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This lean tool can help companies level production, resulting in dramatic reductions in throughput time and costs, and improved quality
All value produced by an organization is the end result of a complex process, a series of actions that lean thinkers call a value stream. What's more, the customer, whether external or internal, is interested only in the value flowing to them, not in the weighted average of an organization's efforts for all products or in value flowing to other customers. This being the case, it is surprising how hard it seems to be for managers to focus on the value stream for each product for each customer to improve it for the benefit both of the customer and the value-creating organization.
Toyota has known how to do this for many years, using what are usually called information and material flow diagrams. Even in the late 1990s, however, I observed that these techniques were largely unknown outside of Toyota. I therefore asked Mike Rother and John Shook to use their knowledge of Toyota practice to create a simple way for managers to see the flow of value. We called it value stream mapping, as introduced in the Lean Enterprise Institute (LEI) workbook Learning to see in 1998.
The first step in any mapping activity is to identify a product family. This is the group of similar items that proceed through the same basic steps and equipment within the organization. Mapping is greatly simplified, and the benefits of mapping are maximized, if careful thought is given at the very outset to the appropriate classification of products by families.
The second step, often using A3 analysis, is to determine the current problem with the value stream for this product from the standpoint of the customer and from the standpoint of the organization. For example, the customer may be demanding a price reduction and planning to go elsewhere if the new price (based on lower costs) can't be obtained. Or the producing organization may be providing value acceptable to the customer, but at a margin unacceptable to the business. Or there may be chronic quality problems. Or there may be disruptive turnover in employees working along the value stream because of stress inherent to the current organization...