( iamma Stamping Plant Product ion Control

o Nt l ichigan Steel Service Product ion Control

2A

In almost all manufacturing companies, the sales and prclrlucticln control departmencs actuallysend a ser ies of forecasts, schedules, and product ion releases back upstream. For example,in the car industry a rhree-month forecasr, a one-month rolling schedule, a weekly fixedschedule, and a dai ly shipping release might be typical . For our purposes, the impolantinformation is the weeklv f ixed schedule and the dai ly shipping release because rheseactually trigger production in facilities and shipmenrs between facilities. These arc theinformation flows wc will capture on this map.

I f we fol low the weekly schcdule and wri te down the infrrrmation managemcnt steps andthe time involvcd, as we did earlicr with physical actions pcrformed on the producr, wenote the fol lowing along the longest path.

In fo rmat ion Ac t ions Cur ren t ly Requ i red toManage the Value Strearn

Steps Delays*Production at Alpha Motors

1. Dealer Orders queue in the Sales Order Bank 10 Davs2. Tiansmit weekly orders from Alpha Sales Order Bank3. Queue at Alpha Headquarters Product ion ( lontrol 14 davs4. Release vl'eekly production requiremcnts to Alpha plant

5. Queue at Alpha Plant Product ion Control 6 davs6. Release of dai ly product ion sequence

Production at Beta Wipers

7. Tiansmit weekly orders fiom Alpha HQ to Beta HeB. Queue at Beta HQ Product ion Control 6 davs9. Ttansmit weekly production requirements to Bera plant

10. Queue at Bera Plant Product ion C<tntrol 6 davs11. Release of weekly product ion schedule

12. Beta Plant issues dai ly ordcrs from Beta Warehouse13. Alpha N'Iaterials control rransmirs daily requiremenrs to Beta plant

14. Beta Plant Product ion Control issues dai lv shipping release

Production at Gamma Stamping

15. Tiansmit weckly orders from Bera HQ to Gamma He16. Queue at Gamma HQ Product ion Control l , l davs17. Tiansmit weekly production requirements to (iamma plarit

18. Queue at Gamma Plant Product ion Control 6 davs19. Release of weekly product ion schedule

20. Beta Nlatcrials transmits rwice-weekly requiremcnrs to Gamma planr

21. Gamma Plant Producti'n control issucs twice-weekly shipping release* Al l t ransmissions are electronic and essent ial ly instantaneous.


Delivery from Michigan Steel

22- Transmit weekly orders from Gamma He to Michigan Steel23. Queue at Michigan Steel

24' Gamma Materials conrrol transmirs twice-weekly requiremenmto Michigan Steel

25. Michigan Steel issues twice-weekly shipping release

Total number of stepsElapsed time for an order from the first to the last step(along the longest information path)Actual processing t ime (assuming each MRp runs overnight)* Al l t ransmissions are electronic and essent ial ly instantaneous.

14 days*

25 steps58 days

8 nights

The Value of InformationNote that we have made no effort to categorize information management steps as .,value

creating" versus "wasteful", as we did for the list of physical steps. This is because fromthe end customer's standpoint none of the information processing steps creaces any value.To test this - perhaps shocking - assertion, just ask yourself whether you would be lesssatisfied with a product if it could be ordered and delivered to you with no managemenrof production and logistics information. Obviously you would not be less satisfied. Indeed,you would be more satisfied if the cost savings from eliminating information acquisition andmanagement could be passed along to you. Yet in the modern era of automated informationmanagement' most managers have implicitly accepted the notion that information is good,more information is better, and all possible information is best. In fact, information fbrcontrol of operations is necessary waste (Type One Muda). Managers ought to be minimizingthe need for it rather than maximizing it's availability. In the future srares and ideal statewe will show how

As the weekly order information flows across the top of the map from headquarters toheadquarters, it is also flowing from each headquarters down to plant production controldepartments where weekly schedules for each plant are set. For example, Alpha Motors,Assembly Plant Production Control takes the schedules from Alpha Headquarrers productionControl, runs them through its computerized Materials Requiremenrs planning (MRp)system (after a delay averaging six days), and creares a rolling six-day ahead schedule forthe assembly plant. This schedule is ful ly sequenced (e.g, a blue Model A with high tr im,then a green Model B with standard trim) and takes into account iine balancing constraints.For example, there are limits on how many Model As or Model Bs can be run down theline in a row without overloading some workstations where work content varies significantlybetween Model A and Model B. These schedules are rhen released to the plant floor.

At the same time information is being released to the floor in each plant it is also beingsent upstream, from plant-level materials control departments, in the form of dailyshipping releases. These are the precise amounts of each part number the upstreamplant is authorized to ship to its downstream customer on the next pickup. These dailyrelease amounts are based on known order lead times and the stocks thought to be onhand at the downstream plant.

From this it is apparent that there are two separate information flows coming into eachplant - the weekly schedule from each firm's production control department and thedaily release from the customer. Often, these flows are nor precisely synchronized. Soa third information management loop comes into play, which is direct communicarionbetween the materials handling department in the downsrream plant and the shippingdepartment in the upstream plant.

This direct link, usually a telephone voice line, becomes the real production controland shipping mechanism whenever managers at the ends of this l ink overr ide theshipping releases and, in extreme si tuat ions, product ion schedules. They usual ly do thisbased on their direct observations of emerging shortages and their judgment about whatto do in response. We have drawn these information flows between the plants with adotted line and our information expediting icon - an old-fashioned telephone.

A Warn ing on Order DataAs you move upstream don't confuse the customer's officialrelease with the amount each plant actual ly made. Insteadgather from each faci l i ty data on what was actual ly produceddai ly over an extended period and compare this with customerdai ly requests in the form of shipping releases so you can seethe relat ion of one to the other and the amount of var iat ion inboth. We're always amazed that companies awash in informationabout what ought to happen do a poor job of recording andpreserving what actual ly happened. So you may need to dig a bi tor even assign an observer to capture accurate information on l

plant- level product ion and shipping performance. What you f indwi l l be invaluable for achieving your future states.


Gurrent State Map Showing Information Ftovv

I l r - J I

6 days

Fuffalo, NY

/v44f f iluichiqanst,utl frji.I

servtce co. I


o o o o . . >

Tonawanda,NYo

RM336h.wt?110h.FG4Ah.SShifts

2 UaVS

E?E=3DavsDefects

=2000p?m

t . 2 . * . Y " 7 " . . . ' RM 56 h.

wt? 41h.

25hif'rs5Davs

E ? E = 1 D a v

Oefects =4OO ppm

14 dayo

I- "",,* I- | ?roduction I

f Controt

I

f-MEI-ICleveland, OH

tdr1V

I l r { |6 daye

I-1, 1""il?,21,"^l <,zl Control

If-- MiF--]

Harl ingen,TXI ,

I Dailv I

7..'''''''''( , T'"-1-

_/1/L.-1 llr+-+

,=;,,.;;, ,Trrrr+1 Harl ingen,TX'...fr..JReynosa,Mex ico t . . . . -

t E T ] - . ' ' o . .

+_

-Tonawanda,NY

o.3 d. +.o d. o.25 d.

20.6 a. (3131e.) 4.6 d, (3o s.)

32

.

I l f ' J I

10 dayo

Harl ingen,fXa a a a a a a a a l o a a a a a a a a a a a a a a a

4.O d.

o.5 d. 1 o.5 d.

4 4

l r N I14 daye

4.O d.

1 2.8 d, (12O e.)

11(2)

b i rmingham,Ml

t4

t--:-;----lI vaity I

TI Atpha II Dietribution IL

Center I

<1 Ctevetand.oH/r-J -

//- PrE?-1// | +zosr I

// | z+ur If--H----l | 32oD Ir k | 2135T I' t x D a y

| r c Z n r I

o.5 d.

I--r-x{':'-l.i,' l.l

'\

Crrrr-r>

f 1 " -L1,3" l.'

2xYea r

1

Plymouth, Ml

WeetOrange,NJ

R M 5 0 hwt?2h.F G 1 4 h .

2Sh i f ts

5 Days

EPE = 1 Day

DefecI.s =5ppm

Ouality and Delivery Screen

MICHIGAN GAMMA BETA ALPHA TO

TO GAMMA TO BETA TO ALPHA ALPHA PC

Demand Ampli f icat ionFor the pasr year, Alpha Motors sales order Bank has senr very stable weeklyorders calling for 960 vehicles per day, five working days per week to Alpha'sHeadquarters Production Control. And HQ Production Conrrol has releasecl levelweekly buckets of orders to Alpha's Assembly Plant Production Control and toBeta Headquarters Production Control.

The actual build stil l varies from the schedule - due to pulling vehicles out ofsequence to correct defects or because of problems in the paint booth or due ro alack of parts. However, by adjusting the schedule and working overrime at the endof each shift as necessary, rhe output of Alpha Morors Assembly varies by onlyabout SVo from the 960 units planned for each day and all vehicles built are shippedon the daily train to the Alpha Distribution Cenrer.

Dernand Arnplification for Arpha Motors

wipers/day

2800

2600

2400

2200

20001920

1800

1600

1400

1200

1000

amplificationot +l-

4Oo/"

3OVo

2OVo

10o/o

OVo

-1Oo/"

'20o/o

-30o/o

-40o/"

March

ALPHA PRODUCTION ALPHA ORDERS TO BETA

3025201 5

wipers/day

2800

2600

2400

2200

20001920

1800

1600

1400

1200

1000

Similarly, the mix of models (A versus B) varies by only about 5% daily as does themix of wipers (Standard Tiim with flat paint versus High Tiim with glossy paint.)On average, Model A accounts for two thirds of production and Model B one thirdwhile Standard Thim wipers account for two thirds of demand and High Tiim theremainder. Thus production and shipments are fairly stable ar rhe cusromer (rieht)

end of our map.

Yet, as we plot the production and order/release data back upstream, we nore thatthe amplitude of changes in both production and releases increases markedly fromfacility to facility. Minor variations in production at Alpha Motors Assembly becomemuch larger by the time we reach Beta Wiper's assembly plant, as shown below.

