Over the 16 years that we've been providing support to organizations at nearly every stage of the Lean journey, leadership has consistently emerged as the single most important determinant of success. Those organizations with strong leadership engagement soar, while those who don't fail to experience significant transformation.
These are the materials for Karen's third (and final) of three webinars on Lean Leadership. In this webinar, Karen reviewed the system of Lean principles, management practices, and tools, and then focuses on the role of leaders in understanding their organization's value streams, setting the strategic direction for value stream transformation, and monitoring the cycle of improvement.
The webinar recording is available at:http://www.slideshare.net/KarenMartinGroup/lean-leadership-part-3-of-3-webinars-67941809
Not a subscriber? To receive automatic notification of future webinars, gain access to our library of free assessments and templates, and receive our occasional newsletter with improvement tips: www.ksmartin.com/subscribe.
6. You will learn…
• What’s a value stream?
• What are the organizational benefits of looking at work
through the value stream lens?
• What’s involved in a value stream transformation cycle?
• What’s a value stream map?
• Why is VSM a team-based, leadership-heavy activity?
• How does one prepare for a mapping activity, create current
and future state maps, and develop a transformation plan?
• Key success factors
7. Wherever there is a request and a deliverable,
there is a value stream.
8. Value Stream
All of the activities required to transform a
customer request into a good or service.
8
First defined in The Machine That Changed the World,
James Womack, Daniel Jones, & Daniel Roos, 1990.
Process ProcessProcess
Customer
Request
Customer
Receipt
10. Value Stream Mapping Progression
10
Mike Rother &
John Shook
1999
Beau Keyte &
Drew Locher,
2004 & 2015
Karen Martin &
Mike Osterling
2014
“Whenever there is a product for a
customer, there is a value stream.
The challenge lies in seeing it.”
11. Work: Degrees of Granularity
11
Value
Stream
Process Process Process
Step StepStep
Macro
Perspective
• Define strategic
direction
(“what”)
• Heavy leadership
involvement
• Value Stream
Mapping
Micro
Perspective
• Identify the
tactical “how”
• Heavy frontline
involvement
• Metrics-Based
Process
Mapping
12. Work: Levels of Granularity
12
Begin Discussions
with Prospective
Client
Negotiate &
Execute
Contract
Communicate
Plan Options &
Enrollment Process
Enroll
Employees
Service
the Contract
Value
Stream
Process
Negotiate
pricing
Approve
Negotiate
terms
Approve
Execute
Contract
CUSTOMER
14. One Value Stream Map for Each Product Family
Function A Function B Function C Function D Function E Function F Function B Function H
X X X X X
X X X X X
X X X X X X X X
X X X X X
X X X X X
X X X X X X X X
X X X X
X X X X X X X
X X X X X
Value
Stream
Map #1
15. Value Stream Scoping Diagram: Defining Specific Conditions
Golden State
Equipment, Inc.
Capital
Equipment
80% $; 10% vol.
Catalog
40%
Configure to
order
15%
Engineer to
order
35%
Custom
hardware
20%
Custom
software
20%
Both
60%
New Product
Development
10%
Spares &
subassemblies
20% $; 90% vol.
Catalog
Engineer to
order
15
16. Value Stream Mapping Benefit:
Seeing the Whole
16
Value Stream Mapping enables a
mapping team to get ABOVE the work
26. Sample Future State Decisions
• Replace sales commissions with annual profit sharing.
• Insource an outsourced activity.
• Restructure broker relationships.
• Merge two departments.
• Shift work from one department to another.
• Push authorizations down two levels.
• Eliminate a department (with staff redeployment to other areas).
• Build the means for customers to order online.
• Add value stream owners to org chart.
• Double the financial levels of authority.
