World-class manufacturing companies achieve outstanding levels of performance by making products flow through the production process from dock to dock. These companies have successfully eliminated the barriers that prevent material and information flowing smoothly throughout the organisation. The benefits are significant reductions in manufacturing lead times (and its inverse inventory turns), inventory levels and higher throughput. But how did they manage to do this, and more importantly how can you do the same?

The answer is to use the process of Value Stream Mapping to analyse and improve how products flow through your process. Value Stream Mapping is a set of tools that analyses your overall process flow and presents it in a visual form, allowing the process to be re-designed to eliminate barriers to flow.

Now this may sound similar to long established industrial engineering techniques such as process flowcharting, but there are some important differences:

• Value Stream Mapping has an overall product level focus cutting across processes, functions and departments.
• It incorporates lean concepts and tools, such as takt time (cycle time based on customer demand), theory of constraints and pull-based scheduling systems.

Creating Your Value Steam Map

Anyone who can draw a flowchart can build a Value Steam Map. However, here are some guidelines that will help you get the most out of the process:

1. Form a Team
Because value stream mapping is a holistic approach it is a good idea to involve people from different parts of the business. Forming a cross functional team allows current issues to be understood from different perspectives and provides better problem solving and buy in when you come to developing solutions.

2. Select a Product Family
Next you need to set some boundaries for the process to make the exercise manageable. Trying to map every product and process flow creates unnecessary complexity, so value stream maps work on individual product families where each product family has its own value stream map. A product family is a group of products that follow basically similar process routings, possibly with minor variations for product varieties.

3. Draw a Current State Map
Start by walking through the process starting at the downstream (customer) end and walking back towards the raw material stage. This may seem strange as it would seem more logical to follow the process in the same direction as the product flows. However, starting from the customer end makes it easier to visualise the flow of the product family from the customer’s perspective. Our initial walkthrough is an overview, to gain understanding of the basic process sequence.

Next we draw out a basic high level map of the material flow. Now we can start to collect the detailed data for each process step and start to add this to the map. The main process data we are interested in are process cycle time, batch size, downtime, scrap rate and inventory levels.

We now start to add the information flows to the map. Use arrows to show the sequence and direction of the key information flows, things like orders, schedules and drawings.

4. Develop a Future State Map
The information on the current state map will give you some very important information about your process, such as:

• How long is our overall lead time?
• What percentage of the lead time is spent on value added processes?
• How much inventory are we carrying?
• Where is our process bottleneck?

A word of warning - the answers to these questions often come as a big surprise! For example we frequently find that less than 5% of the time a product spends on the shop floor is adding value, while 95% is spent waiting, being moved, stored or inspected. Because of this the actual lead time can be much longer than the lead time we expect, which may be the one we quote to the customer.

The future state map is our opportunity to design out these problems by building a process where material and information flows smoothly with minimum interruption. The future state map allows us to calculate how long (or short) our lead times should be, and how much inventory we really need to carry.

5. Prepare an Action Plan
The gap between the future and current state maps may seem huge, but there are usually a relatively small number of key actions that need to be taken to move us forward. The most common issues that need addressing are:

• Are you focusing enough attention on the pacemaker (bottleneck) process?
• Does the customer ‘pull’ demand through the system, or do you ‘push’ material as soon as it becomes available?
• Is inventory used strategically to protect against variability, or does it accumulate and provide limited benefit?
• Do you make small frequent batches or large irregular ones?

Examples of Using Value Stream Mapping

Some recent examples of companies using the Value Stream Mapping process illustrate the various issues that the process highlights.

1. A packaging company

• Issue: Leadtime of 15 weeks causing high inventory levels and long delivery times.
• Cause: process-based layout caused material to pass through 3 separate departments with transport and storage required between each stage.
• Solution: Redesign layout based on product family cells, eliminating the excessive transportation and storage.
• Impact: Lead time reduced from 15 weeks to 6 weeks.

2. A furniture manufacturer

• Issue: High work in progress upstream of the bottleneck process – final assembly
• Cause: Push system scheduling material in excess of customer demand
• Solution: Introduce a pull system based on actual demand
• Impact: Significant reduction in WIP, lead time cut from 6 days to 3.5

3. Trailers 2000

• Issue: Leadtime of 15 days too long to keep up with growing customer demand
• Cause: Bottleneck process – assembly again – unable to keep pace
• Solution: Improve assembly cycle time to match takt time by improved load levelling and 5S organisation of the assembly area
• Impact: Lead time cut from 15 days to 6.

In Summary

Most manufacturing companies face a whole range of challenges that impact the performance of their systems. Many, if not most of these issues are related to the way material and information flows through the process. Proof of this lies in the longer than expected lead times and resulting high inventories, which are required to maintain acceptable delivery times.

Many companies take a piecemeal approach to smoothing their process flow, such as buying a new machine to relieve a bottleneck or implementing a set up reduction on a key process. However, the only way to achieve the type of dramatic improvements seen at the companies mentioned above is to take a holistic approach that shows exactly what the current flow is doing.

Value Stream Mapping is by far the best way of understanding flow in a holistic way, and the tools it contains provides a step by step process for selecting the key actions that lead to dramatically improved performance.