Dernanel Arnplif ication -nclrrding Beta Wipers

I

I

t l' - - ' l - - , '

I

I

I

tI

I

I

I

,,,I

I

I,,,II,

amplificationol +l-

4OVo

30Vo

2OYo

1Oo/o

0o/o

'1Oo/o

-20o/"

-30%

-4OYo

l ,1 tl l

1 tI

? J 't l

i ;{

I

I

I

t

I

I

l ,l ll ll ,

I ,,

t

30251 0

ALPHA PRODUCTION

BETA PRODUCTION

ALPHA ORDERS TO BETA

BETA ORDERS TO GAMMA

March 1 5

PART II: THE CURRENT STATE MAP 35

Bv the t ime we reach Gamma Stamping, the var iat ions arc very large. Indeed, GamrnaStamping's releases to Nlichigan Steel varicd by nearly 40% in the month prior to thc arriyalof the mapping team. This infbrmation for Gamma Stamping completes the DemancjAmplification Screen lbr our current state. as shown below.

'lb make this verv common phenomenon clearer, we've summarizecl the maximum perccnrage

change in dailv production and dailv releases over rhe past month for each facility and aligneclthem in a simplified Demand Amplification chart as shown at right. We've placed this chart ina box in the upper left corner of our Current State map, as shown on the ncxr page spread.

Dernancl Arnplification screen in Grrrrent statewipers/day

2800

2600

2400

2200

1400

20001920

1800i v i tt i "il-z \r ir

'i .'t

r i . jr'tt'

: ' r: t t

t.:

i

amplif icat ionoI +l-

40o/o

-1Oo/o

-40o/o

j

1 0

ALPHA PRODUCTIONBETA PRODUCTIONGAMMA PRODUCTION

ALPHA ORDERS TO BETABETA ORDERS TO GAMMAGAMMA ORDERS TO MICHIGAN STEEL

'Ib deal r'vith thc erratic order flow, Beta, Gamma, and Nlichigan Steel must either maintain

extra production capacity or carry large stocks of finished goods in inventory or disappoinrdownstream customers a significant fraction of the time. Because failing to ship on tirne tomeet customcr needs is an unacceptablc al ternat ive for suppl iers in thc auto industry andbccausc extra tool ing can be very expensivc, most f i rms in this industrv includine Beta.

36

Demand Ampl i f icat ion

Sirnplif ied Dernand Arnplif ication Screen

% variation

GAMMA GAMMAORDER PRODUCTION

BETAPRODUCTION

ALPHA

ORDER

BETAORDER

ALPHA

PRODUCTION

Gamma, and N'I ichigan Stecl , carry extra inventr l r ics ro protect the customcr. T'he costimpl icat ions of demand ampl i f icat ion are therefcrre apparent in the amount of errrainventor ies in the value stream.

Whv does this growing variation exist? For the simple reasons that production problems occurin cvery plant (even the lcanest!), transport problems occur on evcry link, feedback on crlrrcnrconditions and amounts of product on hand is nevcr completely accurate, and large minimumproduct ion and shipment quant i t ies cause vcry smal l changes in the amounts necded

downstream to produce much larger changes in the amounts requcsted and produced upstrcam.

To take the u'orst-case example, if one wiper is discovcred to be defective at thc asser-r-rblvplant and the re-order amount is just on thc cdge of one new;rallet (containing 320 r,r ipcrs inour example) che re-order wi l l jump to 2 pal lets - or a total of 6,10 wipers - even thoughonly onc addit ional wiper is needcd. And this phenomenon can be repeated several moretimes as the order flows back upstream, creating a wave. The reason this wavc grows largcras we move upstream is because of the numbcr of schedul ing points (B) and the length ofthe delays (totaling .58 days) before infcrrmation is acted upon. Each system recalculates itsschedule bascd on its own (not very accurate) forccasts and on information from cusromcrs

that is already up to a week old. This is the famil iar and dreaded "F orresrer l i f fect"

documented by Jay Forrestcr at MIT in the 1960s.

The irregularities in the systcm are tlrther exaggerated by the misalignment of what theofficial schcduling and releasing system (in the ccntralized compurers) are saying and what

the individuals in shipping and receiving jobs are seeing and doing. Then, as misal ignmentsgrow, confidence in the formal system declincs and more and more of thc actual sche dulingand rclcasing may be done manually despitc the large investments in information tcchnologv.



BETA BETA ALPHA ALPHAORDER PRODUCTION ORDER PRODUCTION

GAMMAPROOUCTION

GAMMAORDER

I l f { |

6 daya

I ",",* I- | ?roduction I

I Controt

If-- MRp-l

Cleveland, OH

I wTkry I

1V

-l-t ̂ ,16 days

r-]r lr,flX,li,"l <,zl Control

I

C MRp-l

Fuffalo. NY

ts

WI

Shipdarch| =6?a l le ts

@

' fonawanda,NY

(anffilY2n?:"7:"1;'"*"


,- rt ;c"ltt-]- : - \ - - i: \

..,.

3 f2"-1---'. . l w e e k l l t ' . . t'. T-U 2a\'... \ 19)

I- 6.-l-- \ '\'

+.+J xReynosa,Mexico

RM 56 h.wt? 41h.E C l C U

25hi f ts

SDavs

E?E=1 Dav

Defects =4OO ppm

Tonawanda,NY

RM336h.wt?110h.FG40h.SShrtbs

SDaysE?E=3Davs

Defecte=2oooppm

o.3 d.

20.6d.(3131s.)

22(3)

4.6 d. (3O s.)

21(3)

3a

l l ' { r10 dayt

Final Gurrent State Map Showing Demand Arnpli f ication

{ - 'N, l14 daye

6 i rmingham,Ml

i4E

I-4-4-1

I ,,Jl?,1,i,,", II center I

1 Cleveland,OH

/f ar6ot-6oto-o"v--]// |

640^ |

// | i"f:i Il-lJ---] i 32ob I- - ' 2 1 z g r I

.r r,*o^t I roznr I

I-T*-L:'t.'\.l.i'v l.l \

rl;-llJ'v l.t| 9etaWivers I

I Croes-Oock I

Trr) ' -=*-l tl - - - - , - + |I - l TIME

o.5 d.

1

7o DEFECTIVEDELIVERIES

1 0

' PPMDEF6CTS

2000

1500

1000

500

o

Plymouth, Ml

a-

Harlingen,TX

4.O d.

o.5 d. 1 o.5 d.

4 4

I - t JEl?aso,TX

n-s\-t-->zl-z*

| zooo"rAYear @

| = 6?alteto I@,"-J4

WestOrange,NJ

RM 50 h.w l?2h.F G I A h

2Shi f te

SOaya

E?E = 1 Dav

Defecl,s =Sppm

4.O d.

1 2.8 d. (12O e.)

11(2)Ouality and Delivery Scrgon

| 10,000

defeds

ttr?*- t

MICHIGAN

TO GAMMA

44.3 day:

31.O day:

13.3 dayt

32b1 sec54.7min

GAMMA BETA ALPHA TOTO BETA TO ALPHA ALPHA PC

The L imi ts o f Our Map

As thc team finishes recording these product and information flows, it seems sensible toconclude the Current State map at this scope of mapping. The map does not go all the rvaydownstream to the customer taking dcl ivery of a car at the dealership and i t does not go al lthe way upstream to the steel mi l l , much less to ore in the ground. Mapping these acidi t ionalsteps would doubt less provide addit ional insights, but to do so would require large amountsof time and expense to examine organizations whose behavior the team has little prospect ofchanging right now. Yet cven within this scope, the map covers a considerable pgrtion of alengthy and complex value stream and uncovers some very provocative pcrfclrmance features.

What We See When We See the WholeWith regard to physical flows we note that 421.3 days and 73 acrions on thc product arenceded to achieve 3,281 seconds (54.7 minutes) of value crearion involving only cightact ions. This means that 99.9992% of the elapsed t ime and 89% of rhe roral acr igns,while currently unavoidable, are of no value to the customcr.

we can express these findings in terms of lead times and invenrory rurns:

GammaCurrent State 20.6

LEAD TIME (in days)+ Beta + Alpha : In-plant*

4.6 2 .8 31 .0+ Tiansporr = Total

13.3 44.3 days

INVENTORY TURNS (annually)**1149805

*lncludes three days spent in warehouses and cross-docks.**Note that faci l i t ies with simple, f requent act iv i t ies (e.g., assembly operat ions) wi l l have higher

turns than faci l i t ies with many batch operat ions, and individual faci l i t ies wi l l have higher turnsthan the ent ire value stream.

With regard to qLrality and delivery reliability, we nore that end-of-the-value srream indicatorsof both measures are very good (5 ppm and lVa defecdve shipments to the customer) br-rt thisis achieved through a serics of screens with significant cosrs and delays.

With regard to information about customer clemand, \\,e note rhat ordcr information is actedupon up to 17 t imes and stored for up to 58 days in queues. What is morc, s ix incl iv iduals inreceiving and shipping direct ly intervene in mediat ing orcler f lows within an expensive,tcchnically sophisticated information management sysrem rhat on its face is totallv ar,rtomated.Evcn with this intervent ion - and in some case s probably because of i t - demanclampl i f icat ion, with compcnsaring inventor ies to protcct customers, increases steadi lv toa very high level as onc looks back up the value stream.

40

Grrrrent State Srrrnrn ary'

GurrentState

44.3days

o.oB%

11%

5

400

B

7

5300

Total Lead Tme

Value Percentage of Time(va lue c rea t ing t ime

to to ta l t ime)

Value Percentage of Steps(value creating steps

to total steos)

Inventory Turns

Ouality Screen(defects at the downstream end

over defects at the upstream end)

Delivery Screen(% defective shipments at thedownstream over o/" defective

sh ipments a t ups t ream end)

Demand Amplification Index(% change in demand a t downst ream

end over % change in demand a tups t ream end)

Product Travel Distance( m i l e s )

Final ly, we must note a suddenly obvious point about the performance of the manv

departmcnts and firms touching the physical product on its 44-day journey and order

information on its 5B-day journey: However effective the various functions - operations,

production control, logistics, manufacturing engineering, quality, and purchasing - may be

in achieving their own objectives, they are not at all effective in supporting this product on

its path to the customer. What's more, because the processes inv<r.lved are common to all

products passing through these departments and firms, it is highly unlikely that they are

doing a better job of support ing other product famil ies. The funct ional diagnost ic aspect

of our extended mapping process - which we believe is its most important contribution

to firms in the long run - therefore reveals severely mal-performing functions all thc wav

up and down the value stream.


If this is an accurate portrayal of the current state - and, because the value stream team hasdirectly observed it, there is good reason to think that it is - there are surely opportunitiesto speed the accurate delivery of products to the customer while eliminating large amounrsof cost. To begin to do this we need to specify in rhe nexr secrion the features of a leanextended value stream that can deliver these benefits.

