VSM Non-Manufacturing Guide

Company
LOGO
Value Stream Mapping in
Non-Manufacturing
Environments
June 15, 2009

© 2010 Karen Martin & Associates
Welcome!
To new friends and old across the U.S.
(28 states)
To our global friends in:
 Canada
 India
 Ireland
 Mexico
 Portugal
 Spain
 Sweden
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Your Instructor
 Early career as a scientist; migrated to
quality & operations design in the mid-80’s.
 Launched Karen Martin & Associates in
1993; applied Total Quality Management.
 Introduced to Lean in 2000.
 Specialize in Lean transformations in non-
manufacturing environments.
 Co-author of The Kaizen Event Planner;
co-developer of Metrics-Based Process
Mapping: An Excel-Based Solution.
 Instructor in University of California, San
Diego’s Lean Enterprise program.
7
Karen Martin,
Principal
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.
8

Webinar Structure
Value Stream Mapping…
 What is it?
 Why is it needed?
 What’s a value stream map look like?
 How do I create one?
 Then what?
9

Value Stream
Mapping’s Beginnings
Learning to See,
Mike Rother & John Shook
Administrative & Office
Environments
The Complete Lean Enterprise,
Beau Keyte & Drew Locher

Womack’s Five Principles of a
Lean Enterprise
 Value
 Value stream
 Flow
 Pull
 Perfection
11
— Jim Womack, Lean Thinking, 1996, 2003

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
12
Value Stream
Process Process
Process
Customer
Request
Customer
Receipt

The Work We Do:
Degrees of Granularity
13
In the
Weeds
(Tactical)
Rooftop
View
(Strategic)
Metrics-Based
Process Map
Value
Stream
Process Process Process
Step Step Step
Value Stream
Map

© 2010 Karen Martin & Associates 14
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
Strategic
Tactical
Middle
Management

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
15

VSM Goal: System Efficiency
16
Individual Efficiency =
Sub-optimization
System Efficiency =
Optimal Value Stream
Performance

Types of Value Streams
Product Value Streams
 Goods - manufacturing
 Services
 Healthcare – ED, inpatient, outpatient
 Financial Services – banking, loans, credit, investments
 Repair and maintenance
 Energy
 Government
 Military
 Professional Services – Accounting, legal, architecture,
engineering, etc.
 Non-Profit services
Support Value Streams
Value Stream “Segments”
17

Types of Value Streams
(continued)
 Product Value Streams
 Support Value Streams
 Recruiting and Hiring Process
 Tech Support
 Accounts Receivable
 Payroll
 Physician credentialing
 Billing
 Value Stream “Segments”
 Order fulfillment
 Product development
 New account set-up
 Laboratory services
 Imaging services
18

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?
19

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.
20

Lead Time vs. Process Time
Scenario 1
21
Lead Time
Work
Received
Work passed
to next step
Process Time
LT = PT + Waiting / Delays

Lead Time vs. Process Time
Scenario 2
22
Lead Time
Work
Received
Work passed
to next step
Process Time
LT = PT + Waiting / Delays

Summary Metrics: Time
% Activity (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 – %Activity = % Time Work is Idle
 Common finding = 1-10%
 Could also calculate %VA Activity to show how
little time is spent on value-adding activities.
23

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.
24

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
25

Current State Value Stream Map
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%
1
Financial 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 Reqs
External
Supplier
PT = 20 mins.
Hard Copy
Supplies
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
C&A = % Complete & Accurate
AR = Activ ity Ratio (PT/LT x 100)
RFPY = Rolled First Pass Yield
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%
2
8 hrs.
Originator
Enter Req.
in ERP
PT=30 mins.
C&A = 85%
31
File Maker ERP
Vendor
Websites
6 hrs.
Standard
Workfor
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 = 71%
80 hrs.
Future State Value Stream Map

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

Summary Metrics: Measuring
Productivity Gains
Labor Effort
29
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
30

Key VSM Components
Process 1 Process 2 Process 3 Process 4
SUPPLIER CUSTOMER
Production
Control
Information
Flow
Product
Flow
Minutes Minutes Minutes Minutes
Hours Hours Hours
Timeline
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
Information
Flow
Product
Flow
Minutes Minutes Minutes Minutes
Hours Hours Hours
Timeline
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

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
Minutes Minutes
Minutes
Minutes
Hours Hours
Hours
Lead Time
Process Time
Timeline
Work-in-Process
I

Outpatient Imaging Services
VSM Champion: Paul Scanner
Created: July 17, 2007
Demand = 15 per day
Customer Demand:
15patients perDay
(Takt Time1920seconds)
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%
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 %
2
30 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
1
2
3
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%

