Value Stream Mapping

Value Stream Mapping

Guest was Drew Locher Managing Director for Change Management Associates.

Business901 Podcast Transcript

Drew was my guest on the Business901 Podcast. Our talked centered around how Drew uses the Lean tool of Value Stream Mapping. I think you may be surprised by a few of his answers.

Drew is currently Managing Director for Change Management Associates. CMA provides Lean Enterprise Consulting and Organizational Development services to industrial and service organizations representing a wide variety of industries including: Healthcare, Transportation, Distribution, Education, Financial Services and Manufacturing. Drew first became involved in the development and delivery of innovative Business Improvement programs while working for General Electric in the 1980s. In 1990, Drew left GE to form CMA. Since then, he has utilized his diverse experience to help develop creative solutions for the companies with whom CMA works, in order to improve their business performance.

In 2004, Drew co-authored a book titled, “The Complete Lean Enterprise: Value Stream Mapping for Administrative and Office Processes ”. The book won a 2005 Shingo Prize for Manufacturing Excellence in Manufacturing Research. In 2008 he published a book titled, “Value Stream Mapping for Lean Development: A How-To Guide for Streamlining Time to Market ”. This book demonstrates the application of Lean Thinking to the third primary value stream, “problem solving”.

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Joe Dager: Thanks everyone for joining me. This is Joe Dager; the host of the Business901 podcast. Participating in the program today is Drew Locher, the managing director for Change Management Associates. Drew also co-authored a book titled "The Complete Lean Enterprise - Value Stream Mapping for Administrative and Office Processes" which won the Shingo Prize. Drew, what does Change Management Associates do?

Drew Locher: Well, Joe, we've been in existence since 1990, so actually next year, 2010 we'll be celebrating our 20th year in business. Basically, we've been providing organizational development and operational excellence services to a wide variety of companies representing a broad spectrum of industries, those in manufacturing and services. More specifically, we provide educational and training services to organizations to try and develop internal resources basically in the subject areas of world class or what today people are calling lean thinking, lean enterprise.

Joe: You say world class or lean thinking. Can you kind of expand on that a little bit?

Drew: The underlying concepts date back as many as 90 years but in its modern form, lean thinking became the operative terminology starting in 1996 with the publication of "Lean Thinking" from Jim Womack and Dan Jones. Basically at that time, it was summarizing what many of us were already doing at that time in terms of business improvement. But basically, the terminology really has taken root where the book has been out for 14 years and it's just now getting traction. I'm pleased to think that finally now we're getting the message right about business improving in general and viable, successful business models that companies should be practicing in any industry.

Joe: Can you explain what value stream mapping is?

Drew: You could call Value Stream Mapping, the assessment and planning tool of lean

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practitioners. It allows any individual or any organization to take a look at business systems, even complex systems such as product development and understanding how the current state currently flows or not; where the wastes are, where the issues are that are keeping the organization back from reaching higher levels of performance. To me, that's an important tool to have and a great value and benefit to a company. But even more so, if the tool is used properly, it actually can provide organizations the meanings to redesign those systems based on lean principals of value flow, pull, leveling and perfection, as well as develop an implementation plan to get there. So if the tool is used properly, it's not just an assessment tool, it's an enabling tool.

It allows folks to be able to apply lean thinking to any business process and any overall business, as we also do enterprise wide maps, and be able to redesign them based on the principles of lean. So the way we view it, it's a very powerful and enabling tool for organizations.

Joe: So you introduce to Value Stream Mapping to a customer very early in your engagement with them?

Drew: Absolutely, it’s our assessment tool. So when we do an enterprise map, we're assessing the current operations of that enterprise and that gives us a good idea of kind of where they're at and where they need to go. And of course, we develop these maps with an internal team, typically management, and when we're doing an enterprise map because they've got to be part of this process, this change process. So absolutely, it's done very early in our transformation methodology.

Joe: Is there a time you should not be using it?

