Efficient businesses do not stand still. If a business is efficient, it has likely gotten to that point through a process of continuous improvement. A core aspect of continuous improvement involves closely examining your business’ value chains in order to spot opportunities to advance. Value stream mapping is an essential part of this process. Let’s take a closer look at value stream mapping, and how you can implement it in your business.
Your Business’ Value Chains
A value chain is simply the steps and processes that support ordering or manufacturing inventory and delivering customer value. At a very high level, it can be helpful to think of the value chain as encompassing procurement, production, distribution, sales and marketing processes. Value chains can also be understood as involving primary and support activities.
By including support activities (such as strategy, accounting and finance, human resources and information technology), value chains become a useful way to understand the role of every pair of hands in your business in manufacturing inventory and delivering value to your customers.
Value Stream Mapping
Value stream mapping arose out of lean business methodologies. Lean is a philosophy involving doing more with less, or maximising customer value while minimising customer waste. Value stream mapping is simply a way of analysing the current state of a business’ value chains and designing improvements to deliver products more efficiently. On no more than two pages, a value stream map should be able to outline the existing value chain as well as an ideal ‘future state’. In a company which develops a large number of different products, a value stream map might focus on one product or product family. What is crucially important is to keep it simple; the current and future state of the value chain should each fit on a single page or slide.
How to Produce a Value Stream Map
The first step is to decide where your business needs to focus its efforts. If your business produces a large range of products, consider which are a strategic priority for your business. Are certain products high value or do certain products trade particularly strongly? Do any of your products form part of your business’ strategic goals? In some businesses, a desire to implement lean methodology across the board might require producing maps for every value stream.
A value stream map is a picture from start to finish, so to produce one it is essential to decide where the value chain starts and stops. This will vary for every business; a distributor’s value chain will look markedly different to a vertically integrated manufacturer and retailer.
After setting the parameters of your value stream, the next step is to map the process. Doing this involves considering the journey the product takes from the starting point to the finish. This does not involve specifying every single task – remember that a value stream map is intended to be a broad, high-level overview. As value stream mapping is a lean management tool, setting out information flows is also important. These should show how customer orders translate into ordering or manufacturing inventory, working right back to the starting point and/or key suppliers.
Finally, a value stream map should show process data and estimates. In particular, this should include current and estimated lead time and manufacturing inventory levels. This analysis should help you spot inefficiencies and areas where stock is likely to build up.