The Power of Simpl ic i ty

"What do you consider the largest [scale] map that would be really useful?"

"About 6 inches to the mile."

"Only six incbes!...We actually made a map on the scale of a mile to the mile!"

"Have you used i t much?, I enquired."

"It has never been spread out... the farmers objected [that] it would cover rhe wholecountry and shut out the sunlight! So now we use the country itself, as its own map,and I assure you thar it does very well."

- Lewis Carroll, Syluie and Bruno Concluded, Chapter l1

As you experiment with drawing extended maps suitable for your product families, youmay wonder just how much detail to include. We often find that novice reams - likeLewis Carroll 's myopic mapmaker - want to record every conceivable {etail about thecurrent state, as well as mapping the flow of every part in the finished product. To makeroom for all this detail they even create wall-sized maps in corporare war rooms.

But too much detail in an extended map interferes with clear thinking about how toimprove the value stream. We therefore urge teams to keep extended maps as simple aspossible. The objective must be to truly "see the whole" by summarizing the value srreamon a single sheet of paper (11" x 17" is a good size, 43 in Europe) and to use this bigpicture to raise consciousness among all the value stream participants. Only then can youidentify ways to quickly improve performance all along the value stream and motivate thefirms involved to optimize the whole.

r-) e^

Principles of a Lean Extended Value Stream

Fifty years ago Thiichi Ohno at Toyota enumerated seven types of waste in value streams.

You may have them memorized by now but they bear repeating because the types of waste

are the same at the process, the facility, and the extended value stream levels of analysis:

Overproduction - Making items upstream before anyone wants or needs them downstream.

Defects - Errors in products, paperwork supporting products, or delivery performance.

Unnecessary inventory - Products in excess of the amount needed to insure meeting

customer needs.

Unnecessary processing - Activities not adding value that could be eliminated, such as

a separate inspeccion step replaced by a self-monitoring machine with auto-stop, or flash-

removal after molding eliminated with higher mold tolerances and better mold maintenance.

Unnecessary transportation between work sites - Moving products between facilities

that could easi ly be consol idated.

Waiting - lJsually production associates waiting for machines to cycle.

Unnecessary motion in the workplace - Associates moving out of their work space

to find materials, lools, work instructions, and help.

When mapping at the facility level and at the process level within facilities, we are always

concerned about overproduction due to poor information flows withiz facilities and the

desire of managers to move products ahead to meet performance metrics for equipment

utilization. (Ohno always stressed that overproduction is the worst waste.) We are also

looking carefully for unnecessary processing, defects, waiting, and motion.

When we more our analysis of product and information flows to the extended, macro

level, overproduction is stil l a critical concern but now due to erratic information flows

between firms and facilities. And we are now specially interested in the two final forms of

waste: unnecessary inventories (due to erratic information flows as well as incapable and

batch-oriented upstream processes) and unnecessary transportation (caused by location

decisions that seek to optimize performance at individual points along the value stream

rather than the whole value stream). Reducing these three forms of waste - largely by

better managing information flows and logistic.s - will be centrai concerns for our

extended-mapping of future states.

PART III: THE EXTENDED VALUE STREAM

What should a lean extendet l value stream look l ike?

First, everyone in the entire value stream should be aware of the rate of customerconsumption of the product at the end of the stream.You are probably familiar with takt time, which is the amount of procluct dcmandedper unit t ime adjusted for the amount of product ion r ime avai lable. This is awonderfully uscful concept within every facility because it tells everyone rhenecessary rate of production from minute to minute to meet the neecls of the nexrdownstream customer. Howevel note that takt time will vary from facility to facilityalong a value stream if the amount of available production time differs from facilitvto facility and if downstream steps incorporate more than one unit of an upsrreamcomponent ' Thus takt t ime at the Alpha Motors Assembly Plant is 60 seconds (tcrbui ld 960 vehicles during the sixteen hours of product ion t ime avai lable each dav)but is 30 seconds at Beta's wiper assembly plant running the same shif t pattern(because each vehicle needs two wipers) and would fal l to l5 seconds i f the wipcrassembly plant switched to only a single eight hour shift each day. T.hus, in mostcases' there is no single takt time for the entire value stream.

However, every facility along on the stream needs to be aware of the encl rate ofconsumption to calculate facility-specific takt time. Production ar every Llpsrreamstage should run on average at the same rate, as adjustecl for the availablc amounrof product ion t ime at each step and the neecl t ' make mult iple copies of someproducts to incorporate in products downstream. Any time we see a chronic pattcrnof imbalanced production rates in clifferent facilities we know we don,r have alean value stream.

However, please understand that every facility upsrream should not conduct itsactivities in lock step with the current rate of the end facility in the stream. Thisseems to be the implication today of many naive claims for e-commerce and theweb: " I f you know the rate of end consumption r ight now you can scheduley'urself accordingly." In facr, what each facility should produce each m.rningis a leveled mix of what the next downstream facility requests for delivery thisafternoon or tomorrow Knowing changes in actual consumption at the end of thestream (part icular ly the ampl i tude of the changes) is extremely important forcapacity planning but is not sufficient for controlling productioh todav.

44

-

What u'e can learn from comparing production rates upstream with actual consumption

downstream is hou, faithfully the production control system is sending true customer

demand (which we call "signal") upstream versus distorted demand (which we call

"noise"). If there is significant noise, producing "demand amplification" unrelated to

true customer desires (as we see in our Current State map), steps need to be taken

to eliminate these gyrations in future states.

A second feature of a truly lean extended value stream will be very little inventory.

This inventory will consist of the minimum amount of (1) raw materials, (2) work-in-

process, and (3) finished goods required to support the needs of the next downstream

customer given (a) the var iabi l i ty of downstream demand, (b) the capabi l i ty of

upstream processes, and (c) the inventory reqr-rired between processing steps due to

batch sizes and shipping quantities. Toyota calls the minimum amounts of invcntory

needed to support the customers in a value stream at any given t ime the standard

inventory. The standard is calculated for each category of inventory depending

upon its function in the value stream. Toyota continr.rally seeks to reduce this

amount by decreasing batch sizes, increasing shipment frequencies, level ing

demand, and improving capabi l i ty.

Lovv lnwentor ies vvi th High Demand Variabi l i ty andLow Process Gapabi l i ty = Ghaos

We somet imes encounter lean imp lementers who seek to reduce inventor iesalong a value stream without bothering to calculate the standard inventoryneeded fo r the cur ren t leve ls o f var iab i l i t y and capab i l i t y . An immedia te" lowering of the water level" may indeed "expose the rocks" and putpressure on everyone to go faster to reduce variabi l i ty and improvecapabi l i ty. However, a more l ikely consequence is chaos and outragedcustomers when the newly " lean" value stream fai ls to del iver the r ightamounts w i th the r igh t qua l i t y a t the r igh t t ime.

A better strategy is to calculate the standard inventory at every storagepo in t a long the va lue s t ream in the cur ren t s ta te and immedia te ly e l im ina teinventor ies g rea ter than the s tandard . Then lower the s tandard and reduceinventor ies to the new standard in a future state after var iabi l i ty andcapabi l i ty issues are addressed.

PART III: THE EXTENDED VALUE STREAM

The Many Forms and Uses of Inventory: Great ing a StrategyWe've def ined the three tradi t ional categories of inventory and compared these withseveral addit ional categories in common use (as shown in the next page). Note that thesecategories overlap. "Finished goods" can be "safety stocks", "buffer stocks", or "shippingstocks". What 's more, the same i tem-a pal let of windshield wipers in Beta's f in ishedgoods area, for example-can be included in several categories-a "safety stock" anda "buffer stock" in the case of our wiper-depending on the pract ice of the f i rm and thefaci l i ty. The key point with regard to def ini t ions is for the members of the value streamteam to agree on a consistent use of this sometimes confusing terminology.

The key point with regard to the inventories themselves is for the team to make a strategicplan for every part in a future state, describing the reasons for keeping specific amounts ofmater ials and goods in specif ic places as standard inventory. As they do this, many valuestream teams decide to actual ly increase the amount of inventory in a downstream f inishedgoods area near the schedul ing point, both as a buffer stock and as a safety stock. Thisguards against demand ampl i f icat ion travel ing upstream and faci l i tates the reduct ion ofwork- in-process and raw mater ials to a very low level in upstream faci l i t ies. By increasinginventory at one point - seemingly a step backward - i t may be possible to reduceinventor ies at every other point along the value stream and for the value stream as a whole.

The Manyz Forrns of lnrrentort/

E:E

lT. ll #, ll #=lEE:

l'T'all F+l|mql

46

Tlrpes of lnrrentory

TRADITIONAL CATEGORI ESDefined by their position in the value stream

Raur MaterialsGoods entering a facil i ty that have not yet been processed.

Work-ln-ProcessItems between processing steps within a facility.

Finished GoodsItems a facil i ty has completed that await shipment.

ADDITIONAL CATEGORIESDefined by their purpose in the value stream

Safety StocksGoods held at any point ( in Raw Mater ia ls, WlP, or FinishedGoods) to prevent downstream customers from being starvedby upstream process capabil ity issues.

Buffer StocksGoods held, usually at the downstream end of a faci l i ty orprocess, to protect the downstream customer from starvation inthe event of an abrupt increase in point demand by a customer-a demand spike that exceeds point production capacity.

Shipping StocksGoods in shipping lanes at the downstream end of a faci l i ty thatare being bui l t up for the next sh ipment . (These are genera l lyproport ional to shipping batch sizes and frequencies).

PART III : THE EXTENDED VALUE STREAM 47

A third feature of an extended lean value stream is as few transport linksas possible between steps in the production process.

As we have noted earlier, no customer attaches value to moving thc product

around. Indeed, customers wi l l of ten be wi l l ing to pay more for a product i f i tcan be supplied in the eract specification they want very quickly. Thus weneed to ask about every transport l ink: Is this real ly necessary? SLrbst i tut ing

modes, notably air fbr truck, is certainly an alternative way to reduce

thftrughput t ime, but typical ly at an unacceptable cost premium. In general

\ \ re want to el iminate transport rather than speed i t up.

A fourth feature of a lean value stream is as little information processing aspossible, with pure signal and no noise in the information flows that remain.