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 = 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 %
2
20 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-up
Reduction
Remove
Check in
and Reduce
System Access
Work
Balancing
Standard
Work
Pull System
(Supplies
Kanban)
Visual
Workplace Voice
Recognition
Batch
Reductions
5S
Co-locate
Standard
Work
Work
Balance
Continuous
Flow
Value Stream
Alignment
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 perDay
(Takt Time1920 seconds)
8 hours per day
1
2
3
4
5 6 7 8 9 10 11
Risk
Reduction
(Joint
Commision)
Meditech

Outpatient Imaging
Projected Results
36
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

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
Repeat
The goal of mapping!
Create
Implementation Plan
Include accountability and
timeframes for completion

Value Stream Mapping
Planning Your Activity
38

Value Stream Mapping Activity
Team-based
Heavily weighted with those who can authorize an
innovative future state.
 Typically manager and above
 The team goes to the gemba to obtain the metrics from
those doing the work.
Three day activity; three deliverables.
Leadership learning is a significant side benefit.
Key success factor - interim briefings to
communicate and achieve consensus.
39

40
Briefing(s)
Date & Time
1 Contact Information
2 1
3 2
4 3
5 4
5
1 6
2 7
3 8
4 9
5 10
1 Contact Information
2 1
3 2
4 3
5 4
1
2
3
4 Date: Date:
Signature: Signature:
Name
Facilitator
Meals
Provided?
Location
Value Stream
Champion
Event Date(s)
Logistics
Coordinator
Executive
Sponsor
Specific
Conditions
Value Stream
Customer Demand
Last Step
First Step
Value Stream Mapping Charter
Event Scope Leadership / Coordination Schedule
Start/End
Times
Takt Time
Event Drivers / Current State Issues Mapping Team
Gemba Walk
Date & Time
Required Briefing
Attendees
Boundaries &
Limitations
FS Implementation
Timeframe
Function
Event Goals & Measurable Objectives
Projected Deliverables On-Call Support
Implementation Plan
Current State Value Stream Map Function
Approvals
Name
Facilitator
Value Stream Champion
Potential Obstacles to Event Success
Signature:
Date:
Executive Sponsor

Scoping: 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 41
Group Product Families by similar downstream processes, steps or equipment.
Vol.
50
73
2
5
15
12
1

Narrowing the Scope:
Selected Specific Conditions
42
Hiring
Process
Replacements
New
Positions
Exempt
Staff
Non-Exempt
Staff
Exempt
Staff
Non-Exempt
Staff

Narrowing the Scope:
Selecting Specific Conditions
43
Order
Fulfillment
Process
International
Domestic
Service Parts
Consumables
Units
Non-
Warranty
Warranty
Service Parts
Consumables
Units
Non-
Warranty
Warranty

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

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.
48

Concurrent Work / Parallel Flows
49
LT = 8 hrs
Process
LT = 4 hrs
Process Process Process
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)
50

Takt Time:
The Key to Continuous Flow
51
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 a handoff to
another function/work team.
 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
52

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?
54

Step 4
Number the process blocks from left to
right.
 If parallel processes exist, use alpha modifiers
– e.g. 8A, 8B, etc.
Connect the customer, supplier (if present)
and process blocks
 “Striped” arrow for push systems
 Hollow arrow for material flow
Connect and I.T. systems
56

Post-it Conventions
# Staff
(if relevant)
Barriers to flow
PT (process time)
LT (Lead time)
% Complete &
Accurate
Process
(Verb/Noun)
Function
Process Block #

Depicting e-Information Flow
58
Process
Block
I.T.
Application
Arrow pointing to
I.T. application:
Staff enters data
Process
Block
I.T.
Application
Arrow pointing from
I.T. application:
Staff views data
Process
Block
I.T.
Application
Two-headed arrow:
Staff both views and
enters data
#1 I.T.
Application
#2 I.T.
Application
Lightning bolt arrow:
Application #1 auto-populates
application #2

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%
1
Financial Mgr
Review
Requisition
PT = 10 mins.
C&A = 95%
1
Admin Asst
Enter
Requisition
PT = 15 mins.
C&A = 98%
1
Originator
Inititate Req.
PT = 10 mins.
C&A = 10%
31
2 hrs.
Quicken
Vendor
Website
Excel
4 hrs.
Customer Demand:
20 Reqs
External
Supplier
PT = 20 mins.
Hard Copy
Supplies
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
80 hrs.
Material
flow
ERP auto-
populates
P.O.
Push
Arrow

Step 5
Add key metrics for all process blocks
 Process Time (PT)
 Lead Time (LT)
 Percent Complete & Accurate (%C&A)
Add additional obstacles to flow if any are
identified (e.g. batches, shared resources
system availability/speed, etc.)
Add the WIP (work-in-process) for all
process blocks.
60

