How To Optimize Your Value Stream

How to Optimize Your Value Stream

Value streams need to be frequently evaluated. Even if a team thinks they have created the perfect value stream, they will quickly find that it can always be improved – steps without adding true customer value can be removed, and the entire process can be more streamlined.

Value stream optimization is done through value stream mapping (VSM) – a process designed to analyze, manage and improve any process with repeatable steps. VSM originated in lean manufacturing and has since been successfully utilized in Lean practices across industries.

This blog post will describe the steps required to map your value streams and optimize them for fast and error-free value delivery to your customers.

What is value stream mapping?

In short, value stream mapping serves to analyze and improve the material or information flow required to create value for customers. This aspect of value stream management looks at the value stream process as a whole instead of individual steps or tasks.

Even though it was created in manufacturing, VSM can be applied to any industry.

Here are some examples of how this optimization process can add to the continuous improvement of a range of organizations:

  • Supply chain management – VSM can eliminate expensive delays and prevent stock-outs.
  • Manufacturing – VSM can improve the production flow, as well as reduce waste.
  • Service – VSM can streamline processes to produce quality services faster, both to external and internal customers.
  • Healthcare – VSM can improve patient flow and ensure that the required medical supplies are available whenever needed.
  • Information technology – In software delivery, VSM can improve the flow of information between departments while also ensuring that any code issues are identified and fixed promptly.

Who benefits from value stream mapping?

The first and most important person to benefit from this endeavor is, of course, the customer. The customer who will gain from faster delivery of their order or service and increased product or service quality.

Other people who can significantly benefit include various team members, managers, executives, stakeholders, and even your organization’s shareholders.

There are various benefits of value stream mapping, including:

  • Decreased waste – Any activity that does not add actual customer value can be eliminated.
  • Decreased lead time – Streamlining production and business processes will allow faster and more efficient creation of value.
  • Increased productivity – Since any steps that do not add customer value will be eliminated, this will free up time for other tasks and processes. This can result in increased daily output or weekly/monthly revenues.
  • Improved quality standards – Every step of the value stream is carefully examined through VSM, allowing for the identification of areas with room for improvement. This leads to creating a stream that is both faster and more reliable in terms of its final product or service delivery.
  • Increased customer satisfaction – Customers can receive what they purchased in a more timely manner – this can be the difference between getting your product to market first or coming in second.
  • Increased employee morale – Employee satisfaction is directly linked to customer satisfaction, which is greatly improved through VSM. Therefore, employees will feel much happier when they know that their work contributes toward the increased delivery speed of products or services.

The Value Stream Mapping Steps

There are eight steps involved in VSM. Here is how to optimize your value stream most efficiently.

1. Define the problem

Before you set out to map your value stream, you need to understand what makes the current value chain inefficient. This means identifying the problem that needs solving and defining who this solution is for (your customer).

In order to do so, ask yourself:

  • What are we trying to achieve?
  • What pain points or issues am I looking at addressing through VSM?
  • What are the main benefits to our customers or company in doing so?

Having a clear understanding of these questions will make it easier for you and your team to complete all subsequent steps. This primary problem should be your focus throughout the mapping process.

2. Assemble a team

Who will be in charge of VSM? The answer depends on who can make the changes that might result from the activity. If the changes require executive decisions and permissions, then a manager or director would be a good candidate for being on the team. If the changes you need to make are on the lower, tactical level of the organization, then it’s best if there are no managers in the mix.

Ensure that all team members are cross-functional and have an excellent working knowledge of how their area interacts with others in the value stream.

Involving those affected by potential changes is crucial as they will have more information about what might work best – after all, they know their job better than anyone else.

There shouldn’t be too many people on the team. 6-10 people is a good number as more than that might result in communication problems and wasted time.

3. Limit the scope

Based on the problem statement you defined in step 1, determine what needs to be included in the value stream mapping. It may not be the entire value stream top to bottom, so focus on the areas of your organization that will benefit most from process improvement. Limit the VSM scope to the places where the pain points are and work from there.

4. Map the value stream selection

Once you have your problems, team, and value stream focus areas to work on, it is time to start mapping the process steps. This is a collaborative activity, and the whole team must be involved.

Define each step in the value stream. Depending on the process being mapped, defining the steps can take several hours or several days.

Analyzing the mapping as the team goes is also important. This can be done several times until everyone agrees that nothing is missing and all steps are there.

5. Current state value stream map

The result of the previous step is a value stream map that shows the current state of your process.

Once you have that, it is time for value stream analysis. Look at each step you’ve mapped out in detail and determine how long it takes, what functions are being performed within that time frame (who does them), why they are done this way instead of another, etc.

Look for ways to increase efficiency through standardization of steps, worker training programs, tools and technologies that can help with process automation, etc.

Study the current state value stream map against your company’s strategy – does it align? If not, now is a good time to make adjustments where necessary.

Once you are satisfied with the results of this analysis, you are ready to move on.

6. Design the future state map

All the previous steps should have helped you precisely identify how the value stream needs to be changed to achieve your goals.

Outline what will change, and create a value stream map that shows how it should look after these changes are implemented.

In most cases, this step can also help you identify areas where standardization of work is possible across departments or with external partners – make sure to take advantage of it.

When you are finished, your future state map should be a clear guide for everyone involved in the process as well as those who need to work with these steps externally – suppliers and customers alike.

7. Validate the future state map

Validation is required to ensure that your future state map does indeed achieve the goals you set for it.

Your team should be open to feedback from everyone involved and be prepared to make adjustments where necessary.

Does the future state map solve the problem statement? Does it achieve the company’s strategy? Does it align with customer needs and expectations?

Study your process mapping against these questions to determine whether or not it will be helpful, and adjust accordingly.

8. Implement the future state map

Finally, after everything is said and done, you are ready to implement the future state map.

After implementation, make sure that you follow the relevant KPIs to determine whether or not the changes you made were successful.

This includes internal flow metrics, such as production time reduction and product quality improvement, and external indicators like customer satisfaction levels. If these do not increase noticeably, it may mean that your future state map was unsuccessful at achieving its goals for one reason or another. In this case, it is best to go back and re-evaluate your current state value stream map to identify the issue so you can fix it.

It is important to remember that in Agile, nothing is set in stone. You should expect to constantly change your future state map throughout the project, based on your feedback from all stakeholders.

Conclusion

Value stream mapping is a tool that enables companies to optimize their value delivery process for fast results. It will help achieve a sustainable competitive advantage while minimizing waste and maximizing customer satisfaction.

This blog post described the steps required to map your value streams and optimize them for fast value delivery to your customers.

If you’d like to know more about implementing VSM in your organization, please reach out to The i4 Group. We will be happy to help with any questions you may have.