Drew: Yes, it's like any tool, there's a place for it and a time for it and there's applications you shouldn't be looking at. Mainly it is not to assess a specific problem

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unless it strongly relates to a process. Nor should it be used to look at information flows or any processed flow that solely resides within a department or within even a cubicle.

The third area I would say that is not helpful is if a company has strategic issues. It's not a strategic tool. It's not going to tell a company they're in the wrong business, though it might shine some light on that if performance is very poor. So it shouldn't be used to determine if we are in the right business or the wrong business.

For example, I was doing an enterprise map at a company years ago and almost the first or second process box that we started discussing was developing quotes and proposals for potential new business. Their hit rate, their conversion rate of proposals to orders was one percent, which is just horrible. I started asking questions about what was their strategy, who their customers really are, and what markets they hoped to serve and what ensued with a near riot amongst the management of that company.

What came out of it was strong, strong disagreements on strategy. And I basically called time out and said, "OK. We're not going to map this. We're going to come back and talk strategy on another visit.“ So those are probably the three most common misuses of the mapping tool itself.

Joe: When you discover problems in the middle of the mapping and it becomes apparent that there's an issue there, do you take a time out and look at other tools to use?

Drew: Absolutely. We very well could. Not usually during the mapping event itself, but thereafter, we might bring to bear some of the basic quality managing tools. You know, we see some problems that are triggered by data on the map, we might revert back to classic cause and effect diagrams to understand what the potential root causes of that problem is. Not typically during the mapping event because we're usually pretty pressed on time to complete the current state and the future state and the implementation plan in what's usually like a three day event. But the map would identify the need to apply other

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tools like the basic quality management tools or even the more advanced quality management tools, the statistical based tools. The mapping process itself could identify the need for those.

Joe: Typically you spend a lot of time at the beginning to get it right. Then the next cycle gets shorten. Then the last cycle, you've just got X amount of time for it. You end up rushing through it? Does that happen a lot when you're doing current state, future state and implementation plans?

Drew: Yeah, there's some. In the beginning, what I see the people that are using the tool and I've done countless numbers of training the trainers where we teach internal folks -- how to do this at a facilitated mapping event. Probably the most frequent trap they fall into is too much detail on the map, so they tend to spend an inordinate amount of time on current state mapping. So, it's one of the most frequently asked questions that we receive is, "How much detail is too much and how much is not enough?"

We have a response for that and it’s basically understood what the use of the tool is. It's trying to identify impediments to flow and waste. Now, you have to ask yourself do you want to identify every stoppage of flow and do you want to highlight every waste. Or do you just want to highlight the significant ones? Most people would say, "Well, we want to highlight the significant ones."

Well, what makes it significant? Well, if it's a stoppage of flow of say minutes and we're looking in the context of an overall lead time of weeks, we probably really don't care about the minutes. We may care about the hours or the days, not the minutes. So I'd map things where the overall lead time was anywhere from five hours to 15 years, so the granularity or the level of the detail you get into has to be adjusted accordingly.

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So we always tell people if you're getting into too much detail, ask yourself a question.

Am I gaining any additional knowledge by this detail? Am I highlighting any waste between process steps that I wouldn't see if I combined process steps? And is it one box that depicts multiple steps. Usually the answer is no, you're not going to lose anything like that, and that allows companies or practitioners to be able to find the right level of details so they don't get hung up on too much detail.

The second pitfall they fall into, as you know, Joe, from value stream mapping yourself, it's a lot of data on the map and a lot of times there's this tendency to want to put a lot of precision in those numbers. But we always try to respond to that by telling people you're up to 20,000 foot view with most value stream maps and therefore you don't need precision in the data. You need accuracy, but not precision.

If we can't observe the processing and gather the information firsthand, or maybe we put in some means of collecting the data in the weeks leading up to the mapping event, we'll actually defer to people's best judgments and estimates, and usually that's close enough.

I can probably count on one hand in the 19 years that that didn't work, whereas I've seen so many people just really try to get precision in the numbers. At the 20,000 foot view, it's just not necessary. You're still going to see what you need to see.

Those are probably the two biggest pitfalls I see people falling into.

