Why Use Value Stream Mapping? 

Any business thrives by delivering innovative products (or services) to its customers faster, better and at a lower cost than its competitors!  To deliver a service or to build a product, a business executes a single process (or multiple linked processes).  Each process consists of a sequence of steps that consume resources (labor hours, equipment hours, energy, materials, floor space, office overhead, etc.).  Each step costs money because it consumes resources to execute it!  Unfortunately, every step in the current process may not deliver value to the customer.  A step could be: 

• A VA (value-added) step because it is “an activity that physically changes the shape or character of the product”

OR

• A NVA (non-value-added) step because it is “an activity that consumes more than the absolute minimum of materials, machines, manpower, etc. required to produce the product”

OR    

• A NNVA (necessary but not value-added) step because it is “an activity that creates no value but is necessary given the limitations of the current system”.

If they knew, the customer would want to pay only for the VA steps that were performed to deliver the product.  But the reality is that the customer ends up paying also for the unnecessary NNVA and NVA steps that were performed to deliver the product!    

The Seven Wastes in the Operations of Any Business

Studies have shown that a business only adds value to a product for less than 5% of the Lead Time they quoted to the customer.  As for the rest of the Lead Time, it is NNVA (necessary but not value-added) or NVA (non-value-added).[1]  Every NVA or NNVA activity is waste that (1) increases the price that is charged to the customer for the product (or service) and (2) increases the time it takes to deliver the product (or service) to the customer.  The NVA and NNVA activities that are performed every day in the office and the shop floor are the Seven Forms of Waste:

• Over-production: Producing more than is needed, faster than is needed or earlier than is needed.
• Inventory: Any inventory that is in excess of market demand or actual consumption.
• Over-processing: Redundant effort, such as excessive number of steps, high setup time on the equipment used for any processing step or high cycle time on the equipment used for any processing step.
• Waiting: Idle time that occurs when co-dependent events are not synchronized due to poor or non-existent scheduling.
• Scrap and Rework: Extra effort and resources needed when a process has to be repeated to repair, rework or replace a defective product delivered to a customer.
• Transportation: Any movement of material, people, tools, etc. that does not directly support the actual production of a product.
• Employee Motion: Any movement of people which does not add value to the product delivered to a customer. This includes meetings and other communications to convey or share information that is either unnecessary or available in the company’s ERP (Enterprise Resource Planning) system.
• Unfortunately, there is an Eighth Waste = Unused Employee Creativity! This waste results when management refuses to (or fails to) engage with and listen to their skilled and experienced employees who come forward with good ideas to improve core business operations.  When low morale, apathy, resentment, etc. start to affect the performance of employees, both the business and its customers suffer!  

Agenda

[1] SOURCE: www.LeanManufacturingTools.org