Value Stream Mapping – Definition, Steps & Examples

 Value stream mapping can transform a business from average to exceptional. It’s an incredibly useful process that allows organizations to maximize the output of those things that are most appreciated by customers. Stream mapping enables you to identify improvement areas, sources of waste, and opportunities to save time and money. It’s one of the key lean principles that help businesses to grow and scale successfully. Whether you manufacture a product or sell services, developing a value stream map will completely change how you look at your offering. In this article, we define the concept, walk you through the steps to doing it, and provide concrete examples that you can reference.

What Is Value Stream Mapping?

Value stream mapping is defined as the process of recording the lifecycle of a product or service. It’s one of the key principles of lean manufacturing and can contribute substantially to continuous improvement efforts. The technique is helpful for documenting, analyzing, and improving the flow of materials or information that contribute to a final product.

The value stream itself refers to the complete lifespan of a specific offering, from inception to disposal and every stage in between. It encompasses the entire supply chain, source materials, production processes, features, and transport that bring about the product. Understanding where value is created (or not) helps organizations to align their activities with customer needs and focus on the areas that matter most.

In lean philosophy, value is considered to be anything that the customer is willing to pay for. It represents the aspects of a product or service that make it worth the money for them. But not every part of a process will directly contribute to value creation. So, while value stream mapping can help you identify areas of waste, it’s important to consider each element on its own merits. Some steps may not create value themselves but be part of a wider process that does do so. For example, quality control may not be something that a customer is willing to pay for. However, without it, the product finish or durability may suffer which would quickly lead to customer dissatisfaction and refunds. This makes it a fundamental element of any process, despite it not being directly linked to value creation.

What Is Value Stream Mapping Used For?

In lean thinking, mapping the value stream is most commonly the stage where waste is identified and improvement areas are suggested. It enables you to visualize the steps of a process as well as the inputs and outputs. Doing this allows you to easily understand how goods or materials flow through your organization between the suppliers at one end and customers at the other.

A key lean concept is the elimination of waste so as to keep everything as streamlined as possible. Creating value stream maps are therefore important in order to evaluate where there are opportunities for removing wasteful steps or optimizing the work in process. Some things will be necessary to create value and others will be unavoidable due to technological limitations. But there will also be types of waste that fall into a third category – these are areas that can be eliminated to improve overall efficiency.

It’s also helpful for understanding how teams or departments work together. Recording all of the steps in a process allows you to gain a high-level overview of the tasks involved. This can be useful when reviewing processes, identifying potential areas of improvement, or understanding the progress of an assignment. Having a guide that visualizes information flow is an easy way to spot communication gaps or sources of misunderstanding between teams.

Why It Matters

In order for a company to eliminate waste, it must first have a clear picture of the value stream. This enables them to examine the processes, materials, transport, and features in a holistic way. By doing this, it’s possible to identify where value is added and where none exists. Value stream mapping also makes it easy to see which areas are contributing to waste so that these can be addressed.

 Flow refers to the consistent creation and movement of the value stream. It’s one of the most abstract of all these principles but it is worth taking time to understand. When the value stream flow is blocked or stops moving forward, waste is created. This may be in the form of lost time, additional movement, or extra storage costs. Delays lead to customer value disruptions and also result in reduced efficiency, both of which defy the principles of lean.

 In a nutshell, the benefits of value stream mapping include;

•         Recognizing continuous improvement areas
•         Enabling focus on the most valuable (and therefore profitable) elements of a business
•         Identifying waste and reducing associated monetary or time costs
•         Breaking down silos between teams and departments

History of Value Stream Theory – Where Did It Come From?

Value stream mapping has its roots in the lean Toyota production system. Like Kaizen, Six Sigma, and Kanban processes, it rose to fame as part of the automotive manufacturer’s continuous improvement efforts. The concept was crucial to the company’s success and is still used in Japan today. However, Toyota didn’t invent this idea – they simply ran with it which helped to multiply awareness around the world. In fact, mapping the flow of materials and information was discussed in Charles E. Knoeppel’s 1918 book, Installing Efficiency Methods. Nowadays the concept is more commonly associated with lean thinking and Toyota’s world-leading production methods. It’s spread across industries and sectors, being adopted in every area of business, from software development and marketing to healthcare and consulting.

