Step 2 in Value Stream Mapping

Create a Current State Value Stream Map

Now, let’s turn this diagram into a Current State Value Stream Map. The original working session for developing a value stream map is very manual, and as I mentioned earlier, is best done on a white board or with Post-it Notes®. I prefer the flexibility of Post-it Notes®, and a real world working session using this technique is shown in the attached Figure. As you can clearly see, the current state map covers an entire wall, which is very typical when defining how a process is really operating.

Processmap

As the name implies, the goal is to find out how the processing is currently operating today, not how the SOP says things “should” be or how it was “designed” to be. The goal is to capture reality onto a piece of paper; the current state. Use a stopwatch for the time studies and determine the actual times where practical. While the VSM will eventually be finalized with software, the initial map should be created with Post-it Notes® because there will be frequent changes as the team goes through this process. Once the process has been defined, the Post-it Notes® map can be digitized with flowcharting software. Value stream maps use a variety of unique symbols that are not used in traditional flowcharts and diagrams, and while Word and Excel can be used for flowcharting, for ease of use, professional flowcharting software like Visio should be used.

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Step 1 in Value Stream Mapping

As we discussed in an earlier article, one of the most critical steps in the value stream creation process is recognizing non-value (waste) in your process. Value stream mapping brings together lean concepts and techniques and helps to avoid the “cherry picking syndrome” in which processes that have very little impact on the product or service are chosen because they will be easy to improve.

Identify the Proper Process

This step cannot be stressed enough because it is often overlooked by many companies new to lean. Fresh out of training, the VSM team often runs out and starts mapping the first process they see. While value stream mapping anything is better than nothing, efforts should be focused on the critical processes having the greatest impact on the product.

Let’s look at a typical supply chain transaction from the point of a customer order through delivery of the product. This example shows a macro view of the supply chain cycle to illustrate how value stream mapping works. This high-level view would be one way to drive lean down through the supply chain to sub-suppliers. Of course, discrete processes within each supplier would need to be value stream mapped to enable reductions in their respective lead-times. The attached diagram depicts a product with an eight-week lead-time, which after value stream mapping the process, reveals that there are only 7 ½ hours of value-added time on this product. As unbelievable as these results sound, most organizations experience a similar disparity in their processes. The key takeaway of this scenario is that the excessive lead-time has created enough customer dissatisfaction that the business is in jeopardy.VSM

 

 

 

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Why a 99% Yield Is Not Good Enough

I remember the not-too-distant past when a 99% yield rate would earn you bragging rights (myself included). Looking at what that really means by today’s metrics show that a 1% scrap rate converts to 10,000 defective parts per million (DPPM). As a customer, imagine a supplier striving to give you only 1% defective parts! World-class six sigma levels allow only 3.4 DPPM. If you are still hanging in there with me at this point, I would hope that you agree that 10,000 DPPM is totally unacceptable and are prepared to do something about it.

Note: It must be mentioned that the 3.4 DPPM attributed to six sigma levels was developed by Motorola, and based on the assumption that over time a process is likely to have a shift in the mean of up to +- 1.5 sigma. This potential shift is factored into the 3.4 DPPM. Statistical purists would argue that a six sigma level is actually .002 DPPM, but since the Motorola interpretation is universally accepted, I use 3.4 DPPM to represent a six sigma level.

When organizations like Motorola and General Electric began communicating six sigma expectations to their suppliers in the early 1980s, what began as a ripple quickly developed into a shockwave throughout the supply chain. To say that this concept was met with some resistance is a monumental understatement. Companies had absolutely no idea how they were going to affect a change of such magnitude that their process defect rate would drop from 10,000 to 3.4 DPPM. Through a slow and painful process, companies began to understand that the way to achieve these quantum paradigm changes was through lean best practices. The interesting paradox is that none of us would accept 99% in our personal lives, so why do we accept it in our businesses? The attached Figure shows what life would look like if we settled for having things right only 99% of the time in some areas we can all relate to. This kind of changes the perception that 99% is good enough, doesn’t it?

notgoodenough1

Contrast this with a six sigma level in which your local weatherperson’s forecast would be correct every single day for 795 years in a row! (talk about a pipe dream; but that could be another whole article)

What is Six Sigma?