Joe: Well, and I think that people don't have the numbers to begin with when they're first starting out in lean either.

Drew: Right. They get very frustrated particularly when mapping development processes or office processes where there's not a lot of metrics readily available. In manufacturing, there are a lot of measurements there, so we can make use of those for

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the maps to create the maps. But in the office and development processes, sadly there's very few metrics. And also we're creating them for the first time when we do the first current state map.

Joe: That brings me to your book on lean development and then your new book that's going to be published next year -- "Extending Lean to Office and Services" if that is true, there aren't a lot of metrics. What is the value -- just the picture?

Drew: We will create the metrics for the first time as part of the current state development. It allows people to start looking at things a little more objectively and being able to step back and see what's happening. So even though they might be estimates or collection of data for a short period of time, they're still very telling. And that really opens up peoples' eyes when they start looking at overall lead times and they look at overall quality metrics - what we call first pass yield or whatever people call first time quality or first time through or roll through quick yield. People have different terminology for these measures. But usually when they look at those things for the first time, even if they're estimates, they're very, very eye opening for people.

And that hopefully, motivates them to want to put some metrics into their future state, because they have to create a future state for the business process or the overall enterprises as well.

Joe: I see that a lot, the first time I started asking questions from a marketing perspective to build a value stream map, I just ask: How many customers do you need a month? How many customers do you want to have?" And then we walk them through the funnel and we run the numbers back to get the percentage of conversions that is needed.

I just have them guess, on what that number is and what that percentage is sometimes.

But if you would sell everything on your website - if all your sales came from your website

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and you had 20,000 visitors and you had 1,000 new customers, then you kind of walk them through the process and see where you're losing them and where you're gaining them. It's real eye opening to them.

Drew: It is very eye opening. We want part of lean thinking to be data oriented. Just don't overdo it; that's bad. It's that happy middle ground where we've got to find because you can also go the other extreme. Too much data where you have paralysis by analysis, so it's just finding that happy medium somewhere.

Joe: People that have never tried to map a process before, similar to when I introduce it to marketing people. It is kind of shocking to them, but I relate it to a marketing funnel and marketing calendar, like having those stages together.

Drew: It is difficult for several reasons. One there's no well defined process to begin with. Two, as we just were discussing, there are no readily available metrics which we want to apply to the value stream maps. So, for those two reasons, it's difficult but it's not impossible. What marketing folks, like any folks that liken themselves as creative, they're in creative processes like development, there's no difference, what they have to realize is that what they are doing is a process.

And I'll give you a great example of this. A relative of mine works with, does all the marketing for a brewery, a beer company, a beverage company. I'll leave them nameless.

And he read my first book and he says, "I just don't see how this applies to marketing."

He handles all of it: print ads, radio, TV spots, all of it. And I said, "Well, let me come out, we'll facilitate a mapping event, and you'll see." To make a very long story short, what became very apparent to them was 85% of it was process.

So think about it. I want to sell more beer to people, right? First thing I have to figure out is who has a propensity to drink more beer. What tells me that, market research,

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which is a process? It's a process of identifying information I need, and how I'm going to get it, and what I'm going to do with it. So the market research tells me males 18 to 46 drink a lot of beer, and we want to sell them more beer. Maybe steal some market share.

So the next question is, well, what resonates with those people? Do they listen to radios?

Are they reading magazines, and if so what types? What tells us that? Market research again, which is a process. Tells what information I need, where am I going to get it, and what am I going to do with it.

Next is, all right so the research says they listen to drive time radio. They read various magazines. So now we start getting into the actual creative spot part of that process.

What's that radio spot going to sound like, what's the theme going to be, that kind of thing. Well, when you really look at it, overall lead time and overall work content or process time that was only about 15% was the actual design of the radio spot, actual production of that spot.

