Value Stream Transformation: Achieving Excellence through Leadership Alignment and Holistic Design

Value Stream Transformation: Achieving Excellence through Leadership Alignment

and Holistic Design

CONNECT

January 8, 2014

© 2014 The Karen Martin Group, Inc. 2

Why Value Stream Mapping? Why Now?

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Value Stream Mapping’s Roots

• Value

• Value Stream

• Flow

• Pull

• Perfection

1996

Value Stream Defined

Value Stream: All of the activities required to

transform a customer request into a good or service.

4

First defined in The Machine That Changed the World, James Womack, Daniel Jones, & Daniel Roos, 1990.

Process Process Process

Customer

Request

Customer

Receipt

© 2014 The Karen Martin Group, Inc.

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Function Function Function Function

Core Value Stream

Support Value Stream

Support Value Stream

Silo-Centric vs. Value Stream Thinking

Value stream segment

Value stream segment


Value Stream Mapping’s Roots

Mike Rother & John Shook 1999

Beau Keyte & Drew Locher 2004

Whenever there is a product for a customer, there is a value stream.

The challenge lies in seeing it.

— Mike Rother & John Shook, Learning to See


Value Stream Mapping: Common Failings

• Using the mapping process solely as a work design exercise

• Using the map to make tactical improvements

• Creating maps but taking no action

• Mapping with an inappropriate team—or no team at all

• Creating value stream maps during a kaizen event

• Creating maps with no metrics

• Mapping without a team charter or not socializing it


Value Stream Thinking: Strategy Before Tactics

Where am I? Where do I want

to go?

I-80 option I-40 option I-70 option

Which route should I take?

? ? ?


Value Stream Mapping Benefit: Reaching Leadership Consensus


Value Stream Mapping enables a mapping team to get ABOVE the work


VSM Promotes Systems Thinking

11

System Efficiency = Optimal Value Stream Performance

Individual Efficiency = Sub-optimization

Work: Degrees of Granularity

Value Stream

Process Process Process

Step Step Step

12

Macro Perspective

• Define strategic direction (“what”)

• Heavy leadership involvement

• Value Stream Mapping

Micro Perspective

• Identify the tactical “how”

• Heavy frontline involvement

• Metrics-Based Process Mapping


Work: Degrees of Granularity Order Fulfillment Value Stream

Order Fulfillment

Quote Design Produce

Fabricate Ship Assemble

Tactical Process-level Perspective

Strategic Value-stream Perspective

13 © 2014 The Karen Martin Group, Inc.

Value Stream Mapping: Visualize your Entire Operation on a Single Sheet of Paper


Customer

1

Process 5

Function E

LT = 1 days

PT = 15 mins.

%C&A = 95%

4

6

10 mins.

480 mins.

5 mins.

240 mins.

120 mins.

5 days

30 mins.

2 days

15 mins.

480 mins. Total LT = 9.5 days

Total PT = 180 mins.

Activ ity Ratio = 3.9%

Rolled %C&A = 30.0%

Process 3

Function C

LT = 5 days

PT = 120 mins.

%C&A = 85%

3

4

Process 4

Function D

LT = 2 days

PT = 30 mins.

%C&A = 99%

7

5

ABC Technology, Inc.

Current State Value Stream Map

Name of Value Stream Being Mapped

Demand Rate = XX / Year

Name of Value Stream Champion

Mapping Date

IT-1 IT-2

45 items

Process 2

Function B

LT = 0.5 days

PT = 5 mins.

%C&A = 75%

11

3

Process 1

Function A

LT = 1 days

PT = 10 mins.

%C&A = 50%

5

2

1 items

Information

Flow

Work

Flow

Timeline

10 items

15

Basic Value Stream Map: 3 Sections

1

2

3



Customer

1

Process 3

Function E

LT = 0.5 days

PT = 30 mins.

%C&A = 95%

4

4

10 mins.

1 days

120 mins.

2 days

30 mins.

0.5 days Total LT = 3.5 days

Total PT = 160 mins.

Activity Ratio = 9.5%

Rolled %C&A = 89.3%

Process 2

Function C

LT = 2 days

PT = 120 mins.

