Value Stream Analysis:Beyond the Mechanics (Part 3 of 3)

WebinarFebruary 18, 2014

© 2014 The Karen Martin Group, Inc.

Welcome!• Australia• Brazil• Botswana• Canada• Denmark• Egypt• Great Britain• Ireland

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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.www.ksmartin.com

3

2013 Shingo Prize winner!

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© 2014 The Karen Martin Group, Inc. 4

After the webinar…• Recordings:

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Before the webinar…• Materials:

– www.ksmartin.com/files/webinarmaterials/02‐18‐2014_slides.pdf (or _handout.pdf)

More VSM Learning

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• Next Webinar– Thursday, March 27, 11:00 am – 12:15 pm PT– Value Stream Mapping: Case Studies– https://www2.gotomeeting.com/register/288652530

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© 2014 The Karen Martin Group, Inc.

© 2014 The Karen Martin Group, Inc. 6

You will learn how to…

• Create & manage a value stream transformation plan.

• Apply PDSA to assure that you’re making the best improvements.

• Engage the entire workforce in making change.

• Measure your progress.

7

Basic Current State Value Stream Map: 3 Sections

1

2

3

© 2014 The Karen Martin Group, Inc.

© 2014 The Karen Martin Group, Inc. 8

Customer

1

Process 3

Function E

LT = 0.5 daysPT = 30 mins.%C&A = 95%

4

4

10 mins.1 days

120 mins.2 days

30 mins.0.5 days Total LT = 3.5 days

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

Process 2

Function C

LT = 2 daysPT = 120 mins.%C&A = 95%

3

3

IT-1 IT-2

5 items

Process 1

Function A

LT = 1 daysPT = 10 mins.%C&A = 99%

5

2

1 items 10 items

Standard work

Modified approvals

IT interface

Cross-train

Cross-train

Standard workError

proof

Basic Value Stream Map: Future State

© 2014 The Karen Martin Group, Inc. 9

Basic Value StreamFuture State Performance Metrics

Metric Current State  ProjectedFuture State 

Projected% Improvement

Total Lead Time 9.5 days 3.5 days 63.2%

Total Process Time 180 minutes 160 minutes 11.1%

Activity Ratio 3.9% 9.5% 143.6%

Rolled % Complete & Accurate 30.0% 89.3% 197.7%

Other?

Other?

Prepare Understand Current State

DesignFuture State

Develop Transformation 

Plan

Execute Transformation 

Plan

Three Consecutive Days4 Weeks Prior to Mapping

Following Mapping

Repeat

Value Stream Mapping:Phases and Timing

10

Customer

0.5 weeks10.0 days

50.4 weeks 0.3 weeks10.0 days

0.4 weeks 2.3 weeks30.0 days

3.1 weeks147.0 days

9.0 weeks105.0 days

0.1 weeks85.0 days

0.1 weeks10.0 days

0.1 weeks42.0 days

1.2 weeks20.0 days

0.3 weeks5.0 days

0.5 weeks3.0 days

1.8 weeks20.0 days

8.4 weeks 25.2 weeks 0.1 weeks21.0 days Total LT = 930.0 days

Total PT = 103.7 weeksActivity Ratio = 55.8%Rolled %C&A = 0%

Hand Over to Proj Mgmt

Sales 2 approvals

LT = 2 weeksPT = 12 hrs.%C&A = 2%

3

Review Specs; scope

project. Prepare initial

cust. docs

Eng, Quality, Planning

Start designing

projectLT = 6 weeksPT = 92 hrs.%C&A = 0%

5

SalesForce

Send PO or LOI

Customer

LT = 1 years%C&A = 5%

2

Prepare Proposal

Sales (~ 200 pp)

LT = 2 weeksPT = 2.5 days%C&A = 75%

1

Finalize Customer

Documents

EngineeringQuality

LT = 2 months%C&A = 50%

15A

Package & Ship

Product & Systems

Logistics

LT = 4 weeksPT = 72 hrs.%C&A = 99%

14

Release Long LT Items to Production

Eng

LT = 105 daysPT = 360 hrs.%C&A = 75%

7

Plan & Schedule Project

Project Mgmt

LT = 0 weeksPT = 16 hrs.%C&A = 35%

4

ReleaseComplete

Final Design

Eng

LT = 85 daysPT = 144 mins.%C&A = 25%

8A

Begin Create Customer

Docs

X3

EngineeringQuality

LT = 7 monthsPT = 124 hrs.%C&A = 0%

6B

Invoice Customer

Finance

LT = 4 weeksPT = 2.5 hrs.%C&A = 95%

6C

Issue Reqs for Short

Lead Parts

PurchasingPlanning

LT = 2 weeksPT = 3 hrs.%C&A = 5%

10A

Create Demand;

