Holistic Methodologies: Value Stream Mapping (VSM)
The missing link in translation of business requirements into effective enabling technology solutions
Do you sometimes feel you are on a production line where you do your piece of the work but can't see the big picture of how it fits in overall? Perhaps you feel like you want to pull back the curtain to see what is behind it? Do you sometimes feel like you don't understand why the customer has asked for a specific feature or request? Do you want to talk to the customer in their own language and be a trusted advocate to define and design solutions that add measureable value to the business process? If so, read on!
Value Stream Mapping (VSM)
A Value Stream Map (VSM) makes it possible to quantify the value or capacity of the business process. VSM will also validate the value your application can provide to improve capacity and/or cycle time reduction. A VSM can also be used to set success goals and capability levels for the process, provide a quantifiable baseline to demonstrate value and eliminate waste.
VSM has been around for many years and is a staple of lean manufacturing and supply chain management. As with many Lean and Six Sigma tools, which started life in manufacturing, they have been adapted to a variety of complex business systems and processes across many industries. To create a VSM, we will revisit some of the tools discussed in previous articles.
A word of caution! While VSM is a very powerful tool, initial implementation should be accomplished in phases. Obtaining the full value from VSM requires significant up-front effort to create "as is" models, as well as a degree of ongoing maintenance commitment. Choose your target processes wisely!
Value Stream Mapping Core Components
Successful VSM requires information from several process components. This information may be provided by reviewing data from previous process improvement efforts or operational and historical documentation of the process to be re-engineered.
- Material flow – raw materials, subassembly, and product to be delivered, including any assembly
- Information flow – how data moves between systems or actors in the process -- customer records, orders, invoices, bills of lading, etc. -- whether electronically or paper-based via Kanban boards located along the production line or within a warehouse
- Process data – defects, capacity, and steps in the process, and actors performing the steps
- Cycle time data – overall duration of the process, time taken for each value-added or non-value-added step
In relation to requirements gathering, IT professionals and business analysts typically focus on the Information Flow in from Use Case or Data Flow Diagrams. Within a database, an Entity Relationship Diagram may be used by a Database Administrator.
Adding a VSM to the above documents clarifies cycle time and the capacity of the process, which the typical IT/Business Analysis documents can't provide. Adding the dimension of cycle time and capacity to the requirements gathering identifies opportunities to harden the process by increasing its fault tolerance.
Cycle time and capacity management are cost saving components by using a just-in-time component order/availability model. (The just-in-time approach reduces shelf time for costly components.) Cycle time reduction while maintaining quality controls is a relentless goal for any process owner.
Cycle time and capacity management dimensions provide a method of turning many soft metrics into hard, quantifiable benefits by reductions in product/process execution costs. These cost savings can be identified by using empirical data to establish a baseline cost of running the process or construction before and after the re-engineering project is completed.
The core components of VSM can be thought of as a quadruple constraint. In other words, which of these core components are you solving for as you try to enhance the process? As with many projects using the triple constraint paradigm, all components have to be taken into consideration, but one or two components tend to dominate and impact the others. Here are some examples to illustrate where an emphasis on one flow impacts the others.
- Information Flow – gathers process data and cycle time data to track defects and process performance metrics
- Material Flow – controlled by Information Flow to determine when raw materials need to be ordered, which in turn may impact Cycle Time
- Cycle Time Data Flow – may be constrained by defects from Process Data or lack of raw materials (Material Flow)
- Process Data Flow – impacted by one or more of the other flows as described above
All of these flows directly impact Process Capability.
Ten High-Level Steps to Create a VSM
Constructing a VSM is beyond the scope of this article, but some high-level instructions on the steps to create a VSM (highlighting the other tools necessary) are provided below:
- Create a SIPOC chart to understand all the components. The SIPOC assists with identification of supplies needed for the process and outputs for the customer, that is, Y = f(x1,x2,x3,xn . . . ).
- Map the "as is" process using a swim lane flow chart. This step helps document the "P" from the SIPOC.
- Choose your process:
- Determine the service or product family you will examine using VSM. This is an important scoping tool
- Develop a Process/Service Matrix (It is important to understand the start and end of the process you are mapping.)
- Draw the Process Flow. Transfer the process steps from the swim lane into high-level steps.
- Add the Material Flow from the SIPOC (Inputs) and (Outputs).
- Add the Informational Flow, both electronic and manual.
- Add Process Data collection boxes to the VSM diagram from the established collection (Listening Posts) points in your process. These "Listening Posts" or inspection points are the same as the spectacles on the VSM diagram.
- Add Process and Lead Time data from historical process execution data.
- Verify the map of the current state ("as is" VSM) with the process actors/owner.
- Create a Future State Map. (The Future State Map is the "to be" state VSM and should be used as validation criteria upon improvement implementation.)
VSM and other tool examples
There are many good online tools and videos on how to build a VSM, which are provided in the Further Reading section.
As you can see in the example below, a VSM is an information-rich tool, which can provide a transparent view into the "voice of the process." Using a VSM, it becomes easier to highlight where issues and bottlenecks are occurring. Using other tools we have already covered in root cause analysis, improvement candidates can thus be quantified by metrics. There are many other tools we covered in the earlier article on Project or Process that can also be used in the initial analysis of the candidate business process.
As-Is Swim Lane
Swim lane diagrams have limitations. They can only illustrate the steps and the actors performing the steps. While a temporal component can be added to a swim lane diagram by using vertical lines, swim lanes stop short of providing additional data that can help identify bottlenecks in the process.
SIPOC is used to further map the steps in the swim lane diagram, in order to illustrate the requirements and process step deliverables.
Process/ Service Matrix
A Process/Service Matrix using a RACI diagram will show a deeper level of the communication flow required to make the process functional. Other uses of a Process/Service Matrix can include volume and margin metrics to further quantify the value of each step. (For simplification, I have not included volume and margin metrics in this example.)
Measurement System Analysis (MSA)*
Within any process, the method of gathering metrics is just as important as the actual metrics being gathered. The data being gathered can be skewed by one or more of the following characteristics:
- Measurement approach – frequency/size of sample, units of measure, step in process
- Measuring device – objective (count, dimension, etc.) or subjective (visual, cosmetic, expert judgment, etc.)
- Measurement process/procedure – measurement of the procedure can be impacted by the training, skill, and care of the operator (does Operator A capture the measurement the same way Operator B does?)
- Measurement interaction – impacts by external forces, temperature, humidity, light levels, and so on
- Accuracy/Precision of MSA – a calculated level of uncertainty in the overall MSA model (all measurement systems have a certain degree of error)
*MSA will be a topic for a future article, since it's applicable to gathering data for scoping and solution selection.
Future State VSM
Steps 1-9 above culminate in a baseline VSM, which documents the current state of the process. Just as with any process being optimized, it is also important to create a future state model. This future state model documents the success criteria the project will attempt to achieve. The future state model further identifies the value-added and non-value-added steps within the process that your project will attempt to remove while retaining the appropriate process safety and governance controls.
Similar to a Quality Function Deployment (QFD), a VSM is a multifaceted tool to enhance the requirements gathering and fulfilment steps in a product/process development lifecycle. These are complex and advanced tools that have a challenging learning curve. Whether you use them holistically or take best practices from them is dependent on the process value, the maturity of the organization, and the need to find solutions to process capability issues that cannot be derived by data/information flow alone.
Overview of the technique
Overall Equipment Effectiveness calculations
First Pass or Throughput Yield calculations
http://www.lean.org/FuseTalk/Forum/Attachments/Value%20Stream%20VSM%20Template.xls (Excel spreadsheet download)