Manufacturers face intense pressures, especially when it comes to managing costs. Supply chain disruptions loom ominously over core processes, and meeting stringent quality demands amid global competition only intensifies the pressure.
But with value stream mapping (VSM), manufacturers and other organizations can systematically reduce costs by making their processes more Lean. VSM involves breaking down processes to identify individual steps, how long each takes, and the materials and systems required.
Like all Lean tools, the driving principle behind VSM is maximizing value for the customer. Whenever a step doesn’t add value, there may be an opportunity to eliminate the step or adjust it. Value stream mapping highlights these opportunities, setting the stage for deep, detailed optimizations that reduce your costs.
Manufacturers are ideal candidates for value stream mapping because they use well-defined processes to make physical products for their customers. By breaking processes down into their steps and documenting how long each takes, manufacturers can identify steps to remove or reimagine in order to reduce costs and deliver more value to customers.
In this blog post, we explore how value stream mapping in manufacturing has helped organizations reduce spending and improve the net value of their products. As we walk through VSM implementation step-by-step, we’ll include real-world manufacturing examples of value stream mapping so you can see exactly how VSM benefits manufacturers.
The following breakdown of value stream mapping in manufacturing illustrates how each step informs the next.
Remember that VSM occurs before optimization, and the two are separate disciplines. In other words, VSM provides visibility into the elements of your processes that you can optimize to save money and increase customer value. You then use this information to make changes to your processes.
Here’s how to implement value stream mapping as a manufacturer:
First, choose a process and then set goals around how to improve it.
For instance, your VSM exercise may examine your inventory management system. Specifically, you could analyze your inventory carrying costs. These include money spent on stored inventory that you could use for other things, such as research and development (R&D) or paying down debt. It also encompasses costs associated with storing and warehousing items.
In this case, defining the scope of this element of your VSM may look like this:
While defining processes to target and your goals, keep your scope narrow. For instance, a vehicle accessories manufacturer could target a specific product family, such as trailer hitches, rather than trailer hitches, floor mats, liners, and mud flaps.
Also, look for multiple VSM opportunities. Sometimes, relatively simple differences require completely different VSM exercises. For instance, let’s say a plant makes two different products. One is packaged in bulk, and the other is packaged individually.
Each packaging process has a distinct value stream. By homing in on each individually, you’re more likely to discover multiple optimization opportunities.
It may also help to group products by type, such as business to business (B2B) versus business to consumer (B2C). A B2C product may require faster order fulfillment. This would demand a different VSM process than the B2B product.
While the focus of your VSM should be narrow, the team you enlist should be relatively broad. In this way, you improve the quality of the data you collect and boost buy-in. Your team could include members from:
These principles are especially important when performing value stream mapping in supply chain optimization because each production element may have multiple dependencies spanning different disciplines. For instance, a decision to reduce time spent in storage can give the marketing team an opportunity to add “speed” to its branding profile.
Mapping your current state is foundational. Use your current state map to establish a baseline that guides your objectives.
To build a map of your current state:
Mapping your current state will give you a clear view of lead time (from when an order is placed to when it’s fulfilled) versus processing time (time spent working to fulfill an order).
VSM can be particularly helpful when the market calls for adjustments, such as when increased demand requires shorter processing times. Performing a VSM can help you identify the impact of these kinds of changes.
Supply chain optimization techniques center around pinpointing and attacking waste. To identify wasteful steps, analyze your value stream map to see where customer value is added and where you’re only adding business value. Steps that add business value are those that benefit your business but have no direct impact on value for the customer.
For instance, in an effort to boost financial performance, a manufacturer may take time to categorize the cost of each component before finalizing the end product for delivery.
This is very valuable to the business because it enables cost optimization and improves accounting accuracy. However, it doesn’t benefit the customer in any direct way.
Flag each step you can improve, perhaps using a Kaizen burst that labels what needs fixing.
While identifying waste, you should put “time spent” in your crosshairs. Relentlessly question anything that adds to lead time and identify any barriers preventing it from adding customer value. Each barrier you identify becomes an opportunity.
For example, a part you manufacture may need a manual inspection before it’s added to your end product. In some cases, a part may sit in a manual inspection queue for a day, two days, or longer. While this may have value for the business, it has little, if any, value for the customer and adds significant lead time.
Your future state is how the reimagined process will look after you’ve reduced waste. The future state may be a byproduct of:
Sometimes, it’s best to use what’s called a “supermarket pull system,” in which downstream steps pull items they need from a “supermarket” in inventory. Upstream steps have to fill the supermarket with items that their downstream partners will need.
But this isn’t always best. For instance, the carrying costs associated with items in a supermarket pull system may be so high that they eclipse any potential efficiency benefits.
In this case, it may be better to transition to a flow-based system.
Once your future state is clear and feasible, it’s time to devise an action plan. Action plans start with listing the projects or Kaizen events you identified in step 4.
Categorize each project into those that can score quick wins and those that would require more long-term changes.
For instance, suppose you’re a manufacturer that has performed VSM on a production process that involves CNC machining, painting, then packing and shipping.
VSM identifies a few areas to address:
Given this data, you decide to:
VSM implementation in manufacturing depends on getting the quick-win versus longer-term change decision just right. Trying to stuff a complicated change into a short time frame can result in frustration, failure, and reduced buy-in.
You can maximize VSM’s benefits by extending your efforts beyond your immediate sphere. Some organizations coordinate a VSM exercise across multiple sites. If you have more than one facility producing your goods, you may be able to run a single VSM that delivers Lean benefits across all your factories.
You may have VSM opportunities beyond your company’s boundaries as well. For example, if your production process is highly dependent on a certain supplier, you could team up with them to perform a mutually beneficial VSM.
Calculating the success of your VSM processes comes down to leading and lagging indicators:
At the outset of your VSM journey, identifying leading and lagging indicators is key because they have different timelines. You don’t want decision-makers to sit in expectation of several lagging indicators for months, thinking they should’ve seen benefits in the first few weeks.
Implementing VSM in manufacturing starts with performing a readiness assessment. Is your organization prepared for value stream mapping and taking the steps necessary to act on its findings?
Once you’ve determined your organization is ready for the VSM process, you need to allocate resources around:
Many companies don’t have the bandwidth or internal expertise for the full process. If that’s the case, it’s best to enlist an external partner. If your team members already have their plates full with day-to-day tasks, VSM services may be your best move.
Your next step as a manufacturing leader is to determine how VSM can reduce your expenses and increase customer value. You can make a list of your processes and then assess whether you have the capacity, time, and resources to build a team, conduct the exercises, and pay participants.
Value stream mapping is the first step in gaining the competitive advantages that come from optimized workflows.
By identifying where you can reduce costs, you free up valuable headroom, which allows you to invest more in customer interaction and product enhancements. And since VSM prioritizes value for the customer, you can weave a more customer-first mentality throughout your organizational fabric, not just your sales team.
Centric Consulting’s operational excellence experts are ready to help streamline your value stream mapping. Learn more by reaching out to us.