Issue Reqs forLong Lead

Items

PMPlanning

Doc ControlME

LT = 5 daysPT = 8 hours%C&A = 80%

8B

Build for ShipmentPRODUCT

Production

LT = 3 daysPT = 18 hrs.%C&A = 95%

13A

Build for Test Product

Production

LT = 4 weeksPT = 48 hrs.%C&A = 95%

11A

Test & Disassemble

Product

Production

LT = 5 daysPT = 14 hrs.%C&A = 90%

12

9 items

Procure Long Lead Items

Purchasing

LT = 2 weeksPT = 3 hrs.%C&A = 5%

9

Invoice Customer

Finance

LT = 2 monthsPT = 4 hrs.%C&A = 5%

10B

Test & Build from Test Systems

Production

LT = 6 daysPT = 44 hrs.%C&A = 95%

11B

Build for ShipmentSYSTEMS

SystemsProduction

LT = 1 daysPT = 8 hrs.%C&A = 95%

13B

Invoice Customer

(Shipment)

FinanceLogistics

PM

LT = 30 daysPT = 6 hrs.%C&A = 95%

15B

Invoice Customer

(final)

Finance

LT = 1 monthsPT = 3 hrs.%C&A = 95%

17

<Client>CURRENT STATE Value Stream Map

(Product><Map assumptions>

Demand Rate = XXXX/ Year February 03, 2014

7 items 7 items 41 items 19 items 21 items 3 items 6 items 3 items 4 items 20 items 50 items 3 items450 items

150 items

CustomerReview &

Approve Docs

LT = 2 weeks%C&A = 5%

6

CustomerApprove Final

Documents

LT = 6 months

16

120 items

22 items

0 items

SupplierSend Parts

LT = 7 months

10C

3 items 18 items

25 items

3 items

3 items

MS ProjectExcel

Current State Value Stream Map

Future State Value Stream Map

Invoice Customer

Finance

LT = 2 daysPT = 2.5 hrs.%C&A = 95%

5B

Value StreamSTOPS if

no PO

Customer

Procure items

Purchasing

LT = 8 hoursPT = 6 hrs .%C&A = 99%

6A

4 hrs.8 hrs.

36 hrs.5 days

206 hrs.35 days

6 hrs.8 hrs. 105 days

2 hrs.4 hrs.

8 hrs.1 days

16 hrs.5 days

18 hrs.3 days

24 hrs.3 days Timeline LT = 160 days

Timeline PT = 320 hrs.Activity Ratio = 25.0%

Review PO

Sales

LT = 8 hoursPT = 4 hrs.%C&A = 95%

3

Prepare Proposals

Sales Engineering

QualityPurchasing

LT = 10 daysPT = 64 hours%C&A = 95%

1

Plan & Schedule

Project

PM

PT = 16 hrs.%C&A = 90%

4A

Stage order(100% comp.)Prod. Control

Hydrotest

Warehouse

LT = 4 hoursPT = 2 hrs .%C&A = 99%

8

Create balance of customer

docs

X 1.5Total PT=186h

ENGQuality

LT = 3 monthsPT = 124 hrs.%C&A = 80%

6B

Complete & Release ENG package BOM

Total PT=268h

LT = 7 weeksPT = 206 hrs.%C&A = 85%

5C

Test & Disassemble

Product(Includes Quality

Inspection)

Total PT=48h

Production

LT = 5 daysPT = 16 hrs.%C&A = 95%

10

Invoice Customer

(shipment)

Finance

LT = 8 daysPT = 6 hrs.%C&A = 95%

13A

Build for Shipment(Product)

Total PT=36h

Production

LT = 3 daysPT = 18 hrs.%C&A = 95%

11A

Package; ready to ship (including

docs)

Total PT=72h

Logistics

LT = 3.1 daysPT = 24 hrs.%C&A = 99%

12

Build for Test

(Product)

Total PT = 16h

Production

LT = 1.1 daysPT = 8 hrs .%C&A = 95%

9A

Build for Shipment(Systems)

Production

LT = 1 daysPT = 8 hrs .%C&A = 95%

11B

Build Crates

Total PT=48h

Logistics

LT = 3 daysPT = 24 hours%C&A = 99%

11C

Invoice Customer

(docs)

Finance

LT = 2 daysPT = 3 hrs .%C&A = 95%

13B

1. Create procedure/train GS service engineers to properly feedback

suggestions to engineering

2.Create bulletin re: s tandardized headplate des ign to eliminate flange

orientation.