How Do You Create a Value Stream Map?

At a high level, you begin by mapping your processes and then charting the flow of information or materials above or below it. Depending on the complexity involved, this can be done with a variety of mapping tools. Using pencil and paper, process diagrams in Microsoft PowerPoint or specialist value stream mapping software can all work. Some people like to use a collection of post-it notes that they can arrange and color-code. Others prefer to work on a long roll of brown paper – it’s really down to which option works best for your organization in terms of process recording and internal communication. While the old-school paper-based versions may seem appealing, it can be difficult to translate this content into shareable versions to distribute with other teams.

Whichever method you choose, we recommend starting small. This might mean focusing on a single department or product in the beginning. Gather together the people involved in the area that you want to map and explain the objectives of the activity. Ensure that they understand why you’re doing it and what you want to achieve. If they see how the value stream map will be used in the future, then they’ll be better able to feed relevant content into it. 

Start by recording every step of a process in a long line, including feedback loops or other splits in the process where applicable. Then add the information or materials that are required for each step. What is needed for that stage to occur? What output is produced as a result? This is where you start to see what’s going in and coming out of a process. By following these easy steps, you’ll soon have a visual overview of the value and waste being created.

Tips for Maximizing Value in Your Workflow

Mapping is just one part of the approach – value stream management is where things get really exciting. Here are some practical tips for the value stream mapping process and maximizing what you get out of it.

Don’t Limit Yourself

Don’t feel restricted by the number of steps or stages that you believe ‘should’ be involved. It’s better to include every tiny element than overlook something. While a step may be seemingly small and innocuous, it could hold the key to streamlining a process or improving overall output. So, don’t limit yourself or be tempted to produce a ‘summary’ map – go detailed, to begin with, and then step back to evaluate what really matters.  

Understand Your Ideal State

Begin with the end in mind. What is your ideal state and how does it differ from your current one? Are you trying to achieve a pull system or would integration between sales pipelines and manufacturing lead times be sufficient? Is continuous delivery your aim or simply a product on-demand type model? Value stream analysis is difficult unless you know what success looks like. So, when reviewing your current state map, keep in mind what the ideals are.

Clearly Identify Handoffs

Handoffs or handovers between stages are most commonly where things go wrong. There’s often a gap between one team finishing their part and another one starting. Lack of communication can cause delays or other forms of wastage, so it’s worth paying special attention to these hotspots. Clearly identify them in your map and then discuss these points in more detail to establish what’s working and what could be improved.

Include Metrics and KPIs

Metrics and key performance indicators (KPIs) can help you understand whether your processes are working smoothly. They can also be used to track exactly how much value is being created and whether there’s potential for more. Some useful areas you could measure include;

•         Throughput of a stage or entire system – should be as high as possible
•         Lead time – should be quick so that customers receive orders promptly
•         Cycle time – aim to keep this closely aligned with your lead time
•         Volume of work in progress (WIP) – an indicator of waiting time (one of the seven wastes of lean)

It can be helpful to record these things on your state map and use them as a benchmark. You can then see whether the changes you implement impact these KPIs positively or negatively.

What’s the Difference Between A Process Map and a Value Stream Map?

At this point, you may be wondering about the difference between a process map and a value stream map. Process mapping is a common business tool and often used as part of lean Six Sigma efforts. It breaks down the steps involved in the production or development of something. A process map outlines the stages and helps you visualize the order in which they happen. Value stream maps build on these with more information. They include the steps of a process, along with the info or materials involved. This gives you a broader picture of the value and waste that is inherent rather than just the steps. 

The key differences between a process and value stream map can be summarized as follows;

•         Value stream maps are a strategic management tool that inform decision making, opportunity areas, and where to focus future project efforts.
•         Value stream maps convey a wider variety of information than process maps.
•         They may illustrate elements at a higher level.
•         VSMs will start and end at different points to a process map since they include receiving raw inventory or materials all the way through to finished goods delivery.