26
27. Improvement Roles
Who? Accountability Practice / Tool
Sr. Leaders What has to happen Hoshin Planning,
Value Stream
Mapping
Frontlines How it will happen” Projects, Kaizen
Events, Just-do-its,
Daily Kaizen
StrategicTactical
Middle
Management
28. Value Stream
Improvement
Annual Goals & Priorities
(Strategy Deployment) or
High-level A3
Projects (w/ or w/o A3),
Rapid Improvement Events
(Kaizen Events), Daily Kaizen (Kata)
30. Lead Time vs. Process Time
Lead Time (LT)
Work
Received
Work passed to
next process or
department
Process Time
(PT)
Lead Time = Elapsed time; Throughput time; turnaround time
Process Time = Touch time; work time; cycle time
Work is Idle Work is Idle
31. Measuring In-Process Quality:
Percent Complete & Accurate (%C&A)
Customer
Process
1
Process
2
Process
3
Process
4
80% 50%95%
75%
90%
%C&A = % of incoming work that’s “usable as is”; no need for rework:
• Correcting information or material that was supplied
• Adding information that should have been supplied
• Clarifying information that should have or could have been clearer
31
32. Customer
1
Process 3
Function E
LT = 0.5 days
PT = 30 mins.
%C&A = 95%
4
4
10 mins.
1 days
120 mins.
2 days
30 mins.
0.5 days Total LT = 3.5 days
Total PT = 160 mins.
Activity Ratio = 9.5%
Rolled %C&A = 89.3%
Process 2
Function C
LT = 2 days
PT = 120 mins.
%C&A = 95%
3
3
IT-1 IT-2
5 items
Process 1
Function A
LT = 1 days
PT = 10 mins.
%C&A = 99%
5
2
1 items 10 items
Standard
work
Modified
approvals
IT interface
Cross-
train
Cross-
train
Standard
work
Error
proof
Basic Value Stream Map: Future State
33. Value Stream Performance
Sample Results
Metric Current State
Projected
Future State
Projected
% Improvement
Lead Time
(PO to shipping)
17 months 7.5 months 56%
Process Time 600 hours 450 hours 25% (22 FTEs)
Rolled % Complete &
Accurate
0% 21% > 2,000%
On-time delivery 13% 90% 592%
# Internally-produced
Change Orders
25/project 12/project 52%
Freed Cash flow $25M per year
35. 1
2 1
3 2
4 3
5 4
5
1 6
2 7
3 8
4 9
5 10
1
2 1
3 2
4 3
5 4
1
2
3
4 Date: Date:engagement, financials, lead time, safety records, etc.
effectiveness, market trends, customer satisfaction, employee Signature:
Date:
Relevant Data Agreement
Examples: work volume & volume variation, process quality &
Executive SponsorWhat data is required to understand relevant current state isues.
Signature: Signature:
How will the business, internal and external customers, and Function
internal and external suppliers benefit from value stream improvement? SMEs that may not be needed full time
Always a nice touch; keeps
the team from wandering
On-site, ample wall space,
quiet/private location
Benefits to Customers & Business On-Call Support
Increase <defined metric> from X to Y (Z% improvement).
Reduce <defined metric> from X to Y (Z% improvement).
Measurable Target Condition
What's driving the need for improvement? Function
Leadership-heavy
Current State Problems & Business Needs Mapping Team
Boundaries &
Limitations
Improvement Time
Frame
What is the team NOT authorized to change?
Typically 3-6 months
Last Step Task on last process block
Logistics
Coordinator
Not always needed
Aids in consensus building
and organizational learning.
Typically the last hour of the
day.
First Step Task on first process block
Briefing
Dates &
Times
Meals
Provided
Briefing
Attendees
** required
*optional
List the the people that are
required to attend the briefings (**)
and those whose attendance is
optional (*).
Demand Rate
Trigger
How many times is this done per wk, qtr, mo, or yr?
What initiates the process?
Value Stream Mapping Charter
Scope Accountable Parties Logistics
Required: typically VP or C-level
If needed—often director or
manager level
Specific
Conditions
What circumstances are included and excluded?
(e.g., type of customer, geographic location, etc.)
Value Stream
Champion
Value stream being improved
Executive
Sponsor
Value Stream
Event Dates
& Times
3 days typically; consecutive
is best; 6 hrs per day
minimum; 7 or 8 hrs is best
Required: skilled, objective person
leading the activity
Base-camp
Location
Facilitator
Name
Name
FacilitatorValue Stream Champion
Contact Information
Contact Information
Charter: Critical planning, communication, and consensus-building tool
Available at www.ksmartin.com/vsm-charter
36. What problem are you trying to solve?
36
Desired State
(or known standard)
Current State
Gap =
Problem
37. Agency
1.3 hrs. 5.0 hrs.
