Value Stream Mapping in Office & Service Setttings

Company

LOGO

Lean Webinar Series Value Stream Mapping in Office &

Service Environments

November 4, 2009

© 2010 Karen Martin & Associates

Learning Objectives

Participants will learn:

What a Value Stream Map is – and what it is not.

Best practices for holding a Value Stream Mapping

activity.

How to define office & service product families.

Step-by-step approach for creating current and future

state maps.

Key differences between manufacturing and

office/service VMSs.

How to create an implementation plan from the future

state VSM.

2


Womack’s Five Principles of a

Lean Enterprise

Value

Value stream

Flow

Pull

Perfection

3

— Jim Womack, Lean Thinking, 1996, 2003

Value Stream Mapping’s Beginnings

Mike Rother & John Shook

http://www.amazon.com/gp/product/images/0966784308/sr=8-1/qid=1257260686/ref=dp_image_0?ie=UTF8&n=283155&s=books&qid=1257260686&sr=8-1


Value Stream Defined

Value Stream: All of the activities, required to fulfill a customer request from order to delivery (and beyond to cash received).

Customer

5

Value Stream

Process Process Process

Customer

Request

Customer

Receipt


The Work We Do:

Degrees of Granularity

6

Value

Stream


Step Step Step

Value Stream

Map

In the

Weeds

(Tactical)

Rooftop

View

(Strategic)

Metrics-Based

Process Map


Types of Value Streams

Product Value Streams

Support Value Streams

Recruiting and Hiring Process

Tech Support

Accounts Receivable

Payroll

Value Stream “Segments”

The order fulfillment segment of a product line

The product development cycle

New account set-up

7

Customer

Fabrication

PT = 3 minutes

C/O = 2.2 hrs.

Uptime = 85%

FPY: 93%

5

Test & Pack

PT = 2 mins.

FPY: 100%

4

Production

Control

Supplier

Work

Order &

Schedule

19 days

3 mins.

12 days

42 mins.

3 days

2 mins.

34 days Total LT = 68.1 days

Total PT = 47 mins.

AR = 0.144%

19 days

Shipper

Assembly

PT = 42 mins.

C/O = 0.1 hrs.

Uptime = 60%

FPY: 98%

22

Forecast

PO

Schedule

PO

PO

Forecast

Sales

PT = 20 mins.

%C&A = 90%

25

Order

Entry

PT = 2 mins.

%C&A = 75%

5

On-time Delivery=55%

34 days3 days12 days

2 x weekly

PT = Process Time LT = Lead Time C&A = % Complete & Accurate

AR = Activity Ratio (PT/LT x 100) RFPY = Rolled First Pass Yield

Value Stream: Product Family ABC

Current State Value Stream Map

Customer Demand: 200 units / day

RFPY = 91.1%

Weekly

Current State VSM – ABC Product Family

Production

Loop

Supplier

Loop

Order

Fulfillment

Loop

Current State VSM - Order Fulfillment Loop

Customer

Enter Order

Order Entry

PT = 5 mins.

%C&A = 90%

5

Pick and ship

order

Warehouse

PT = 15 mins.

%C&A = 99%

5

2 hrs.

15 mins.

4 hrs.

5 mins.

2 hrs.

20 mins.

2 hrs.

15 mins.

10 hrs. Total LT = 20.9 hrs.

Total PT = 55 mins.

AR = 4.38%

Run Credit

Check

Finance

PT = 20 mins.

%C&A = 99%

1

PO

On-time delivery = 55%

10 hrs.2 hrs.2 hrs.4 hrs.

SAP System

2 hrs.

Review &

approve PO

Sales

PT = 15 mins.

%C&A = 90%

25

PT = Process Time

LT = Lead Time

C&A = % Complete & Accurate

AR = Activity Ratio (PT/LT x 100)

RFPY = Rolled First Pass Yield

Value Stream Loop: Domestic Order Fulfillment


Customer Demand: 150 orders / day

RFPY = 55.6%

Excel

Account data

Sales Order

Shipper

Approval

2 x

weekly

%C&A = 70%


Why Value Stream Mapping?

To set strategy before diving into tactics.

Enables us to SEE the process.

Promotes systems thinking / seeing the whole

Helps us avoid sub-optimizing

10


VSM Goal: System Efficiency

11

Individual Efficiency =

Sub-optimization

System Efficiency =

Optimal Value Stream

Performance


Why Value Stream Mapping? (continued)

Shows the linkage between information and material flow.

Makes the disconnects and obstacles to flow visible at a macro level

Metrics-based decision making: What are you going to do to affect the numbers?

12


Key Metrics: Time

Process time (PT)

The time it takes to actually perform the work, if one is

able to work on it uninterrupted

Includes task-specific doing, talking, and thinking

aka “touch time,” work time, cycle time

Lead time (LT)

The elapsed time from the time work is made available

until it’s completed and passed on to the next person or

department in the chain

aka throughput time, turnaround time, elapsed time

Includes Process Time, not merely waiting time.

13


Lead Time vs. Process Time

Scenario 1

14

Lead Time

Work

Received Work passed

to next step

Process Time

LT = PT + Waiting / Delays


Lead Time vs. Process Time

Scenario 2

15

Lead Time

Work

Received

Work passed

to next step

Process Time

LT = PT + Waiting / Delays


Show of Hands

How many of your currently include a

quality metric for each process block on

your value stream maps?