This means pulling information management down from highcr levels of theorganization, in remote information management dcpartments, to the shopfloor where each processing step and each facility can signal the previous srcp

and faci l i ty direct ly about i ts immediate necds. We should schedule the cnt i revalue stream from only one point, in this case the assembly l ine of Alpha, andpul l mater ials back up rhe value stream from this point.

A fifth feature of lean value stream will be the shortest possible lead time.Indeed, this may be the most importanr of al l . Thi ichi Ohno ofren remarked

the whole point of the Toyota Production System was simplv to reduce lead

times from raw materials to the customer. The shorter the lead timc, the morclikely it becomes that thc entire value stream can respond to real orders rathcrthan inaccurate forecasts. And the more likely it becomes that defects, proccss

variations, and every other problem will be detected before significant wasreis created.

A final principle of a lean value stream at the macro level is that changesintroduced to smooth flow, eliminate inventories, and eliminate excesstransport and lead time, should involve the least possible or even zero cost.What's more, capital costs, when they are necessary, should be deferred untilcasier and quicker act ions have already been taken.

48

The Plan for the Remainder of thisBreakthrough Guide' l 'he last principle suggests that we address in-plant product flolr,s first using

the methods described in Learning to See and Creating Continwous Flow.' Ihese

entai l pract ical ly no capital costs and wi l l creatc what we wi l l cal l our

Future Statel , as descr ibed in Part IV of this Guide.

Once f low and pul l have been introduced within each faci l i ty, el iminat ing

many wasteful steps in the process, it will be time to examine the information

and transport links between facilities. Often it will be possiblc to smoorh

the value stream and reduce the need for buffers by introducing direct

feedback loops with leveling mechanisms for information flowing from each

downstream "cl lstomer" to the preceding upstream "producer". We wi l l do

this in Future State 2, as descr ibed in Part V of this Guide, not ing rhar a

smooth pull of orders can often be tested on an experimcntal basis for oneproduct family without effecting information flows for other products going

through thc same faci l i t ies.

With information flows smoothed and noise reduced, it will be timc to

reduce shipmcnt sizes whi le increasing shipment frequencies between each

facility and it's upstream customer. We will also do this in FurLrre State 2.

Frequent delivery in small lors will require the introduction of some tvpc of"milk run" logistics between facilities and for the first time will raise the issue

of relat ions between mult iple product famil ies. This is because organizing a

milk rLrn for the parts needed for only a single product family ar rhe next

downstream facility will often be impractical. Instead, major portions of a

facility or an entire facility may need to make rhe leap from dedicated

shipments arriving infrequently to shared shipments arriving often.

Finally, after Future State 1 and Fr-rture State 2 are achieved, it may make

sense to begin re-siz ing and relocat ing act iv i t ies in order to "compress" the

value stream. Doing this may make it possible to remove large remaining

blocks of time and cost and move the value stream much clgser to perfection

in an ldeal State.

PART III : THE EXTENDED VALUE STREAM 49

Because value stream compression will often require significanr investmentsby a firm at Point A that lower costs for a firm downstream at point B, somemethod will be needed to justify these investmenrs and to determine how thefirms can share the cosrs and benefits. We'll provide some simple guiclelinesin Part VI of this Guide, descr ibing the Ideal State.

A truly ideal state will be the happy circumstance in which all actions createvalue with zero defects and consumer response is instantaneous. No one islikely to reach this perfect realm soon, bur it is highly provocative to askwhat types of product designs, production technologies, and locarional logiccan close as much of this gap as possible. what's more, the process ofdeveloping an Ideal State can provide an invaluable North Star for steeringeach value stream through succeeding product generations that come closerand closer to perfect ion.

5()

Future State 1

Once the team completes the Current State map and everyone agrees that

it is accurate, the key question becomes, "What should be done in what

sequence to create a better future state?" In our experience, the easiest

place to start is to create future states within the walls of each of the facilities

the product visits en route to the customer. By drawing and then achieving

a future state of the type described in Learning to See within each major

facility it will be possible to achieve a substantial improvemenr in the

performance of the entire value stream and to do this within a short time.

This creates confidence in the process and give teams a sense that much

more is possible.

Beginning with this step also has che critical advanrage of imposing a

"price of admission" on all of the value stream participants. Drawing the

current state map is fun but entails no real commitment. It 's when you get

to the, "What are we going to do today about the waste?" question that the

hard issues arise. Insisting that each participating facility and firm quickly

implement actual improvements as the price of continuing with the exercise

also tends to gain buy-in for the process. Yet the hurdle is nor roo onerous

because little capital investment is needed to achieve a future state within

the ind iv idua l fac i l i t i es .

Level Pull and Flovv Within All Facil it ies

In Appendix B, we show the Future State Maps for the Alpha Morors Final

Assembly Plant, the Beta Wipers Component Assembly Plant, and the Gamma

Stamping Part Fabrication Plant. At the urging of the extended value stream

team, these were implemented and stabilized over a three-month period by

newly appointed value stream managers in each plant. (As noted earlier, no

changes have been attempted at the Alpha and Beta cross docks and in the

Beta warehouse. This is both to keep the exercise manageable and because

we will seek to eliminate these facilities in Future State 2..)

The cumulative result of these actions at the plant level is shown in the

summary boxes on the Future State 1 map.

PART IV: FUTURE STATE 1

Demand Ampl i f icat ion7o variation

35

30

25

20

1 5

1 0

5

GAMMA GAMMA BETA BETA ALPHAORDER PRODUCTION OBDER PRODUCTION ORDER

ALPHAPRODUCTION

t-il-f14 daye

f "",,* I-r"ijl"#i^lC-MEI-I

Cleveland,OH

@\v

E6 days

r-1/ lr"#7,21,",1.,zf Conrrol

I

f M-Rr--]

RM 16 h.

wt? oh.

2Shi l ts

SOays

E?E=1 Day

Defecls =2OO ppm

tFt +-6 days

-

o.25 d.

fri{ -elwichiqansteell ? WI seiviceco. I

Adavs | ?tant| ?roductio

Dearborn Hei7htz, Ml

a-sr.mt'-]------\- >i \-_ r..i \-". t l l: | ?.. l__ \.. ar;fi;iltlF"w,,kl. lWeek l I \ l ' - - - - - - r -. r----T 751 Liq\". \3,..r:t-f ,-'8.-- .fr.. \'#!i fr

' o o r . . > I 32nfr?.,, I '-rrr.+l,-J A-s\- |lonawanda,NY. ?

I

nlfl""'7;."'Jf----;;;-------l I re vn' I| 5oom. la zeh:, f t ; -- ] | soo^.-- l lI ehipaar,ch I |-jD-=2;-- l- shtpl^r*h I| =7zcoits

I arr l r : io^ '1 | =36?atets II Derective = 8%

| a D"r*r"= F"r."t-;4%1I r l t o o o p p m I f - - - - - _ _ - 1

Harl ingen,TX

o.3 d. 4.O d. o.25 d.

Buffalo, NY

Ionawanda.NY

DetaWipersWarehouse

5Jd. (3131s.) 2.O d. 1.2 d. (3o e.)

52

20 (3) I (3)

Wiper Value Stream Future State 1

Harlinaen.TX" o a a a a a l a o o a a a a o a a a a a . ,

-

{ '--l14 daye

4.O d.

1 1.3 d. (12O s.)

:I I F J

10 da,

Cleveland, OH

,160 tDrv 1| 640^ || 426e1 || 214Hr I| 32oe I| 21351 |I lo7Hr I

_._ . \ i . t

lT---l \t _'Y,Ys:oi" I b:I+

-r-] f rfrrr=r}

I betaWipers II Cross1ock I

rrll .----> lyl---X___+ || ---<'-+ |I - l

o.5 d.

2 xYear

4.O d.

1

o.5 d.

1o.5 d.

ppmdeteds

2000

r500

1000

500

0

% defedivede l iver ies

Plymouth, Mlb i rminqham,Ml

I/r//

//q=il. l x D a y

, Oual i ty and Del ivery Screen

il;-lI p,v [-]!----i5

WeetOrange,NJ

RM 15 h.wt? 2h .F G 1 4 h .29hi f te

5Davs

E?E = 1 Dav

Defecf,s =5PP^



7 (2)44

Future State 1 Ghanges

At Alpha Motors Assembly it was possible to eliminate a kitting

operation and deliver parts directly from receiving to lineside. At thesame time, a simple pull system was introduced between final assembly

and wiper subassembly to cur the amount of invenrory in half whi lesmoothing the flow.

At Beta Wipers the team took advantage of the approach described in

Creating Continuous Flow ro relocate 4 formerly srand-alone tasks into

one cel l whi le reducing the number of product ion associates neededfrom five to three. At the same time, the team created leveled pull loopsfrom the supermarket in the shipping area to the assembly cell and fromthe assembly cell to the supermarket in receiving, to reduce invenrories

and smooth flow.

Finally, at Gamma Stamping, the batch narure of che stamping andpainting operations was accepted for the moment. Rather than trying tointroduce continuous flow by cellularizing these operarions, the teamfocused on introducing leveled pull loops berween the three operationsand reducing set-up times (from one hour ro three minutes on the twostamping presses and from 30 minutes to five minutes in the painr

booth). This permitted much smaller batches to be made, with frequentreplenishment of the downstream supermarkets in small amounrs.

Note that the extended map itself seems hardly ro have changed. All

of the facility boxes and flow arrows are as they were. Yet the summaryfigures in the facility data boxes are now considerably different and thedata in the summary box at rhe lower right corner is different as well.Specifically, the total number of steps has been cut from 73 to 54 andtotal throughput time has been reduced from 44 to 24 days. All of theindicators of value stream performance in Future State 1, compared

with the Current State, are shown on the next page.

Euen more important, each firm participating in this shared ualue streamhas quickly taken concrete steps to eliminate wdste and improueperformance in its own operdtions.This is not an example, as we seeall too often, of downstream firms and facilities lecturing upsrream firmsand facilities on improving their performance while doing nothing abouttheir own performance.

Frrtrrre State I

Total Lead Tme


to total t ime)


to total steps)

Inventory Turns



Delivery Screen(% defective shipments at thedownstream over o/o defective


Demand Amplification Index(% change in demand at downstream

end over 7o change in demand atups t ream end)

Product Travel Distance(mi les)

Srrrnrn ary'

Gurrent FutureState State 1

44.3daye

23.9daye

o.oB% o.16%

11% 15%

5 I

400 200

B B

7 7

5300 5300

At the level of the scamping plant, che component assembly plant, and the final assembly

plant these changes are often truly impressive. In the most striking instance - the Beta

Wipers component assembly plant in Reynosa - the number of steps at has been cut by

60Vo and the throughputt ime has been slashed by75%. However, in terms of the ent ire

value stream, as experienced by the customer at the end, the change in performance is more

modest: a 25% reduction in the number of steps and 46% reductiori in total throughput time,

which is stil l much longer than the end customer is willing to wait. Thus the whole value

stream is stil l producing to a forecast rather than to confirmed order. What's more, the

performance improvements only assume these magnitudes when every facility touching

the product achieves its future state.