10.0 days
3.0 hrs.
5.0 days
0.2 hrs.
1.0 days
1.0 hrs.
3.0 days
5.0 hrs.
2.0 days
1.3 hrs.
1.5 days
8.0 hrs. 4.0 hrs.
10.0 days
0.1 hrs.
10.0 days
40.0 hrs.
10.0 days
4.0 hrs.
7.0 days
3.0 hrs.
64.0 days Total LT = 124.7 days
Total PT = 75.8 hrs.
Activity Ratio = 8%
Customer's
Order
System
Apptus/
Design
C9
Apollo
Create
Opportunity
Conduct
Credit Check
Sales
Credit
LT = 0 days
PT = 1.25 hrs.
%C&A: 60%
1
Create & Send
Proposal
Validate
Opportunity
create IO
Sales
Strategic
Response
LT = 2 weeks
PT = 5 hrs.
%C&A: 80%
2
Rev iew &
Negotiate
Deal Via
Unsigned IO
Sales
Deal Desk
LT = 1 weeks
PT = 3 hrs.
%C&A: 66%
4
3
Sign & return
IO
Customer
LT = 1 days
PT = 0.25 hrs.
%C&A: 100%
4
Confirm
Campaign
Details
Direct Teams
to setup
campaign,
obtain assetsAcct Mgmt
LT = 3 days
PT = 1 hours
%C&A: 52%
5
Setup &
Launch
Campaign
Ad
Operations
Analytics
LT = 2 days
PT = 5 hrs.
%C&A: 50%
30
6
Obtain
Ext. Data &
Config. Auto
Load (AO)
Acct Mgmt
Ad
Operations
LT = 1.5 days
PT = 1.25 hrs.
%C&A: 80%
7
Rolled %C&A = 1.9%
Monitor
Campaign &
Trouble Shoot
Operations
Acct Mgmt
Analytics
LT = 0 days
PT = 8 hrs.
%C&A: 50%
8
Inv oice
Customer
(Batch = 1x/
mnth)
Finance
LT = 2 weeks
PT = 4 hrs.
%C&A: 60%
13
9
Send
Commission
Report To
Comp
(Batch =
1x/mnth)
Finance
LT = 2 weeks
PT = 0.1 hrs.
%C&A: 99%
10
Assign
Campaign To
Reps
(Batch = 45
Days)
Comp
LT = 10 days
PT = 40 hrs.
%C&A: 95%
11
Pay
Commission
Finance
Payroll
LT = 7 days
PT = 4 hrs.
%C&A: 100%
12
Notify Client
They Are Liv e
&Send SS's
Acct Mgmt
Ad
Operations
LT = 1 days
PT = 1 hrs.
%C&A: 98%
7B
Receiv e Cash
(inv oice
payment)
90 Calendar
days = 64
working days
LT = 64 days
PT = 3 hrs.
%C&A: 100%
6
13
Marketing Campaign
Current State Value Stream Map
1,000 Campaigns per Month
Rev iew &
sign IO
Finance
Legal
Analytics
Product
LT = 2 days
PT = 0 hrs.
%C&A: 95%
3B
Up Sell & Ask
For Incr.
Rev enue
Acct Mgmt
Sales
LT = 0 days
PT = 1 hrs.
8B
Send Wrap-Up
Reports &
Cond. QBR's
Acct Mgmt
Sales
Analytics
LT = 0 days
PT = 2 hrs.
9B
Rate Card
Kanter
Data.com
Credit Safe
Forsev a
DNB
Sales Force
JIRA Fuel/ DSP
Admin
Excel/
Google
Sheets
NetSuite
Customer's
Billing
System
ADPXactlyX1
Agency's
Customer
38. Go to the
Gemba to
learn how
work REALLY
gets done
Go & See
Ask Why
Show Respect
39. Daily Leadership Briefings
Day 1 – Share insights; reduce resistance
Day 2 – Build consensus re: future state
Day 3 – Gain commitment for action plan 39
40. Agency
0.5 hrs. 2.5 hrs.
