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Value stream mapping is a technique used to identify and strip wasteful steps out of a company's flow of information and materials. The end goal of the technique is to make the company "lean," meaning free of wasted effort. Toyota is generally given credit for the development of lean production techniques, which have been adapted and added to by succeeding generations of managers and consultants.
Though the implementation and emphasis of lean techniques may vary greatly, value stream mapping remains a key and recognizable element across companies, industries and even countries. To understand value stream mapping, it is important to first understand a few relevant terms. When we talk about process, we mean every step that occurs from the supply chain to the point where the customer receives the finished product. For example, value stream mapping for a paper mill might begin at the receipt of raw materials, such as wood and chemicals, and end at the shipment of finished, packaged paper products. Note that lean techniques such as value stream mapping may be applied to any segment of the larger process. More often than not, companies divide their process into discrete sections, allowing several teams of experts to apply lean techniques simultaneously.
Next, the difference must be established between value and waste. In its broadest sense, value is adding to the product something which the customer wants or needs. Returning to the paper mill example, value steps are those that give the paper the desired dimensions, color, composition, etc. Waste, on the other hand, is any step that does not add value. The most commonly cited forms of waste are movement of the product, equipment or employees unnecessarily; maintaining an inventory of raw materials or products waiting to be worked upon; making more parts or products than there is customer demand for; processing a component more than the customer actually needs or expects; quality checks; or the subsequent reprocessing of defects.
Now let's apply these terms to value stream mapping. A company starts with a process, or a part of a process. The paper mill decides to make its pulping section leaner. The most knowledgeable workers and managers from that section will meet and determine where the pulping process begins and ends. They will identify every step in between, presenting it in the form of a flow chart or process map. Once they have an accurate map of the process, it's time to map the value stream. Each step on their map is analyzed and labeled as either adding value, wasteful but required, or waste.
Skilled managers then evaluate the steps identified as wasteful and cut them mercilessly from the process. Perhaps the company is holding an excessive inventory of pulping chemicals, tying up cash that could otherwise be put to better use. Or they realize that the quality checks done in the middle of pulping are redundant and unnecessary. The best managers, though, are not satisfied with using value stream mapping solely to eliminate waste and lean their process. These savvy businessmen also use value stream mapping to find ways to increase the product's value to customers, a practice certain to add value to the company's income stream as well.