PART IV: FUTURE STATE 1 55

This realization provides a useful insight to rhe value srream team abour the limitsof isolated, individual action: If you want ro achieve a breakthrough - a "gamechanger" - that alters your position in your industry or produces profits far aboveindustry averages, you'll need to optimize the entire value stream rather thanstopping after improving the flow along small courses of the stream within your

own facility - as many managers and firms do today.

Any f i rm unwil l ing or unable to implement the Future State I in i ts faci l i t ies isunlikely to be willing or able to take the next steps to achieve Furure State 2.'Iherefore,

if it becomes apparent at this point that some participants won'r makethis commitment, it will be critical to find alternative value stream members befcrreother participants waste time in futile efforts. An obvious additional question forthc firms downstream to ask is, "Do we want to keep the do-nothing upstreamfirms in our supply base?"

The Distance St i l l to Go

While the first five items in the summary box show a substantial improvementbetween the Current State and Future State 1, the last three items - the clelivervscreen, the demand amplificacion screen, and travel distance - show no change.This is because these indicators are driven by relations between facilities ratherthan activities solely within facilities. The next challenge for the team thereforeis to tackle relations between the facilities. This necessarily requires tacklingoperational relations between firms.

56

Future State 2

As the value stream team achieves Futurc State 1 within each facility and begins tcrsense that collective management of the value stream is possible, it 's time to take thcnext leap. This is to draw and quickly achieve a Future StateZ, introducing a smoorhand leveled pul l along with frequent shipments between each of the faci l i t ies.

Instal l ing Leveled Pul l Betwreen Faci l i t ies

In concept, this is very simple. What we want to do is to link each point of use of theproduct in a downstream facility with the prcvious point of production or shipmentin the next upstream facility. In this way, consumption at thc point-of-use is tluicklyand exact ly replenished by the nexr upsrream process.

In practice, shipping qr-rantities u'il l be considerably largcr than minimum trrroductionquant i t ies, even in a very lean value stream. For example, the minimum shippingquantity of wipers to the final assembly plant in this casc is one paller with 20 tra1,sof wiper arms with each tray containing 16 wiper arms, for a total of 320 wipers. It issimply too expensive to ship individual rrays, much less individual wipcrs.

The minimum product ion quant i ty, by contrast, would be one tray of 16 wipers.This is because set-up times and cosr ro alrernare berween -fyp"

A and Type B

wipers in the two trim levels are now zero at thc Beta Wiper Plant, after

implementing F'uture State 1. But i twould st i l l be too expensive for mater ials

handlers to wrap and movc individual wipers.

Therefore, to level production to the maximum extent feasible as orders travel backupstream, we will want to send production signals to the work cell at Beta by travsrather than by pal lets and to level these orders. For example, i f 20 trays (one pal let)

are ordered by Alpha Motors Assembly with the order consisting of:

5 trays of Type A, High Trim (which we will call Part #1)

5 trays of Type B, High Trim (Part #2)

5 trays of Type A, Low Trim (Part #3), and

5 Trays of Type B, Low Trim (Part #4)

PART V: FUTURE STATE 2 57

we will want to send these orders ro the Beta assembly cell in the sequence:

1 t 2 l 3 | 4 l 1 t 2 l 3 I 4 t 1 t 2 t3 I 4 t 1 t 2 t3 t 4 t 1 t 2 t3 t 4

rather than in the sequence:

1 I 1 I 1 | 1 I 1 t 2 t 2 t 2 t 2 t 2 t 3 t 3 t 3 t 3 t 3 t 4 t 4 t 4 t 4 t 4

By repeating this production leveling process ar every link upstream we will continuallvsmooth production rather than creating waves due to batchine.

In practice, there are many ways to achieve this result. Some firms install pull systems ona strictly manual basis by collecting kanban cards from trays and phoning or faxing theseorders back to the next upstream facility. There, kanban signal cards are written up andsent to the finished-goods supermarket to assemble the next shipment. (When plants arevery close together and shipments from the next upstream facility occur many times a day- not the case in our example - the cards can be sent back with the truck bringing thenew parts and returning the empty pallets. For many years, this was the primary methodof information transfer in Toyota City.)

A small step up in automation would involve the use of an electronic reader ro scan thekanban cards from emptied trays and send this information through an Electronic DataInterchange (EDI) network to the next upstream facility. There, new kanban cards couldbe printed and released to the finished goods supermarker to inserr in trays and place inpallets for the next shipment. (When these trays are received in pallets ar rhe downstreamfacility' the cards can be scanned again to confirm receipt and trigger supplier paymenr.They would be scanned one last time - and discarded to complete the cycle - when theyare removed from the empty trays as the parts are consumed in the downstream process.)The cards removed from trays in the upstream supermarket as product is shipped wouldthen be placed in some type of load-leveling(heijunka) device before transmissionupstream to the previous processing step.

A further step in automation that has become atrractive recently is to substitute a simpleweb-based information transfer system for the EDI link. The bar code scanning and theprinting of new cards at the upstream facility remain the same but now the dam are senr overthe web. (This configuration of information management is shown in the diagram below.)

Still a further step is to eliminate the cards altogether and send electronic signals directlyfrom the downstream process to the supermarket in the next upsrream process whereshipping instructions can be displayed on screens or hand-held devices. However, wealways start to get anxious when information disappears into complex electronic sysrems

Electronic kanban rrsing a bar code reaeler

via Web

Hei junka device---1 t@ r :

rytttt+l l-------:

|Ca rd I f c r , . d l - i

l?nnterl lg,cannerl '

II

It - - - r - - - - ! - - - t

IIII

-Y

lIII- t

I

II

IIIII!III

Clean,?aifii"&.Bake A99EMBLYCELL

Gamma 1tamping DetaWipers

Note that the rows in the heijunka box are for the four types of parts in this productfami ly whi le the columns (across the top) are for the p i tch ( rate) of wi thdrawal of thecards for conveyance to the upstream paint process.

whose inner workings are opaque to line managers and production associates. We adviseusing the simplest possible system that can get the job done, acknowledging that somebusinesses inherently require more complexity in information management than others.

The key point to note about each of these arrangements is that there is no need to sendday-to-day production instructions down from MRPs in the plant office or ar companyheadquarters. Nor is there a need for customers to send daily releases generared by theirscheduling computers. Rather than requiring elaborate calculations in a centralizedprocessing system on what should be produced in each plant and at each machine - given

expected operating conditions and pre-established lead times - the new system simply,reflexively re-orders from the next upstream point what has just been consumed by thenex t downsr ream po in t .

Note that the telephone-based expediting loop, which was often rhe real scheduling sysremin the Current State and in Future State 1, is now gone. If small amounts of parts arere-ordered and shipped automatically, accurately, and frequently in response ro acrual use,the need for expediting is eliminated. We've drawn this new information managemenrsystem in our Future State 2 map.

PART V: FUTURE STATE 2



GAMMAPRODUCTION

GAMMAORDER

o.3 d.

RM24wt?62F G 1 2

3 thifr,s5 Days

E?E = 1 DavDefects =25O ppm

a.o d. (3131s.)

20 (3)

4.O d.

1.2d. (3O s.)

B (3)

RM 16

wtP oFG 12

2 Shitrs

5 Davs

E P E = 1 D a v

Defects =50 ppm

60

;:,^,-

loiaeroanulrlDirmingham,Ml

t\I Daity I-T

Z1z1--lI Atpha II Distribution II Cen+er I

Cleveland,OH

#r-*rll

| 32oo I

o.5 d.

t=fll xDay

Future State 2Betvveen Facil it ies

1.3 d. (12O s.)

7 (2)

Wiper Value StreamShovving Level Pull

bxof -%

4.5 d.

PPMDEFfCTS

)ooo

1500

1000

500

0

% DEFECTIVEDELIVERIES

1 0

ALPHA TOALPHA rc

Alpha?roduclion

ControlAlpha

MaterialsConlrol

RM 15

wt?2FG14

2ShifIs

SDays

EPE='lDav

Defects =5 ?P-

Oual i ty and Del ivery Screen

dofectivedeliveries

@ . . . .

MICHIGAN GAMMA BETATO GAMMA TO BETA TO ALPHA

The Need for Gontrolled Experiments"But," you will say, "how can you do this for information flow for only a singlevalue stream co-mingled with many others? The same compurer sending signalsto control this stream is also scheduling other streams. Surely the whole sysremmust be changed in order to change anything and this, realistically, is a massiveand costly undertaking."

Actually massive change is nor necessary. Just as we have disconnected oursample product family from the MRPs within several plants in Future Stare 1,and installed simple pull loops between activities within each plant, we candisconnect individual value streams currendy running between facilities undercentral conrrol and instal l s imple pul l loops.

The key point is for the value stream ream ro take this opportunity ro try theexperiment and judge the results. We confidently predict that the performanceof the value stream as mapped in Future State2 will argue forconverring moreand more product families to simple pull systems so rhat the overly complexproduction control systems commonly in place today are gradually convertedto an activity where they are actually useful. This is capacity planning on atotal system basis.

Lean Lab

62

/c

Futn7 ^

\-t

HUU

Instal l ing Frequent Transport LoopsThe logical and necessary complement ro pull systems berween facilities is

increased shipping frequencies between facilities. This can be achieved by

converting infrequent full-truck direct shipments between two facilities

to frequent milk runs involving several facilities.

This has an additional and substantial benefit. The introducrion of milk

runs and more frequent deliveries makes it possible to eliminate the srop

at the Beta Wipers warehouse in Harlingen and the long excursion to the

Alpha Motors cross dock in El Paso. This saves eight steps and six days of

throughput time and a thousand miles of rransport. (Plus, if the parts for

other value streams using these facilities are treated similarly, the facilicies

themselves can be eliminated with major cost savings.)

