Value Stream Mapping From Tool to Management Practice

Value Stream Mapping: From Tool to Management Practice Webinar with Gemba Academy April 23, 2014

Housekeeping • Questions/Polls – Please ask them! – Use Webinar Panel Question Box, or – Email to ron@gembaacademy. com • Slides & Audio – Enlarge screen as desired – Master volume on computer – Slides: • Recorded Version – This webinar will be available online within 3 days – Presentation notes will be shared in PDF format – An email will be sent once it’s ready • Tweet your questions and comments with #Gemba. Webinar

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Wherever there is a request and a deliverable, there is a value stream. © 2014 The Karen Martin Group, Inc.

§ Coach / Facilitator / Consultant / Trainer: Lean transformation & business performance improvement in all industries. § Teacher: University of California, San Diego § Author & Speaker: Karen Martin, President The Karen Martin Group, Inc. 2013 Shingo Prize winner! www. ksmartin. com/subscribe 5

www. ksmartin. com/VSM

You will learn… • Use value stream mapping as an organizational transformation tool • Properly scope and plan for a value stream mapping activity • Obtain leadership consensus about the future state design • Create and execute a highly effective Value Stream Transformation Plan

Value Stream Defined Value Stream: All of the activities required to transform a customer request into a good or service. Process Customer Request Process Customer Receipt First defined in The Machine That Changed the World, James Womack, Daniel Jones, & Daniel Roos, 1990. 8

Value Stream Mapping’s Roots • • • Value Stream Flow Pull Perfection 1996

Value Stream Mapping Progression Mike Rother & John Shook, 1999 Beau Keyte & Drew Locher, 2004 Karen Martin & Mike Osterling, 2014

Why We Wrote the Book • Too many organizations use VSM solely as a work design exercise • Too many organizations use VSM to make tactical vs. strategic decisions • Too many organizations map with an inappropriate team —or no team at all • Too many maps are process maps or contain no metrics • Too many organization miss out on the behavior and culture shifting benefits of value stream mapping

Which do you prefer? OR

Basic Current State Value Stream Map: 3 Sections 1 2 3 © 2014 The Karen Martin Group, Inc. 13

Visualize the entire cycle of value delivery on a single sheet of paper © 2014 The Karen Martin Group, Inc. 14

Value Stream Performance Projected Results Current State Projected Future State Projected % Improvement Lead Time 17 months 7. 5 months 56% Process Time 600 hours 450 hours 25% (22 FTEs) Rolled % Complete & Accurate 0% 21% > 2, 000% On-time delivery 13% 90% 592% 25/project 12/project 52% Metric (PO to shipping) # Internally-produced Change Orders Freed Cash flow $25 M per year

Common Failing: Approaching VSM Mechanistically

Proper Value Stream Mapping Builds Your Organizational Muscles

Value Stream Mapping is a Strategic, Leadership-Heavy Activity

Value Stream Maps: Strategy Before Tactics Where am I? Where do I want to go? Which route should I take? I-80 option ? ? ? I-40 option I-70 option

Value Stream Mapping Executing Transformation Plan © 2014 The Karen Martin Group, Inc. Making Specific Improvements 20

Value Stream Mapping Benefit: Seeing the Whole Value Stream Mapping enables a mapping team to get ABOVE the work © 2014 The Karen Martin Group, Inc. 21 21

VSM Aids in Developing Systems Thinking System Efficiency = Optimal Value Stream Performance Individual Efficiency = Sub-optimization 22

VSM Helps Break Down Functional Silos Function Support Value Stream © 2014 The Karen Martin Group, Inc. Customer Core Value Stream Customer Support Value Stream Customer 23

Work: Degrees of Granularity Macro Perspective • • • Value Stream Define strategic direction (“what”) Heavy leadership involvement Value Stream Mapping Process Micro Perspective Process • • Step • Identify the tactical “how” Heavy frontline involvement Metrics-Based Process Mapping 24

Value Stream Mapping Activity Phases and Timing And Repeat Prepare 4 Weeks Prior to Mapping Understand Current State Design Future State Develop Transformation Plan Three Consecutive Days Execute Transformation Plan Following Mapping 25

Charter: Critical planning, communication, and consensus-building tool & t a h W ? y Wh ? W o h W ? n he Available at www. ksmartin. com/downloads

Accountable Parties • Executive Sponsor – Typically VP or higher – Authority over significant portion of value stream (or strong relationship w/ peer group) – Ultimately accountable for results – Must attend briefings • Value Stream Champion – Oversee significant portion of the value stream – Heavily engaged in entire value stream transformation (own the transformation plan) – Member of mapping team – In small companies or those just starting out, the VS Champion and Exec Sponsor could be the same person. • Facilitator – Objective; no “skin in the game” – Skilled in both mapping/improvement mechanics, and high-level team dynamics.

Where should the “fenceposts” be? Function Activity Marketing Generates sales leads Sales Calls on and qualifies customers Customer Submits RFQ to sales Sales Reviews RFQ Estimating Generates quote Sales Approve quote Customer Accepts quote; submits a PO Sales Approves PO Customer service Creates SO; compiles spec package EE/ME design Designs product; generates BOM Customer Approves design EE/ME design Forwards design to SW dev Software Dev Writes code Purchasing/Planning Releases WO; schedules production Supplier (external) Delivers materials Production Manufactures & ships product Customer Installs equipment Field service Conducts 90 -day follow-up

Value Stream Scoping Diagram Defining Specific Conditions Catalog Capital Equipment Golden State Equipment, Inc. Configure to order Custom hardware Engineer to order Custom software New Product Development Both Catalog Spares & subassemblies Engineer to order 29

Who should be on the team, be on call, and attend briefings? © 2014 The Karen Martin Group, Inc. 30

Briefing #1 Purpose: Reduce resistance to future state design 31

Briefing #2 Purpose: Build consensus around future state design 32

Briefing #3 Purpose: Gain commitment re: improvement priorities, ownership, resources needed, and timeline. 33

Socializing the Charter • Conversation, not merely an email attachment. • To the entire workforce who will be affected by change. • Adjust the charter if new discoveries or concerns surface.

Basic Value Stream Map: Future State © 2014 The Karen Martin Group, Inc. 35

Value Stream Performance Improvement Projected Results Current State Projected Future State Projected % Improvement Lead Time 17 months 7. 5 months 56% Process Time 600 hours 450 hours 25% (22 FTEs) Rolled % Complete & Accurate 0% 21% > 2, 000% On-time delivery 13% 90% 592% 25/project 12/project 52% Metric (PO to shipping) # Internally-produced Change Orders Freed Cash flow $25 M per year

Confidential Content Removed

Tactical Strategic Improvement Roles Who? Accountability Tool Sr. Leaders “What has to happen” Hoshin Plan, A 3, Value Stream Mapping “How it will happen” Kaizen Events, Just-do- Middle Management Frontlines its,

Physically Post the Future State Map Physically Post the Transformation Plan

And Repeat…

Who Owns the Value Stream? 41

For Further Questions Karen Martin, President 858. 677. 6799 ksm@ksmartin. com www. bitly. com/VSMbk www. ksmartin. com/VSM Blog & newsletter: www. ksmartin. com/subscribe