The rest of it was all process. And even a large chunk of the radio spot was process too -- scheduling hours in the studio, that kind of stuff. So what became very apparent to this relative of mine and his team was that it really is about process. And, in the beginning, I could see it in their eyes. They weren't real pleased with that, because they liken themselves to these very creative people. That's their business. What they're selling is creativity. And to recognize that a large, large majority of what they do is process was not easy for them to initially swallow. Once they did, they were off and running. We were able to create a future state that cut the lead time to bring a new radio spot out to the market by 50%, which is a tremendous benefit to them. Because, let's say a radio spot is put out and it's not working. They can get a new spot out in half the time now.

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So that's just one example of the benefit to them. But it all took them really looking in a mirror, which a current state map really represents, is looking in a mirror and not liking what they see. In other words, seeing that there is a way of doing this better, and recognizing, first and foremost, it is about process. Then, and only then, were they really properly motivated to create the future state map, which they were.

Joe: Is that similar to the explanation you would use for lean development?

Drew: It's the same kind of behavioral resistance that we encounter, development is a creative process. Again, it's a process. And the creativity part of it is a really very small part of it. Most product development involves information, again. What information I need, where do I get it, and what do I do with it? Most development processes are really about knowledge reuse. They're just making changes to existing technologies, existing design. A very small percentage is pure green field, you know, something brand new that's never been developed.

Joe: Right. I've seen that a lot, everybody always thinks, thinking out of the box and all the different things. When it comes down to it what really works and what's really used, is something that was really in the box.

Drew: Exactly. It already existed. Some preexisting technology, This is why General Motors Corporation has a thousand ways of locking a car door, across all models. And Toyota has eight. It's either six or eight.

Joe: And we just want it to lock, the people that own it.

Drew: Right.

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Joe: You talk about in your value stream mapping about identifying loops as an important part of it. Could you briefly explain loops?

Drew: Well there's no science behind loops. We don't always do it; it depends on the complexity of the future state. But basically what happens is when we design the future state, the room gets quiet because people start looking at this picture and start saying, "Wow, how are we going to make this happen?" because it represents significant system wide changes usually. If we're doing this properly it should. So, we have learned to chunk down the future state into what some people call loops, which allows for them prioritize those and then prioritize the highs and opportunities within those.

So we can start laying out a more reasonable realistic plan that people can have a better sense of, yes, they can accomplish this. And that's really all loops are about in terms of chunking down a future state into pieces that people can get their heads and their hands around in terms of implementing it.

Joe: And so you do the future state and get it done. Then you break it in loops and kind of break it off into chunks to be able to accomplish it.

Drew: Right, and then allow the company to just prioritize it and decide which area is going to have to come first. And which are is going to have to wait. And that helps them kind of lay out a realistic plan, because if they put together a plan that's not realistic, they won't see the future state through successful implementation and we just wasted everyone's time. Which happens, people do not implement the future state.

Joe: Now, there's been a lot of argument that I've seen lately coming from different people and saying that lean is about the tools. There's another section that says get rid of tools, it's about culture and that's what lean is about. Can you kind of give me a little take on that? A view...

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Drew: It is about culture. It's always been about culture. Back in the TQM days where I kind of started in the 80s, it was very clearly about culture, trying to develop a culture for continuous improvement. Trying to get people coming to work every day thinking about ways to do things better than yesterday or last week or last month. That's really what it was all about. Has always been that way. The tools are a means to that end. The tools allow people to practice continuous improvement and be successful. The value stream mapping is a tool. Now we see it as a very powerful too.

Not just to allow people to redesign system, but we see it as a tool to teach, to teach the principles, the key principles of lean to value flow, pull, leveling, and perfection. But it is a tool. It's an enabling tool but it is a tool. So it has its use and has its, as we discussed earlier, has times when you shouldn't be using it.

But doing the value stream mapping does not make you a lean enterprise. Just like applying 5S does not necessarily make you a lean enterprise. Those are a means to a greater end.

So, what has happened in the last, well, 20 years that I've been doing this; people have been enamored by the tools. They apply them and they think they are "finished". And I always respond and say, "No, now you can begin." And they say, "What do you mean?"

And so well now you have the foundation for the system in place. Now you can begin.

