Value Stream Mapping

Array Architects
January 16, 2014
 Agenda
1. What is a value stream? What is value stream
mapping?
2. The purpose and benefits of value stream
mapping
3. Structure and focus for our three days
 Value Stream Defined
Value Stream: All of the activities required to transform a
customer request into a good or service.

Process Process Process

Customer Customer
Request Receipt

First defined in The Machine That Changed the World,

James Womack, Daniel Jones, & Daniel Roos, 1990.
3
 Value Stream Mapping’s Roots

• Value
• Value Stream
• Flow
• Pull
• Perfection
1996
© 2015 The Karen Martin Group, Inc. 4
 Value Stream Mapping’s Roots

Mike Rother & John Shook Beau Keyte & Drew Locher Karen Martin & Mike Osterling
1999 2004 2013

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

© 2015 The Karen Martin Group, Inc. 5 5
 Work: Degrees of Granularity
Macro
Perspective Value
• Define strategic Stream
direction (“what”)
• Heavy leadership
involvement
Micro
• Value Stream Process Process Process Perspective
Mapping • Identify the
tactical “how”
• Heavy frontline
involvement
Step Step Step • Metrics-Based
Process Mapping

6
 VSM Helps Break Down Functional Silos
Function Function Function Function

Support Value Stream Customer

Core Value Stream Customer

Support Value Stream Customer

© 2014 The Karen Martin Group, Inc. 7

VSM Aids in Developing Systems Thinking

System Efficiency = Optimal Value Stream Performance

Individual Efficiency = Sub-optimization 8

 VSM Enables an Org to Get Above the Work

© 2015 The Karen Martin Group, Inc. 9

 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
 Basic Current State Value Stream Map

1
Information
Flow

2
Work Flow

3
Timeline

11
 Basic Value Stream Map: Future State
1
Customer

IT interface

Standard IT-1 IT-2

work
Error Cross-
proof Modified train
approvals
2 Cross- 3 Standard 4
Process 1 train Process 2 work Process 3

Function A Function C Function E

1 items 5 5 items 3 10 items 4
LT = 1 days LT = 2 days LT = 0.5 days
PT = 10 mins. PT = 120 mins. PT = 30 mins.
%C&A = 99% %C&A = 95% %C&A = 95%

1 days 2 days 0.5 days Total LT = 3.5 days

10 mins. 120 mins. 30 mins. Total PT = 160 mins.
Activity Ratio = 9.5%
Rolled %C&A = 89.3%

© 2015 The Karen Martin Group, Inc. 12

 Value Stream Transformation Plan
Value Stream Product Y Scheduled Review Dates
Executive Sponsor Jim McMahon 2/10 + bi-weekly Thu 10 am
Value Stream Champion Sally Brooks
Value Stream Mapping Facilitator Karen Martin
Date Created 1/5/2014
Kaizen Exec. Planned Timeline for Execution
Improvement Objective / Hypothesis Proposed Countermeasure Owner Status
Burst # Method * J F M A M J J A S O N D
Create procedure/train GS service engineers to
1 properly feedback suggestions to engineering.
PROJ Steve 0%

Confidential Content Removed

Create bulletin re: standardized headplate
2
design to eliminate flange orientation.
PROJ Steve 100%
Create visual "milestone" timeline to
3
educate customers.
KE Bruce 50%
Define technical info needed from
4
customer and when.
KE Bruce 50%
Socialize new criteria for engineering,
5
quality, & purchasing involvement.
PROJ Jessie 100%
Revise standard Ts & Cs to incorporate time limit
6 for customer approval for final payment.
PROJ Sally 100%
Error proof P.O. info (correct specs, ship to,
7 etc.); notify customer re missing info and KE Jessie 0%
drop dead date.

8 Create criteria for LOI acceptance. PROJ Mike 100%

9 Add initial project release in SF. JDI Jessie 50%

Resocialize existing customer-requested
10
CO procedure.
PROJ Steve 80%

11 One piece engineering flow PROJ Steve 10%

12 Move to one release (pump & systems) PROJ Bob 0%

Revise proposal template to limit time to 4
13
revisions.
JDI Jessie 100%

14 Standardize WPS/PQR from suppliers. PROJ Marcia 25%

Create commodity management team &
15
supplier SLAs.
PROJ Tom 30%
Create trigger to release (BOMs) for
16
purchase.
KE Marcia 50%

