Analyze your value streams

by Dave Melhus

Last issue, I provided suggestions on how to set the stage for lean within your organization. In a nutshell, identify two or three global metrics that, if improved, would substantially help your business. Ideally, the business focus will create the pull for specific process improvement activities. In reality, the improvement activities initially will need a gentle nudge from you.

If you haven’t identified global metrics and related stretch goals, you’re wasting time. Assuming you have, now is the right time to apply the tool known as value stream mapping or value stream analysis (VSA).

The use of value stream mapping has increased significantly over the past several years. In fact, many good books are available to explain the process (e-mail me and I can point you to a couple). I suggest you take your organization beyond value stream mapping; link the map to your business strategy and reap its full benefit through VSA.

While the mapping tool is well documented, the definition and how to link it to enterprise strategy is not. Let’s start with the definition.

A value stream is the sequence of steps required to satisfy a need (typically, a good or service). Many people separate the value streams into manufacturing and administrative. The administrative/manufacturing split is rather clunky. I prefer to reference the combination of these streams as the enterprise value stream. The enterprise value streams within most businesses can then be classified into four categories:
1) demand (where the need for a good or service is created);
2) delivery (where the need for the good or service is satisfied);
3) development (where the need for a product or service is turned into a robust design); and,
4) support (the internal processes required to allow the first three streams to effectively function).

In other words, the entire business is made up of many value streams. So, where do you start? This is the question many miss. If interested (again, e-mail me), I have a file identifying typical lower-level value streams within a company’s major four value streams (demand, delivery, development and support). Creating a quick matrix listing the value streams and overlaying your organizational structure is often an interesting exercise in identifying productivity, functional handoffs and value-added/non-value-added flows.

So, in introducing the VSA process into your organization, keep in mind that it’s not about mapping the shop floor, mapping the entire enterprise, capturing all the data within the process nor selecting which icon to use. It is, as always, assessing your value stream processes against the business objective and identifying the shortcomings. For example, if your product is a custom-engineered product and your objective is lead-time reduction to improve sales, a value stream analysis starting with order entry through the delivery of product (entire delivery value stream excluding cash receipt) may be appropriate, particularly if most of the lead time is outside of manufacturing. If reduced working capital is yet another objective, include the cash piece in the analysis.

You must look at the value stream with the correct set of glasses. For instance, the data required to increase capacity within a value stream would be different than a productivity or lead time reduction focus. Knowing the improvement target lets you put the appropriate glasses on (capacity, cycle time, productivity, working capital, etc.). Understanding the “where” (which value streams) and the “what” (what data is required — which glasses) is the key nugget.

Narrowing the focus is a difficult concept. Most lean zealots would say, “If it’s waste, eliminate it.” While this is correct, your passion to eliminate waste will always, if you have caught the lean bug, outstrip your organization’s ability to change. Hence, the need to prioritize will be forever present. Do not misconstrue this as a way to rationalize away your current pace of change. As a leader, your rate of change should improve (that is your job). What process do you have in place to cultivate the increase in rate of change?

All right, you’re good. You defined your business objective, you have focus and have a great implementation plan. What’s next? It’s developing your organization’s ability to execute through organization alignment. We’ll discuss this next issue.

One last challenge: If you haven’t yet, develop a plan to visually communicate to your organization the status of your value stream map and related improvements and why they are important to your organization (VSA). If you struggle to do so, then you should question whether you are walking the lean talk. Keep on the path; it’s worth the effort.

Dave Melhus, the former vice president of operations for Iowa’s Vermeer Manufacturing, is currently a VP with Simpler Consulting. He can be reached at or by e-mailing . 

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