May 2016 value management

Tutorial

© QualSure Associates Ltd 2016 www.qualsure-associates.co.uk

Certificate & Diploma in Quality Management

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Presented by

Indulis L Svikis MBA, MCMI, MCQI CQP, Cert Ed.

QualSure Associates Ltd www.qualsure-associates.co.uk

Value Management Part II


This document and supporting resources has been issued for the sole use of study by learners registered with QualSure Associates Ltd.

Learning resources are issued on the understanding that they

will be only used for the purpose of study as a registered learner with QualSure Associates Ltd and may not be reproduced or utilized in any form or by any means, electronic or mechanical, including photo-copying, recording, or by any information storage or retrieval system, without permission in writing from QualSure Associates Ltd.


Value Management

This unit is supported by a number of learner resource packs that will be accessible through the QualSure Academy Learning Management System @ www.qualsure-academy.co.uk

Throughout your studies you may be required to undertake: Research, complete Exercises and submit Coursework .... or simply to Reflect utilising mind mapping techniques Please take time to complete these learner tasks.


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Key learning points are identified by …. Please take time to understand these to enhance your knowledge


Value Management

August 2015 Tutorial

Value Management Part II


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Tutorial aim

§  Part II of ‘Value Management’ aims to develop the principles of Value Analysis and Value Stream Mapping which were discussed at the last tutorial


Value Management

Learner Outcomes

Learners will be able to:

§  Understand, present and apply the key principles of Value Stream Analysis and Value Stream Mapping

§  When undertaking examinations and assignments, the learner should be able to incorporate value management principles within the context of the question / brief


Value Management


Value Management

‘Value’

Company Logic

Customer Logic

Individual Exercise

§  Please answer the following questions Refer to the previous tutorial learner resources to check your answers


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20 minutes

1.  Define the term ‘value’ 2.  Define the terms (Quality Management System ISO 9001:2015)

•  ‘context in which the organization operates ’ •  the needs of ‘interested parties ’

3.  How would an organization identify it’s ‘future state’ ? 4.  What is meant by the term ‘value stream’ ? 5.  What is the purpose of ‘value stream mapping’ ? 6.  When assessing the ‘current state’ what process ‘wastes’

would your team be looking for ?


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Recap of key learning points from the previous tutorial: Value Management Part I


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§  Definition of customer value: The difference between

what a customer gets from a product, and what he or she has to give in order to get it


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Customer Expectations

Customer Experience

Negative Value Positive Value Positive Value

Customer Experience

Customer Experience



§  Value Management


Value Management Value in the

eyes of the customer is forever changing. The challenge is to ensure Value = Customer Expectations = Customer Experience

§  If we think about the future state: our customer is

expecting to see a year-in-year out transformation of our products and services


Value Management

“I need you but I don’t need the old you. I need a new you who understands the transformation I’m going through as your customer. If you don’t, you’re out of touch.” Daniel Burrus

§  Value Management should be focussed on three areas:


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Strategic High Level Strategy

Product Product A

Product B

Process Process A

Process B


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Design Product Maturity Decline Launch

Scope of Value Engineering

Sales

Time

Product Life Cycle (Bathtub Curve)

0



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Business Objectives

Business Strategy

Integrated Management

Systems

Business Plan

Customer Experience

§  Effective and efficient ‘Value Streams’ must be created


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A value stream can be defined as all the steps – both value added and non value added – required to take a product or service from its raw materials state into the waiting arms of a happy customer.

Gemba Academy


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Op. Op. Op. VALUE

VALUE STREAM

LEAD TIME

The ‘ideal’ value stream Op. = Production / Service operation, activity or process task


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VALUE STREAM

LEAD TIME

Op. Waste Op. Waste Op. Waste VALUE

Value streams often include ‘waste’ Value stream analysis /mapping should identify ‘waste’

The Seven Wastes consist of:-

1. Defects 2. Overproduction 3. Transportation 4. Waiting 5. Inventory 6. Motion 7. Processing


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Value Loss

Defects

Overproduction

Transportation

Waiting Inventory

Motion

Processing


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Cost

Value

TARGET

Low Cost High Value

Low

High

High

……… end of re-cap Please refer to the previous tutorial learner resources and workbook for the full presentation


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Value Stream Mapping (extract)


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§  Value Stream Mapping utilises the basic principles of

‘Storyboards’ developed by the Walt Disney Studio in the 1930’s


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§  A storyboard is a graphic representation in the form of illustrations or images displayed in sequence for the purpose of pre-visualisation of motion pictures or animations. The storyboard maps out the sequence of action to enable the production team to visualise the overall scene and find potential problems before they occur


Value Management

§  Value Stream Mapping is utilised to visually represent the ‘value streams’ – the sequence of activities at the strategic level of an organisation

§  Mapping the value stream includes the sequential activities undertaken and information flow

§  Value Stream Mapping should not be confused with ‘Process Mapping’ – which is concerned with the detailed steps of each activity

§  Value Stream Mapping is strategic §  Process Mapping is tactical © QualSure Associates Ltd 2016 www.qualsure-associates.co.uk

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§  Value Stream Mapping utilises the Shewart (adopted by Deming) PDCA cycle


