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?

THANK YOU VETERANS!

As the daughter of an American veteran who fought in three wars -  WWII, Korea, and Vietnam - I thank my hero, my father, and all veterans for the sacrifices you made/make for this country. 

“here, let me show you” (leading by example)

(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 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!

Leadership skills that make an environment successful are the same skills that we learned when we were little.  Today, a coaching skill, leading by example.

It's not that the young ones can't do something.  They just need to be shown.  We demonstrate, step by step, how to put things together and they follow our lead.  We make it easy for them.  We relieve the stress they may have.  We show them how to do it right.  Once they learn, they go to the next level.  They experiment.  They do better than we can.  They now show us.

“You cannot create experience, you must undergo it.”  Albert Camus, French Novelist

The new CBS television show “Bosses” is one I enjoy because it represents leadership at its best.  It answers the question of how decisions made in the corporate office impacts those who have to perform the actual implementation of those decisions. 

Prior to consulting on topics I am not 100% familiar with, I spend time beforehand to familiarize myself with the workflows of the environment.  The two pictures are ones taken at the International Bridges in El Paso, Texas.  The picture on the left is a walk-over bridge for pedestrians, the one below, a drive-over for vehicles.  The time I spent following-by-example gave me a much better perspective on the associates' working environment on the bridge. 

A checklist for instructions includes the following:

1.  Find out what each employee knows (don’t make assumptions).  I found the associates to be well-versed.  They had to determine the crossing charge in both US change or dollars and Mexican Pesos.  I barely kept up as people walked or drove by and, many times, tossed in their change.

2.   Demonstrate whenever possible.  I took over for 5 minutes at a time and my head was reeling with the exchange I had to make between both country’s monies.

3.   Encourage questions.  I have always been one to drive my teachers crazy with questions.  As a (Dr.) Deming disciple, the "5 whys" comes naturally to me.  There are no stupid questions!

4.   Explain purpose of job.  Both associates were well-informed tutors.  I was able to tailor my course to the department with the knowledge they had taught me. 

5.   Follow up.  Their thirst for additional learning encouraged the manager and director to provide more team based education.  Procedures were tweaked to meet their respective needs.

6.   Recognize accomplishment.  Writing a column in the City’s online newsletter lets everyone know your Department news.  Everyone likes to see their name in print (and it’s zerO cost)!

My hands-on experience with the associates facilitated tailoring the team-based class to the needs of the department. Sometimes taking the lead means you have to follow first. 

“what a good boy/girl!” (praise phrases)

(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 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!

Leadership skills that make an environment successful are the same skills that we learned when we were little.  Today, praise phrases.

My June 27th blog addressed low self-esteem and the behavior we learn based on our environment as a child.  Titled To belittle is to be little; it addresses the behavior change needed in the 21st century.  Praise is a skill we give to children when they do something well or they've tried very hard to do well.  Your approval motivates them to continue to keep on trying.  Praise makes children proud. They want to do more and to do it better.

I have yet to be bored by someone paying me a compliment.  Psychology professor, Otto Van Isch

Praise defined:  words that express approval or admiration, e.g. for somebody’s achievements.  Praise is a zerO cost motivating solution. One of the 6 critical factors for successful coaches in a team based environment is praise.  A great coach gives positive feedback to motivate his players.  A great coach:

1. looks for opportunities to commend people publicly
2. rewards Outstanding Achievement
3. finds ways to recognize achievers in a public way
4. is consistent
5. looks for opportunities to praise people for their work (ref:  praise exercise below)

 F  exercise:  Develop Your “Praise” Phrases

Praise is a skill 21^st century leaders must acquire.  Brainstorm phrases you can use on / with your associates.  If it’s difficult, start with simple two word phrases:  good job, great job, add any positive adjective for the word job; atta boy, well done. Create a list of 20.  Use one every day. 

Praise is one of the most powerful methods of letting employees know they make a difference.  Praise is the opportunity to reward as soon as possible to the action, at zerO cost.  One of Dr. Deming’s people philosophies:  Every organization has undiscovered “gems” waiting to be discovered.  Two words are worth discovering those “gems”.

"wanna see what else..." (creativity)

(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 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!

Leadership skills that make an environment successful are the same skills that we learned when we were little and playing in the sandbox.  Today's sandbox skill is creativity.

Kids can make something out of nothing.  A bucket and a shovel can make beautiful castles.  You take the shovel and scoop up the sand into the bucket.  Once the bucket is full, you pack it down.  Very carefully, the child will quickly turn the bucket over and very carefully pull the bucket up, et voilà, a castle form.  From there, they add doors, windows, a moat, a bridge, and whatever else they feel makes their castle better.  Their creativity has no boundaries.