10.0 days
2.0 hrs.
5.0 days
0.2 hrs.
1.0 days
0.5 hrs.
3.0 days
2.0 hrs.
0.4 days
1.3 hrs.
1.5 days
6.5 hrs. 0.2 hrs.
4.0 days
0.1 hrs.
5.0 days
16.0 hrs.
5.0 days
4.0 hrs.
7.0 days
2.0 hrs.
53.0 days Total LT = 95.8 days
Total PT = 37.8 hrs.
Activity Ratio = 5%
Customer
Order
Systems
Apptus/
DocuSign
C9
Create
Opportunity
Conduct
Credit Check
Sales
Credit
LT = 0 days
PT = 0.5 hrs.
%C&A: 90%
1
Create & Send
Proposal
Validate
Opportunity
Create IO
Sales
Acct Mgmt
Strategic
Response
LT = 2 weeks
PT = 2.5 hrs.
%C&A: 90%
2
Rev iew &
Negotiate
Deal Via
Unsigned IO
Sales
Deal Desk
LT = 1 weeks
PT = 2 hrs.
%C&A: 90%
3
Sign & return
IO
Close IO in
SFDC
Customer
Sales
LT = 1 days
PT = 15 mins.
%C&A: 100%
4
Confirm
Campaign
Details
Obtain
Creativ e
Assets
Acct Mgmt
LT = 3 days
PT = 30 mins.
%C&A: 75%
5
Setup &
Launch
Campaign
Ad
Operations
Analytics
LT = 3 hours
PT = 2 hrs.
%C&A: 70%
6
Obtain
Ext. Data &
Config. Auto
Load (AO)
Acct Mgmt
Ad
Operations
LT = 1.5 days
PT = 1.25 hours
%C&A: 95%
7
Rolled %C&A = 27%
Monitor &
Trouble Shoot
Campaign
Operations
Acct Mgmt
Analytics
LT = 0 days
PT = 6.5 hrs.
%C&A: 80%
8
Send
Commission
Report To
Comp.
(Batch =
Weekly)
Finance
LT = 5 days
PT = 5 mins.
%C&A: 99%
10
Assign
Campaign To
Reps
(Batch =
Weekly)
Comp
LT = 5 days
PT = 2 days
%C&A: 99%
11
Pay
Commission
Finance
Payroll
LT = 7 days
PT = 4 hrs.
%C&A: 100%
12
Notify Client
They Are Liv e
&Send Screen
Shots
AM
Ad
Operations
LT = 1 days
PT = 1 hrs.
%C&A: 98%
7B
Reciev e Cash
(Inv oice
Payment)
75 Calendar
days=53
working days
LT = 53 days
PT = 2 hrs.
%C&A: 100%
13
Marketing Campaign
Future State Value Stream
2,000 Campaigns per Month
Up Sell & Ask
For Incr.
Rev enue
AM
Sales
PT = 0.5 hrs.
8B
Send Wrap-Up
Reports &
Cond. QBR's
AM
Sales
Analytics
PT = 2 hours
9B
Gainsight
Kantar
Data.com
Creditsafe
Forsev a
DNB
Sales Force
JIRA
Fuel/ DSP
Scale Tool
NetSuite
Customer's
Billing
System
ADPXactly
Agency's
Customer
Inv oice
Customer
(Batch = end
of campaign
+ 4 days)
Finance
LT = 4 days
PT = 0.25 hrs.
