What Is Value Stream Mapping and How Does It Drive Continuous Process Improvement?

Value stream mapping is a Lean management tool that helps you see where value is created and what’s standing in the way of attaining it. By using high-level measures and system-specific metrics, value stream maps identify specific opportunities to improve processes and reduce waste.

In brief:

• Value stream mapping (VSM) is a Lean management tool that helps you analyze processes to better understand how they deliver value for customers. This allows you to identify and reduce waste in your processes.
• “Efficiency” and “value” are both necessary for business and process optimization.
• Value stream mapping does not require extensive details or precise data. Instead, it is a high-level process that highlights efficiency and value-adding opportunities.
• You can apply VSM to any industry that has a production process that creates value for customers.
• To succeed, value stream mapping must prioritize process steps and avoid becoming bogged down in details.
• Sustaining VSM requires continuously applying Lean tools and periodically revisiting your value stream maps to identify new focus areas.

In conversations about Lean methodology, one word stands out: efficiency. That makes sense. But efficiency is useless without its sibling: value. Real, tangible value for the customer validates efficiency. All the automation and supply chain optimization in the world are worthless unless they create value.

Value stream mapping (VSM) ensures your Lean processes deliver authentic value for your customers while also flagging excess costs. With effective VSM, you can identify the value each step provides relative to the time and resources it requires. The result is a graphical representation, or value stream map, that shows how to optimize your business.

“Value stream mapping is the first step in gaining the competitive advantages that come from optimized workflows,” says Rob Williams, Centric Consulting’s operational modernization supply chain lead. “By identifying where you can reduce costs, you free up valuable headroom, which allows you to invest more in customer interaction and product enhancements.”

In this blog post, we’ll break down what VSM is, common misconceptions about it, real-world examples, and how to implement value stream mapping for continuous process improvement.

But first, we will define value stream mapping and how it relates to Lean principles.

What Is Value Stream Mapping? A Foundation for Lean Excellence

Value stream mapping is a Lean management tool for analyzing processes to better understand how they deliver value for customers. VSM involves identifying exactly where value is created, conducting bottleneck analysis, and pinpointing wasteful phases that produce little or no value.

For example, suppose a manufacturer makes outboard boat motors. After the motors are fully assembled, they must wait for a shipping coordinator to arrange transportation to customers. Unfortunately, the coordinator only performs that task each morning for products completed the previous day.

As managers create a value stream map, they see this gap between completed production and shipping. They decide to adjust the shipping coordinator’s routine to allow the shipping coordinator to plan shipments as a designated quantity of motors becomes available.

The best value stream maps share characteristics that standardize your approach to deliver the most value. We’ll explore those next.

3 Essential Components of an Effective Value Stream Map

1. High-Level Process Steps

To begin, let’s define some key high-level measures your value stream map needs:

• Cycle Time. The time spent at each step in the value stream.
• Lead Time. The total time a process takes from when a customer places an order to when they receive it. Lead time includes each cycle time plus time spent waiting for parts to arrive, shipping, and other time-consuming elements outside of actual production work.
• Changeover Time. The time needed to move from one task to another or to transition between creating one product and the next. While not an essential measure, changeover time may be identified as an improvement opportunity.
• Uptime. The amount of time that production equipment or systems are routinely planned to be working and available.

2. Data Collection

You have to build your VSM around system data by using actual observed time frames and end results. If, for instance, you use outdated production timeline estimates, you may end up with inaccurate, unreliable data.

However, it’s important to avoid becoming overly concerned with data accuracy for your VSM. Teams can become bogged down searching for exact numbers, but you don’t need specifics at this stage — you’re just looking for the most common values.

Instead, focus on gathering people who understand how your processes run and encourage them to use their best judgment.

3. System-Specific Metrics: The Goal of a Value Stream Map

A VSM uses predefined metrics to identify where further effort can drive improvement. For example, consider the metric of percentage of time where value is added.