Sigma (σ) is the eighteenth letter in the Greek alphabet, and is defined and used in two different ways: 1) As a mathematical measure of the amount of variation in a process. This is normally referred to as the standard deviation of a process; the lower the standard deviation, the better, and 2) To describe the quantity of defects a process will produce. This is normally referred to as the sigma level of a process and is a measure of process performance; the higher the sigma level, the better. Although statistics are usually associated with six sigma, that is only part of it; six sigma is the problem solving methodology called DMAIC (Define, Measure, Analyze, Improve, Control). DMAIC is a process that uses a collection of tools to identify, analyze, and eliminate sources of variation in a process. Six sigma can be an intimidating concept to grasp, particularly regarding the statistics and scary math part of the process. The key takeaway is that to achieve a six sigma level, process variation must be cut in half from a three sigma level.

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Quality in the 21st Century

Looking back through the annals of our industry, when it comes to quality, we have evolved from a reactive, to a proactive mindset. This evolution has lead to what is loosely called the Zero Defects Methodology (ZDM). The “old” gold standard of three sigma is no longer acceptable and has gone the way of the dinosaur.

Pipe Dream?

Are zero defects an achievable, sustainable goal 100% of the time? Of course not, but with six sigma levels we can come pretty close. Recognizing that we will occasionally fall short of any goal mandates that the goal be set at zero defects. The reasons why a zero defect mentality is required can be condensed down to the singular, bottom line principle of reducing costs, and as we all know, it’s always about the dollars. 4-quality-managementCosts are always attached to defective product in the form of inspection/test, rework/repair, scrap, & warranty (customer returns). Reducing these costs result in increased customer satisfaction, and quite simply, happy customers mean higher revenue.

Truth in Advertising

It is always an interesting study to compare the “advertised” capability of a company to their “actual” capability. The sales force touts world-class quality, which implies that they are operating at a six sigma level. However, an objective on-site assessment of their processes quickly separates the bluster from the facts, typically revealing that most organizations are operating at a true yield somewhere between 93 and 99%, the old three sigma complacency. Statistics are a wonderful tool, but like most things in life, you will only get out of them what you put in. It all boils down to what the organizational objective is; superficial window dressing or honest-to-goodness improvement. Inflating process yields by excluding things like rework, customer waivers, or returns do nothing but mask problems and will not result in true improvement. If window dressing is indeed your goal, then I would suggest tossing this article and immediately picking up a copy of Extinction for Dummies, by Peter T. Platypus.  However, if your goal is to utilize best practices to improve your business, stay tuned…

Next week we will explore why a 99% yield is not good enough!

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Value Add vs. Non-Value Add

Value stream mapping brings together lean concepts and techniques and helps to avoid the “cherry picking syndrome” in which processes that have very little impact on the product or service are chosen because they will be easy to improve. Value stream mapping forms the basis of an action plan (going from current state to future state), and illustrates the linkage between information and material flows. Like most things related to lean, or any initiative, there are some basic steps to follow when creating a value stream map. The process of value stream mapping is self-perpetuating; meaning that eventually the future state becomes the new current state and the cycle continues.

One of the most critical steps in the value stream creation process is recognizing non-value (waste) in the process. If we use the definition of value presented earlier in this book, waste will be anything that the customer is not willing to pay for. Value-adding activities are tasks that that transform (add value to) the product in some way. This transformation can take the form of either hard changes to the product, or soft changes such as brand vs. private label products. Each step, of each task, of each process needs to be objectively evaluated against this criterion to successfully identify wastes that can be eliminated. The following five principles can be used to guide an organization in this evaluation:

1)         Define value from the customer perspective

2)         Identify the value stream for each product family

3)         Make the product flow

4)         Create pull to build only what is needed, when it is needed, and

5)         Strive toward excellence.

Throughout the process analysis activity, it is critical to remain focused on the right things; activities that impact improvement of the organization’s products or services. Next time we will deep dive into the four critical steps of value stream mapping.VSM Pt. 5

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Message to EMS Leaders on Lean Implementation; Think Different.