5. Socialize new criteria for engineering, quality &

purchasing involvement4. Define technical info

Ebara needs from customer and when

3.Create v isual timeline to educate

customers

6. Revise s tandard Ts & Cs to incorporate time limit for customer

approval for final payment

8. Create criteria for LOI acceptance

9. Add initial project release in

SF10. Enforce customer

-requested CO procedure

Complete & release initial

customer docs

Eng (32 hrs)Quality (4 hrs)

LT = 5 daysPT = 36 hrs.%C&A = 85%

4B

12. Move to one release (pump &

systems)

11. Create one-piece engineering flow

18. Eliminate Requisitions

20. Create approved supplier program

16. Create trigger to release (BOMs) for

purchase.

14. Standardize WBS/QPR from

suppliers27. Pre-arrange

shipping based on production schedule

26. Update data book process to submit after test

reports received.

7. Error proof P.O. info (correct specs, ship to, etc .);

notify customer re missing info and drop dead date

Invoice customer

(major materials)

Finance

LT = 2 daysPT = 3 hours%C&A = 95%

7B

Build for Test

(Systems)

Production

LT = 5 daysPT = 22 hours%C&A = 95%

9B

13. Revise proposal template to limit time

to 4 revisions

15. Create commodity management team &

supplier SLAs

16. Create pull s ignal for invoicing.

19. Analyze/implement change management

system.

22. Create engineering tools

23. Automate shop order

release.

24. Eliminate witnessed testing of electrical feed-

throughs onsite

25. Transition data reduction to test engineer

28. Create the means to have a daily level-loaded

production schedule

Approve final

documents

Customer

LT = 30 days

12B

Send materials

Supplier

LT = 5 monthsPT = 0 hrs .

7A

Approve cust. doc package

Customer

LT = 2 weeks

5A

Send PO or LOI

Customer

LT = 1 years%C&A = 75%

2

21. Create configurator

(standard part)

Rolled %C&A = 21% Total PT = XX

© 2014 The Karen Martin Group, Inc. 13

Improvements / Hypotheses• Improved quality of information upfront.• Removed handoffs.• Shifted roles & responsibilities in 4 work areas.• Added a proper cross‐functional kick‐off activity.• Merged work.• Re‐sequenced work.• Moved work in parallel.• Innovated re: design.• Created new work triggers.• Created one‐piece flow in engineering by reconfiguring staff and workloads.

• Rationalized suppliers (starting the process).• Implementing a hard stop to work if no PO received.

© 2014 The Karen Martin Group, Inc. 14

Value Stream Performance ImprovementProjected Results

Metric Current State  ProjectedFuture State 

Projected% Improvement

Timeline Lead Time(RFQ to shipping)

17 months 7.5 months 56%

Timeline Process Time 600 hours 450 hour 25%

Rolled % Complete & Accurate 0% 21% > 2,000%

On‐time delivery 13% 90% 592%

# Internally‐produced Change Orders 25/project 12/project 52%

© 2014 The Karen Martin Group, Inc. 15

PACE Prioritization chart

Prioritization GridCreating the Transformation Plan

16

17

J F M A M J J A S O N D

1 PROJ Steve

2 PROJ Steve

3 KE Bruce

4 KE Bruce

5 PROJ Jessie

6 PROJ Sally

7 KE Jessie

8 PROJ Mike

9 JDI Jessie

10 PROJ Steve

11 PROJ Steve

12 PROJ Bob

13 JDI Jessie

14 PROJ Marcia

15 PROJ Tom

16 KE Marcia

17 PROJ Sally

Value Stream Champion Sally BrooksValue Stream Mapping Facilitator Karen Martin

Value Stream Transformation PlanValue Stream Product Y Scheduled Review Dates

Executive Sponsor Jim McMahon 2/10 + bi-weekly Thu 10 am

Socialize new criteria for engineering, quality, & purchasing involvement.

Date Created 1/5/2014Kaizen Burst # Improvement Objective / Hypothesis Proposed Countermeasure

Exec. Method * Owner

Planned Timeline for ExecutionStatus

Create procedure/train GS service engineers to properly feedback suggestions to engineering.

Create bulletin re: standardized headplate design to eliminate flange orientation.

Create visual "milestone" timeline to educate customers.

Define technical info needed from customer and when.

Signature: Signature: Signature:

Revise standard Ts & Cs to incorporate time limit for customer approval for f inal payment.