We've drawn these changes in the F'uture State 2 map

by substituting our icon for milk run replenishment loops

for the striped push arrows used in the Current State

and Future State 1.m i l k r u n

rep len ishment

Introducing pul l loops and milk runs on an experimental basis wi l l require

a modest investment, but bounding the experiment can keep the amounts

small until results are in and a decision is made on whether whole production

systems should undergo conversion. And often these days, other suppliers

and customers within an industry are already using milk runs. Perhaps your

product can tag along.

PART V; FUTURE STATE 2 6:

Demand Ampl i f icat ion7o variation

353025201 51 05


GAMMAORDER

GAMMAPRODUCTION

4-/v/l W^^Aluicrtisansteetl J Daity I ba;i;tr ^ |lsewicecenterla_\- |

center I

Dearborn{eiqhts,Ml -1

F.M24wtP 62FG'12.

3 thifr,sSOays

E?E = 1 Dav

Defects =25O ppm

<-

I

(

o.3 d. 4.O d,

4.o d. (3131e.)

20 (3)

1.2 d. (3O s.)

I (3)

i ii iiv

I beta I

I wipe.g I

Reynosa,Mexico

RM 16WIP OFG 12

21hifr,s

5Davs

E?E = 1 Dav

Defects =50 ppm

64

Wloraeraanu I

-b i rmingham,Ml

+LI ouiry I_TZLa-'1I Atpha II Diotribution II Cenrer I

Cleveland,OH

(\7 "*^-1ll I x: II

PPMDEFECTS

' 2000

1 500

1000

500

0

Wiper Value Stream Future State 2Shovving Frequent Transport Loops

Ioxoxl ---%

Alpha?roduclion

ControlAlpha

MaterialsConl,rol

l-J-J1 xDay

o.5 d.

Weet Orange,NJ

1.3 d. (12O s.)

7 (2)

4.5 d,

V DEFECTIVEDELIVERIES

1 0

ALPHA TO

ALPHA PCGAMMATO BETA

MICHIGAN

TO GAMMA

RM 15wl?2FG14

25hi t ts

SDavs

E?E =1 Dav

DefecLs =5 P P

o'uality and Delivery Screen

defeds

de{ectivedeliveries

@ . . . . .

BETA

TO ALPHA

Frrtrrre State 2 Srrrnrnary

CurrentState

Total Lead l-ime


to to ta l t ime)


to total steos)

Inventory Turns



Delivery Screen(% defective shipments at thedownstream over Yo defective



end over 70 change in demand a tups t ream end)

Product Travel Distance( m i l e s )

Future FutureState 1 State 2

44.3days

23.9daye

15.8daye

o.o8% o.16% o.6%

11% 15% 21%

5 I 14

400 200 50

B I 3

7 7 5

5300 5300 4300

Total ing the Results

The consequence of smooth pul l s ignals and frequent replenishment for our eightindicators of value stream performance is shown in the summary boxes on theFuture State 2 map and in the chart above. The most striking change from FurureState 1 to Future State 2 is the dramatic reduction in demand amplification, qualiryproblems, and late shipments as the orders move back upstream. The amount ofvariation experienced at Michigan Steel is now much closer to the very low level ofvariation at Alpha Motors Assembly. In addition the dramatic reduction in shippingcomplexity and lag time between the creation of a defect and its discovery at thenext downstream process has caused defects and shipping errors at the upper end ofthe value stream to converge on the low levels at the lower end of the value stream.

66

Compressing the Value Stream

So far we have left every value creating activity in its original place, changing

only information flows and shipment frequencies while eliminating unneeded

warehouses and cross-docks. Although the value stream team has cut the

number of steps from 73 to 39, reduced throughput time by 64%, and greatly

damped demand amplification, much waste and long time lags remain.

Because it appears that mosc of the remaining waste and time are due to the

need to move the product between many facilities and over long disrances,

a logical next step is "value stream compression" to relocate and co-locate

value-creating activities so they can be performed faster with less effort.

What i s the log ic o f re loca t ion?

The first principle is simply that all manufacturing steps in the product

should be moved as close together as possible. Ideal ly this would even be

in the same room.

A second principle is that the closer this compressed sequence of activities

is to the customer - Alpha Motors Assembly in our example - the better.

The objective of lean thinking, after all, is to reduce cosrs and improve

quality while getting customers exactly what they want when they want it.

Remote manufacturing always works against this goal because it increases

response time once the customers' desires are known. The unavoidable

consequence for remotely located manufacturers who are determined to

immediately serve their customers is to create inventories of finished units

produced to (usually inaccurate) forecasts. In the currenr global security

environment, where shipments across borders are subject to disruptions,

this is even more the case.

"Do it all in one place" and "locate that place next to thg customer" are

useful principles to get started. However, a critical third rule is necessary:

That if proximity should entail extra manufacturing costs (although the

reverse will be more common), these cosrs musr be weighid against the

value of the time savinqs.

PART VI: THE IDEAL STATE

These pr inciples in combinat ion suggest a very simple locat ion algori thm formost products:

1. I f the cusromcr is in a high labor-cosr counrry (e.g., the [J.s. , Japan, Germany)and needs immediate response to orders, and i f the product has relat ively l i t t lelabor content, conduct all of the manufacturing steps in close proximity and closeto the customer in the high-wage country.

2. I f the customer is in a high labor-cost countrv, is wi l l ing to wait for some shippinginterval, and the product is price sensitive, manufacture the entire product, fromraw mater ials to f in ished goods, in close proximity in a low-cosr locale, shippingOnly the final goods. In our experience the correct location is almost always at alow-wage country within the region of sale. F-or example, Mexico for the fl.S.,China fbr Japan, Poland fbr Germany. Shipment of the finished product by rruck,or a short ferry ride, and across only one border can stil l permit response to thccustomer within a few days, whi le shipment by sea from another cont inentrequires wecks.

3. I f the customer in a high labor-cost country needs immcdiate response but thcproduct has high labor content, do a careful costing exercise to determine thecorrect location of manufacture. The best location might vary from a very low-wagesite in another region of the world, with the product even delivered by air, ro a newtechnology removing high-cost manufacturing labor in the high-cost counrry of saleand permitting the conduct of all manufacturing steps close to the customer.

4. I f the customer is in a low labor-cost country and scale requirements permit ,manufacrure the entire product - from raw marerial to finished goods - ingeographic proximity in that counrry.

As the wiper value stream teams looked at the si tuat ion and pondered these rulesi t became apparent that the best locat ion for an ic leal state in this case would beimmediately adjacent to the vehicle assembly plant in the high-cost country ( theL.f .S.) This was because the amount of direct labor content in the product wasactual ly very smal l , indeed only thir ty seconds at rhe wiper assembly plant and avanishingly sl ight amounr ar rhe stamping plant. (The number.of wiper assemblyoperators required had already been reduced from five in the Current State to threein Future State 2.) The team found that a small increase in direct labor costs fromrelocat ion of this assembly step from Mexico ro rhe t l .S. - even when tradit ionalcorporate overheads werc added to direct wage costs - would be more than offsetby a big reduction in shipping, inventory, and general connectivity costs.

68

- -

ldeal State Changes

The value stream team therefore created the Ideal State map shown on the

next page. Note that wiper assembly (inclLrding the blade-to-arm assembly stcp

previously conducted in Alpha's assembly plant) , paint ing, and stamping have

now been compressed into one room in a "suppl ier park" cln the si te of the Alpha

Motors assembly plant. A cheaper, low-speed stamping press has been introduced,

which we cal l a "r ight-sized" tool because i ts capacity is prt- 'port ional to the

requirements of this value stream. This press is also able to make both the ;rrimaryand secondary stampings for all of the other parts needed for the wiper assembly

(see thc schematic drawing on pages 12 and 13 showing these parts) and in very

smal l batches to minimize inventor ies and lead t imes. A mini paint booth - a

second right-sized tool - has also been designed and is located between the

stamping step and wiper assembly.

Bccause thc new wiper manufacturing module gets an electronic signal on what

to bui ld next as each vehicle leaves the paint booth in the vehicle assembly plant

(a 3-hour lead t ime) and because the t ime needed from the start of wiper assemblv

unt i l del ivery to the f inal assembly l inc is less than thc avai lable lead t ime, wipers

with high and low trim for vehicle models A and B can now be assembled to line

sequence. They are then placed in l ine-sequenced trays of 40 wipers and conveved

to the f i t point on the f inal assembly l ine every twentv minrrtes by a "water spider"

(a small cart pulled by a converted fork-lift). The water spider lo<-rp connects several

simi lar component plants adjacent to the Alpha f inal assembly plant, br inging back

empty trays and needed parts to the wiper assembly area on each circuit.

Ocs

PART VI: THE IDEAL STATE

Demand Arnpl i f icat ion

BETA BETA ALPHA ALPHAORDER PRODUCTION ORDER PROOUCTION

GAMMAORDER

GAMMAPRODUCTION

New Jersey1beel5ervice Center

EaetOrange,NJWiper Value Stream ldeal State

o.4 d.

70

WDearborn.Ml

/

%t - - J '

1.1d . (3161s . )

20 (6)

o.5 d.

O.8 d. (12O s.) 1

7 (2)

IIt



Alpha?roduction

ControlAlpha

MaterialsControl

Daily

AlphaDistribui;ion

Center

AlphaMotorsI--ELL

-l I-cE[_-l

@Gl-ffiful

Ouality and Delivery Scro€n

PART VI: THE IDEAL STATE 7 1

ldeal State Srrrnrn ar,y-

GurrentState

Total Lead Time


to total t ime)


to total steos)

l dea lState

44.3days

23,9daye

15.8daye

2.&days

o.oB% o.16% o.6% 1.5%

11% 15% 21% 27%

5 I 14 79

400 200 50 2.5

B B 3 1

7 7 5 1

5300 5300 4300 525

FutureState 1

FutureState 2

Inventory Turns



Delivery Screen(% defective shipments at thedownstream over lo defective

shipments at upstream end)


end over % change in demand a tups t ream end)

Product Travel Distance(mi les)

Dramat ic Changes

Throughput time from raw materials to customer has now been reduced by 94Vo t<tZ.t3 days,and practically all of the transport links, invenrories, and handoffs - the key drivers ofconnectivity costs - have been eliminated, from thc final assembler back through thewiper maker to the stamper and raw mater ials suppl ier. In addit ion, i t is hard to tel l whereone company leaves off and the next picks up the valuc stream bepause activities formerlvconducted by Alpha, Beta, and Gamma at locations thousands of miles apart are now beingconducted in continuous flow in one room located across the road fiom the customer.