17 Create pull signal for invoicing. PROJ Sally 50%

Agreement
Executive Sponsor Value Stream Champion Value Stream Mapping Facilitator
Signature: Signature: Signature:

Date: Date: Date:

* Execution Method = JDI (Just-do-it), KE (Kaizen Event), or Proj (Project)

 Value Stream
Mapping

Executing
Transformation
Plan

Making
Specific
© 2015 The Karen Martin Group, Inc.
Improvements 14
 Value Stream Mapping Activity
Phases and Timing
Repeat

Understand Design Develop Execute

Prepare
Current State Future State Transformation Plan Transformation Plan

4 Weeks Prior Following

to Mapping
Three Consecutive Days
Mapping

© 2015 The Karen Martin Group

 Improvement Roles
Who? Accountability Practice / Tool
Strategic

Sr. Leaders “What has to happen” Hoshin Planning,

Value Stream
Mapping
Middle
Management
Tactical

Frontlines “How it will happen” Kaizen Events,

Process mapping
Just-do-its,
and Projects
© 2015 The Karen Martin Group, Inc. 16
 Basic Current State Value Stream Map

1
Information
Flow

2
Work Flow

3
Timeline

17
Three Places WIP Can Accumulate

18
 Lead Time vs. Process Time

Lead Time (LT)

Work is Idle
Work is Idle Process Time
Work (PT) Work passed to
Received next process or
department
Lead Time = Elapsed time; Throughput time; turnaround time
Process Time = Touch time; work time; cycle time
© 2015 The Karen Martin Group, Inc. 19
 Measuring Quality:
Percent Complete & Accurate (%C&A)

Customer

Process Process Process Process

1 2 3 4

© 2014 The Karen Martin Group, Inc.

 Future State Design Questions
• General questions
– What are the problems or opportunities you wish to address?
– What does the customer truly value?
• Look at:
– Touch points
– Delays
– Sequencing & pacing
– Variation management
– Technology
– Quality
– Labor effort
– How to manage the value stream & monitor performance
© 2015 The Karen Martin Group, Inc. 21
 Value Stream Transformation Results
%
Metric From To
Improvement
Timeline Lead Time 4.0 days 1.3 days 67.5%

Timeline Process Time* 59 minutes 48 minutes 18.6%

Activity Ratio 3.1% 7.6% 145.2%

Rolled % Complete &

30.5% 65.0% 113.1%
Accurate

Staff Turnover (annual) 100% 0%

* Reduction in staff ‘s PT frees

enough capacity to earn add’l Surprise
$500K in annual revenue. discovery!
Value Stream Maps Help Visualize Problems

23
 Rules of Engagement
1. The team starts and ends the day together; begin and end breaks together.
2. No interruptions or distractions – 100% focus; phones on silent; no email;
no texting.
3. When walking the value stream, approach with curiosity, humility, and
respect for the people doing the work.
4. Seek the wisdom of ten instead of the knowledge of one.
5. Use creativity before capital.
6. Finger-pointing and blame has no place: “It is what it is.”
7. Respectful disagreement is encouraged.
8. No silent objectors; don’t leave in silent disagreement.
9. One conversation at a time; no side bars.
10. What’s said in the room stays in the room.
11. Ask Why? Why not? What if?
12. Ban “Can’t” and “No, because…” from your vocabulary.
13. Think holistically (across the value stream) vs. in silos.
© 2015 The Karen Martin Group, Inc. 24
Charter: Critical planning, communication, and consensus-building tool
Value Stream Mapping Charter
Scope Accountable Parties Logistics
Executive
Value Stream Value stream being improved Required: typically VP or C-level 3 days typically; consecutive
Sponsor Event Dates
is best; 6 hrs per day
Specific What circumstances are included and excluded? Value Stream If needed—often director or & Times
minimum; 7 or 8 hrs is best
Conditions (e.g., type of customer, geographic location, etc.) Champion manager level
Demand Rate How many times is this done per wk, qtr, mo, or yr? Required: skilled, objective person Base-camp On-site, ample wall space,
Facilitator
Trigger What initiates the process? leading the activity Location quiet/private location
First Step Task on first process block Logistics Meals Always a nice touch; keeps
Not always needed
Last Step Task on last process block Coordinator Provided the team from wandering
Boundaries & Briefing List the the people that are Aids in consensus building
What is the team NOT authorized to change? Briefing
Limitations Attendees required to attend the briefings (**) and organizational learning.
Dates &
Improvement Time ** required and those whose attendance is Typically the last hour of the
Typically 3-6 months Times
Frame *optional optional (*). day.