Error proof P.O. info (correct specs, ship to, etc.); notify customer re missing info and drop dead date.

Create criteria for LOI acceptance.

Add initial project release in SF.

Resocialize existing customer-requested CO procedure.

One piece engineering flow

Agreement

Executive Sponsor Value Stream Champion Value Stream Mapping Facilitator

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

Move to one release (pump & systems)

Date: Date: Date:

Create commodity management team & supplier SLAs.

Standardize WPS/PQR from suppliers.

Revise proposal template to limit time to 4 revisions.

Create pull signal for invoicing.

Create trigger to release (BOMs) for purchase.Co

nten

t rem

oved

 for san

itizatio

n pu

rposes

© 2014 The Karen Martin Group, Inc. 18

Who? Accountability Tool

Sr. Leaders “What has to happen” Hoshin Plan, A3, Value Stream Mapping

Frontlines “How it will happen” Kaizen Events, Just‐do‐its,    and Projects

Improvement RolesStrategic

Tactical

Middle Management

Tactical

Prepare Understand Current State

DesignFuture State

Develop Transformation 

Plan

Execute Transformation 

Plan

Three Consecutive Days4 Weeks Prior to Mapping

Following Mapping

Repeat

Value Stream Mapping:Phases and Timing

19

© 2014 The Karen Martin Group, Inc. 20

Key Success Factors• Consistent Executive Sponsor involvement

– Run or attend status meetings• Consistent status meetings

– At least monthly– Every other week to start

• Single point of ownership– But collaborative problem solving and obstacle removal.

• PDSA at every meeting• Edit the future state map real time• Adjust the transformation plan as needed

© 2014 The Karen Martin Group, Inc. 2121

Develophypothesis

Conduct experiment

Measure results

RefineStandardize Stabilize

© 2014 The Karen Martin Group, Inc. 22

Physically Post the Future State Map

Physically Postthe Transformation Plan

J F M A M J J A S O N D

1 PROJ Steve 0%

2 PROJ Steve 100%

3 KE Bruce 50%

4 KE Bruce 50%

5 PROJ Jessie 100%

6 PROJ Sally 100%

7 KE Jessie 0%

8 PROJ Mike 100%

9 JDI Jessie 50%

10 PROJ Steve 80%

11 PROJ Steve 10%

12 PROJ Bob 0%

13 JDI Jessie 100%

14 PROJ Marcia 25%

15 PROJ Tom 30%

16 KE Marcia 50%

17 PROJ Sally 50%

Value Stream Champion Sally BrooksValue Stream Mapping Facilitator Karen Martin

Value Stream Transformation PlanValue Stream Product Y Scheduled Review Dates

Executive Sponsor Jim McMahon 2/10 + bi-weekly Thu 10 am

Socialize new criteria for engineering, quality, & purchasing involvement.

Date Created 1/5/2014Kaizen Burst # Improvement Objective / Hypothesis Proposed Countermeasure Exec.

Method * OwnerPlanned Timeline for Execution

Status

Create procedure/train GS service engineers to properly feedback suggestions to engineering.

Create bulletin re: standardized headplate design to eliminate flange orientation.

Create visual "milestone" timeline to educate customers.

Define technical info needed from customer and when.

Signature: Signature: Signature:

Revise standard Ts & Cs to incorporate time limit for customer approval for f inal payment.

Error proof P.O. info (correct specs, ship to, etc.); notify customer re missing info and drop dead date.

Create criteria for LOI acceptance.

Add initial project release in SF.

Resocialize existing customer-requested CO procedure.

One piece engineering flow

Agreement

Executive Sponsor Value Stream Champion Value Stream Mapping Facilitator

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

Move to one release (pump & systems)

Date: Date: Date:

Create commodity management team & supplier SLAs.

Standardize WPS/PQR from suppliers.

Revise proposal template to limit time to 4 revisions.

Create pull signal for invoicing.

Create trigger to release (BOMs) for purchase.Co

nten

t rem

oved

 for san

itizatio

n pu

rposes

© 2014 The Karen Martin Group, Inc. 24

And Repeat…

© 2014 The Karen Martin Group, Inc. 25

Amazon: www.bitly.com/VSMbkMore info: www.ksmartin.com/VSM

“The new bible for value stream mapping.”—Art Byrne, author, The Lean Turnaround

© 2014 The Karen Martin Group, Inc. 26

Karen Martin, President7770 Regents Road #635San Diego, CA 92122

858.677.6799

ksm@ksmartin.com

26

For Further Questions

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