Value Stream Mapping – Appraising your Business Supply Chain

Hope all of you had a happy holiday and are ready for 2013!  Last year I wrote about defining your 2012 objectives and putting them into actionable events.  I hope that as you review your objectives and actions, you were able to complete each one.  If not, and they are still important to you, determine why you weren’t able to accomplish, define whether or not they are still achievable and if the answer is yes, place those at the beginning of this year’s list.

For those of us who are responsible for achieving increased profits, I wanted to address the process of value stream mapping.  A value stream includes all activities to bring a product from your vendor’s raw material into the hands of the customer.  It includes all activities from Sales through the receipt of dollars for your product.  Any part of the process that takes time and resources but does not add value to the product is waste!  

Statistics show that 60% of operations activities do not add value to the customer.  VSM provides the key to

n      Reduce lead times

n      Improves product quality and space utilization

n      Reduces rework/scrap and inventory levels

n      Reduces indirect labor costs

Value Stream Mapping (VSM) serves as a personal magnifying glass and provides you with the tools to stand back, identify the waste in your business and to streamline processes to get rid of wa$te.

First, question how you currently run the organization.  How are sales measured? Are they measured by actual orders received and shipped?  In which case, you can invoice and receive monies.  Are they measured by what is forecasted by the sales person?  Does the product actually ship or is your warehouse filling up?

Order Entry:  Are orders tracked through the system based on need date or ship date?  Does everyone know?  Is the computer set up correctly to reflect?

How do you measure performance or do you?  Do you determine the sales accuracy of your sales people?  Do they understand that under-ordering or over-ordering will impact the levels of inventory on hand or the amount of wasted money spent on expediting and premium freight?

New Product Design is the key to your customer retention and growth.  It is the number one process to measure (your) business performance. Are all players at the table at the genesis of the new product - Sales / Engineering/ Producing Plant or Service provider/ suppliers / customer?  Have you evaluated the amount of old items that needs to be used up to avoid obsolesce and all the costs surrounding this waste?  Do we know the real date of the new product, part or service or will we upset and/or lose customers with a late introduction?

Purchasing/Inventory Management’s responsibility is to eliminate extras (they cost money in transporting, storage, and space).  This means we must evaluate our decisions to insure that we carefully order only what we need.  Working hand in hand with Sales people will assist in scheduling (only) needed parts.  This means that standards must be set for sales people and suppliers.

Once we understand how the stream should flow we need to evaluate the work involved in meeting our value stream objective.  Use a storyboard to facilitate “seeing” the process.  A picture is worth a thousand words and visualizing the process negates the denial factor.  What you will almost always learn is “gee, I had no idea….”

First, we must specify (remember, magnifying glass evaluation) the current process stream.  How does your organization really work?  Each step of each activity must be documented.  I always suggest using post-it notes as they are easy to move around as you begin to evaluate the waste in the process.  Once each step is documented – go back to the first one and evaluate the following:

• What is the labor cost per action – break labor down per step/action.
• How many forms do we need to use for each action – what is the cost of printing the forms?  Are they 100% useable or old and need to be replaced?  Can you combine several of them to save costs?
• How many times does the paperwork move from one desk to another before actually being actioned – quantify the labor costs as well as the potential loss of customers.
• Does your IT system enhance or delay your process – what has it cost you in customers?  What has it cost you in low productivity (and more errors) from your frustrated employees?

 Once each of the steps has been quantified in the process, sum to arrive at the total stream cost.                                                             $ TOTAL  _______________ 

Now, define the process stream if everything worked right. (labor, steps process, movement  process, IT process)  What will be the anticipated value of each?  Quantify each step as you did before.  Arrive at a sum total for this process stream. 

                                                                               $ TOTAL  _______________ 

Now, you are in the position to quantify your savings

Step 1. (the old way)    List the cost of old stream                   $_________________

Subtract

Step 2.  (the new way)  List the value of new stream              $_________________

Enter your total Activity Based Cost Savings (labor, steps process, movement process, IT process)                  

Value Stream Cost Benefits Dollars         $  _________________

Evaluate your strategy for eliminating waste in the process to insure success

ò  Define waste / AOP (Areas of Opportunity)

ò  Define process owners

ò  Develop Value Stream PITs (Process Improvement Teams)

ò  Schedule progress meetings between all process owners (internal / external) to insure understanding, buy-in or consensus!

As non-value streams are eliminated and streamlined solutions are implemented, remember to update the storyboard to show continued progress.  Invest those saved dollar$ on value-added education, capital equipment, and/or ergonomic equipment and furniture for your employees.  Provide cost reductions to your customers on your products and/or services without losing a dime!  The short term effort is well worth your long term objective.

WHERE WILL YOU BEGIN?

“wanna play wif us?” (Team Building)

(part of the Total Quality Leadership (TQL) series)

How an organization achieves world class quality excellence depends on its leaders within the organization, at all levels of the organization.  Whether your organization has just started its quality journey with ISO certification or is ready to apply for the world renowned Deming award, the critical success factor to world class quality excellence…it’s all in the leadership!

