Lean Manufacturing

Value Stream Mapping
by Sal Ganino

Many years ago, when I first got into manufacturing, I worked for a very large, international metals company. My first few years as an Industrial Engineer I spent doing time studies and product standard cost. I would determine how long it should take to make the product, then calculate the standard cost using the algorithms of the time; the number of pieces in the order increased by ten percent, the scrap allowance times the units cost (based on my time study). Next we added the set up cost, which included and allowance for set up scrap (usually ten to twenty pieces).

Once I had finished with my cost development work, the Cost Accountants would add an allowance for packing and internal handling, and then an allowance to cover any other indirect costs, and finally an allowance for general, sales and administrative expenses. The sales people would in turn add the profit they wanted to make on this product and, voila! We had our selling price.

Today it just doesn’t work like that. Today, the market sets the selling price and if we intend to sell in that market and make profit, we have to learn how to make some of those costs go away, costs that are the product of one or more of the eight deadly sins of operations waste:

1. Over-production
2. Waiting
3. Transportation
4. Non-value added processes
5. Excessive inventory
6. Defects
7. Excessive motion
8. Under-utilization of our people

The problem for most of us is that we are so close to all these wastes that we can’t see them.

Value Stream Mapping is a variant of the old flow charting and the more recent process mapping. It’s a graphic tool for identifying “non-value-added” activities within a process. This process allows us to view the entire operation, from beginning to end – from customer all the way around and back to the customer. Where flow charting and most other earlier tools concentrated on one process at a time, forcing us to sub-optimize each process, Value Stream Mapping is meant to cause change by streamlining the process, removing queuing, movement, delay and other activities for which a customer is unwilling to pay. A Value Stream Map describes how material and information actually move through the process.

It is best to develop the map through a focused team activity. The five step process of developing a Value Stream Map generally takes about two days. The first day the team will focus on developing the Current State Map; this map is a snap shot of the process as it exists in a moment of time – that day.

The five-step process includes:

1. Develop Product Families
2. Develop a Current State Map
3. Develop a Future State Map
4. Develop the Implementation Plan
5. Implement the Plan

Select a team of people, some totally familiar with the product and all the processes of producing them, but not all. It’s common for the teams to pick a particular product or family of products to follow through the value stream. Most companies, no matter how much we want to believe that each part we make is different from the rest, have parts and products that fall into families; groups of products that pass through similar processing steps and over common equipment in their downstream processes.

Starting at the back of the plant, (the shipping function) work backwards, filling in all the operations required to produce the family of products. Record how information flows into, within, and out of the process. After all the information is recorded on the map, it’s time to get some information about the products in our family of parts. Gather as much information about the demand for these product as is available; data can be collected through a number of different channels. Some of the data that should be collected includes:

• Cycle times
• Changeover of setup times
• Number of people involved
• Quantity of units in Work-In-Process inventory at each workstation
• Downtime
• Current batch sizes

Once we have these families of products, we’ll need to develop the Current State Map. This is a look at the entire operation from beginning to end. But here we don’t need a floor plan drawing and a whole bunch of drawing equipment, all we’ll need is a blank piece of paper, a pencil and an eraser. No need for fancy artwork; represent each operation with a box. Place the title of the operation in the top of the box and the number of people required to perform the operation at the bottom. Draw another box under the first one, and record the Cycle Time per piece at this operation, the setup or change over time, the percentage of up time experienced by the equipment, and any information you feel would be important.

Between each operation we’ll place a small triangle, point up, to represent the storage of parts; Work-In-Process inventory. Record the amount of inventory present. Remember, this is a snap shot of the operation - don’t look for an average amount of WIP. What you see is what you record.

Develop a daily requirement for these parts, and dividing each inventory quantity by this number will determine the number of days of work we have at each work station. The factory lead time or customer promise lead time is the summation of the number of days at each work station. After all, nothing new can get out of the factory until all this material has preceded it.

Next we’ll need to develop a Takt time for this family or group of parts. Takt is the German word for the baton the orchestra conductor uses to keep time for the orchestra. Thus, Takt Time is “Beat Time,” “Rate Time,” or “Heart Beat.” Lean Production uses Takt Time as the rate or time that a completed product is finished. Takt Time is calculated by dividing the available production time by the number of pieces required during that time period. If you have a Takt Time of two minutes, that means every two minutes a complete product, assembly or machine is produced.

Now that we can see the current state of the process from end to end, we can begin to design a future state that permits production of this family of parts at Takt Time with as little inventory is possible.

Avoid the common pitfalls in developing the improvement map (Future State). In organizations where high volume production is prevalent, the team tendency might be to focus on cycle-time reduction. Years of training in engineering and business encourages us to focus on these types of activities and, as a result, we have become very good at targeting and improving individual value-added activities. But, product or parts made in excess or faster and sooner than the downstream customer can use them, is wasteful; consuming both time and material. It is not uncommon to find that about 95% of the total time the product is in the value stream is spent on performing activities that don’t add value.

Value Stream Mapping is a powerful tool that can help an organization learn how a process looks from its customers’ perspective. As employees begin to understand the upstream and downstream activities and appreciate the importance of their roles in the overall process, continuous improvements become a way of life.

Value Stream Mapping has resulted in companies improving output per employee by 50% and more. Realizing inventory reductions of hundreds of thousands of dollars, lead-time reductions by up to 75%, reduced floor space requirements by 50%, and by pointing to long, inefficient setup times, has resulted in setup times being reduced from hours to minutes. How would this type of efficiency impact your bottom line?