Value Stream Mapping--An Essential Lean Manufacturing Tool

By Rhonda Huskins, SCMEP manufacturing specialist

Value Stream Mapping has been introduced to many South Carolina companies since SCMEP staff first wrote about the topic in the Winter 2000 issue of The Competitive Edge. On average, new companies are mapping their value streams at the rate of over one new company per month. In this article, SCMEP reviews the progress made so far and looks at what is motivating companies to use this mapping tool.

For those who are new to the terminology, Value Stream Mapping (VSM) is an improvement on process flow-charting that follows a product's path from beginning to end. Using simple icons, you can draw a visual representation of every process in the material and information flows. VSM captures all activities in which a manufacturer presently engages to produce a product--both value-added and non value-added. Value-added activities are those activities which are necessary and add value to the product. Non value-added activities do not add value to the product and fall into the waste categories of overproduction, waiting, idle capacity, unnecessary movement, design flaws, unnecessary activity, unnecessary work-in-process, production of defective goods, or rework.

Why Should You Lean Toward VSM?

Any organization that wants to implement continuous improvement techniques needs to get a real-life look at what actually occurs in the material and information flows. Many manufacturers have routings and time standards for the products they produce. Unfortunately, these elements--when they are accurate--do not give a comprehensive picture of what actually takes place from the time an order is received until it is shipped.

For example, let's assume that the time standards or process times are correct at Company X and that it has a 4-week lead time for delivery. Added together, the true value-added process time to produce a widget is less than one day. How does one day of processing compare to a 4-week delivery lead time? If the value-added time is short and the lead time is long, what else takes place from the time the order is received until the product ships? VSM is the tool we use to identify everything that happens in between these two events.

While this may sound like an extreme example, it is not uncommon to discover that 95% of lead time is waste. VSM looks beyond machine and manual processing to get a big picture look at the entire process. In doing so, we turn information processing, inventory, changeovers and delays into time. Time can be translated into dollars of cash flow. Time then becomes the measuring stick that drives planning for the implementation of continuous improvement initiatives. 

Lessons Learned and Impacts Realized

SCMEP clients are learning that the time between true value-added time and lead time can be shortened by eliminating waste in the value stream. Waste shows up as excess inventory, long changeover times, machine downtime, rework, over-processing, complicated information processing, or a multitude of other ways.

Some have discovered that inventory is both the time and cash eater in their organization. Others have found that machine changeovers and unplanned downtime steal time and labor dollars from their operation. Many find it is not one, but a combination of wastes, that cause problems. Some have reduced excess inventory located in stockrooms or between operations - inventory reductions that drop dollars directly to the bottom line. Impacts reported from a two- or three-day value stream mapping event have ranged from $100,000 to over $4.5 million.

VSM is the first step on an organization's road to improved profitability. Many SCMEP clients have discovered that one success leads to another, and the Lean principles they learn to implement can be used in a number of places within their organizations.

While the short-term gains from reducing inventory and eliminating other wastes have been weighty, the long-term value of these improvements are yet to be discovered. What is the value of beating your competition on delivery by days or weeks? What will you be able to do with the additional cash flow freed up by inventory reductions? If current resources are pushed to meet demand, how much additional revenue can be generated by freeing up capacity?

In the quest to keep jobs on American soil, one key strategy is to reduce unnecessary costs and shorten lead times. Manufacturers must do everything they can to make purchasing products from overseas less desirable for their customers. Lean Manufacturing is the fastest and least costly method to attain that goal.

How Can My Company Get Started?

SCMEP encourages companies to begin with an overview of Lean Manufacturing Principles in its Lean 101 course in order to have a working knowledge of Lean tools. The words 5S, Kan Ban, Visual Controls, SMED, Takt Time, Cellular Manufacturing, TPM and other Lean terminology are often misused and misunderstood. A solid understanding of Lean principles is key to successful implementation.

Once this understanding is in place, the next step is to use Value Stream Mapping to identify the value-added and non value-added components in your production process. The first step of mapping is the identification of a product or product family to map. SCMEP assists with this endeavor and recommends selection of your highest volume product or product family. After the map is finished, an implementation plan is created. This plan identifies each opportunity for improvement, prioritizes them and specifies the Lean tool(s) that will be used to address these opportunities.

Once the plan is complete, the implementation of improvements can begin. SCMEP recommends companies begin with the improvement that will provide the largest impact to the bottom line. Often, clients find their first Lean initiative provides enough payback to cover the cost of the training and many future initiatives.

Value Stream Mapping has proved itself one of the most valuable Lean tools. In using VSM to design a plan, many companies make the changes that move them toward a more profitable future. As a result of these changes, individual employees have been promoted and plants have been recognized as leaders of continuous improvement. Costs are going down and profits are going up. In some instances, revenues have increased due to more manufacturing flexibility and the ability to deliver products faster than the competition.

Getting started on improving your value stream is not difficult at all. SCMEP has several trained and proven Value Stream Mapping experts who can train your employees to map, or SCMEP can map for you. Call SCMEP at 1-800-MEP-4MFG (in South Carolina only) or 803-252-6976.

Rhonda Huskins is an SCMEP manufacturing specialist located in Rock Hill, SC. She can be reached at 803-324-2273 or rhuskins@scmep.org.