Lean Administration The Goal

To recognize the value streams that, if transformed, would provide the greatest impact to customers and to the business. To clearly define the Value Stream transformation project, identify the people involved and set the team up for success.

Reference Guide
Step 1. Identify Candidate Processes
1. From the external customers view: Products/ Services Customers Customer Needs Gaps
1. What are the products and services that our business provides to external customers? Prioritize: Which products/ services are most critical to customers and the business? 2. For each high-priority product/ service, who are the customers? Prioritize: who are the primary customers? 3. For each primary customer, what are their needs (timing, quality, other)? If not clearly understood, how can we best obtain the customers specific needs and requirements? 4. Which of these needs are most important to the customer? Which needs are not being met well today (i.e. what are the gaps)? Prioritize: Which gaps are most critical to customers and the business? 5. Which processes (value streams) within the business contribute to the gaps?

Step 2. Evaluate and Select Processes

Evaluate candidate processes :
A. Generate a list of evaluation criteria. Always include criteria that captures the impact the value stream transformation would have on customers and the business. B. Conduct structured matrix evaluation. Use Pugh, KT Decision Analysis, or a simplified approach such as that shown below.

Critical to Success
Maintain a big picture view to assure the transformation efforts are placed on the processes that impact customers and the business the most. Consider Primary value streams that directly touch external customers, such as: Product Development, or Fulfillment from order to delivery Also consider support streams necessary to operate a primary stream. Start by determining customer need, then identify the processes critical to meeting that need. Identify a value stream architect who is responsible for re-thinking an existing value stream and creating a lean value-creating process. Ideally, this person is a line manager. Identify a Value Stream manager for each process once it is transformed, to continually monitor and improve the performance of the value stream. Use a skilled Lean Practitioner to facilitate the team, and provide training for the team in Lean strategies and methods. Use structured Project Management; clarify roles and responsibilities for Project Leader, Team Members, Team Scribe, Steering Team/ Sponsor, Lean Practitioner.

Example --Criteria used by an HR team to select process:

1. Which process needs improvement? (poor quality from customers perspective, considerable waste, takes too much time) 2. Which process is highly unstable? (High degree of randomness in the way work is done; little or no standardized work) 3. With which process are many employees / departments not satisfied? 4. Which process has the highest volume and occurs most frequently? 5. Which process has the highest impact if quality is poor? 6. Which process is the largest obstacle to flow of a bigger value stream?

Processes

Key Point: The processes or value streams may be large sets of

connected activity that cross a number of functions. Transforming such a value stream usually offers strong potential impact, since poor connections between functions and groups are responsible for a great deal of waste.

Criteria
1. Needs improvement (poor quality, considerable waste, too much time) 2. Unstable; Lacks standardized work 3. Many people dissatisfied 4. High volume/ frequency 5. High impact of poor quality 6. Obstructs flow

Process I

Process II

Process III

Process IV

2 1 2 3 2 2

1 1 1 1 2 1

3 2 3 3 3 3

1 1 1 1 2 2

2. From internal customers view:

For example, within Human Resources or within Finance, which processes are in the greatest need of improvement? One approach is to list the processes, and identify the ones with high rate of customer dissatisfaction (identify gaps using above steps). Then evaluate these candidate processes against a more complete list of criteria (see Step 2).

Rating scale: 1: Low need, volume, impact 2: Medium need, volume, impact 3: High need, volume, impact

3. From the business view:

Strategic View: Identify the value streams that provide strategic products and services to external customers (the success of these are paramount to the companys future). Systemic Business Issues View: Identify the value streams responsible for generating systemic wastes such as high warranty costs. Once a number of candidate processes (value streams) have been identified, evaluate them and select the one(s) to transform first. (See step #2).

Other Reference Guides

1. Lean Administration Overview What is lean administration; Example Lean Admin project; Types of waste, Toyotas 4 rules for designing processes 2. Learning to See Examples of waste and violations to Toyotas 4 rules; Introduction to value stream mapping 3. Learning to Do Steps for conducting projects; Lean strategies; Problem solving 4. Value Stream Mapping Facilitators Guide detailed steps for facilitating a team through value stream mapping

Lean Reference Guide Administration Identifying Processes by Mapping & Diagnosing a Large Primary Value Stream
Map the Value Stream:
Is it possible to map an entire primary value stream for providing a given product or service to an external customer? By maintaining a macro view that only includes the major processes along the value stream, and the primary connections (flow of product or information), it can be done. For diagnosis, we often divide the entire flow into its major segments. Major segments for the example at right might include: The Business Development segment of the value stream: From RFQ to Award (outlined with dashed lines) The Product & Process Development segment of the value stream:From Award to Start of Production The Manufacturing segment of the value stream: From order to delivery or From order to cash. Each of these segments are large value streams in and of themselves.

Providing Product X Current Primary Value Stream (Includes Finance & Scheduling)

Step 3: Define the Transformation Project

The Value Stream:
What is the value stream to be improved? What are the start and end points?

As always, start with customer needs/ requirements.

The Problem & Project Objectives:

What are the major issues? What customer needs are not currently being met to the customers satisfaction? What are the objectives of the transformation project? What is the projects intended impact on customers and the business?

The People:
Team Members: Who touches the value stream? Who works inside the process and has considerable knowledge about how the process actually works? Project Leader: Who is the Value Stream architect? Who is the overall project leader? (preferably a line manager) Lean Practitioner: Who is the skilled Lean expert who will facilitate the team through Value Stream Mapping and the entire project? Steering Team: Which executives have a stake in the value stream? Value Stream Manager: After the transformation, who will continually monitor and improve the processes?

Huge wastes result from the failure to provide the next process or any customer with exactly what they need when they need it!

Diagnose the Value Stream:

Goal: To identify the major roadblocks and wastes within the overall flow. (Roadblocks are inhibitors to moving forward with the process, and result in the creation of waste). This will lead us to identifying the processes (the portions of the value stream) that need to be transformed in order to remove the roadblocks and eliminate the waste. How to see the roadblocks and major wastes: For the given value stream, identify gaps in meeting customer needs. For each major process within the value stream, identify external and internal customers and the gaps in meeting their needs. Add actual time and quality data to the map at key process steps, to see bottlenecks and other wastes. Quality is defined from the customers perspective.

The Plan: Caution:

Creating a VSM complete with time and quality data for such a large value stream should only be attempted after sufficient Lean skills have been developed within the business. Most experts advise, for example, to first map a value stream within the four walls of a plant; then move on to mapping the extended value stream that includes suppliers and other facilities. What approach(es) will be used? What training is needed for the team? What are the key project milestones, and projected timing for reaching them? Preparation for Lean Event Lean Event Follow-through (Executing the Action Plan) What project management structure is needed? Create a Team Charter (Statement of Work) that contains the above information.