16


Key Metrics: Quality

%Complete and Accurate (%C&A)

The percentage of input that’s deemed “usable as is”

by the person doing the work

% of incoming work where the downstream customer

can perform task without having to “CAC”:

Correct information or material that was supplied

Add information that should have been supplied

Clarify information that should have or could have been

clearer

Measured by the immediate downstream customer

and all subsequent downstream customers.

Similar to first pass yield in manufacturing.

17


Summary Metrics: Quality

Rolled First Pass Yield (RFPY)

The percent of value stream output that passes

through the process “clean,” with no “hiccups,”

no rework required.

RFPY = %C&A x %C&A x %C&A…

Common finding = 0-15%

Multiply ALL %C&A’s, even if parallel processes

18


Summary Metrics: Time

Percent Activity (%Act) (also referred to as

Activity Ratio)

The percentage of time anything is being done

to the work passing through the system (whether

value-adding or non-value-adding)

%Act = (∑PT ÷ ∑LT) × 100

100 – %Act = % Time Work is Idle

Common finding = 1-10%

Could also calculate %VA to show much activity

is value-adding – is typically lower than % Act.

19


Outpatient Imaging Services

VSM Champion: Paul Scanner

Created: July 17, 2007

Demand = 15 per day

Customer Demand:

15 patients per Day

(Takt Time 1920 seconds)

8 hours per day

Referring

Physician

% C&A = 65 %

Check-in

Patient

(Admitting)

Cycle Time = 2 mins.

% C&A = 90 %

5

Send

Reports

(Imaging)


% C&A = 90 %

6

Hospital

5 mins.

Schedule

Appointment


Lead Time = 12 mins.

% C&A = 98 %

6

Pre-register

Patient



% C&A = 100 %

5

CT=Cycle Time

LT=Lead Time

%C&A=% Complete & Accurate

0.0833 hrs.

2 mins.

0.0833 hrs.

1 mins.

0.75 hrs.

10 mins.

0.5 hrs.

15 mins.

0.0833 hrs.

3 mins.

4.13 hrs.

15 mins.

6.08 hrs.

5 mins.

16 hrs.

1 mins.

1.83 hrs.

1 mins.

2 hrs.

3 mins.

LT = 32.5 hrs.

CT = 56 mins.

CT/LT Ratio = 2.87%

Lead Time = 12 mins.Lead Time = 990 mins.

Prep

Patient

(Tech)


% C&A = 100 %

2

Check-in

Patient

(Imaging)


% C&A = 98 %

3

Complete

Exam

(Tech)


% C&A = 90 %

2

Transmit

Images

(Tech)


% C&A = 100 %

2

Read/Dictate

Exam

(Radiologist)


% C&A = 95 %

2

Transcribe

Report

(MDI)


% C&A = 75 %

6

Review

Draft/Sign

(Radiologist)


% C&A = 95 %

2

Print

Reports

(Imaging)


% C&A = 99 %

230 mins. 5 mins. 248 mins. 365 mins. 960 mins. 110 mins. 120 mins.45 mins.

E Pay

Excel

ADS

Symposium

Internet

Waiting Room

Management

System

Fax Order

Solutions

PACS

5 mins.

Lead Time = 24 days

Meditech

123

4

5 6 7 8 9 10 11 12 13 14

Auto Fax 50%

Us Mail 25%

MD Mailbox 25%

Rework Loop via Fax 25% of the time

Rolled First Pass

yield = 29%

Future State Value Stream Map

Outpatient Imaging Services

VSM Champion: Paul Scanner

Created: July 18, 2007

Demand = 15 per day

Referring

Physician

% C&A = 85 %

Send

Reports

(Imaging)


% C&A = 90 %

6

Hospital

Schedule appt

Pre-register



% C&A = 98 %

6

CT=Cycle Time

LT=Lead Time

%C&A=% Complete & Accurate

0.0833 hrs.

1 mins.

0.583 hrs.

10 mins.

0.333 hrs.

10 mins.

0.0833 hrs.

2 mins.

2 hrs.

15 mins.

7 hrs.

1 mins.

0.0333 hrs.

1 mins.

0.5 hrs.

3 mins.

LT = 11.3 hrs.

CT = 43 mins.

CT/LT Ratio = 6.32%

Lead Time = 45 mins.Lead Time = 15 days

Prep

Patient

(Tech)


% C&A = 100 %

2

Check-in

Patient

(Imaging)


% C&A = 98 %

3

Complete

Exam

(Tech)


% C&A = 90 %

2

Transmit

Images

(Tech)


% C&A = 100 %

2

Read/Dictate

Exam

(Radiologist)


% C&A = 95 %

2

Review

Draft/Sign

(Radiologist)


% C&A = 95 %

2

Print

Reports

(Imaging)


% C&A = 99 %

220 mins. 5 mins. 120 mins. 420 mins. 2 mins. 30 mins.35 mins.

E Pay

Excel

Symposium

Internet

Waiting Room

Management

System

Fax Order

Solutions

PACS

5 mins.