Current State Problems & Business Needs Mapping Team

1 What's driving the need for improvement? Function Name Contact Information
2 1 Leadership-heavy
3 2
4 3
5 4
Measurable Target Condition 5
1 Reduce <defined metric> from X to Y (Z% improvement). 6
2 Increase <defined metric> from X to Y (Z% improvement). 7
3 8
4 9
5 10
Benefits to Customers & Business On-Call Support
1 How will the business, internal and external customers, and Function Name Contact Information
2 internal and external suppliers benefit from value stream improvement? 1 SMEs that may not be needed f ull time
3 2
4 3
5 4
Relevant Data Agreement
1 What data is required to understand relevant current state isues. Executive Sponsor Value Stream Champion Facilitator
2 Examples: work volume & volume variation, process quality &
3 effectiveness, market trends, customer satisfaction, employee Signature: Signature: Signature:
4 engagement, financials, lead time, safety records, etc. Date: Date: Date:
 Value Stream Mapping Charter
Scope Accountable Parties Logistics
Executive
Value Stream Project delivery Carl
Sponsor Event Dates January 27-29, 2015
Specific Basic services with programming Value Stream & Times 8 am - 5 pm
Jonathan
Conditions (90% of core work) Champion
Demand Rate 310 RFPs per year; 85 projects per year (2014 data) Base-camp Array Philadelphia Conference
Facilitator Karen Martin
Trigger Client selects Array as a potential partner Location Room 1
First Step Array receives RFP from client Logistics Meals Light breakfast & lunch will be
Nancy Erb
Last Step 1st patient seen (in FS Array conducts the POE) Coordinator Provided provided
Boundaries & Briefing
N/A Briefing Jan 27 4-5 pm (invitees)
Limitations Attendees Regional VPs, Directors, and
Dates Jan 28 4-5 pm (invitees)
Improvement ** required PMs.
9 months to realize the future state design &Times Jan 29 4-5 pm (full firm)
Timeframe *optional

Current State Problems & Business Needs Mapping Team

1 Wish to be a thought leader vs. commodity provider Function Name Contact Information
2 Need method for improvement prioritization 1 Business Leader Carl Davis cdavis@[Link]
3 Desire to deliver higher value more efficiently 2 Interior Design Pat Malick pmalick@[Link]
4 Desire to work with/on higher profile clients/projects 3 Planning Noah Tolson ntolson@[Link]
5 4 Operations George Shmidheiser gshmidheiser@[Link]

Measurable From/To's 5 Design Kent Doss kdoss@[Link]

1 Increase # of projects completing at target multiplier from 54% to 80% 6 Project Management Adrian Hagerty ahagerty@[Link]
2 Increase # of new strategic accounts that become clients from 9 to 18 annually 7 Relationship Development Jeffrey Drucker jdrucker@[Link]
3 Increase win rate for strategic clients/projects from 48% to 75% 8 Architecture Jason Lee jlee@[Link]
4 9 Improvement Jonathan Bykowski jbykowski@[Link]
5 10 Construction Administration Marsha Whitt mwhitt@[Link]
Benefits to Customers & Business On-Call Support
1 Business - Increased recognition as a high-value partner Function Name Contact Information
2 Customers - deliver project more efficiently 1 Design Technology Robert Mencarini rmencarini@[Link]

3 Business - Increased profit margins 2 Business Development Jennifer O'Donnell jodonnell@[Link]

4 Staff - Improve project opportunities by improving client base 3 Marketing Ali Ellinger aellinger@[Link]
5 Business - Improve geographical presence in all markets 4 Quality Control / Assurance Joe Garity jgarity@[Link]
Relevant Data 5 Studio Director Joe Doherty jdoherty@[Link]
1 Sales effectiveness: RFQ conversion rate. Agreement
2 Financial: Target-to-actual Net Multiplier comparison. Executive Sponsor Value Stream Champion Facilitator
3 Client Quality: Strategic Account conversion rate. Signature: Signature: Signature:
4 Date: Date: Date:
 Daily Briefings

#1 – Deepen understanding; reduce resistance

#2 – Build consensus around future state
#3 – Gain commitment re: transformation plan 27
And Repeat…
Who Owns the
Value Stream?

29
 858.677.6799
@karenmartinopex

[Link]/subscribe

30