PRESS RELEASE

November 4, 2014

Steve Williams had a clear message to EMS leadersThe world is flat on lean implementation; Think Different. Last week Mr. Williams, President of Steve Williams Consulting and 38 year industry executive, spoke to senior leadership of EMS companies at the IPC Tech Summit held in North Carolina, and discussed how lean can be implemented and effective in a HMLV (high-mix, low-volume) manufacturing environment.

Williams presented the tools, techniques and methodologies that thousands of small, custom manufacturers are using to dominate their markets. He urged a shift from the traditional “cost based” model to a “time based” model with a laser focus on lead-time reduction.  Organizations interested in learning more can contact Steve Williams at www.stevewilliamsconsulting.com.

Tech Summit

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Best Practices Toolbox

Every year I get together with a group of my good friends, Bobby, Dudley, Doug and Woody, all fellow Harley-Davidson enthusiasts, and take an epic ride to “parts unknown”. As we were sitting around the campfire one night during this year’s trip, I mentioned that I was writing the Quality 101 book and was struggling with fitting all of the available quality tools into one chapter. Doug, who has his own handyman show as his day job, said “Steve, it is all about having the right tools in your toolbox for the job at hand.”

Quality ToolboxAs is normally the case, my friend Doug had just condensed a complex problem down to a simple solution; develop a Quality Toolbox with only the most powerful tools that should be a day-to-day part of any quality professional’s arsenal. I have classified this toolbox into four categories: Process Analysis Tools, Data Collection & Analysis Tools, Problem-Solving Tools and Quality Planning Tools. While this toolbox is certainly not all inclusive, the set of tools contained in the chapter will provide a blueprint that any organization can use to develop, implement, and maintain a world-class quality system that supports a continuous improvement culture.

Buy now at http://www.quality101book.com/

 

 

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Best Practices 101-PT 4

“But we already made a process flowchart – isn’t that good enough?”

In a word, no. Process flow diagrams are a great first step, but they don’t tell the entire story. Value stream maps add one critical ingredient that standard process flowcharts don’t have; time. Process flowcharts, whether drawn by hand or electronically, do not capture this important element. They only simply present a snapshot of the sequence of steps in the process. Time is essential to understanding how one operation affects another and where your resources are being spent.

Value Stream Mapping

A value stream map (VSM) takes the basic flowchart to the next level, kind of like a process flowchart on steroids. In addition to the basic action boxes with arrows showing the flow of work, a lot of other information is added, including material and information flow, operating parameters, process lead-times, inventory, a timeline depicting value-added time relative to  non-value added time, and so on. Value stream mapping is the single most effective major process analysis step to identify the value stream, and conversely, the non-value waste in your processes. The value stream is the set of all the specific actions and activities required from the beginning of a process to the end of a process. Imagine a long and winding deep blue stream flowing through cities, counties, and states. Next, visualize all the things that the river carries within it: water, fish, minerals, plants and a thousand other elements which combine to form the stream. Processes are very much like a stream; they flow in a natural direction and carry materials and information within them from one point to another.

VSMThe activity of value stream mapping is the core fundamental method of identifying the areas of waste which can be eliminated within any process. By finding the sources of waste and quantifying them, action plans for reducing or eliminating them can be prioritized. Apart from identification, value steam mapping can also help to streamline a process for higher productivity and efficiency. Each process needs to have the beginning and end clearly identified before this can occur. This sounds simple, but since many of these discrete processes often run together, it is critical to define the boundaries of the process from a value stream standpoint.  Only through a detailed process analysis can you identify the non-value added steps that have become accepted, unquestioned parts of the process that result in “the way we have always done it.”

The Value Stream Map Paradox: Value stream mapping is the most effective lean tool for identifying high payoff opportunities, yet value stream mapping is the lean tool most likely not to be used by companies doing “Drive-By Lean”.

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Best Practices 101-PT 2

Process Analysis Terms

The following terms may be useful to an organization during the activity of process flowcharting, value stream mapping, and analysis.