Set-upReduction

Remove Check in

and ReduceSystem Access

Work Balancing

StandardWork

Pull System(Supplies Kanban)

VisualWorkplace

Voice Recognition

Batch Reductions

5S

Co-locate

StandardWork

Work Balance

ContinuousFlow

Value StreamAlignment

Auto Fax 80%

Us Mail 15%

MD Mailbox 5%

Rolled First Pass

yield = 40%

Rework Loop via Fax 10% of the time

Customer Demand:

15 patients per Day

(Takt Time 1920 seconds)

8 hours per day

12

3

45 6 7 8 9 10 11

Risk Reduction

(Joint Commision)

Meditech


Outpatient Imaging

Projected Results

22

Metric

Current

State

Projected

Future State

%

Improvement

Lead Time 32.5 hrs 11.3 hrs 65%

Process Time 56 mins 43 mins 23%

Percent Activity 2.9% 6.3% 117%

Rolled First

Pass Yield 29% 40% 38%

# Macro Steps 14 11 21%

Tech turnover

(annual) 100% 25% 75%

Note: Freed capacity (PT reductions) allowed the organization to earn

$500,000 additional annual revenue with no additional headcount


Summary Metrics: Measuring

Productivity Gains

Labor Effort

23

Total PT (in hrs) X # occurrences/year

# FTEs

Available work hrs/year/employee =

Freed

Capacity = Current State FTEs – Future State FTEs

Note: Improvement can be expressed as Freed

Capacity (FTEs), Time, or Labor Expense (or all)

# FTEs = Full Time Equivalents; 2 half-time people = 1 FTE


What do you do with freed capacity?

Absorb additional work without increasing staff

Reduce payroll through natural attrition

Innovate – create new revenue streams

Conduct ongoing continuous improvement activities

Do a better job with fewer errors and higher safety

Talk and work with your customers and suppliers

Mentor staff to create career growth opportunities

Provide additional workforce development; cross-train

Better work/life balance

Slow down & think

Get/stay caught up

Do the things you haven’t been able to get to

Collaborate with other areas

24


Value Stream Mapping Activities

Team-based

Heavily weighted with those who can

authorize an innovative future state.

The team goes to the gemba to obtain the

metrics from those doing the work.

Three day activity; three deliverables.

Leadership learning is huge.

Interim briefings are a key success factor.

25

HR Value Stream Mapping Charter Event Scope Leadership / Coordination Schedule

Value Stream Recruiting, Hiring, & Onboarding Process Executive Sponsor Sherrye Hutcherson Event Date(s) Oct 27, 28 & 29, 2009

Specific Conditions External hires Value Stream

Champion N/A Start/End Times

Oct 27, 28 8:00 am - 4:30 pm

Oct 29 7:30 am - 2:00 pm

Customer Demand 100 per year Facilitator Karen Martin Location 9 West Seminar

Trigger Vacancy

First Step Hiring manager completes VPA Team Lead N/A

Meals

Provided?

Lunch, morning & afternoon

snacks Last Step Employee completes NEI

Boundaries &

Limitations N/A

Coordinator Andrew Peacock

Interim

Briefing(s)

Oct 27 & 28 3:30-4:30 pm

Oct 29 1-2 pm

Improvement

Timeframe Future state will be fully implemented by 2/15/2009

Briefing

Attendees

Tim Burke, Sherrye H and other

Division Managers

Event Drivers Mapping Team

1 Cumbersome process as perceived by the customer. Function Name Contact Information

2 Need to free capacity and operate more effectively. 1 Staffing Paula Pittman

3 2 FCS HR Patty Yager

4 3 Talent Management Tad Leeper

5 4 HRIS Chris Ritz

Measureable Objectives 5 HR Compliance Carl Olsen

1 Reduce LT from req to offer acceptance from 45-55 days to 30 days. 6 Comp & Benefits Nyla Cork

2 7 Recruiting Sheila Love

3 8 Diversity / Affirmative Action Joyce Cooper

4 9 Hiring Manager, Call Ctr Deb Emerson

5 10 Hiring Manager, Production Ops

Planned Deliverables On-Call Support

1 Current State VSM Function Name Contact Information

2 Future State VSM 1 IT Gary Van Osdel

3 Implementation Plan 2 Fort Calhoun - Security Herb Childs

4 3

5 4

Potential Obstacles Approvals

1 Executive Sponsor Value Stream Champion Facilitator

2

3 Signature: Signature: Signature:

4 Date: Date: Date: 26

Value Stream Mapping Process

Define

Product Family

Design Future

State

Document Current

State

Implement!

3 Day

Event

Foundation (the basis) for the

future state; 70-80% accurate is

acceptable (directionally correct)

Create flow by eliminating waste

it is now obvious from your

current state map); typically 3-6

months out

Products (good or services) with

common process steps

Rep

eat

The goal of mapping!

Create

Implementation Plan

Include accountability and

timeframes for completion


One VSM per Product Family

Process Steps & Equipment

Step A Step B Step C Step D Step E Step F

Products

Product

ABC X X X X X

Product

XYZ X X X X X

Product

IBM X X X

Product

AWR X X X X

Product

ACC X X X

Product

SUB X X X

Product

IDR X X X X X X 28

Group Product Families by similar downstream processes, steps or equipment.

Vol.

50

73

2

5

15

12

1


Narrowing the Scope:

Selected Specific Conditions

29

Hiring

Process

Replacements

New

Positions

Exempt

Staff

Non-Exempt

Staff

Exempt

Staff

Non-Exempt

Staff

Narrowing the Scope:

Selecting Specific Conditions

30

Order

Fulfillment

Process

International

Domestic

Service Parts

Consumables

Units

Non-

Warranty

Warranty

Service Parts

Consumables

Units

Non-

Warranty

Warranty


Define

Product Family

Design Future

State

Document Current

State

Implement!

3 Day

Event







months out



Rep

eat


Create

Implementation Plan




Value Stream Mapping Facilitator

Range of Necessary Traits

Skills / Knowledge Improvement tools (root cause analysis, flow-enhancing tools, etc.)