Three Places WIP Accumulates
Before the process block – work not yet begun.
Within the process block – work currently being
performed.
After the process block – Work that’s complete,
but hasn’t been passed on
62
Step 1 Step 2 Step 3
WIP
WIP WIP

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%
1
Financial Mgr
Review
Requisition
PT = 10 mins.
C&A = 95%
1
Admin Asst
Enter
Requisition
PT = 15 mins.
C&A = 98%
1
Originator
Inititate Req.
PT = 10 mins.
C&A = 10%
31
2 hrs.
Quicken
Vendor
Website
Excel
4 hrs.
Customer Demand:
20 Reqs
External
Supplier
PT = 20 mins.
Hard Copy
Supplies
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
80 hrs.
WIP

Step 6
Create timeline & calculate summary
metrics
 Timeline PT Sum
 Timeline LT Sum
 % Activity Ratio (AR)
 Rolled First Pass Yield (RFPY)
64

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
Lead Time
Process Time

Projected Results
66
Metric Current State
Projected
Future State
Projected %
Improvement
Lead Time
Process Time
% Activity
Rolled First
Pass Yield
Labor Effort
Others, as
relevant

Typical Current State Findings
Islands of activity (process times) within long lead times.
67
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
68
Enter
Order
Check
Credit
Approve
Order
Customer Rep Sales Rep
Finance
VA N
Value-adding
Unnecessary
Non-Value-Adding
Necessary
Non-Value-Adding

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
69

Unnecessary Non-
value adding
Necessary non-value-
adding
Value-adding
Work Effort as Defined by the
External Customer

Designing the Future State Value
Stream
72
Target All Waste!

Eight Wastes (Muda)
Overproduction
Inventory
Waiting
Over-Processing
Errors
Motion (people)
Transportation
(material/data)
Underutilized
people
73

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
74

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
76

The Right Process
Standardize work
Mistake proof work
Make problems visual
Fix problems immediately
Create continuous flow
Level demand
Balance work
Create pull systems
77

Building a Lean Enterprise
Process
Stabilization
Tools

Building a Lean Enterprise
Flow Enabling
Tools

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

Projected Results
81
Metric Current State
Projected
Future State
Projected %
Improvement
Lead Time
Process Time
% Activity
Rolled First
Pass Yield
Labor Effort

Value Stream
1 2 3 4 5 6 7 8 9 10 11 12
2 Improve quality of referral KE Sean O'Ryan
3, 4
Reduce lead time beween schedulingand
preregistration steps
PROJ
Dianne
Prichard
5, 6
Eliminate the need for two patient check-
ins
KE
Michael
O'Shea
6 Eliminate bottleneck in waiting area KE
Dianne
Prichard
9
Eliminate lead time associated with
transcription step
PROJ Sam Parks
10 Eliminate batched reading KE Sam Parks
7
Reduce inventory costs, regulatory risk
and storage needs
KE
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
Value Stream Mapping Facilitator
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 Owner
Implementation 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

84
PACE Prioritization Matrix
High Low
Anticipated Benefit
Ease
of
Implementation
Difficult
Easy
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

VSM Software
iGrafx FlowCharter – my favorite
Minitab
e-VSM
Systems2Win – Excel-based
85

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

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
87

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

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.
89

Resources to Learn About
Metrics-Based Process Mapping
The Kaizen Event Planner: Achieving
Rapid Improvement in Office, Service, and
Technical Environments (Chapter 12)
Metrics-Based Process Mapping: An
Excel-Based Solution
Webinar on work standardization –
Tuesday, August 10.
90

Your Questions
 Level of leadership involvement needed (Ram)
 Software programs (Arnoldo)
 How to VSM in hospitals (many), laboratory settings
(Lynn & Linda), state governments (Cindy), construction
(Marc) and office areas in manufacturing (many).
 How to create linear VSMs in a world of “swim lane”
processes (David).
 How to begin VSM’ing (been doing Lean but never
VSM’d) (Bonnie)
 How to and when to VSM (Carlos).
 Who decides what “value” is in the process (Helen).
91

Your Questions (continued)
 Difference between VSM and other process mapping
techniques – advantages & disadvantages (Kathryn).
 How non-manufacturing environments benefit from
VSMs. (Manuel)
 How to use the VSM as a communication tool (Landy)
 How to enact VSM without 5S (Sheila).
 How to VSM capital program planning (Robert) and lab
billing department (Linda).
 How to define product families (Mike).
 How to roll out the technique to the business (Glenda).
92

Karen Martin, Principal
7770 Regents Road #635
San Diego, CA 92122
858.677.6799
ksm@ksmartin.com
For Further Questions

VSM Non-Manufacturing Guide

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