5 Practices to Kick Off Value Stream Optimization

A value stream is a series of actions that add value for customers from the initial request through the realization of value by the customer. It begins with the initial concept and moves through different stages of development and on through delivery and support. A value stream always starts and ends with a customer.

Value streams highlight the flow of value, delays, rework, and bottlenecks. They help illustrate how the current process flow affects the people who do all the work.

• All the steps required to transform the trigger into value delivery.
• The people responsible for carrying out these steps.
• The systems they use to perform their tasks.
• The flow of information and materials needed to fulfill the request.

However, it is not sufficient to identify the value stream once for your business. Instead, the most important thing is to relook at the value stream derived and continuously improve it to deliver value to the customers faster. Value stream is not an artifact you create once, which signifies the flow of value delivery but an understanding of the entire system. There could be a lot of factors that can be improved to boost the efficiency of value delivery. This often becomes a bottleneck for businesses because of a lack of expertise, resources, clarity of scope, resistance to change, etc.

This blog aims to understand in detail:

• What is value stream mapping?
• Why do we need to optimize value streams continuously?
• How do we approach value stream optimization?

But First, What Is Value Stream Mapping?

Value Stream Mapping (VSM) is a lean management technique for visualizing and analyzing the flow of materials, information, and other activities required to deliver a product or service to customers. It provides a comprehensive view of the entire value stream, from when a customer orders to the final delivery.

Value stream mapping is done to analyze the current state and design a future one for the process that takes a product or service from its inception to successful delivery. VSM was primarily used in the manufacturing line to understand the flow of materials, work streams, logistics, etc., and reduce gaps. However, it gained popularity in the corporate setup, which included the flow of information, handoffs, sign-offs, and many more. Value stream mapping can be done in any setup, including product and service delivery.

Why Do We Need Value Stream Optimization?

Even when you think you have the ideal value stream for your business or team, you may soon realize several opportunities to improve it. Opportunities for improvement can come from different areas, such as customer feedback, new technology innovation, team problems surfacing, etc.

Value stream optimization is a continuous process of improving the efficiency of the value streams with a single-point agenda to increase value delivery while reducing costs and ensuring that every step in the value chain adds value for the customer.

Most companies face difficulties once the value stream is identified. Some of the common problems faced include:

• Lack of clarity on the earlier scope or scope change for the value stream.
• Change in team structuring and dynamics.
• Dip in key metrics like NPS and CSATs.
• Resistance to change in initiatives derived earlier.
• New business direction.
• Addition of new offerings.
• Acquisitions or merging with a bigger value stream.

5 Invaluable Practices for Value Stream Optimization

Value stream mapping enables organizations to better understand their processes, eliminate waste, improve flow, and ultimately provide greater value to customers. Below are a few points on how to approach value stream optimization:

1. Identify Waste and Non-Value Steps in the Flow

Identify and understand which activities are actually not adding value and further causing bottlenecks in the process. Some of the common waste (also known as the 7 waste of Lean) that comes up are:

• Overproduction: Overproduction is considered a significant waste because it ties up resources without providing immediate value to the customer.
• Excess inventory: A type of waste that ties up cost, storage, increased lead time, etc.
• Defects: Defects in products or services result in rework, scrap, and additional costs and hamper the company's reputation.
• Over-processing: Over-processing involves adding more value to a product or service than what the customer actually requires. This includes using higher-grade materials, overengineering, or providing features that customers do not value.
• Increased waiting time: Waiting time occurs when work items or information are idle, waiting for the next step in the process. This includes downtime for machines and delays in processing.
• Handoff overheads: Refers to the delays, errors, and inefficiencies that can occur when work is transferred or handed off from one person, team, or department to another within a process.
• Task switching: Refers to the inefficiencies and productivity losses that occur when individuals or teams frequently switch between different tasks or activities within a process.

2. Visit the Metrics

Lean metrics like lead time and cycle time for each flow and step can also influence the decision of what to remove, automate, or tweak.

3. Plot the Resource Utilization

Steps in the value stream also include resources being utilized. Plot the resource utilization against all steps to validate the ROI for that step.

4. Identify Areas of Improvement

Once the wastes are identified and the metric data is available, it is time to revisit and tweak the value stream. With the data available and probing, remove the steps and flows, which will help make the value delivery more efficient. Validate whether any repeatable steps in the process can be automated or if any step needs some digital intervention.

5. Visual Mapping

With the data available and the decisions made, it is time to plot the value stream, which is the to-be state for delivering value to the customer. Re-plot/edit or modify the steps in the value stream and create a new version.

Key Takeaways to Remember

Value stream optimization is not a one-time activity, and it is not about changing the process but about modifying and transforming how value is delivered to the customers. There could be a lot of factors like the ones mentioned above, and constant monitoring and evaluation of what is best for the business is needed.

There could be waste induced in the flows, delays due to team restructuring, not being able to meet the business objectives, change in business direction, new offering from the business, inputs from customers, and these factors directly influences revisiting the value streams and streamlining processes to make value delivery to the customers faster.

Often, companies dilute the concept of optimizing the flow because of the various challenges they face. Be it resistance to change, internal politics, or even change in leadership or focus. Consultants can bring an outside perspective and help companies optimize their value flow neutrally without biases. They can also bring industry standards that help companies deliver customer value efficiently and faster.