Project & time management

Mediation; consensus building

People effectiveness – from front line workers to execs

Authority / Respect Designated change agent / influence leader

Trustworthy

Comfortable removing obstacles & reaching out to senior leadership

Personality / Energy Naturally curious

Challenging, yet supportive

Positive, upbeat, energetic

Pushy without irritating

Objectivity / Fairness No attachment to the work being improved

32

© 2010 Karen Martin & Associates 33

Who? Accountability Tool

Leadership “What has to happen” Value Stream

Mapping

Workforce “How it will happen” Kaizen Events,

Just-do-its,

and Projects

Improvement Roles S

tra

teg

ic

Tac

tic

al

Middle

Management


The VSM Event

3 days

Sequestered team composed primarily of those

who can authorize change

Schedule

Day 1 – Document and analyze the current state

Go to the Gemba!

Day 2 – Design the future state (3-6 months out)

Day 3 – Create the implementation plan

Interim briefings (preferably daily) to non-team

leadership


Interim Briefings

Day 1 – here’s what we’ve learned

Establishes a mental framework for embracing

improvements; “sells” the need for improvement

Day 2 – here’s what we plan to do

Does anyone object? If so, why?

Challenge policies

Day 3 – here’s how we’re going to execute

Priorities, approach, timeframes, accountability

Obtain final buy-in right then and there


Define

Product Family

Design Future

State

Document Current

State

Implement!

3 Day

Event







months out



Rep

eat


Create

Implementation Plan



Key VSM Components

Process 1 Process 2 Process 3 Process 4

SUPPLIER CUSTOMER

Production

Control

Info

rmati

on

Flo

w

Pro

du

ct

Flo

w

Minutes Minutes Minutes Minutes

Hours Hours Hours

Tim

eli

ne

1

2

3

I I I

LT

PT

Order Initiation

Current State Map

Demand = XXXX

May 8, 2008

Robert Parker

Hours

Key VSM Components -

Office / Service

Process 3 Process 4

CUSTOMER

Info

rmati

on

Flo

w

Pro

du

ct

Flo

w


Hours Hours Hours

Tim

eli

ne

1

2

3 LT

PT

ABC Value Stream

Current State Map

Demand = XXXX/yr

Date

Key Contact

I.T. I.T. I.T.

Process 1 Process 2


The timeline is the most important of the three defining characteristics of a

VSM:

1) information flow

2) product flow

3) timeline

If your map doesn’t include a timeline, it is not a VSM. If your map has swim

lanes, it’s not a VSM. 39

Basic Mapping Icons

Push Arrow

Electronic

Information

Flow

Manual

Information Flow

Operator / Employee

Material receipts

& shipments

Go See Scheduling

External

Organization

Process Block

2 Shifts Takt= 60m

C/O= 40 m PT= 25 m

Data Block

Movement

by Truck

In-box


Hours Hours Hours Lead Time

Process Time

Timeline

Work-in-Process

I


Concurrent Work / Parallel Flows

41

LT = 8 hrs

Process

LT = 4 hrs


Process

Bring longest lead time to the timeline,

unless it’s a “dead end step.”


Step 1

Label your map

Value stream name

Current or future state

Customer demand (volume of work per time

period)

Takt time (if relevant)

Date

Facilitator’s name (and/or team)

42


Takt Time:

The Key to Continuous Flow

43

Available work time Takt time = Customer demand

480 minutes/day Takt time = = 10.6 mins 45 new accounts

OR…

Time Available divided by what Kustomer Takes

“Touch down”


Step 2

Identify all blocks in the process (target 5-15 blocks)

Customer icon is placed in upper right or middle

Upper right if supplier exists (supplier is placed in upper left)

Middle position if a separate supplier doesn’t exist

Supplier (if relevant) is placed in upper left

Each block (post-it) contains an activity or group of activities that

occurs before a break in the timeline occurs (typically WIP or

handoff)

Activity format is verb/noun – what happens to what

Include the function who performs the task

Include number of workers who perform the task

Include any obstacles to flow – batches, shared/inaccessible

resources, system downtime, etc.

Consider walking the process

44

Post-it Conventions

# Staff

(if relevant)

Barriers to flow

Process

(Verb/Noun)

Function


Step 3

Identify all I.T. systems used in the

process and information flow

For most VSMs, these are placed above the

process blocks

In very complicated VSMs with two rows of

process blocks, I.T. systems can be placed

between the rows, if necessary.

Note any scheduling that occurs (rare in

current state)

Who tells whom to do what?

46


Purchasing — Non-repetitive purchases less than $5,000 Supplies Purchasing - Current State VSM

Finance

Review

Budget

PT = 5 mins.

C&A = 60%

6

Corp Purchasing

Manager

Approve in

ERP

PT = 5 mins.

C&A = 90%

1

0.25 days

5 mins.

0.5 days

5 mins.

5 days

5 mins.

1 days

5 mins.

1 days

10 mins.

0.5 days

15 mins.

3 days

5 mins.

7 days

15 mins.

10 days LT = 28.4 days

PT = 65 mins.

AR = 0.477%

Supervisor

Review Req.

PT = 5 mins.

C&A = 95%

2

Sys Engineer

Review

Requisition

PT = 5 mins.

C&A = 90%

1

IS Manager

Review

Requisition

PT = 5 mins.

C&A = 100%

1Financial Mgr

Review

Requisition

PT = 10 mins.

C&A = 95%

1

Admin Asst

Enter

Requisition

PT = 15 mins.

