At some point, the COVID pandemic will pass, whether that’s due to a vaccine, a 2-minute test, or herd immunity. But if you want to thrive in the post-COVID world, you’ve got to start working on operational improvements now. After all, if you’re walking to the starting line while your competitors are already settled into the blocks, you’ll never catch up. Value stream mapping is the tool that will help you become faster and more nimble—both now, and in the World 2.0.
What is value stream mapping?
Value stream maps (VSMs) show both the material and the information flow in any kind of end-to-end process such as order to cash, or new product introduction. By revealing the handoffs, the delays, and the defects within and between processes, they act as an X-ray into the otherwise invisible workings of your operations, enabling you to address long-hidden problems that make your organization slow and unresponsive.
Two of my clients, a mid-sized manufacturer of girl’s dresses, and a small producer of camping accessories, have taken advantage of the COVID-induced business slowdown to map key processes. Their maps revealed numerous steps with long lead times, poor information flow, and high error rates—all clear opportunities for improvement that had heretofore been hidden. Both companies are already seeing benefits in the form of lower costs and shorter lead times.
Here are three examples of how their maps have helped them see into their processes more clearly and make changes to become more efficient.
Sample development
The dress maker designs dresses in the US and uses contract factories in Asia for manufacturing. Design and development is an iterative process that broadly works like this:
Depending on the complexity of the item or the idiosyncrasies of the fabrics, there might be a third or fourth round of samples.
Each shipment adds 2-4 days of lead time to the following step: the actual transit time, as well as the time spent waiting for FedEx to both pick up and deliver the package. In total, the back and forth shipping of samples could add weeks to the product development timeline. When the VSM made the non-value-added wait time shockingly clear, the leadership team integrated video into the process to eliminate shipping. Now when a sample is complete, the design and development teams review it with the factory by video conference, and the factory can immediately begin work on the next round. This not only cuts weeks out of the process, it increases clarity and reduces communication errors. Even better, the president of the company estimates that they’ll save several hundred thousand dollars in shipping charges alone over the course of a year.
Selling and merchandising
Value stream mapping revealed an additional drag on the company: the sales process. As with most companies, the sales team would take dress samples on the road to visit accounts. Flying around the country is both costly and time consuming, but it’s the way business has always been done, and it’s seldom been questioned.
COVID travel restrictions made those customer visits impossible. Consequently, like most companies, they began making customer presentations online, through video. But they made an important change to the sales process—rather than having the salespeople show the line, the merchandising and design team made a “canned” presentation for the customer. The salespeople still served as the voice of the customer, maintained the relationship with the accounts, set up the meetings, and managed the orders, but it was the designers who merchandised the line for the accounts.
The VSM highlighted an obvious inefficiency in the old process: the designers explained the line to the sales team, and then they had to relay the design inspiration and vision to the customer. In essence, it was a game of telephone, with predictable results. The designers’ overall vision wasn’t communicated clearly through the intermediary of the sales team. Even more problematic, when faced with any buyer skepticism, the salespeople would suggest bringing back older styles, which compromised the design consistency of the overall line. Design may not be important in industrial equipment, but it’s everything in fashion.
The VSM helped the company identify—and separate—the different types of information flows that are needed for success. The direct line from designer to customer has increased customer understanding and appreciation of the brand, it’s improved the designers’ morale, and it’s redirected the sales team’s efforts in a more productive way.
Picking, packing, and shipping
The camping goods manufacturer used a VSM to attack a different problem: their inability to meet the shorter shipping window of their biggest customer, Amazon. Amazon ordered once per week, on Mondays. In the past, Amazon allowed the company up to four days to deliver its order. But now Amazon was demanding that orders be received within three days (by Wednesday) or face a penalty charge. With the current process, there was no way to meet the new conditions.
Here’s a simplified version of the VSM for processing Amazon’s order (or any order that arrives via EDI):
The map made several problems immediately visible:
Resorting and reprinting the order created unnecessary errors.
There was a long delay between receipt of the order and approval to build, because the Director of Operations was in a regular Monday morning meeting for three hours.
The three-day lead time to build products killed any chance of meeting Amazon’s requirements.
Of course, when everyone looked at the VSM together—both literally and metaphorically from the same side of the table—the problems were obvious, as were the solutions.
The discussions that arose out of the mapping process revealed that the picking team didn’t need the order to be resorted and reprinted. The Director of Operations pushed his weekly meeting back by one hour so that he could approve the build plan as soon as it was ready. And the company scheduled small batches of manufacturing every weekday (instead of one large batch of production on Wednesdays), so that they almost always had stock for the Amazon order. Now the company ships Amazon’s order on the same day, or at worst, the following day.
Key VSM Terms
Value stream mapping is blissfully light on jargon. You don’t need to be an expert in statistical analysis to evaluate the quality and efficiency of the process you’re mapping. The three key terms are:
Lead time (L/T): Lead time is the time from when work is handed to one person until the time it’s handed off to the next person. Lead time includes all the periods of inactivity, including machine downtime, changeovers, waiting for a batch process (like FedEx pickup or a database update), interruptions, etc.
Process time (P/T): Sometimes called “touch time,” process time is the time it would take to complete the task if the person faced no delays—no interruptions, no computer crashes, no searching for parts, no waiting for information, etc.
Percent complete and accurate (%C&A): Equivalent to “first-pass yield” in a manufacturing environment, this is a measurement of the quality of the work done at each step in a service setting. %C&A is evaluated by the downstream person, not by the person doing the work. In an office/admin/service environment, directional correctness is more important than statistical precision: it doesn’t really matter whether the mortgage application is correct 80% of the time or 85%—we know there’s room for improvement.
Best practices
Mapping a value stream is as much art as skill. Nevertheless, there are several best practices to keep in mind.
Mapping is a participatory exercise requiring involvement with both front line workers and executives. Front line workers are needed because they’re the experts—they know how the process actually runs. Executives are needed because any change will require their approval, and it’s important that they understand what the mapping team has learned.
Walk through the value stream to see how the work actually flows through the company. You want to map the reality, not what’s supposed to happen or what you think is happening.
Don’t judge! The VSM is designed to show the messy reality of work as it’s currently done. Don’t criticize people if work isn’t being done “right.”
When evaluating the VSM, look for the following signs of improvement opportunities:
o Large discrepancies between process time and lead time.
o Low % complete and accurate (i.e., high error rate).
o Dead-end or disconnected information flows.
o Inventory buildups between steps.
Mapping a value stream can be laborious and time-consuming. It often takes several days (and several passes) to create an accurate current state map. And it takes additional time to devise improvements in those processes so that that the value stream flows faster and with fewer errors.
But COVID presents a tremendous opportunity for improvement. The pandemic has involuntarily forced massive change upon everyone. Workers have lost all the props and crutches—their workstations, in-baskets, pencil sharpeners, coffee buddies, pet peeves, and their cannot-love-withouts—that anchored them to the old way of work. This seismic shift means that people can no longer say, “But we’ve always done it this way. I can’t do without that step.” Without those anchors, resistance to change is significantly lower. There’s nothing to hold onto, because the old way of working no longer exists.
Thriving in the post-COVID world will require organizations to be more nimble, and to execute more quickly and with fewer errors. The pandemic has clearly changed our way of working dramatically, and perhaps permanently. But that also means it’s an accelerant to change, and a golden opportunity to move forward—if you have the will and the stomach.
Originally posted 9/29/20 in Industry Week magazine.