  • Blocking: Occurs when the activities in a process stage must stop because there is no place to deposit the item just completed
  • Bottleneck: Occurs when the limited capacity of a process stage causes work to pile up or become unevenly distributed in the flow of a process
  • Cycle Time: Is the average time between completions of successive units exiting a process
  • Make-to-order: Only produced in response to an actual order that results in minimum inventory levels
  • Make-to-stock: Process produced to meet expected or forecasted demand, shipped from stock, and results in high inventory levels
  • Process: Any activity within an organization that converts inputs into outputs
  • Starving: Occurs when the activities in a process stage must stop because there is no incoming work
  • Takt time: Setting the pace of production to match actual demand Takt time = Available work time per day / daily total customer demand
  • Throughput Time: The time it takes a discrete unit to go from start to finish in a process
  • Utilization: The ratio of the time that a resource is actually utilized relative to the time that it is available for use

Process FlowchartingFlowchart

Process flowcharting is the use of a diagram to represent the major elements of a process; in other words, a picture of the process. There are many symbols used in process flowcharting, but the basic elements are tasks or operations, decision points, queue or storage, and directional process flow. The first step in many process improvement projects is to flowchart the process as it currently exists, which may not have any resemblance to company standard operating procedures (SOP). The realization that their SOPs do not reflect how the operation is really running is generally an “Ah-Ha!” moment for the company. Flowcharting also determines the parameters for process improvement since a process cannot be improved before it is understood. Although turning a process into a picture may sound very simple, it is an incredibly powerful tool to see what is really happening in a process. After a flowcharting session, the people actually doing the job are always amazed at the difference between how they perceive the process and what is really going on. A common result is a spaghetti diagram that highlights excessive travel, motion and redundancy. A picture truly is worth a thousand words.

As a working guideline, a flowchart should be used to: 1) Understand how a whole process works, 2) Identify the critical points, bottlenecks, or problem areas in a process, 3) See how the different steps in the process are related, or 4) Identify the “ideal” flow of a process.

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Best Practices 101-PT 1

In the global economy that is today’s business environment, there are no guarantees as indeed, survival is not mandatory! The need for best practices is present in every industry, but mandatory in both high technology industries and commercial manufacturing operations. Over the course of the next few weeks I will try to present some of the personal knowledge gained through my intimate manufacturing involvement in over 1,000 companies that has allowed me the unique perspective of truly understanding best practices by seeing both the “best of the best” and the “worst of the worst”.

Best Practice – n. In business, a technique or methodology that, through practical experience has proven to consistently lead to superior results over other means. Applied as a system, it combines all the collective experience, knowledge and technology at one’s disposal. – Williams Business Dictionary 2014

Process AnalysisBest Practices

One could argue, actually I would argue, that before any improvement to a process can be made, the current state of the processes must be understood. Process analysis is just a fancy way to say this. If we consider waste to be anything in a process that is not adding value, then the question becomes “How do I identify waste in my process? The most effective method of identifying wastes is by process mapping; from simple basic process flowcharting to advanced value stream mapping. These two powerful tools will help any organization take the first step in identifying the value, and non-value, activities in their processes. As my esteemed high school classmate Dr. Shigeo Shingo once famously said, “The most dangerous kind of waste is the waste we do not recognize.”

Process improvement is the key to achieving both short- and long-term gains, resulting in a significant increase in overall operational performance. By analyzing your current processes you can determine which steps add value, as well as where and when defects occur. Process analysis is a careful evaluation of each step of the process from the input’s perspective as it is transformed into the output. Each step needs to be questioned on both why and how it is being performed. Just because “we have always done it this way” does not mean that it is the best way, and this is the part most organizations struggle with the most. Quantum improvement sometimes requires quantum change, and the willingness to approach process analysis with an open mind is critical to the degree of success that can be achieved. Process analysis involves utilizing a team approach to map each of the processes at the appropriate level, and then analyzing each step for its value from the customer’s perspective.

Most organizations have many processes that work together to bring a specific product from the point of a customer purchase order through the conversion process and ending with order fulfillment at the customer. The conversion process is simply turning (converting) inputs into outputs. From a big picture perspective, raw materials are turned into finished goods, but within this macro process there are many conversion cycles taking place as each process hands off a partially completed product to the next process. And again, remember that this could be one office function handing off to another just as easily as two manufacturing processes. The entire enterprise must be evaluated, from the problem-solving activity of taking a concept through engineering, the information management activity involving order-taking and scheduling, to the physical transformation of converting raw materials into finished product delivered to the customer.

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