I believe the leadership skills that make an environment successful are the same skills learned on the playground.  Today's skill, team building.

Children love everyone!  The eagerly want to join others and play.  They pick their friends  and others they believe will help them win the game for their side. They help each other out and they enjoy interacting with each other. They learn the rules of the game(s) and follow them.  They learn what happens if they do not follow the rules of the game(s). Their parents or other adults are there to oversee they play agreeably.  

Let's identify true team-based environments using one example of what should be a very simple process. Do your associates schedule their vacations and days off with the approval of their team mates (the people they work with 8 hours a day and who are the ones directly impacted by their absence?)  or

is there still a signature process that involves a litany of people up the "management chain" - supervisors, managers, HR?   if yes, why?  Ninety percent of the responses suggest the "team" is unable to "make those kind of decisions". 

If, as a supervisor or above, you are still spending your time signing off on vacation or time off requests (except for your direct staff) you are unnecssarily adding to the cost of a simple process and negatively impacting the growth of your staff to becoming a self-directed work team. (see blog, ABCM 7/14 and 7/19)

In a true team based environment,

1.) the associate team (those that work together 8 hours a day) would deliberate the "request for absences" at the morning associate team meeting. “Absences or request for time off” would be listed as an agenda item (daily, weekly, monthly— depending on the size of the business).

(the team leader would share the work or tasks for the week in a daily “data-exchange” agenda item)

2.) Together, the associate team would evaluate the team leader's input and make their "yes, no" decision.  The team leader would assist in the process only if needed.

The prelude for the above team process is:

1. We have educated the associates on the process of  “decision-making" in a team building class.

· We have implemented job / skill sharing (some still use the vernacular "cross training") with each member on the team.

2. We have educated the associates on the company policy specifics for “time off”. (identify the rules)

· My policy:  we will not hire temporary worker(s) for the job;  the work will not fall behind  (read:  job / skill sharing [cross training] has taken place).

3. My policy:  All desk procedures are written and up-to-date. (identify the rules and what happens if they are not followed)

· "Your vacation will be interrupted if something happens and no one knows what to do.  This will also negatively impact your request the next time you ask for time off. It will also be noted in your performance review."

Just as we do with children, if we share the rules of the game (read:  set policy) with our team, they should be able to carry them out (read:  implement the procedure) and be held accountable for their decisions. Decision-making is an invaluable skill for the team to learn. It is the basis for any problem solving technique.  Vacations and time off is one that impacts them directly.  Teaching them how to approve or disapprove this request is a good start to their skill set addition.

This is but one example of how true team-based environments should operate.  Does yours? If not, why not?

"do you want this one or this one?" (Decision-making)

(part of the Total Quality Leadership Skills series)

How an organization achieves world class quality excellence depends on its leaders within the organization, at all levels of the organization.  Whether your organization has just started its quality journey with ISO certification or are ready to apply for the world renowned Deming award, the critical success factor to world class quality excellence…it’s all in the leadership!

It is my (proven) belief that the leadership skills that make an environment successful are the same skills that we learned when we were little and playing in the sandbox.  The sandbox skill I want to talk about today is decision making.

                      

                    

“Which of the two sets do you want?” The choice might be based on a favorite color. The choice might be to pick the orange shovel from one set but the red pail from the other.  As a child, decisions are limited. “Which clothes do want to wear?” “Which toys do you want to take?” “Which sandwich do you feel like eating?” Parents are there to make sure children make the right decisions.  They may have a firm “no” in response or they may try and cajole the child into picking something else. Parent’s responsibility is to tell them the end result of their decisions. Unless the choice is detrimental to the child, letting them make up their own minds is fun for them. It makes them feel grown-up and teaches them life-long learning skills. They face few consequences because parents are their safeguards.

The greatest power that a person possesses is the power to choose.

As adults, decision-making carries the weight of making the RIGHT choice. Following are the decision-making steps needed to make the right choice:

(1.) Start the decision-making by identifying your wants and needs;

(2.) Rank each;

(3) Gather all the information necessary to make a decision. Explore alternatives, consequences, advantages, and disadvantages. Be objective, not emotional:

(4) Establish how much of a risk you are willing to take. Then, consider these strategies

 (a) choose the safest alternative - the one that can’t fail,

 (b) select the one with the best odds for success,

 (c) pick the option with the most desirable outcome - despite the risk

(5) Eliminate any option that might present a loss you won’t be able to live with – despite high odds for its success; and finally,

(6) Picture how you would deal with negative consequences.

The following is an example of a decision-making process to answer the question:  when to get gas:

The act of choice is the high point of the decision-making process. The more we investigate up front, the better our choice The choice itself is the conclusion of the process.  Once made, decisions will trigger: (a) action, (b) movement, or (c) change. It’s wise to remember, adults do face the consequences of  their decisions and, most of the times, there are no safeguards.  (OMG, I ran out of gas!)