%C&A: 95%
2
9
Define, test and
roll out AM role in
proposal process
Migrate rate
card to SFDC
Automate deal
approval (w/
exception
processing)
Automate IO
load into SFDC
Implement BI
Create FYI email to
client confirming
campaign launch
Define opportunity and
create standard wrok
re: entry into SFDC
(including timing)
Implement signed IO
closed date + X days
Create master data
Evaluate keeping C9 vs.
creating SFDC forecast
tool; implement decision
Eliminate
JIRA
Improve
tie-out
Launch campaigns within
1 hr of receiving signed IO
and creative
Improve quality
of external
reports
Continue testing & evaluate
Gainsight and finish roll
out if OK
Complete
development
& roll out
scale tool
Make insight
generator
more robust
Create means for
giving customers
greater insight
Get customer invoice
requirements upfront
Automate external
reports for invoicing
Consolidate to one
vendor for credit
checks
Create
executive
dashboard
Define forecasting data
needs, methodology, timing
& system(s) of record
Design and
implement lock
box automation
Optimize for credit
card payments
(where applicable)
Create weekly
commissionable
revenue report
Implement multi-
seat support
Find means to
eliminate Admin
& Apollo
Design & implement
system integration
Define and gain
consensus re:
"transparency" (geo
specific)
Future State VSM:
Your Blueprint
41. 41
J F M A M J J A S O N D
1
All existing customers with RFQ have
access to form; %C&A of quotes = 90%
KE1
Sean
Michaels
X X 0%
2
Reduce PT @ review step and ensure
RFQ omissions are detected at this step
KE1
Sean
Michaels
X X 50%
3
All estimates created using template;
reduce estimate PT to 1.5 hours
KE2
Dave
Gerald
X X 75%
3,4 Central repository for estimate history Proj
Diana
Marie
X 100%
6
Eliminate manual emails between sales
and estimating
Proj
Diana
Marie
X 100%
8 Fewer bugs passed on to production KE3
Ryan
Austin
X 50%
8
Designated resources for ETO SW
develop - shorter LT & improved
leveraging of experience
Proj
Michael
O'Shea
X X 0%
8,9
Less guessing re: customer requirement;
fewer assumptions and bad design
passed to production
JDI
Diana
Marie
X 100%
8,9
Eliminate need for CS to compile
specification package for eng, SW &
production
Proj
Diana
Marie
X X X 10%
7
Eliminate need to maintain BOMs in
BlueStreak; eliminate licencing cost
Proj
Dave
Gerald
X X 50%
7
Free up time in Sales group (only
contacted if significant variance)
JDI
Danny
Tran
X 100%
10
Customer service able to review PO and
create SO
KE4
Danny
Tran
X X 100%
Value Stream Transformation Plan
Value Stream Golden State Equipment, Inc. Scheduled Review Dates
Executive Sponsor Allen Ward 9-Aug-13 18-Oct-13
Value Stream Champion Nancy Little 23-Aug-13 8-Nov-13
Value Stream Mapping Facilitator Dave Parks 9-Sep-13 26-Nov-13
Activate auto-notification in SalesForce
(work flow)
Date Created 7/26/2013 30-Sep-13 19-Dec-13
FS VSM
Block #
Goal or Measurable Target Proposed Countermeasure
Exec.
Method*
Owner
Planned Timeline for Execution
Status
Standard RFQ form/checklist developed
and made available to customers
Standard review criteria developed for
sales to check incoming RFQs
Update existing estimating template
Link Excel and Salesforce
Improved software testing routines
Designated SW development team for
ETO product
Give Eng design and SW Dev open
access to sales and specification
documents from quoting process
Link data files in SalesForce to SO and
WO in SAP
Activate BOM costing in SAP
Customer service reviews and approves
PO (compares to quote)
Standard work defined for PO review
42. Managing the Value Stream
• Key Performance Indicators
2-5 relevant value stream KPIs (need process level KPIs as well)
Operations heavy
Set targets and visual management boards; track
• Ownership
Designated person – Value Steam Owner
Monitors KPIs and communicates performance to plan
Drives problem solving and ongoing improvements; ensures
alignment with strategy
43. 43
Monitoring Value Stream & Process Performance
Value Stream Value Stream Owner Process Process Owner
Outpatient Imaging Sally V Scheduling & Registration Bill G
Exam & Clinical Reporting Jose C
Reports to physician Maria J
Inpatient surgery Tonianne S Admission Tom M
Clinical stay Kathleen T
Discharge Mike M
Billing Sylvia S
Revenue Cycle Management Bruce T N/A N/A
Value Stream & Process Ownership
ABC Medical Center