C&A = 98%

1

4 hrs. 40 hrs. 8 hrs. 8 hrs. 24 hrs. 56 hrs.

Originator

Inititate Req.

PT = 10 mins.

C&A = 10%

31

2 hrs.

Form File

File Maker

ERP

Quicken

Vendor

Website

Excel

4 hrs.

Customer Demand:

615 requisitions per y ear

20 ReqsExternal

Supplier

PT = 20 mins.

Hard CopySupplies

Data Entry

Corp Purchasing

Submit PO

to Supplier

PT = 15 mins.

C&A = 98%

6

10 Reqs 63 Reqs

1

2 3 4 5 6 7 8 9 10

RFPY = 4.2%

PT = Process Time

LT = Lead Time


AR = Activ ity Ratio (PT/LT x 100)

RFPY = Rolled First Pass Y ield

80 hrs.


Step 4

Number the process blocks

Connect the customer and supplier,

process blocks and I.T. systems

“Lightning bolt” arrow for electronic/automatic

information flow

Regular arrow for push systems

“Hollow” arrow for product flow

If parallel processes exist, use alpha

modifiers – e.g. 8A, 8B, etc.

48

Post-it Conventions

# Staff

(if relevant)

Barriers to flow

PT (process time)

LT (Lead time) % Complete &

Accurate

Process

(Verb/Noun)

Function

Process Block #


Step 5

Add key metrics for all process blocks

Process Time (PT)

Lead Time (LT)

Percent Complete & Accurate (%C&A)

50

Post-it Conventions

# Staff

(if relevant)

Barriers to flow

PT (process time)

LT (Lead time) % Complete &

Accurate

Process

(Verb/Noun)

Function

Process Block #


Step 6

Create timeline & calculate summary

metrics

Timeline PT Sum

Timeline LT Sum

% Activity Ratio (AR)

Rolled First Pass Yield (RFPY)

52


Process 2

PT

LT LT

Process 1

PT

Office/Service Lead Time ―

• From the time work is made available until it’s been completed AND passed on

to the next person/work group/department in the process.

• Placed on the peak of the timeline to the left of the process block it refers to.

• Represents total throughput time, including process time; not merely wait time.

How to Treat Lead Time in

Office/Service Environments (new slide)

Lead Time

Process Time


Value Stream Mapping OPPD Recruiting, Hiring, Onboarding Process Results

54

Metric

Current State

Projected

Future State

Projected %

Improvement

Lead Time

Process Time

% Activity

Rolled First

Pass Yield

Other?


Typical Current State Findings

Islands of activity (process times) within long lead times.

55

Value Add

Necessary

NVA

Available

to work on Available to

next step

Unnecessary

NVA


Step 7

Identify all value-adding (VA) and

necessary non-value-adding (N) steps

Add “VA” or “N” smaller post-it to relevant

process blocks

All unnecessary non-value-adding blocks

remain unlabelled

56


Customer-Defined Value

Value-Adding (VA) - any operation or activity your external customers value and are (or would be) willing to pay for.

Non-Value-Adding (NVA) - any operation or activity that consumes time and/or resources but does not add value to the product (good or service) the customer receives.

Necessary – support processes, regulatory requirements, etc.

Unnecessary – everything else - WASTE

57

Unnecessary Non-value adding

Necessary non-value-adding

Value-adding

Work Effort as Defined by the

External Customer


Define

Product Family

Design Future

State

Document Current

State

Implement!

3 Day

Event







months out



Rep

eat


Create

Implementation Plan




Designing the Future State Value

Stream

60

Target All Waste!


Eight Wastes (Muda)

Overproduction

Inventory

Waiting

Over-Processing

Errors

Motion (people)

Transportation (material/data)

Underutilized

people

61


Future State Design

Goal: Removing all obstacles to flow (“the

thing” should never stop)

Batches

Rework

WIP / Bottlenecks

Handoffs

Setup / changeover

Physical layout

Motion & transportation

62


Eight Questions for

Future State VSM

1. What are the customer requirements? What’s the takt

time?

2. With goods, will we produce to order or to finished

goods inventory? (With services, you’re almost always

producing to order.)

3. Where can continuous flow be put in place?

4. Where should pull systems be implemented?

5. What is the single point of scheduling?

6. How do we level the load and the mix?

7. What should the management time frame be?

8. What process improvements are necessary to achieve

the future state? -- Rother & Shook, Learning to See

Future State Design Considerations

Eliminate steps / handoffs

Combine steps

Create parallel paths

Alter task sequencing and/or timing

Implement pull

Reduce / eliminate batches

Improve quality

Create an organized, visual workplace

Reduce changeover

Eliminate motion & transportation

Standardize work

Eliminate unnecessary approvals / authorizations

Stop performing non-value adding (NVA) tasks

Co-locate functions based on flow; create cells (teams of cross-functional staff)

Balance work to meet takt time requirements

64


The Right Process

Standardize work

Mistake proof work

Make problems visual

Fix problems immediately

Create continuous flow

Level demand

Balance work

Create pull systems

65

Building a Lean Enterprise

Process

Stabilization

Tools

Building a Lean Enterprise

Flow Enabling

Tools


Team Dynamics

Forming

Storming

Norming

Performing

Tuckman Model

Bruce Tuckman, 1965

Adjourning

Future State Icons

Supermarket

Production

Kanban

Withdrawal

Kanban

Signal

Kanban

Kanban

Arriving

in Batches

Withdrawal

OXOX Leveling,

Mix and/or

Volume

Kanban

Path

Kanban

Post

First-In

First-Out

(max WIP

defined)

FIFO

Max 8 “things”

Kaizen Burst

Buffer Stock

Combined Steps

Eliminated Step


Value Stream Mapping OPPD Recruiting, Hiring, Onboarding Process Results

70

Metric

Current State

Projected

Future State

Projected %

Improvement

Lead Time

Process Time

Activity Ratio

Rolled First

Pass Yield


Define

Product Family

Design Future

State

Document Current

State

Implement!