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PLAN

DO

CHECK

ACT

§  The concept of the internal supplier and internal customer was promoted by Joseph Moses Juran who stated that 90% of all errors are ‘management controllable’. The remaining 10% are ‘employee controllable’ providing three criteria have been provided my management


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Internal Supplier

Internal Customer

Internal Supplier

Internal Customer

Internal Supplier

Internal Customer

VALUE STREAM

§  Criteria for Employee Control


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1 • Specification

2 • Means of Measurement

3 • Means of taking regulatory control

§  The concept of ‘employee control’ is fundamental to the management of quality

§  It is often referred to as the ‘quality chain’ because if one link is broken (due to one or more of the three criterion not being met – the weakest link) the chain fails to achieve its desired outcome


Value Management

§  If any one of these criteria are not provided by management (and management have not verified capability, competence or measurement reliability), ‘employee control’ can not be guaranteed. This is likely to result in an internal process than does not produce goods or services 100% right first time


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Internal Supplier

Internal Customer

Internal Supplier

Internal Customer

Internal Supplier

Internal Customer

§  Imagine the inefficiencies and waste in an organization that had not scrutinised each value stream / process to ensure these basic and fundamental criterion had been provided

IC = Internal Customer IS = Internal Supplier © QualSure Associates Ltd 2016 www.qualsure-associates.co.uk

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IS IC IS IC IS IC

IS IC IS IC IS IC

§  Not only do we have inefficient processes that produce waste, but each ‘value stream’ adversely impacts on the final customer / interested parties

IC = Internal Customer IS = Internal Supplier © QualSure Associates Ltd 2016 www.qualsure-associates.co.uk

Value Management

IS IC IS IC IS IC

IS IC IS IC IS IC

§  Understand the ‘current state’ – as this is generally misunderstood by the leadership team

§  Too complex to see the overall picture of how an organization operates

§  Gap in understanding of how work flows


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“The sole purpose is to deliver value to the customer” §  Issues that need to be resolved by the leadership team

include:- §  Interdepartmental priorities §  Fixing problems that move the problem elsewhere §  Bidding for resources


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My

Prio

ritie

s

My

Prio

ritie

s

My

Prio

ritie

s

My

Prio

ritie

s

Departmental Silos

§  Value Streams consist of dual flows of material and information

§  Value Streams operate sequentially and concurrently


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Process 1

Function A

Process 3

Function C

Process 4

Function D

Process 2

Function B

Process 5

Function E

§  Some organizations have one Value Stream

§  Others have dozens of customer facing Value Streams


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1 days 2 days 0.5 days Total LT = 3.5 days

10 mins 120 mins 30 mins Total PT = 160mins

Activity Ratio = 9.5%

Rolled %C&A = 89.3% © QualSure Associates Ltd 2016 www.qualsure-associates.co.uk

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Customer 1

Process 1

Function A Ö 5

LT=1 days

PT=10 mins

%C&A=99%

Process 3

Function E Ö 4

LT=0.5 days

PT=30 mins

%C&A=95%

Process 2

Function D Ö 3

LT=2 days

PT=120 mins

%C&A=95%

IT-1 IT-2

10 1 5

ZX Technology Ltd Future State Value Stream Map

Name of Value Stream Being Mapped Demand Rate = XX / Year

Name of Value Stream Champion Mapping Date

§  Value Stream Mapping is focussed at the ‘macro level’


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Value Stream

Process Process Process

Step Step Step

Macro Strategic Perspective

Micro Tactical

Perspective

§  Value Stream Mapping must involve the top leadership team: Strategic Focus

§  On the other hand, Process Mapping which VSM often gets confused with, can be undertaken by middle management and the operations team through Kaizen events: Tactical Focus


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§  Value Stream Mapping enables the team to fully understand the work flows through a complex system in a matter of days

§  Identifying barriers and process breakdowns §  Forces the organization to make difficult decisions §  Transformational opportunities: changes to the

organization DNA §  Shift in mind-sets and behaviours


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Value Stream Mapping Benefits

§  Visualization unifying activity §  Alignment and consensus arriving at specific improvements §  Reveals disconnects, redundancies, unnecessary

complications, clear line of sight to the external customer §  Visual way to see connections between internal suppliers

and customers, interconnections of processes to make better and faster strategic improvement decisions


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References

§  Thompson, J. L. (2001) Strategic management. London: Thompson Learning §  Juran, J.M. (1979) Quality Control Handbook. McGraw Hill §  Svikis, I.L. (2014) A formula for sustainable business improvement. QualSure

E-Press. Leeds §  Rother, Mike (2009) Toyota Kata. McGraw Hill. New York §  Clawson,R.H. (1970) Value Engineering for Managers. Auerbach §  Crow, Kenneth; DRM Associates (2002) http://www.npd-solutions.com/

va.html (23/06/2015) §  Lawrence D. Miles http://www.valuefoundation.org/whois.htm (23/06/2015) §  www.leanu.net §  Martin, K; Ostering, M (2014) Value stream mapping. McGraw-Hill Education.

New York


Value Management


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Tutorial

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May 2016 value management