This is a percentage based on a ratio. For an order fulfillment process, it could be a ratio like this:

Percentage of time where value is added = (Time to enter order) / (Time to enter order + Time the order waits for the next step to start) × 100

So, an order that takes 15 minutes to enter but then waits 24 hours before the next steps to fulfill the order begin would have a calculation like this:

0.25 hours / 24 hours × 100 = 1.04 percent

This metric means that as the process currently operates, during a 24-hour period, the process adds value only 1 percent of the time. If the team cuts the waiting time to one hour, the calculation reveals a far higher percentage:

0.25 hours / 1 hour × 100 = 25 percent

In other words, by decreasing the time spent waiting for the next step to fulfill the order, the team has increased the percentage of time that they are adding value.

However, this doesn’t mean that they’ve saved money for the company. It simply means that the team has identified a way to get the order to the customer faster, which makes them more competitive in the market.

Common Misconceptions About Value Stream Mapping

People often think value stream mapping involves an extensive, detailed optimization exercise that centers around a granular depiction of each phase of production. This isn’t the case. VSM is a high-level process designed to highlight efficiency and value-adding opportunities across many segments of a production process.

“While defining processes to target and your goals, keep your scope narrow,” says Williams. “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.”

A trailer hitch VSM may include:

• The process of assembling each component
• Testing each hitch
• Packaging and shipping each completed, tested trailer hitch

However, VSM wouldn’t break down the specific added components, in what order they’re added, or at what work center. Instead, it would include the general timing involved in producing the typical product. This data is a tool for identifying specific opportunities and improvement areas across multiple sectors.

Industry Applications: VSM Success Across Sectors

VSM works across all sectors because every industry has a production process that creates tangible value for customers. Both product manufacturers and service providers benefit from value stream mapping.

For instance, many providers have review and approval steps in their processes. An order comes in, and someone must approve it before the rest of the team starts fulfilling it. Or a team designs a service package, and someone must approve it before a salesperson presents the package to the customer.

One Centric Consulting customer, an industrial cleaning product manufacturer, was receiving wholesale orders from a retailer. The process of approving the order before it was fulfilled took up to 24 hours. However, the customer wanted their orders fulfilled as soon as possible. The VSM that Centric conducted revealed a key opportunity: reduce approval time and create greater value for clients.

However, implementing VSM does have its challenges.

2 Value Stream Mapping Implementation Challenges and Solutions

As one of the core Lean manufacturing principles, VSM is typically a very smooth exercise, but you need to keep some challenges in mind.

Fortunately, overcoming these challenges is straightforward, especially when you understand that value stream mapping is, intentionally, very high-level. VSM produces a broad analysis of a macro process, revealing many ways it can be more Lean.

The two most common VSM challenges are:

Being Too Detailed Too Soon

One of the most common challenges with VSM implementation is getting bogged down in the details, which leads to frustration and loss of momentum.

A similar challenge is spending excessive time debating how long each process takes. Is it 5 minutes or 15 minutes? An hour or 1.5 hours? This can cause analysis paralysis.

Failing to Prioritize Your Steps

It’s unrealistic to improve every step that can be enhanced after you’ve completed your value stream analysis. First, focus on a few steps that deliver quantifiable value in the short term before taking on additional steps.

By identifying the right metrics and avoiding these challenges, you will be ready to reap the benefits of VSM for continuous improvement.

Building Long-Term Success: Sustaining VSM Benefits

Sustaining value stream mapping’s benefits hinges on continuously applying Lean tools to reduce waste in your processes. Next, periodically recalculate your VSM to identify new focus areas.

The process optimization that follows will legitimize VSM as one of your most effective Lean transformation tools. Once your team has proven the value of value stream mapping, you should perform it periodically. This way, VSM becomes part of your organizational culture, reducing the friction of future assessments.

With a regular VSM and Lean management strategy, your organization will begin maximizing value for customers and enhancing your market share.

Use Value Stream Mapping to Design Your Path Forward

When you implement systematic VSM, you make waste elimination and process optimization endemic in your culture. If you want deeper insights and careful guidance through your value stream mapping journey, you can rely on Centric’s operational excellence experts. Reach out for a consultation.