3 Day

Event







months out



Rep

eat


Create

Implementation Plan




Purchasing — Non-repetitive purchases less than $5,000 Supplies Purchasing - Current State VSM

Finance

Review

Budget

PT = 5 mins.

C&A = 60%

6

Corp Purchasing

Manager

Approve in

ERP

PT = 5 mins.

C&A = 90%

1

0.25 days

5 mins.

0.5 days

5 mins.

5 days

5 mins.

1 days

5 mins.

1 days

10 mins.

0.5 days

15 mins.

3 days

5 mins.

7 days

15 mins.


PT = 65 mins.

AR = 0.477%

Supervisor

Review Req.

PT = 5 mins.

C&A = 95%

2

Sys Engineer

Review

Requisition

PT = 5 mins.

C&A = 90%

1

IS Manager

Review

Requisition

PT = 5 mins.

C&A = 100%

1Financial Mgr

Review

Requisition

PT = 10 mins.

C&A = 95%

1

Admin Asst

Enter

Requisition

PT = 15 mins.

C&A = 98%

1

4 hrs. 40 hrs. 8 hrs. 8 hrs. 24 hrs. 56 hrs.

Originator

Inititate Req.

PT = 10 mins.

C&A = 10%

31

2 hrs.

Form File

File Maker

ERP

Quicken

Vendor

Website

Excel

4 hrs.

Customer Demand:

615 requisitions per y ear

20 ReqsExternal

Supplier

PT = 20 mins.

Hard CopySupplies

Data Entry

Corp Purchasing

Submit PO

to Supplier

PT = 15 mins.

C&A = 98%

6

10 Reqs 63 Reqs

1

2 3 4 5 6 7 8 9 10

RFPY = 4.2%

PT = Process Time

LT = Lead Time


AR = Activ ity Ratio (PT/LT x 100)

RFPY = Rolled First Pass Y ield

80 hrs.

Supplies Purchasing - Future State VSM

Customer Demand:

615 requistions per year

Dept.

Manager

Approve

in ERP

PT=5 mins.

C&A = 90%

1

0.5 days

5 mins.

0.75 days

5 mins.

1 days

20 mins.


PT = 30 mins.

AR = 0.508%

Supervisor

Review

Req.

PT=5 mins.

C&A = 95%

28 hrs.

Originator

Enter Req.

in ERP

PT=30 mins.

C&A = 85%

31

File Maker

ERP

Vendor

Websites

6 hrs.

Standard

Work for

review

Additional

IT access

Requisition

Checklist

Cross

Training

Additional

IT access

External

Supplier

PT=20 mins.

Supplies

4 hrs.

Auto Notify

Integrate Form

File with File

Maker

Use budget in place

of Quicken

Dedicated

Buyers

Corp Purchasing

Place

Order

PT=20 mins.

C&A = 98%

6

Approval

1

2 3 4 5

PT = Process Time

LT = Lead Time


AR = Activity Ratio (PT/LT x 100)

RFPY = Rolled First Pass Yield

RFPY = 71%

80 hrs.


Purchasing — Non-repetitive purchases less than $5,000


Metric

Current

State

Projected

Future State

%

Improvement

Lead Time 28.4 days 12.3 days 56.7%

Process Time 65 mins 30 mins 53.8%

% Activity 0.48% 0.51% 6.3%

Rolled First

Pass Yield 4.2% 71.0% 1,590%

# Handoffs 10 5 50%

# IT Systems 6 3 50%

Freed capacity 2.1 FTEs 10%

Purchasing Process

Projected Results

75

Source Refrigeration & HVAC, Inc.


Serv ice Deliv ery

Created February 11, 2009

CONFIDENTIAL

Customer

Receive

customer call

Call Center

PT = 2 mins.

%C&A = 60%

Review &

Post Invoices

Posting Admin

PT = 3 mins.

%C&A = 98%

Batch: 1x/day

0.0833

hours

2 minutes

2 hours

5 minutes

1.5

hours

90 minutes

1.25 hours

75 minutes

2 hours

120 minutes

4 hours

5 minutes

10.7

hours

10 minutes

48

hours

25 minutes

4 hours

3 minutes

10.7

hours

10 minutes

2 hours

4 minutes

480

hours Lead Time = 572 hours

Process Time = 349 minutes

Select &

Dispatch Tech

Dispatcher &

Service

Manager

PT = 5 mins.

%C&A = 60%

Make Repair;

Call to raise

the NTE

Tech

PT = 120 mins.

%C&A = 40%

Complete Call

in GP

Dispatcher

PT = 5 mins.

%C&A = 80%

Review

Service Call

Data

Service

Manager

PT = 10 mins.

%C&A = 50%

Batch: 2x/day

Review Open

Ticket Report

Billing Admin

PT = 25 mins.

%C&A = 75%

Upload time

card

Tech

PT = 0 mins.

%C&A = 70%

Batch: 1x/day

Close call in

Verisae

Account

Manager

(West)

PT = 1 mins.

%C&A = 90%

Batch: 1x/day

Process Time

Cards

Payroll Admin

PT = 10 mins.