%C&A = 95%

3

3

ABC Technology, Inc.

Future State Value Stream Map

Name of Value Stream Being Mapped

Demand Rate = XX / Year

Name of Value Stream Champion

Mapping Date

IT-1 IT-2

5 items

Process 1

Function A

LT = 1 days

PT = 10 mins.

%C&A = 99%

5

2

1 items 10 items

Standard

work

Modified

approvals

IT interface

Cross-

train

Cross-

train

Standard

workError

proof

Basic Value Stream Map: Future State


Basic Value Stream Future State Performance Metrics

Metric Current State Projected

Future State Projected

% Improvement

Total Lead Time 9.5 days 3.5 days 63.2%

Total Process Time 180 minutes 160 minutes 11.1%

Activity Ratio 3.9% 9.5% 143.6%

Rolled % Complete & Accurate

30.0% 89.3% 197.7%

User defined

User defined


Executing Transformation

Plan

Value Stream Mapping

Making Specific

Improvements

Prepare Understand

Current State Design

Future State

Develop Transformation

Plan

Execute Transformation

Plan

Three Consecutive Days 4 Weeks Prior to Mapping

Following Mapping

Repeat

Value Stream Mapping Activity Phases and Timing



1

2 1

3 2

4 3

5 4

5

1 6

2 7

3 8

4 9

5 10

1

2 1

3 2

4 3

5 4

1

2

3

4 Date: Date:

Name

Name

Lourdes Dwyer

Diana Marie

Dave Gerald

Ryan Austin

FacilitatorValue Stream Champion

Sean Michaels

Contact Information

Contact Information

Demand Rate

Trigger

1,000 per year

Customer submits RFQ

Value Stream Mapping CharterScope Accountable Parties Logistics

Allen Ward

Nancy LittleSpecific

Conditions

Engineer to order, requires both hardware &

software customization

Value Stream

Champion

Capital equipmentExecutive

SponsorValue Stream

Event Dates

& Times

July 24-26, 2013

8:00 am - 5:00 pm

Dave ParksBase-camp

LocationFacilitator

Current State Problems & Business Needs Mapping Team

Boundaries &

Limitations

Improvement Time

Frame

No new software; only minor changes to existing IT

systems; no additional staff; no budget changes

Future state design is fully realized by

December 31, 2013.

Last Step Production ships product

Logistics

CoordinatorDave Parks

July 24, 25, & 26

4:00-5:00 pm

First Step Sales reviews the RFQ

Briefing

Dates &

Times

Meals

Provided

Briefing

Attendees

** required

*optional

** Allen W (COO), Joe M (CIO),

Sal T (VP Sales)

* Bruce R (VP Ops), Carlos P

(HR), Su T (CFO), Bill M (VP CS)

(Competition's RFQ LT is 1 wk and PO to delivery is 4 wks) Scrum Master

Goals & Measurable Target Conditions Engineering, Vice President

Unclear & incorrect information flowing through value stream. IT, Director

Lead time for RFQ turnaround = 2 weeks; PO to software dev = 5 weeks Finance, Controller

Desire to stay ahead of the competition & deepen customer loyalty. Function / Title

Forecasted growth of 15% for next fiscal year. Sales, Director

Reduce PO to software development lead time by a minimum of 50%. Customer Service, Manager

Ambreen Motiwala

Danny Tran

Nancy Little

Reduce RFQ lead time by a minimum of 50%. Manufacturing, Director

Freed capacity to absorb additional business w/o increasing staff. Production Supervisor

Faster delivery; less hassle; less cost. Function

Better working relationships between sales, estimating & engineering. Planning / Purchasing, Planner

Continential breakfast & lunch

Surf's Up - Room A

Tom St. James

Benefits to Customers & Business On-Call Support

JR HuntImprove quality of information flowing throughout value stream. Customer (contract manufacturer)

Operational: LT in segments (RFQ to quote; PO to development). Signature:

Date:

Relevant Data Agreement

Financial: Estimate-to-actual cost comparison.

Executive SponsorSales effectiveness: RFQ conversion rate.

