Value Stream Mapping Ganesh Botcha, Ajoy Chatterjee 17 Aug ‘15

1. Value Stream MappingGanesh Botcha, Ajoy Chatterjee17 Aug ‘15

2. Agenda #TopicSpeakerMinutes What is Value Ganesh B 2 What is Value Stream Ganesh B 3 Value Stream Mapping Ganesh B 5 Purpose Ganesh B 5 Measurements Ganesh B 5 SDLC Process Ganesh B 5 Little’s Law and Visualization Ajoy C 5 Waste and sub-optimization Ajoy C 4 VSM Metrics Ajoy C 4 VSM Event and Participants Ajoy C 3 How does VSM Look Like Ajoy C 3 Guiding Principle Ajoy C 2 Considerations for Future State Ajoy C 4 Q&A 10

3. "There is only one boss: the customer. And he can fire everybody in the company, from the chairman on down, simply by spending his money somewhere else." Samuel M. Walton Wal-Mart Stores, Inc.Chairman & Chief Executive Officer

4. What is Value? • “Value” is something that the customer would be willing to pay for. • “Value” varies from customer to customer. • Examples of Value • Features/Specifications • Availability when needed/Timely Delivery • Price/Cost • Customer Service/Support • Politeness • Relationship • Use “Value” as your starting point • Align business to customer demands OR Photo Source: Wikimedia Commons

5. What is Value Stream? • Value Stream is the set of all actions performed to bring a Product or Service into the hands of customer along which the information or material flows. • Some of the Value Streams • Portfolio Management • Identifying, prioritizing, authorizing business cases, governance and compliance to achieve strategic business objectives • Projects and Programs Management • Initiation, planning, execution, monitoring and control and closure processes • Software Development Life Cycle • Requirements, Design, Development, Testing, Deployment processes • Operations Support Management • Production Support, Upgrades, Incident Management, etc., • Service Management • Catalog, SLAs, Capability, Availability Management, etc.,

6. Value Stream Mapping (VSM) • Value stream mapping visually maps the flow of materials and information through all processes until the Product or Service reaches the Customer. • It is a tool that helps us to visually see and understand the flow of material and information as a product or service makes its way through the value stream. The steps are laid out from left to right and top to bottom, with specific shapes used to denote the process components. • Identifies Value and Waste • Used to analyze the current state and design the future state • At Toyota, it is known as "material and information flow mapping"

7. Purpose of VSM Purpose of value stream mapping is to identify the Waste (lead time/wait time, duplicates, non value added, and improper sequence of activities) in the current state so that they can later be improved or eliminated in future. Current State Future State

8. VSM Measurements Taktzeit or Meter Also, Process Time Cycle Time and Lead Time are not the same.

9. SDLC Example 2 weeks 4 weeks 1 week Business Requirements UA Test Cases Acceptance Test 1 week 1 week 2 weeks 3 weeks 2 weeks System Requirements System Test Cases System Test 2 weeks 1 week 2 weeks 3 weeks 3 weeks Component Design Integration Test Cases Integration Test 2 weeks 1 week 2 weeks 2 weeks 4 weeks Program Specs Unit Test Cases Unit Test 1 week 1 week 12 weeks Code Cycle Time = 42 weeks, Wait Time = 10 weeks Lead Time = 42 weeks+ 10 weeks= 52 weeks

10. Deep Dive into Business Requirements Process Types of Requirements ● Business Requirements Why the product is needed and its benefits for both customers and the business ● User Functional Requirements The tasks or business processes a user will be able to perform with this product ● Non-Functional Requirements, Quality attributes such as Reliability, Performance, Availability, Maintainability, etc., Business Requirements Process 2 Days Identify Stakeholders 1 Day 1 Day Schedule Meetings 2 Days 4 Days Elicit Requirements 1 Day 3 Days Document BRD 2 Days 1 Day Review Requirements 2 Days Cycle Time = 12 Days, Wait Time = 8 Days Lead Time = 12 Days + 8 Days = 20 Days (4 weeks) 1 Day Baseline Requirements Deep Dive into Suppliers, Inputs, Process Steps, Outputs, Customers, Responsible Roles, How long it takes for the Responsible persons to perform their activities (Cycle Time), How long those persons wait before starting their activity, Reasons for waiting (Wait Time), Lead Time, etc., and identify the improvements needed for future state.