%C&A = 90%

Batch: 1x/day

Process A/P

A/P Admin

PT = 15 mins.

%C&A = 85%

Batch: 1x/day

Tech

Assess

Problem

PT = 90 mins.

%C&A = 90%

Tech

Special Order

Part

Tech

Pick up Part

at Parts Store

PT = 75 mins.

%C&A = 95%

Tech

Get Part from

Truck

PT = 0 mins.

120 m.

Great

Plains

Verisae

(Customer)

Review

Invoices;

Close in

Verisae (Pac)

Account

Manager

PT = 10 mins.

%C&A = 85%

Batch: 3-5x per wk

Enter Invoices

into Verisae &

Excel; Mail

Invoices

Billing Admin

PT = 4 mins.

%C&A = 95%

Batch: 1x/week

Excel

Spreadsheet

(Customer)

40%

Receive

Cash; Post

Payment

Collections

75 m. 120 m. 240 m. 640 m. 6 days 240 mins. 640 m. 120 m. 60 days90 m.5 m.

?%

?%

Supplier

%C&A %Complete and Accurate

AR Activity Ratio

FTE Full Time Equivalent

LT Lead Time

PT Process Time

RFPY Rolled First Pass Yield

Acronym Key

Lead Time to invoice = 86.2 hrs

Process Time =5.9 hrs.

NOTE: Business hours

Activity Ratio = 6.8%

RFPY = 1.1%

Lead time to cash = ? days


Service Organization

76


Source Refrigeration & HVAC, Inc.

Service Delivery

T&M Target example, refrigeration component repair, non-peak season (35 work orders per day)

Created February 13, 2009

CONFIDENTIAL

Customer%C&A = 99%

Dispatcher

Create W.O.

Dispatch Tech

PT = 7 mins.

%C&A = 85%

Supplier

Tech

Assess

Problem

PT = 75 mins.

%C&A = 90%

Billing Admin

Review W.O.,

payroll, AP &

invoice; post

immediately

PT = 25 mins.

%C&A = 95%

Billing Admin

Compare

invoice

register to

invoices and

mail invoices

PT = 5 mins.

%C&A = 99%

1x daily

Collections

Receive

Cash; Post

Payment

2 hrs.

0.117 hrs.

1.25 hrs.

1.25 hrs.

1.25 hrs.

1.25 hrs.

2 hrs.

2 hrs.

24 hrs.

0.417 hrs.

4 hrs.

0.0833 hrs.

480 hrs. Lead Time = 520 hrs.

Process Time = 5.12 hrs.

Tech

Make Repair;

Complete call

on handheld

PT = 120 mins.

%C&A = 75%

Verisae

(Customer)

Great

Plains

Tech

Pick up Part

at Parts Store

PT = 75 mins.

%C&A = 95%

Lead Time to invoice = 34.5 hrs

NOTE: Business hours

Process Time = 5.1 hrs.

Activity Ratio = 14.8%

RFPY = 45.4%

Lead time to cash = 67 days

`

%C&A %Complete and Accurate

AR Activity Ratio

FTE Full Time Equivalent

LT Lead Time

PT Process Time

RFPY Rolled First Pass Yield

Acronym Key

Excel

Spreadsheet

(Customer)

Billing Admin

Enter data

into Verisae

and Excel

from Daily

Report

PT = 5 mins.

%C&A = 99%

1x daily

Tech

Special Order

Part

10%

?

Tech

Contact Tech

Support As

Needed

Tech

Get Part from

Truck

PT = 0 mins.

?

EDI Interf ace

No EDI

120 mins. 75 mins. 75 mins. 2 hrs. 24 hrs. 4 hrs. 60 days

Create Tech

Support Center

Create EDI

Interface w/

Customers

Centralize

Dispatch

Improve Tech

Onboarding

Standardize

Truck Inventory

Improve Tech

Training; Create

Sub-levels

Install kanban

on trucks

Create

Customer Billing

Teams

Create stnd work

for invoicing

Create invoice

exception report

Explore flat rate

pricing

Create Tech

performance

report

Implement

GPS

Create Source

preferred T & C's

Separate labor

& payroll

Create EDI

Interface w/

Verisae

Establish

parameters for time

& parts by

service type


Service Organization


Repair Value Stream Findings and Projected Results

77

Metric Current State Projected

Future State

Projected %

Improvement

Lead Time (request to invoice)

10.8 days 4.3 days 60.2%

Process Time 5.9 hours 5.1 hours 13.6%

% Activity 6.8% 14.8% 117.6%

Rolled First

Pass Yield 1.1% 45.4% 4027.3%

Parts store

trip required 40% 10% 75%

J F M A M J J A S O N D

1 4,7 Integrate call center and dispatch. PROJ Bill V X X X X X X X X

2Create and implement tech suport

center. PROJ Bill V X X X

3Explore EDI with customers for work

orders & invoicingPROJ Steve M X X X X X X X X X

4 Implement GPS. PROJ Curtis C X X X X X X

5 5,6 Create 90-day onboarding process. KE Justin C X X

KE Complete

working on 30

day List

6Develop & roll-out tech training for

existing employees. DOWKE Rich T X

7 Revise tech level criteria. KE Husein A X X

8

35 WO/day = 735 WO/month. 40% to parts store =

294 WO x 75 mins = 367.5 hrs. If 3.25 hrs/repair =

add'l 113 repairs per month x X avg labor

charge/invoice = X potential add'l rev.