Signature: Signature:

Charter: Critical planning, communication, and consensus-building tool


1

2 1

3 2

4 3

5 4

5

1 6

2 7

3 8

4 9

5 10

1

2 1

3 2

4 3

5 4

1

2

3

4 Date: Date:

Name

Name

Lourdes Dwyer

Diana Marie

Dave Gerald

Ryan Austin


Sean Michaels

Contact Information

Contact Information

Demand Rate

Trigger

1,000 per year



Allen Ward


Conditions



Value Stream

Champion


SponsorValue Stream

Event Dates

& Times

July 24-26, 2013

8:00 am - 5:00 pm

Dave ParksBase-camp

LocationFacilitator


Boundaries &

Limitations

Improvement Time

Frame




December 31, 2013.


Logistics


July 24, 25, & 26

4:00-5:00 pm


Briefing

Dates &

Times

Meals

Provided

Briefing

Attendees

** required

*optional


Sal T (VP Sales)










Ambreen Motiwala

Danny Tran

Nancy Little






Surf's Up - Room A

Tom St. James




Date:







1

2 1

3 2

4 3

5 4

5

1 6

2 7

3 8

4 9

5 10

1

2 1

3 2

4 3

5 4

1

2

3

4 Date: Date:

Name

Name

Lourdes Dwyer

Diana Marie

Dave Gerald

Ryan Austin


Sean Michaels

Contact Information

Contact Information

Demand Rate

Trigger

1,000 per year



Allen Ward


Conditions



Value Stream

Champion


SponsorValue Stream

Event Dates

& Times

July 24-26, 2013

8:00 am - 5:00 pm

Dave ParksBase-camp

LocationFacilitator


Boundaries &

Limitations

Improvement Time

Frame




December 31, 2013.


Logistics


July 24, 25, & 26

4:00-5:00 pm


Briefing

Dates &

Times

Meals

Provided

Briefing

Attendees

** required

*optional


Sal T (VP Sales)










Ambreen Motiwala

Danny Tran

Nancy Little






Surf's Up - Room A

Tom St. James




Date:







1

2 1

3 2

4 3

5 4

5

1 6

2 7

3 8

4 9

5 10

1

2 1

3 2

4 3

5 4

1

2

3

4 Date: Date:

Name

Name

Lourdes Dwyer

Diana Marie

Dave Gerald

Ryan Austin


Sean Michaels

Contact Information

Contact Information

Demand Rate

Trigger

1,000 per year



Allen Ward


Conditions



Value Stream

Champion


SponsorValue Stream

Event Dates

& Times

July 24-26, 2013

8:00 am - 5:00 pm

Dave ParksBase-camp

LocationFacilitator


Boundaries &

Limitations

Improvement Time

Frame




December 31, 2013.


Logistics


July 24, 25, & 26

4:00-5:00 pm


Briefing

Dates &

Times

Meals

Provided

Briefing

Attendees

** required

*optional


Sal T (VP Sales)










Ambreen Motiwala

Danny Tran

Nancy Little






Surf's Up - Room A

Tom St. James




Date:






Value Stream Scoping Diagram Defining Specific Conditions

Golden State Equipment, Inc.

Capital Equipment

Catalog

Configure to order

Engineer to order

Custom hardware

Custom software

Both New Product Development

Spares & subassemblies

Catalog

Engineer to order

24 © 2014 The Karen Martin Group, Inc.


Where should the “fenceposts” be? Function Activity

Marketing Generates sales leads

Sales Calls on and qualifies customers

Customer Submits RFQ to sales

Sales Reviews RFQ

Estimating Generates quote

Sales Approve quote

Customer Accepts quote; submits a PO

Sales Approves PO

Customer service Creates SO; compiles spec package

EE/ME design Designs product; generates BOM

Customer Approves design

EE/ME design Forwards design to SW dev

Software Dev Writes code

Purchasing/Planning Releases WO; schedules production

Supplier (external) Delivers materials

Production Manufactures & ships product

Customer Installs equipment

Field service Conducts 90-day follow-up


Who should be on the team, serve on-call, and attend daily briefings?