Creativity is the ability to use the imagination to develop new and original ideas or things.  Creativity is the foundation of brainstorming sessions.  The first requirement is an environment where the associates and team leaders feel free to be creative, to brainstorm.  The old dysfunctional environment, the ‘me boss - you employee’ environment, prevents creativity.  One of the comments I hear all the time is “we tried to tell them” (ref my blog dated on “this is the last time I'm gonna to tell you! “ (listening), August 19, 2012).                                

“As a team, invent as many uses as you can for this pictured item.”  The above 2011 Family Circus cartoon represents an exercise I have used in my creativity, team building classes for many years.  This is a simple exercise to get the brains of the associates and leaders “out of their box”.  It’s also a lot of fun!  Fun is not a dirty word in a team based environment.

The World Class Leadership objective is to build excellence into every aspect of the company by focusing on creating a workplace that encourages EVERYONE to contribute.  The prerequisite is everyone must feel comfortable in voicing ideas and having them actively listened to versus the old dysfunctional attitude of “we (managers) know what’s best for you and we’ll tell you what to do.  We’ll make the decision for you and then we will hold you accountable to make it work.”  It obfuscates the associates.  Fear is not a motivator!

The associates who do the work 8 hours a day know the changes to make in their jobs to make it better.   Ask each associate and leader to “name 3 things that would make your job better?”  I am always (pleasantly) surprised to note the associates make changes that cost little to no monies but save time and increase productivity.  Think 3M, an engineer, paste, a tablet and post-it-notes – who woulda thought?

Associates are like the bucket – you fill them with the right education, top it off with a firm belief in them (based on your outstanding education and coaching to them) and then let them build their castles.  Allow their creativity.  Success is built on "can" not "cannot".   I find 99.9% of the time, they really can.

“don’t forget your …” (planning)

(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 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!

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 today, planning.

If a child has plans to play in the sandbox to build a castle, it is important to plan to bring a shovel and pail.  It is also important to plan to wear a hat and sun screen so the child doesn't get burned.  The latter is an adult's responsibility; the former is a responsibility we teach kids. 

To help them remember, we may write down “shovel and pail” on the blackboard (or paper or easel) in their bedroom.  Together, you may add other toys or things to the list.  Writing it down helps to remember and not forget.  When it is time to get ready, the child only has to look at the blackboard (or paper or easel) and erase it or draw a line through it when the item has been packed to go.  We eliminate the “regrets” and the “forgot” and the tears.  The castle gets built and you can relax and enjoy.

At my age, "senior moments" come often so writing things down is mandatory.  Reminders (post it notes are the best discovery) and checklists are important basic planning tools to help us remember and not forget. The process of planning is a three step process:

1.  What do I have to do?  (write it down)   

2.  What are the steps to get it done?  (be explicit)

3.  By when?

        What is the deadline?

        When did I promise?

I know, as you do, people who spend their lives telling you, “I don’t have time to write it down”.  Yet they always seem to have time to spend an hour “looking for” or “driving back” because they failed to remember.  Forgetting costs money in business and in your personal time.  An additional benefit of crossing a line through a completed action is it induces you to want to do more.  Planning (writing it down) saves time you can spend on other things, like doing absolutely nothing. 

“I knew you could do it” (motivation)

(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 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!

The leadership skills that make an environment successful are the same skills that we learned when we were young.  Today, motivation.

When teaching a child to walk, we take both of their hands, stand behind them, and help them take one step at a time.  One step at a time - the learning experience.  Practicing daily.  One day we let go of one hand and the child takes wobbly steps but knows and feels the steady hand of the parent.  One day, the child takes his first steps alone.  They may fall but it's a new experience and the squeals from the delight of the  parents motivates the child to get up and try again.  One day, the child is walking all by themself (and we are now following behind them to make sure they stay out of harm's way).  Each child learns at their own pace.

Coaching associates is how we lead in a team based environment.  We appraise each associate, determine their strengths and weaknesses, and motivate them accordingly.  •To motivate means I have to know what’s important to you; to know that means I have to listen to you; to do that means I have to talk to you: I have to tell you my requirements so that you can tell me yours.

The best coaches understand that different things motivate different people at different times of their lives.   What motivated me twenty years ago has changed.  My "bucket list" has been a factor for that change.  Time has been a factor. 

As coaches we introduce change, explain the change, document the change and parrot the reason for the change until all associates understand the change and can action it themselves.  Some will stumble and others will run with it immediately.  Eventually, one step at a time, the entire team will move to the continuous improvement phase.  The circle will start again - introduce, explain, document and parrot.  Positive reinforcement ('I knew you could do it') will encourage the team to keep moving forward and remind them (and yourself) "experience is the fruit from the tree of errors". 

What three things motivate you in your personal life; in your professional life?