Sutton Holley is a moonshine magnate whose business is struggling. He simply cannot produce his alcohol fast enough. He has tried everything. From altering the mash recipe to using a different distillation process, Sutton cannot compete with his fellow black market shiners. Reluctantly, Sutton consults his son-in-law, a Lean Six Sigma consultant, for advice. Sutton considers the son-in-law a city slicker who uses a “five-dollar word when a fifty-cent word will do.”
The son-in-law encourages Sutton to evaluate his “value stream,” to which Sutton replies, “Well, sonny, I use the stream to make my moonshine. I already know the stream has value.”
Much to Sutton’s confusion, his son-in-law was not referring to a stream of water when he suggested Sutton conduct a value stream analysis. The son-in-law was instead referring to a process improvement approach known as value stream mapping (aka value stream analysis). It’s easy to understand Sutton’s confusion. When discussing getting value from a stream, most people are likely to think of trout fishing, catching crawfish, sifting for gold, or in Sutton’s case, re-routing cold water for his moonshine still. However, a true value stream has nothing to do with natural resources and everything to do with business resources.
Value stream mapping originated and was made popular by Toyota Manufacturing Company. It’s a process improvement method that focuses on eliminating wasteful, non-value added activities from a process—the value stream.
The stream portion of the term relates to the flow, or key steps, a company performs to provide value to its customers. The value within the stream is considered to be the service or the product a company provides to its customers. As an example, the key steps making up the value stream for a manufacturing company would be: receiving a customer order, purchasing raw materials, and each manufacturing step required to turn the raw materials into the finished good which is then shipped to the customer.
Once the value stream map has been created, the company can begin to analyze each step. Doing so will allow the company to determine how long each process takes to complete, the amount of material and/or time input required, and the expected vs. actual amount of output. By performing the analysis of the value stream, the company can determine which steps are the most inefficient, or which steps within the Value Stream include the most wasteful, non-value added activities.
Similar to deadly sins, there are seven widely-recognized types of waste that can hinder business processes:
- Unnecessary processing
- Non-value added handoffs
- Idle time
- Too much movement
- Too many resources
Each type of waste plays a role in undermining the value-added activities of a business and leads to additional cost and time required to deliver the expected value (i.e. service and/or product) to the customer.
Using the value stream mapping method to improve process efficiency is probably the most useful and underutilized way for companies to address wasteful activities. It’s important to understand what a value stream map does and doesn’t do:
Back to our moonshining friend Sutton. The issue he brought to his Lean Six Sigma consultant son-in-law was related to Sutton’s moonshining process taking too long to produce the desired quantity of alcohol. His son-in-law recommended value stream mapping to identify inefficiencies within Sutton’s distilling process.
After Sutton’s son-in-law explained value stream mapping to him, Sutton figured it was worth a shot and asked, “How do we create one of these value stream mapper things?”
The son-in-law, in true consultant fashion, responded by laying out five steps:
- Identify start and end points for the value stream
- Create a list of key steps found within the value stream
- Align the activities in sequential order using the end customer as the connection of the start and end steps (include informational and physical steps)
- Document quantity of input required, processing time, idle time, and quantity of output for each step
- Accumulate the data for each step to identify totals for the entire value stream
Creating a value stream map seemed simple enough for Sutton, so he started to lay out the components of his distillery. He identified the start and endpoints as rerouting the stream water and bottling his white lightning, respectively. Next, Sutton identified the key activities of his stream:
- Corn/malt procurement
Sutton then analyzed the processing time and expected amount of liquid created after each step. As a result of the analysis, Sutton realized the distillation process was not creating the expected amount of liquid. The results led Sutton to concentrate on the distillation process as the wasteful culprit.
A couple of years back, Sutton attempted innovation by implementing a dual distillation process in the hopes of creating a smoother shine. Turns out, the secondary distillation process reduced the expected amount of alcohol produced, resulting in slower processing times.
“The dual distillation process is a classic case of over-processing because it doesn’t make the moonshine any smoother. But it is making the processing time longer since alcohol volume is lost during the second distillation,” the son-in-law explained.
Sutton was able to swallow his pride, chased by a swig of his latest batch, and admit that his son-in-law was right.
As a result of the value stream mapping analysis, Sutton removed the secondary distillation step, which eliminated the waste associated with over-processing. After firing up his still using his standard single distillation process, Sutton was able to more quickly produce the amount of moonshine he needed to beat his competitors to market. Sutton reclaimed his spot as the nation’s most productive moonshiner, and the son-in-law was finally allowed to sit at the adult table during the holidays.
As displayed by Sutton’s use of the value stream mapping method, performing a mapping and analysis of a company’s value stream can lower costs and improve customer satisfaction through more on-time deliveries. More often than not, when the current state value stream map is analyzed, many opportunities for eliminating wasteful activities become visible. Dive into each opportunity area to determine what can be improved and how to implement the improvements. Doing this will put a company well on its way down the stream of value.
Whether a company is looking to supplement/enhance its current continuous improvement culture or just analyze and assess where the company may be able to improve operations, the value stream mapping method is a strong and effective tool every company should have in its lean toolbox.
This article has been adapted from a chapter of Trenegy’s book, Jar(gone).
Trenegy is a non-traditional consulting firm dedicated to help companies clarify the latest business jargon into useful terms and solutions that actually benefit your company. Find out more by contacting us at email@example.com.