1

2 1

3 2

4 3

5 4

5

1 6

2 7

3 8

4 9

5 10

1

2 1

3 2

4 3

5 4

1

2

3

4 Date: Date:

Name

Name

Lourdes Dwyer

Diana Marie

Dave Gerald

Ryan Austin


Sean Michaels

Contact Information

Contact Information

Demand Rate

Trigger

1,000 per year



Allen Ward


Conditions



Value Stream

Champion


SponsorValue Stream

Event Dates

& Times

July 24-26, 2013

8:00 am - 5:00 pm

Dave ParksBase-camp

LocationFacilitator


Boundaries &

Limitations

Improvement Time

Frame




December 31, 2013.


Logistics


July 24, 25, & 26

4:00-5:00 pm


Briefing

Dates &

Times

Meals

Provided

Briefing

Attendees

** required

*optional


Sal T (VP Sales)










Ambreen Motiwala

Danny Tran

Nancy Little






Surf's Up - Room A

Tom St. James




Date:






Prepare Understand


Future State


Plan


Plan

Create the Current State Map

28

1. Value stream walk #1 2. Layout the map 3. Value stream walk #2 4. Add map details 5. Add timeline; calculate

summary metrics


Effective Way to Visualize Relationships between IT Systems and the Operation

Prepare Understand


Future State


Plan


Plan

Create the Future State Map

1. Define the “right work” 2. Make the right work flow 3. Manage the right work

30

Prepare Understand


Future State


Plan


Plan

How will you realize the future state?

31

1 2 3 4 5 6 7 8 9 10 11 12

2 Improve quality of referral to 85% KESean

Michaels 100%

3,4Reduce lead time between scheduling

and preregistration step to 45 minutesProj

Dianne

Marie 75%

4 Only one check in per patient KERyan

Austin 50%

4 Reduce wait time in waiting area by 50% KEDianne

Marie 50%

6Eliminate 6 hour lead time associated

with transcription stepProj

Dave

Gerald 50%

7 Eliminate redundant data entry ProjDave

Gerald 25%

5Visually managed inventory; no outages

or expired itemsKE

Michael

O'Shea 100%

6 Reduce imaging LT to one hour ProjMartha

Allen 25%

8 Reduce report delivery LT to 30 minutes ProjMartha

Allen 0%

7 Reduce LT at image review to 1 day JDIDave

Gerald 100%

Value Stream Transformation PlanValue Stream

Value Stream Champion

Value Stream Mapping Facilitator

Allen Ward 1-Nov-12Executive Sponsor

Scheduled Review Dates

21-Nov-12

Outpatient Imaging

Paul Scanner

Dave Parks 13-Dec-12

10/18/2012 10-Jan-13Date Created

Value Stream Mapping Facilitator

Increase % of physicians receiving

electronic delivery

Planned Timeline for ExecutionStatus

Signature:

Agreement


FS VSM

Block #Measurable Target Proposed Countermeasure

Implement standard work for referral

process

Exec.

Method*Owner

* Execution Method = JDI (Just-do-it), KE (Kaizen Event), or Proj (Project)

Cross-train and co-locate work teams

Value-stream specific radiologists

Implement voice recognition technology

Auto populate between PACS and

Meditech

5S CT supplies area; implement kanban

Collect copays in Imaging

Balance work / level demand

Visual metrics and indicators

Date: Date:

Executive Sponsor Value Stream Champion

Date:

Prepare Understand


Future State


Plan


Plan

Where the rubber meets the road…

32

• Accountability rests with executive sponsor • Monthly status meetings • Adjust plan as new discoveries are made

And then repeat…

33


Outpatient Imaging Services

Demand = 15 per day

Customer Demand:

15 patients per Day

(Takt Time 1920 seconds)

8 hours per day

Referring

Physician

% C&A = 65 %

Check-in

Patient

(Admitting)

Cycle Time = 2 mins.

% C&A = 90 %

5

Send

Reports

(Imaging)


% C&A = 90 %

6

Hospital

5 mins.

Schedule

Appointment


Lead Time = 12 mins.

% C&A = 98 %

6

Pre-register

Patient



% C&A = 100 %

5

CT=Cycle Time

LT=Lead Time

%C&A=% Complete & Accurate

0.0833 hrs.

