Monday, October 15, 2007

31.Identifying Your Value Streams

Identifying the entire value stream for each product or product family in your business is the first step toward eliminating waste. There are three things you will need to understand before you can identify your value stream:

1. What is value?
2. What is a value stream?
3. What is their significance?

Simply put, value is what your customers are willing to pay for. And a value stream is the set of all the actions required to bring a product to the customer. In the value stream, there are actions that create value and actions that create no value. Among the actions that do not create value, there are some that are unavoidable due to current technology, and there are others that can be eliminated immediately. Eliminating actions that create no value is very significant because it will have a dramatic effect on your company’s bottom line.
Now that you know the definitions, how do you begin to identify the value streams in your business? There are three major steps to identifying your value streams:

1. Group your products into product families whenever possible.
2. Select one of your products/product families to be analyzed.
3. Take a walk through from the customer back to materials in receiving.

Grouping Your Products

Grouping your products is usually a very simple process. Make a table like Table 1 below. Along the left column, list all of your products. Along the top row, list all of your processes/equipment. Place an “X” in each cell where a product uses process. While adjustments will likely need to be made later, this will take you a long way in identifying your product families.

Selecting A Product Family

There are different criteria you can use for selecting the first product family to be analyzed. This depends on your business situation. Some criteria you might consider are:
1. Highest Product volume in $
2. Highest Product volume in units
3. Products with the highest defect rates
4. Products with the highest customer return rate
5. Products that visit the most processes (You will find that most changes you will make in Value Stream Analysis of a product will apply to many products/product families).

Making the Initial Walk-Through

When you make the initial walk-through, begin with the customer and work backwards. As you walk through, consider how customer orders are processed, how work on the shop floor is triggered, how orders are transmitted upstream, how materials are supplied, and how products get from the last step in the process to the customer.

After walking through, you will be well on your way to identifying and gaining a rudimentary understanding of your value stream. The next step is to create a current state value stream map, which will give you a more detailed picture of your value stream.

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