Create standardization plan for

trucks (e.g. tools, equipment, parts,

PPE).

PROJ Fred S X

9 8*5S and pilot kanban on tech trucks;

pilot water spider function for parts.PROJ Fred S X X

10Revise reason codes for credit

memos.JDI Lisa B X Done

11 24* Design & pilot flat rate pricing PROJ Shawn C X

12Draft preferred Source T & C's

(MAC).PROJ Mark K X X X

13Centralize key customers billing;

create billing standard work.PROJ Renae H X X X

14 Separate labor & payroll. PROJ Lisa B X X In Testing

15 Create Target summary invoice. JDI Renae H X In Process

16 Resolve missing invoice situation. JDI Lisa B X

17Create standard work for billing and

collections process.PROJ Lauren X X

19Explore EDI for tech "complete"

status with VerisaePROJ Steve M X X X X X X X X X X

20 24*Create technician performance

report for Service Managers.PROJ Rich B X

21Align remaining call to cash projects

with future state plan.JDI Lisa B X Done

22 17*Create exception report for billing

admins.PROJ Rich B X

24Establish parameters for time, cost

& parts by service type.KE Curtis A X

25Consolidate, simplify, and

standardize parts numbersPROJ Mark K X X X

26 25Evaluate inventory requirements

and process for trackingPROJ Mark K X X X X

27Design and implement new

refrigerant control processKE Bryan B X

3/4/2009

Kaizen

Burst #Objective / Projected Results Pre-req

Date Created

Date

CompleteImprovement Activity

Future State Implementation Plan - CONFIDENTIALExecutive Sponsor

Value Stream Champion


Lauren Abrams

Lisa Baldewin

Karen Martin

Implementation Plan Review Dates

Type OwnerImplementation Schedule (months)

78

Value Stream

1 2 3 4 5 6 7 8 9 10 11 12

2 Improve quality of referral KE Sean O'Ryan

3, 4Reduce lead time beween schedulingand

preregistration stepsPROJ

Dianne

Prichard

5, 6Eliminate the need for two patient check-

insKE

Michael

O'Shea

6 Eliminate bottleneck in waiting area KEDianne

Prichard

9Eliminate lead time associated with

transcription stepPROJ Sam Parks

10 Eliminate batched reading KE Sam Parks

7Reduce inventory costs, regulatory risk

and storage needsKE

Michael

O'Shea

12 Reduce delay in report delivery PROJ Martha Allen

12 Reduce delay in report delivery KE Martha Allen

Implement voice recognition technology

Reduce setup required

Cross-train and colocate work teams

Implement additional fax ports

Collect copays in Imaging

Balance work / level demand

5S CT supplies area; implement kanban


Increase percentage of physicians

receiving electronic delivery (rather than

hard copy)

Approvals

Executive Sponsor Value Stream Champion

Signature:

Date: Date: Date:

Signature: Signature:

Block

#Goal / Objective Improvement Activity

Implement standard work for referral

process

Type OwnerImplementation Schedule (weeks) Date

Complete

Date Created

11/21/2007

Allen Ward

Sally McKinsey

Dave Parks 12/13/2007

10/18/2007 1/10/2008

Future State Implementation Plan

Executive Sponsor

Value Stream Champion


Implementation Plan Review Dates

11/1/2007

Outpatient Imaging


Poll #3

Deliverables produced during Value

Stream Mapping activity

80

81

PACE Prioritization Matrix

High Low Anticipated Benefit

Ease o

f Im

ple

men

tati

on

Dif

fic

ult

E

as

y

7

5

13

4

23

1

22

8

9

2

10

16

11

6

12

14

19

15

17

3

21

18

24

20

25

26

27

Policy

I.T.

Process


Common VSM Facilitation Issues

Keeping the team focused on the macro view

(rooftop level); it’s tempting to go into the weeds

Keeping the team focused on the current state

Assuring the team and leadership that

directionally correct data is good enough

Time management

Schedule Gemba time and conference room time

very tightly

Getting the right people on the team

Getting the right people at the interim briefings

Common Differences - Manufacturing vs. Office VSMs

Manufacturing Office

Customer icon Upper right Center

Supplier icon Upper left None

“The thing” we’re

following

Raw material, sub-

assemblies, finished goods

Paper, verbal, and

electronic Information

Information Flow More structured /

formalized I.T. systems

Multiple I.T. systems and

work-arounds

Schedule notification Multiple points across VSM Work not scheduled

Material flow (via

hollow arrow) Yes Sometimes

WIP icon Inventory triangle In-bin (if preferred)

Quality Metric First Pass Yield (FPY) Percent Complete &

Accurate (%C&A)

Takt Time Typically can be applied Only applicable with

dedicated resources

LT determination for

each block

Based on WIP between

process blocks

Based on a single item

passing through

Recommended Resources

The Complete Lean Enterprise,

Beau Keyte & Drew Locher

Value Stream Management for

the Lean Office, Don Tapping &

Tom Shuker


Learning Objectives

Participants will learn:

What a Value Stream Map is – and what it is not.

Best practices for holding a Value Stream Mapping

activity.

How to define office & service product families.

Step-by-step approach for creating current and future

state maps.

Key differences between manufacturing and

office/service VMSs.

How to create an implementation plan from the future

state VSM.

85


Karen Martin, Principal

7770 Regents Road #635

San Diego, CA 92122

858.677.6799

[email protected]

For Further Questions

Value Stream Mapping in Office & Service Setttings

Business

Transcript of Value Stream Mapping in Office & Service Setttings