2 mins.

0.0833 hrs.

1 mins.

0.75 hrs.

10 mins.

0.5 hrs.

15 mins.

0.0833 hrs.

3 mins.

4.13 hrs.

15 mins.

6.08 hrs.

5 mins.

16 hrs.

1 mins.

1.83 hrs.

1 mins.

2 hrs.

3 mins.

LT = 32.5 hrs.

CT = 56 mins.

CT/LT Ratio = 2.87%

Lead Time = 12 mins.Lead Time = 990 mins.

Prep

Patient

(Tech)


% C&A = 100 %

2

Check-in

Patient

(Imaging)


% C&A = 98 %

3

Complete

Exam

(Tech)


% C&A = 90 %

2

Transmit

Images

(Tech)


% C&A = 100 %

2

Read/Dictate

Exam

(Radiologist)


% C&A = 95 %

2

Transcribe

Report

(MDI)


% C&A = 75 %

6

Review

Draft/Sign

(Radiologist)


% C&A = 95 %

2

Print

Reports

(Imaging)


% C&A = 99 %

230 mins. 5 mins. 248 mins. 365 mins. 960 mins. 110 mins. 120 mins.45 mins.

E Pay

Excel

ADS

Symposium

Internet

Waiting Room

Management

System

Fax Order

Solutions

PACS

5 mins.

Lead Time = 24 days

Meditech

123

4

5 6 7 8 9 10 11 12 13 14

Auto Fax 50%

Us Mail 25%

MD Mailbox 25%

Rework Loop via Fax 25% of the time

Rolled First Pass

yield = 29%


Outpatient Imaging Services

Demand = 15 per day

Referring

Physician

% C&A = 85 %

Send

Reports

(Imaging)


% C&A = 90 %

6

Hospital

Schedule appt

Pre-register



% C&A = 98 %

6

CT=Cycle Time

LT=Lead Time

%C&A=% Complete & Accurate

0.0833 hrs.

1 mins.

0.583 hrs.

10 mins.

0.333 hrs.

10 mins.

0.0833 hrs.

2 mins.

2 hrs.

15 mins.

7 hrs.

1 mins.

0.0333 hrs.

1 mins.

0.5 hrs.

3 mins.

LT = 11.3 hrs.

CT = 43 mins.

CT/LT Ratio = 6.32%

Lead Time = 45 mins.Lead Time = 15 days

Prep

Patient

(Tech)


% C&A = 100 %

2

Check-in

Patient

(Imaging)


% C&A = 98 %

3

Complete

Exam

(Tech)


% C&A = 90 %

2

Transmit

Images

(Tech)


% C&A = 100 %

2

Read/Dictate

Exam

(Radiologist)


% C&A = 95 %

2

Review

Draft/Sign

(Radiologist)


% C&A = 95 %

2

Print

Reports

(Imaging)


% C&A = 99 %

220 mins. 5 mins. 120 mins. 420 mins. 2 mins. 30 mins.35 mins.

E Pay

Excel

Symposium

Internet

Waiting Room

Management

System

Fax Order

Solutions

PACS

5 mins.

Set-upReduction

Remove

Check inand Reduce

System Access

Work Balancing

StandardWork

Pull System(Supplies Kanban)

VisualWorkplace

Voice Recognition

Batch Reductions

5S

Co-locate

Standard

Work

Work

Balance

ContinuousFlow

Value StreamAlignment

Auto Fax 80%

Us Mail 15%

MD Mailbox 5%

Rolled First Pass

yield = 40%

Rework Loop via Fax 10% of the time

Customer Demand:

15 patients per Day

(Takt Time 1920 seconds)

8 hours per day

12

3

45 6 7 8 9 10 11

Risk Reduction

(Joint Commision)

Meditech

Metric Current

State

Improved

State

%

Improvement

LT 32.5 hrs 11.3 hrs 65%

PT 56 mins 43 mins* 23%

AR 2.9% 6.3% 117%

RFPY 29% 40% 38%

# Steps 14 11 21%

Tech turnover

(annual) 100% 25% 75%

Outpatient Imaging

Value Stream Improvement Results

* This reduction (freed capacity) enabled the client to collect $500K more in annual

revenue without incurring additional labor or equipment expenses.