72

Winners Need to Gornpensate Losers

As future state and ideal state maps are drawn up, it will quickly become

apparent that positive change is most likely if the team can find a way for

winners to compensate losers. ' l 'h is is because i t wi l l commonly be the

case that a downstream participant can get better value at lower cost if an

upstream participant leaves out wasted steps, implements leveled pull

systems with its suppliers, introduces more capable process technologies,

and relocates activities. However, even when everyone can see that

the incremental savings exceed the incremental costs of these

ini t iat ives, l i t t le is l ikely to happen unless upstream part ic ipants

are compensated by downstream beneficiaries for taking costly

actions that <,rptimize the wholc.

If i t were easily possible to compare total product cost before

and after the future state improvemen[s, compensation might be

an easier issue. Howevel traditional purchasing and accounting systems

are often incompatible bctween value stream participants and in any case

are poorly suited for calculating product costs for each product family.

Thesc systems typical ly require enormous amounts of data to al locate

overheads by product and they usually fail to calculate costs in a way

that al l part ic ipants wi l l accept as val id.

We propose keeping i t s imple by ignoring tradi t ional systems and instead

determining the incremental cost ( in some common currency unit) and the

incremental benefit (in the same currency unit) of each proposed change in

the value stream in future and ideal states. ' I 'h is is surpr is ingly easy in manv

cases and can change the focus of the value stream team from redressing

(or defending) the mistakes and inequit ies of the past to discovering

win-win-win alternatives ft-rr the future.

The problem of cross-f i rm compensat ion wi l l not be such an issue i f the

product being mapped is new and the course of the value stream is not

constrained by existing facility locations or even existing suppliers.

However, it will stil l be important to calculate connectivity costs for various

configurations of the value stream to see which one will actbally produce

the best combinat ion of low cost and rapid customcr rcsponse.

PART VI: THE IDEAL STATE 73

Timing the Leap to the ldeal StateLower-speed presses will be cheaper and more capable if used on new partdesigns, and a change in the raw marerial provider will be required as well.(Note that New Jersey steel is to be substituted for Michigan steel in rheIdeal State, to reduce shipping distance for steel coils from 500 miles andeight hours to 25 miles and one hour.) Therefore, the best time to leap to theIdeal state will be with the next product generation, when new processequipment wi l l be needed in any case.

The exercise of creating an ideal srate ro contrast with a business-as-usualstate should be conducted for every new product generation. This can leadto a very creative joint mapping of the ideal srate from the very start of thenext design, when the barriers to doing everything right are greatly reduced.

A F ina l R isk to Avo id

In developing the examples for seeing the'whole we have learned ofanother risk for the value srream team to avoid. This is ro turn the mappingexercise into a conventional cost study for a product family by trying ro mapthe flow of every part going into the product. when teams do this we'vefound that they lose sight of the key point. This is that the types of wasreexposed and the demand amplification discovered are also presenr in everyproduct family passing through all of the participant firms. The first purposeof the exercise is to raise consciousness about systemic problems and tospur the development of systemic solutions requiring better performanceby the functions, not to shave a bit of cosr out of one specific product andthen declare victory.

74

Achieving Future StatesValue stream maps at the macro-level are very useful for raising

consciousness about waste and the lack of customer responsiveness intoday's typical current state, a situation often invisible to value streampartners looking only at their own operations. However, if consciousness

is raised but no future stare is achieved the whole mapping exercise just

creates more corporate wallpaper - pure mwda.

How can you actually achieve future states when many departments

and firms must cooperate and no one person or firm is legally "in charge"?We have already suggested that progress is best made in a series of stepsbeginningwith the easiest. I f a Future State 1 can be achieved that reducestime and effort within each participating firm, this will give all of the value

stream partners the courage and incentive to go further.

Then, if Future State 2 can be achieved as well - addressing production

control problems to stabilize demand, remove noise, cut costs, and enhanceresponsiveness to the customer - the momentum for improvement will bemuch stronger. The prospects for successful introduction of the Ideal State,with its requirements for investment and relocation of activities, thenbecome much brighter.

Running the process in the opposite direction, beginning with a big leap toan ideal state, may be possible in some cases - particularly for entirely newproducts - and we certainly don't want to discourage value stream teams ina position to make rhis leap. However, in the great bulk of instances, smallsteps will be essential at the srart ro lay the groundwork for big leaps later.

PART VII: ACHIEVING FUTURE STATES

In our experience, Furure state 1 can be achieved in about three monthsafter completion of the Current Stare map. F uture State Z can be in placein six months after the achievement of Future State 1. Howeveq conditionswill vary and it may be more practical for the value stream ream ro beginimplementing Future state 2 even i f Furure state 1 is not completely inplace and stabi l ized. This is because many of the act iv i t ies involved arequite separate and can proceed in paral lel .

'I 'he timing for the ldeal State may range from "soon" (particularly for

new products) to "much later". The team in our example concluded thatthe new supplier park configurarion can be in place in four years, at thepoint that the nexr generation of vehicle Models A and B with redesignedwiper sysrems is introduced. Tiying to move faster would mean that Betaand Gamma would need to cont inue their remote operat ions for their othercustomers and would incur substantial costs for duplicate rooling andunderutilization of their existing facilities.

Even i f the precise t iming of the later srares is harcl to determine nowthe simple act of writing down all of the necessary steps and agreeing onspecific target dates for achieving specific steps has the highly useful effectof converting vague intentions and "no year" projects into concrete,trackable tasks.

76

The Value Stream Plan

We suggest that the value stream team develop a value stream plan for their

product family at the end of their initial walk, when the Current State map is

drawn. This exercise should only take a few days. If it drags on the odds are

very high that nothing wi l l ever be implemented. Just as in the case of lean

product ion, veloci ty is cr i t ical ly important in lean improvement act iv ir ies.

A value stream plan shows:

o exactly what your team plans to accomplish, step by step

. measurable goals for team members

o clear checkpoints with real deadl ines and responsible individuals

. the formula for sharing costs and benefits among participating firms

'I'his planning process will be familiar to you if you have had experience with

policy deployment or if you have already developed facility-level value stream

plans of the type shown in Part Y of Learning to See (and Part VI of Creating

Continwous Flow). However, it will be a bit more complicated because this plan

builds on the "Yearly Value Stream Plan" for each facility being developed at

the same time, as illustrated in Learning to See.

The wiper value stream team developed a simple value stream plan, as shown

on the next page.


?aul D oe, Beta; J oe baker, G amma:9 ally J ones, Steel 5 up plier

Product-FamilyBusiness Objective

Value StreamObjective

GOAL(measurable)

lmprove Wofitabilityonwipersfor Alpha,Deta,Gamma, +steel eupplier.

F91 *continuousflow

where poeeible inallfacilii"ies

*level pull within alllacilities

Leadt ime=23.9 dayslnventnryturfls=9Quality ecreen=2OO

F92

*level pullbetweenallfacilities

*trequent

repleniehmentloopsbetweenal l faci l i t ies

Leadtime=15.8 days

lnventnry turne = 14

Quality ecreen = 50

Delivery screen=3

Demand amplificationgcreen=5

'value streamcompreeeionbyco-locating allete?e adjacentto customer

Leadt ime=2.8 daye

lnvenlory turns =79

Quafity screen=2.5

DeJivery ecreen=1

Demand amplificationSareen = 1

YEARLY

OUARTERLY

2oo2

O Start A Complet ion

78

: :

\ 'ALUE STREAM PLAN

SCHEDULE

2()()3

SIGNATURES

5mith

Doe

baker

Jones

Operatione?urchaeing?C&LManufacturingEngineeringQuality

(ineveryfirm/facility)

ooA

A

Wipers for Alpha Models A+bO On target A Behind target


CONCLUSIONAt the end of this br ief breakthrough guide for achieving future and ideal srates we must

share a secret: You'll never actually achieve your ideal state ! It rurns out that there is alwaysmore waste to removc and that value for the customer can always be further enhanccd.

For example, wipers might some day be molded as a single piece in matching body colors,el iminat ing the need for the stamping, paint ing, and f inal assembly of considerable numbersof parts. If cycle times for these activities were at or below takt times for wipers on the final

assembly line and if changeovers from onc wiper color and specification to the nexr were alsoessent ial ly instantaneous (or at least within takt t ime), i t woLrld be possible to mold wipers tol ine secluence with total throughput t ime and value crcat ing t ime both shr inking to seconds.At that point, the "Ideal State" portrayed in this workbook will appear to be full of mwdal

However, there's a companion point that also seems to be a secret to manv managers. This isthat successive futurc states getting much closer to the ideal state can be achieved - by realmanagers in real firms building current product designs - in only a short period of rime evenwhen there is no "value stream dictator" giving orders. And even more can be accomplished

with the next generation of products, before machines and facilitics are locked in place.

The trick is to take a walk together so everyone can see the whole. Then estimate the "prize"

available to the group if the whole value stream can be optimized. Then devise a mutuallyacceptable way to split the loot if the current state "Bank of Muda" can be robbed. It won'thappen all at oncc and you'll probably never reach that huppy land of completely frictionless

cooperation but the challenge is to get started, gain some initial successes, and not look back.

As f i rms and departments learn to see together i t should also be possible to make your maps

ever more inclusive, eventual lv reaching al l the way from the customer's use of the product

through the life cycle back upstream to inchoatc matter before any processing. And wc believeit will be attractive to map wider and wider range of goods and services including officeprocesses, as many readers have already started to do with the micro-maps in Learning toSee. (For example, we at LEI have already heard from readers about mapping gold mining,

fish stick manufacture, postal sorting operations, insurance claims processing, the writing of

technical manuals for complex aerospace products, and visits to the doctor.) Bccause there is

always a value stream whenever there is a product (whether it 's a good, a service, or somecombinat ion), we are conf ident that consciousness wi l l cont inue to spread about the pcl tent ial

of value stream mapping.

Wc wish you the best in your endeavors and hope to hear about your problems and your successes.

About the Authors

Dan Jones

Dan is co-author of rhe Machine That changed the'world and Lean Thinking.He is a Senior Advisor to the Lean Enterpr ise Inst i tute (LEI), and Chairman andFounder of LEI's affil iate organization, the Lean Enrerprise Academy in the uK(www.lean.uk.org). He has long had an interest in mapping enrire value srreams andtook the lead in developing the examples presented in Chapte r Z of Lean Thinking.These began with the humble can of cola that requires 319 days to pass through sixdifferent companies and nine facilities across the world, firms and facilities thatcollectively conduct only three hours of value-creating activities before the colafinally reaches rhe cusromer.