11. Little’s Law In a stable system, L = λ W L – Average number of customers in the store λ – average customer arrival rate W – average time a customer stays in the store Example, In a stable system, i.e. arrival rate and departure rate being same, if 20 customers arrive per hour and stays for 15 min on an average, we should find 5 customers at any given time Little’s Law makes the basis of queue management in Lean process WIP = T L WIP – average number of items/ activities/ process in progress or Work in Progress T – average departure rate, i.e. Throughput or inverse of Cycle Time L – average time an item/ activity/ process spends in the system or Lead Time

12. Visualizing the Chain √ Kaizen × Muri × Muda √ Kata × Mura √ Poka-yoke Lead Time Type 2 Type 1 Process n Process n - 1 Process n +1 Work Made Available Work Passed to Next Step Process Time Lead Time = ∑ Process Time + ∑ Essential non-value added Time + ∑ Unnecessary non-value added Time + ∑ Waste/ Delay

13. Types of Waste

14. Sub-Optimization “Sub-optimization is when everyone is for himself. Optimization is when everyone is working to help the company" Edwards Deming Management Consultant and Author Example: ChundanVallam • Similarity, not difference focused approach • Collaboration • Optimization of the Value Stream will increase performance of the system. Sub-optimization may lead to wastage

15. VSM Metrics • Activity Ratio = ∑ Process Time / ∑ Lead Time • 1 – Activity Ratio = Idle Ratio • % Complete and Accurate (%C&A) • Percentage of input in a process that is deemed usable as-is by the resources doing the work • Measured by the immediate downstream customer or process owner • Similar to first pass yield in manufacturing (=Output/Input) • Rolled First Pass Yield (RFPY) = ∑ (%C&A)n • Freed Capacity = Current State FTE – Future State FTE

16. VSM Event Who should participate Value Stream Mapping? Leaders and Process stakeholders up in the chain who can authorize an innovative change on current state Is it not a Team Activity? It is always a team activity. The team obtains current state metrics from the Gemba How long usually is a VSM event? Usually 3 days What is the future state definition? The state, 3-6 months down the line Define Product Family Document Current State Design Future State Repeat 3 days Create Implementation Plan Implement

17. VSM Roles How What Who Strategic • What are the wastes and non-value added spends? • What change has to happen? Value Stream Mapping Executive Leadership Middle Management Tactical • How changes can be executed? Projects, Kaizen Workforce

18. How does it look like?

19. Some of the Symbols used in VSM

20. What is not a Value Stream Map • A VSM must have timelines, i.e. at least lead time and process time. If it does not have timelines, it is not a VSM • A map without any metric is not a VSM • If the map diagram has swim-lanes, it is not a VSM • A VSM is not an ‘Optimum Process Flow’ diagram • A VSM is not a Kanban board • A VSM does not comprise of Kaizen. It may be means to implement future state of a VSM

21. VSM Guiding Principles • Define the value from end customer’s standpoint VALUE VALUE STREAM PERFECTION • Identify the value stream for each product family • As you manage toward perfection PULL FLOW • So the customer can pull • Make the product flow

22. Considerations for Future State Map • Eliminate steps/ handoffs • Combine steps • Create parallel paths • Alter sequence • Alter timing • Implement pull systems • Optimize batches • Improve quality • Reduce manual error monitoring/ automate • Create an organized workplace • Make handshaking seamless • Eliminate motion and transportation • Standardize work • Reduce/ Eliminate unnecessary NVA immediately • Co-locate functions • Create cells of cross-functional staffs • Balance work to meet Takt time

23. References • Bibliography: • Learning to See by Mike Rother and John Shook, Lean Enterprise Institute, 2003 • Value Stream Mapping by Karen Martin and Mike Osterling, McGraw-Hill, 2013 • Lean Thinking by Jim Womack and Daniel Jones, Simon and Schuster, 2013 • Others: • Value Streams as Release Trains in SAFe • http://www.scaledagileframework.com/value-streams/ • How and why to create Value Stream Maps for software engineering projects • http://www.ibm.com/developerworks/rational/library/10/howandwhytocreatevaluestreammapsforswengineerprojects/ • Using Value Stream Maps in Information Technology • http://it.toolbox.com/blogs/integrate-my-jde/using-value-stream-maps-in-information-technology-49414 • Improving the Value of the IT Service Delivery Process • http://www.isixsigma.com/industries/software-it/improving-value-it-service-delivery-process/ • Best Practices for Using Value Stream Mapping as a Continuous Improvement Tool • http://www.industryweek.com/value-stream-mapping%20 • Value Stream Mapping • https://en.wikipedia.org/wiki/Value_stream_mapping

24. Questions?