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New Technology
Lean Value Stream Mapping for distributors
BY STUART MAXEL Special to ThEWhOlESalEr
T
he history of lean manage- ment philosophy is rooted in manufacturing, with compa-
nies like Toyota, Honda, John Deere, Nike, Caterpillar and Illinois Tool Works leading the way. Fundamen- tally, lean is centered on preserving customer value with less work. Lean principles started in distribution as manufacturers demanded lean supply chains. Distributors quickly discov- ered that lean tools applied directly to their business could generate not only savings, but also increased customer satisfaction and employee morale.
Intro to VSM Lean has many tools that are di-
rectly beneficial to the distribution in- dustry, but one of the most effective is “Value Stream Mapping” (VSM). The primary goals of value stream maps are to eliminate waste and allow distributors to spend more process time and resources driving additional value for customers. The effective use of the value stream map tool easily identifies waste that can be transformed into customer value and profit. VSM measures many powerful at-
tributes to be used in the process transformation. The most important is the percentage of time spent on adding customer value. The most common way to determine if a step is value-added is to think about whether a customer would be willing to pay for that step. If not, it is not value- added; therefore, if possible, that step should be eliminated or streamlined.
Present state process map Value stream maps are more than
just process maps with time studies. They measure and improve defects, distances, inventory and many other critical process outputs. They have the power to transform inefficient distribution processes into efficient, defect-free, processes.
customer-driven How do they work? Viewing the entire end-to-end
process from a customer’s perspec- tive, with a goal of driving more cus- tomer value and less waste, Value Stream Mapping captures all of the actions required to bring a product to the customer. VSM helps to visualize the flow, showing the clear linkages — or lack thereof — between infor- mation flows and product flows. The two major phases of VSM are
“present state” and “future state.” The “present state” value stream map is simply how the process is currently performed. Once a present state value stream map is complete with all of the necessary measures (i.e., defects, time, distance), it is normally very in- tuitive as to how the process should be improved. Lean teaches to look for seven types of waste in processes: • Inventory • Motion • Defects • Extra processing •Waiting • Transportation • Over-production/purchasing. After as much waste as possible is
eliminated from the “present state” value stream map, the “future state” value stream map is drawn. Measure- ments are then calculated to deter- mine the actual improvement in
terms of cycle time, value-added time, defects, and many other key at- tributes. There are different styles and
nomenclature when developing value stream maps. The graphic below is a simple example. Each step in the process identifies key information (see process step below). At the very top of the step is a description, with the individual tasks in the white box below. The icon (right) shows that this is an administrative job, and the “1” next to the underlined circle means that one person does this process step. Directly below the white portion, “Eclipse” is the name of the system used, and C/T indicates that the cycle time is 2 minutes. The color green indicates a non-value added step that could be streamlined, automated or eliminated. The step de- scribed was eliminated through sys- tem automation, thus saving 2
Value stream map examples
•THE WHOLESALER® — MARCH 2011
crease in value-added time, and de- creasing the number of process steps from 17 to 10. The more important part is the simplicity of the new process, which is easier for employ- ees and positively impacts their morale and productivity. This single process improvement saved over 2,000 hours per year, which is greater than one FTE (Person). That FTE can be freed up to increase customer value in another part of the supply chain, such as sales, delivery or mar- keting.
Where to start? Value Stream Mapping is a simple
tool that, when used properly, can convert any inefficient process into a customer-driven, efficient, defect- free process. Value stream maps are most beneficial in distribution processes repeated hundreds or thou- sands of times per day. Driving even a small amount of waste out of order entry, picking or shipping p r o c e s s e s will yield huge savings. Distributors regularly re- alize over 30% reduc- tions in cycle
minutes per order on every warranty allowance. Below is a “present state” value
stream map filled with valuable data about a process. The map includes key measurements for cycle time, number of steps, value-added time, systems used, functional responsibil- ity and many other important fea- tures. A value analysis performed on the map is indicated by color, with green indicating that the step can be eliminated and yellow indicating that the step can be streamlined. The future state map shows the ac-
tual results of the new process, in- cluding reducing cycle time from 58 to 21 minutes, achieving a 63% in-
Future state value stream map
time, defects and percentage of non- value-added customer value time with VSM. If you are interested in learning more about Value Stream Mapping or lean for distribution, consider investing in training from a lean expert.
n Stuart Maxel, Continuous Improve-
ment Manager with Activant Solu- tions, is a certified Lean Master and Six Sigma Master black belt. Maxel has been actively leading Lean and Six Sigma activities for over 15 years, specializing in inventory and opera- tional activities. Savings from these activities have exceeded $50 million. He is part of Activant Solution’s busi- ness consulting team focused on dis- tribution process design.
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