Jim Womack

Jim is co-author of The Machine That Changed the'World and Lean Thinking andPresident and Founder of the Lean Enterprise Institute. He fin<is it hard not tothink about extended value streams including those involving healthcare, mobilitvfood, communication, construction, defense, and logistics.

82

APPENDIX A - Extended Value Stream Mapping lconsThe icons and symbols for current and future state mapping fall into three categories:

Material FIow, Information Flow, and General Icons.

Mater ial lcons

tl| .'--+ |

lhl| ----+ |-

ln INS_-?

|-lr-.---ILvdl-J

I Mon. I| + wed. l-lH

nA

3OO pieceslDay

Represents

Manufacturing Process

Outs ide Sources

Data Box

Cross-Dock

Warehouse

Plane Sh ipment

Tra in Sh ipment

Truck Sh ipment

Notes

One process box equals an areaof f low. Al l processes should belabeled. Also used for departments,such as Product ion Control .

Used to show customers, suppl iers,and outside manufactur ing processes.

Used to record information concerninga manufactur ing process, department,customer, etc.

Note frequency of shipments.



Count and t ime shou ld be no ted .Inventory

APPENDIX I

Material lcons

o o o o o o o o o

max.20 pieces

-FIFO*

Information lcons

+-

M i l k R u n

1o Expedited Transport

Supermarke t

Withdrawal

Transfer of control ledquant i t ies of mater ialbetween processes ina "Fi rst-l n-Fi rst-Out,,sequence.

Represents

Movement of product ionmater ia l by PUSH

Movement of f in ishedgoods to the customer

Represents

Manual Information f low

Electronic Information flow

Information

Notes

Mater ia l tha t i s p roduced andmoved forward before the nextprocess needs i t ; usual ly basedon a schedu le .

A control led inventory of partsthat is used to schedule productionat an upstream process.

Pu l l o f mater ia ls , usua l l y f roma supermarket.

Indicates a device to l imit quant i tyand ensure FIFO f low of mater ialbetween processes. Maximumquanti ty should be noted.

Notes

For example : p roduc t ion schedu leor sh ipp ing schedu le .

For example via electronic datain te rchange.

Describes an information f low.

oo

s

84

I

t

Information lcons Represents

Produc t ion Kanban(dotted l ine indicateskanban pa th)

Wi thdrawal Kanban

Signa l Kanban

Kanban Post

Kanban Ar r iv ingin Batches

Load Leveling

Control Center

Phone

Orders

Represents

Operator

Notes

The "one-per -conta iner " kanban.Card or device that tel ls a process

how many o f what can be produced

and g ives permiss ion to do so .

Card or device that instructs themater ial handler to get and transferparts (i.e. from a supermarket to theconsuming process) .

The "one-per -ba tch" kanban.S igna ls when a reorder po in t i sreached and another batch needs tobe produced. Used where supp ly ingprocess must produce in batchesbecause changeovers a re requ i red .

P lace where kanban are co l lec tedand he ld fo r conveyance.

Tool to intercept batches of kanbanand leve l the vo lume and mix o fthem over a per iod o f t ime.

Notes

Represents a person viewedfrom above.

, / t \ \ t- I I I l r r

I t r ' t . , I

T

t

I

t

General lcons

APPENDIX A

Appendix B: Alpha Motors Assernbly plant, west orange, NJGurrent State - February 2OO2

\

Receiving

E|?aso.TX

\

"'?A+ usKitting Wiper5ub-aeeemblyI'T-I

2560 AzAODWipers

160 A8 0 8

Wipere

AlphaCrosb-Dock

--F------>

*

l92OWiperslDay12bO A6406

16WiperslTray

32O Wiperel?allet4 A2 6

Alpha 1alesOrderbank

Dearborn.Ml

960WiperslDay640 A3200

l xDay

2h.

1

Final Aeeembly&Test

CIT = 60 sec.CIO = O,29hif ts

60 e.

12h.

1

2h.

1

AlphaDist..Center

---)(-*.\_>

*

FACILIry9UMMARY

RM 50 h.wt?2h.F G 1 4 h .2Shi f ts

SDaye

E ? E = l D a y

Defects = 5 ppm

Defeciive =1%

1 (1)

APPENDIX B

Appendix B: Beta WipersGurrent State - February

Assembly Plant, Reynosa, Mexico20o2

GammaSaamping

Tonawanda,NY

Har l ingen,TX

@| ZOothox I

I t,ooonau"t I| 1Z?al le ts I

ril--lDuv I I

br-'dvReceiving Assemblyl

QvtA=eP ryAsf

Aseembly2

q9r zN-43242248Wipers

25,600 A12,8000

?arts

43242249Wipers

4324224b?arts

ClT = 10 sec.

CIO =5min.

Uptime = 95%

29hifts

E?E = l Day

CIT =19 e"" .

E ? E = 1 D a y

4.2h. (1o s.) 4.3h. (1o e.)

aa

o,zh. 48.Oh.8.2h.

3 (1)

B.O h.

3 (1)

B.Oh.

Beta HQ?roduction

Control

MRP

AlphaMotors

Detroit.Ml

Harl ingen,TX

hI

weetrv I

Y

AssemblyS

QrryA\il

43242249Wipers

lnspect, &Test

Q2z

4.5h.

ryAsf640 A3 2 0 0Wipers

12,O h.

CIT =1O sec.

ClO =5 min.

Up t ime=95%

2Shi f ts

E ? E = 1 D a y

B.O h.

4.2h. (1o e.)

l92OWiperelDayzAO A640b

4?allets AZ?al le tsA

FACILIry9UMMARY

RM 56 h.wt? 41h.F G 1 2 h .2Shi f ts

SDays

E ? E = 1 D a y

Defects=4OO p?m

Detective = 5%

CIT =20 eec.

3 (1)

1

3

1

APPENDIX B

Appendix B: Garnrna starnping Assembly plant, Tonavvanda, NyGurrent State - February 2OO2

Receiving

"zA\+336 coilg

1tamping2

fT]

25,600 A12,800 b

parae

DearbornHeighte,Ml

CIO = th.

E?E =1week

4.4h. (1 s.) 4.6h. (1O s.)

10 m. 14 d.

Gamma HQ.?roduction

Control

Cleveland,OH

?lant,?roduction

Control

MRP

Shipping

9etaWipereWarehouse

97AM?ED?4R79

2OOlbox

1600l?allet

12?allets

FACILIry9UMMARY

RM336h .

wtP 110 h.

FG4Ah .

SShifts

SDays

E ? E = $ Q 2 y g

Defects=2OOO?pm

Defective = 6%

25,600 A12,800 D

?aft,e

48h.

Tonawanda.NY

Clean,?aint&Bake

4.5h. (312c. e.)

5 (1)

W25,600 A12,800 B

Parts

4Bh.

2 xWeeklythip5chedule

CIT = 52min.CIO = 3O min.

Uptime = 85%

E?E=1week

?roduclion _ 20.6LeadTime days

?rocessing _ 3,1$jTime gec,

3 2

APPENDIX B

Appendix G: Alpha Motors Assernbly plant, west orange, NJFuture State - May 2OO2

betaWipers

AlphaCross-Dock

El?aso,

Wiper1ub-Adoembly

Alpha9alesOrderOank

AlphaDist,. Center

960lday

640 A

320b

1/r//

|_LJ-_--.lt -d l -J

l xDay

%

,F

2h.

_F IFO*

12h.

60 s.

FACILITY9UMMARY

RM 15 h.wt? 2h .F G 1 4 h .29hi f ts

SDays

E ? E = l D a yDefects = 5 ppm

Delective = 1%

Final &,eembly

11

2 (1)

V box ,.)V t / ' a

i ---------------- 'IIIl

Y

Appendix G: Beta wipers Assernbly prant, Reynosa, MexicoFuture State - May 2OO2

?tamped?aris

rNr .....1Tt -

,, &the Cell+

J I A9SEMFLY

4-- I ---1 I lo\e

ll

Tonawanda.NY

BetaWarehouse

Harl ingen,TX

A9SEMDLY CELL

=1OO%

= 30 sec.CIO = 5 min.

25hi f ts

O.1 h. (3O e.)

16 h.

g4

beta HQ?roduction

Control

Harlingen,TX

beta?lant?roduction

Control

Detroit,Ml

Harlingen,TX

D-

toxoXl ->%

12 h.

AlphaMotorg

1920 tNiperelDay

12BO A6404

16WiperslTray

32O Wiperel?allet

4?allets A

Z?al le t 'sO

RM 16 h.

wl? oh.F G 1 2 h .

Defecfts= 4OO ppm

2

APPENDIX C

Appendix C:Tonavvanda,

Gamma Stamping Assernbly PlantNY Future State - May 2OO2

GammaHQ?roduction

Control

Cleveland,OH

9tampingl

ClT - l sec.

CIO = 3 min.

Uptime = 95%

thifts =2

E?E= 4xshi f t

iwa ' t

9t amping 2

CIT =1O sec.

CIO = 3 min.

Uptime = 95%

thifts = 2

E?E= 4xshi f t

DearbornHeights,Ml

Tonawanda,NY

10 m.

2h. (1s. ) 2h. (1O e.)

96

BetaWipersHQ

?roductionControl

thipping

OetaWipersWarehouse

STAM?ED?A'R15

2OOl6ox

1600l?allet,

12?allets

FACILITY9UMMARY

RM 4A h.

wt? 62h.

FG 12h .

SShifts

SDays

7 y g = 1 D a y

Defecl,s=2OOOWm

Defective = 6%

Clean,?aini &6ake

CIT = 52 min.

CIO = 5 min.

Uptime = 95%

Shifts = 2

E?E = shift,Trocessing _ 2131

Time gec.

13O m.(312O e.)

A P P E N D I X C

{-I

Feedbackwe've tried to make this workbook easy to use, wirh detaired instructions,simple illustrations, and clear examples. However, we know fiom years ofexperience that applying even the simplesr concept in a complex organizationis difficult. So we need your help. After you have tried implementing thetechniques described in this workbook, please mail, fax, or email comments to:

Lean Enterprise Institute, one cambridge center, cambridge, MA 0zr42 usAtrax:617-871-2999. Email: [email protected] o Reach us ar: lean.org

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Date post:	25-Oct-2015
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Womack - Seeing the Whole - Mapping the Extended Value Stream

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