Value Stream Mapping Examples

Value stream mapping can be used in a huge variety of different situations. If your organization follows processes for any type of activity, then it’s likely that VSM can be applied. For companies that are looking to boost productivity, enhance customer satisfaction, and increase profitability, it should be a high priority. Let’s look at some practical value stream mapping examples.

Software Development

The software development process typically follows a similar thread, regardless of the end-product involved. Developers design the technology, code a workable product, test it to find the bugs and gather feedback, then review the code to make improvements. Mapping the value stream would involve expanding on each of these stages to identify the inputs and outputs. What information or materials are involved? Which elements are so highly valued by customers that they’re willing to pay for them? Spending time on a feature that they don’t care about is a waste so it can help to focus development efforts and speed up time to market.

Automotive Manufacturing

Since automotive manufacturing is what made the VSM process famous, it’s unsurprising that many examples are from this industry. A typical production process might include acquiring the raw materials, disseminating them around the factory floor, feeding them into the machinery, producing the parts, and then assembling them into a finished vehicle. Value stream mapping would help identify which areas are most valued by customers and where waste is created. Could the materials be delivered directly to each workstation instead of sitting in inventory? Are there steps in the process that don’t contribute value? How could waste be reduced at each stage? Considering the value aspects of a process will help you to streamline and improve it.

Consulting Services

It’s not just products that can benefit from value stream mapping – the concept can be applied to services too. For coaches and consultants, this is a powerful approach to identifying what clients really care about and how to focus their time. Services like these typically involve some kind of discovery stage, solution development, client pitches, and implementation. Each of these steps can include any number of different elements from tutorial creation to website auditing. The precise parts will vary by industry sector but what never changes is that clients will value some parts over others. Value stream mapping allows coaches and consultants to identify which areas these are so that they can focus their time and effort accordingly.  

Using Software to Aid Value-Focused Efforts

Value stream mapping started years ago using good old-fashioned pencil and paper methods. But the complexity of modern manufacturing methods means that this is no longer enough to keep pace. Using software is an easier and more effective way to map all of the elements you need and then share it throughout an organization. 

High-level maps tend to be fairly broad, as they have to track information from raw material delivery to finished good production. But they quickly become complicated once information on inputs, outputs, and potential improvement areas is added. Hand-drawn documents are also difficult to edit and update – if you forget a stage then you’ve got no choice but to rip it up and start again. They’re also hard to communicate across different teams in an organization. Handing around a paper copy and adding notes from other departments soon gets messy.

A better solution is to use a digital tool like Rever to capture and annotate processes. Because the software is cloud-based, it can easily be shared and edited by numerous teams across an organization. Comments can be added and alerts sent to stakeholders at the click of a button. It streamlines the entire process from start to finish so that you have more time to implement the improvement ideas. It is one of the most effective lean tools available for mapping process flows, root cause analysis, and strategic product development. So, why not conduct a value stream mapping exercise and see what lean transformation insights it produces for your organization?

Your Digital Continuous Improvement Tool

Rever is all about sharing and reusing, doing and tracking. Continuous process improvements become a hundred times easier with our innovative digital platform. Using Rever’s dashboard, you can monitor the performance of your teams, the summary of their impact, and easily identify the people making the biggest difference at your company.

Rever Cycle is our version of the PDCA methodology and guides your teams on the exact steps to follow to execute their own ideas. It allows them to capture the entire process, from identifying a problem to experimenting and implementing a solution. They can use it to capture the before and after with pictures, notes and drawings, making their ideas a reality in no time. The time of your team is too valuable to be wasted in handmade drawings and complex explanations. 

At Rever, we believe that anybody can be a knowledge worker and thrive. What makes us human is the capacity to grow our intellect and will, and to use them for good. We observe, especially at work, that most people are asked to stop thinking and do as they are told. We want to change that. We enable people to achieve their full creative potential.

Are you interested in learning more about mapping the value stream or discussing other continuous improvement methods? Then get a demo today with one of our friendly experts.