Value stream mapping is a technique used to make a company “lean” by identifying and removing unnecessary steps. It involves analyzing the process and distinguishing between value and waste. Skilled managers then eliminate wasteful steps and find ways to increase product value.
Value stream mapping is a technique used to identify and remove unnecessary steps from a company’s flow of information and materials. The ultimate goal of the technique is to make the company “lean”, that is, free of wasted effort. Toyota is generally credited with developing lean production techniques, which were adapted and added to by successive generations of managers and consultants.
While the implementation and emphasis of lean techniques can vary greatly, value stream mapping remains a key and recognizable element across companies, industries, and even countries. To understand value stream mapping, it is important to first understand some relevant terms. When we talk about process, we mean all the steps that take place from the supply chain to the point where the customer receives the finished product. For example, value stream mapping for a paper mill might start with receiving raw materials, such as wood and chemicals, and end with shipping packaged and finished paper products. Note that lean techniques such as value stream mapping can be applied to any segment of the larger process. More often than not, companies divide their process into distinct sections, allowing multiple teams of experts to apply lean techniques simultaneously.
Next, the difference must be established between value and waste. In its broadest sense, value is adding to the product something the customer wants or needs. Going back to the paper mill example, the value steps are those that give the paper the desired dimensions, colors, compositions, etc. On the other hand, residuals are steps that do not add value. The most cited forms of waste are the unnecessary movement of the product, equipment or employees; keep an inventory of raw materials or products waiting to be worked on; making more parts or products than customers demand; process a component more than the customer actually needs or expects; quality checks; or the subsequent reprocessing of defects.
Now let’s apply these terms to value stream mapping. A company starts with a process or part of a process. The paper mill decides to make its pulp section thinner. The workers and managers most knowledgeable in that section will come together and determine where the pulping process begins and ends. They will identify each intermediate step, presenting it in the form of a flowchart or process map. Once they have an accurate process map, it’s time to map the value stream. Each step in the map is analyzed and labeled as adding value, wasteful but necessary, or wasteful.
Skilled managers then assess the steps identified as unhelpful and ruthlessly exclude them from the process. Perhaps the company is carrying an excess inventory of pulp chemicals, tying up cash that could otherwise be put to better use. Or they realize that quality checks done mid-pulp are redundant and unnecessary. The best managers, however, are not satisfied with using value stream mapping just to eliminate waste and improve the process. These savvy entrepreneurs also use value stream mapping to find ways to increase product value to customers, a practice that also adds value to the company’s income stream.
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