Purchasing — Non-repetitive purchases less than $5,000 Supplies Purchasing - Current State VSM

Finance

Review

Budget

PT = 5 mins.

C&A = 60%

6

Corp Purchasing

Manager

Approve in

ERP

PT = 5 mins.

C&A = 90%

1

0.25 days

5 mins.

0.5 days

5 mins.

5 days

5 mins.

1 days

5 mins.

1 days

10 mins.

0.5 days

15 mins.

3 days

5 mins.

7 days

15 mins.

10 days LT = 28.4 days

PT = 65 mins.

AR = 0.477%

Supervisor

Review Req.

PT = 5 mins.

C&A = 95%

2

Sys Engineer

Review

Requisition

PT = 5 mins.

C&A = 90%

1

IS Manager

Review

Requisition

PT = 5 mins.

C&A = 100%

1Financial Mgr

Review

Requisition

PT = 10 mins.

C&A = 95%

1

Admin Asst

Enter

Requisition

PT = 15 mins.

C&A = 98%

1

4 hrs. 40 hrs. 8 hrs. 8 hrs. 24 hrs. 56 hrs.

Originator

Inititate Req.

PT = 10 mins.

C&A = 10%

31

2 hrs.

Form File

File Maker

ERP

Quicken

Vendor

Website

Excel

4 hrs.

Customer Demand:

615 requisitions per y ear

20 ReqsExternal

Supplier

PT = 20 mins.

Hard CopySupplies

Data Entry

Corp Purchasing

Submit PO

to Supplier

PT = 15 mins.

C&A = 98%

6

10 Reqs 63 Reqs

1

2 3 4 5 6 7 8 9 10

RFPY = 4.2%

PT = Process Time

LT = Lead Time

C&A = % Complete & Accurate

AR = Activ ity Ratio (PT/LT x 100)

RFPY = Rolled First Pass Y ield

80 hrs.

Supplies Purchasing - Future State VSM

Customer Demand:

615 requistions per year

Dept.

Manager

Approve

in ERP

PT=5 mins.

C&A = 90%

1

0.5 days

5 mins.

0.75 days

5 mins.

1 days

20 mins.

10 days LT = 12.3 days

PT = 30 mins.

AR = 0.508%

Supervisor

Review

Req.

PT=5 mins.

C&A = 95%

28 hrs.

Originator

Enter Req.

in ERP

PT=30 mins.

C&A = 85%

31

File Maker

ERP

Vendor

Websites

6 hrs.

Standard

Work for

review

Additional

IT access

Requisition

Checklist

Cross

Training

Additional

IT access

External

Supplier

PT=20 mins.

Supplies

4 hrs.

Auto Notify

Integrate Form

File with File

Maker

Use budget in place

of Quicken

Dedicated

Buyers

Corp Purchasing

Place

Order

PT=20 mins.

C&A = 98%

6

Approval

1

2 3 4 5

PT = Process Time

LT = Lead Time

C&A = % Complete & Accurate

AR = Activity Ratio (PT/LT x 100)

RFPY = Rolled First Pass Yield

RFPY = 71%

80 hrs.


Purchasing — Non-repetitive purchases less than $5,000

Metric Current

State

Projected

Future State

%

Improvement

Total Lead Time 28.4 days 12.3 days 56.7%

Total Process Time 65 mins 30 mins 53.8%

Activity Ratio 0.48% 0.51% 6.3%

Rolled %C&A 4.2% 71.0% 1,590%

# Handoffs 10 5 50%

# IT Systems 6 3 50%

Purchasing Process

Projected Results

%C&A = Correct & accurate (Quality)


Value Stream Mapping: As Much Art as Science


To order from Amazon: www.bitly.com/VSMbk For more information: www.ksmartin.com/VSM

Available Now!

http://www.bitly.com/VSMbk

http://www.ksmartin.com/VSM


Karen Martin, President 7770 Regents Road #635

San Diego, CA 92122 858.677.6799

[email protected]

For Further Questions

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