Now you can really engage your people to drive continuous improvement over time. You may not get the big break through improvements that we did by the application of the tools. Then we start getting to the more incremental improvement opportunities, but that all well and good. That's what we're after, getting that culture for continuous improvement. Then and only then will it sustain.

Joe: Is there anything you'd like to add to the conversation?

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Drew: I'd really like to talk about are future state mappings. We didn't talk too much about that beyond loops. One of the other misuses of the tool of value stream mapping is people send us maps to review all the time. I'm on the faculty of the Lean Enterprise Institute and people send in their maps and they'll often distribute those to the faculty.

And often I will see a current state map and Ill respond to the person and say, "Where's your future state?" "Well we didn't do that." And I would say, "Well, you've wasted your time".

Or they'll send me a current state map with like a hundred posts it notes around it of improvement opportunities and I'll ask, "What did you do?" And they say, "Oh, we brainstormed. Everyone had a chance to brainstorm. Anything they could think of in terms of improvement." And I respond to that with this basic statement, "Don't ever do that again."

What people are failing to miss in the use of the tool is that it allows you, if used properly, to create future states. System redesigns based on the concepts of value flow, pull, leveling, and perfection. That doesn't happen by chance, that happens by intent.

And what that means is people need to use what we call the future state questions which embody lean thinking.

And those questions will prompt a discussion that will encourage organizations or teams within organizations to apply the lean concepts. So we don't want to do is just do a brainstorming exercise and come up with any improvement ideas we can. We want to fundamentally challenge what we're doing, how work flows. And I don't find brainstorming as an excellent approach to that. What I find to be a better approach is thoughtful discussion of how to apply value flow, pull, leveling, and perfection to any business system.

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So, when I do my workshops and speak and conferences, I always ask people to raise their right hand and promise me that they will use the future state questions. I think also they're just being polite when they respond, but I sincerely mean it because a current state without a future state map is waste. And we don't want to do that. And a future state map that really doesn't fundamentally change how work flows is just waste as well.

So we've got to use the tool fully as it was intended. And I think that's one of the other common pitfalls I see is future states that are just not well designed -- not well thought out.

Joe: You start the process with the whiteboard and put the post it notes up there and then draw the lines on the whiteboard or organize them across as you do it. Then you see people typically taking a picture of it and putting it in a file? Or do you see them taking the picture of and hanging it out on a bulletin board for everyone to see?

Drew: That's a great question. Too often I see people putting it in a filing cabinet never to see the light of day. And with the companies I work with, when we actually walk the flow, when we do an ISG map, I'm always looking for wall space, because that's where we're putting the current state and the future state map when we're done with it.

And then we need to continually go back to it. I'm working with a company in New Jersey right now for this entire year. We did their enterprise map in February. Every Kaizen event that we did subsequently, I took the group, the Kaizen team, and went through that map with them to explain to them where they were, where they're going, and why this Kaizen event is important in the big picture of redesigning their overall business system.

Every single mapping event, the specific business processes, and every Kaizen event of any business process, I review that enterprise map that we did back in February to bring it all back together. That's how the tool should be used. If the map goes into a file

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cabinet, which happens, and it's one of my pet peeves and I tend to go off when I see this, you can't even have that dialogue. It’s out of sight, out of mind, and the map becomes just out of date, just becomes useless and that's not how it should be used.

That's a great point you bring up.

Joe: OK. Well, I wanted to thank you very much for your time, Drew. It was very informative. I think it will be a great podcast of people to listen to. You'll be able to download it on the Business901 podcast site but also from Business901 iTunes store. And again I thank you very much for your time. I appreciate it.

Drew: Thank you for the opportunity. I appreciate it.

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Joseph T. Dager Lean Six Sigma Black Belt

Ph: 260-438-0411

Fax: 260-818-2022

Email: jtdager@business901.com Web/Blog: http://www.business901.com Twitter: @business901 What others say: In the past 20 years, Joe and I have collaborated on many difficult issues. Joe's ability to combine his expertise with "out of the box" thinking is unsurpassed. He has always delivered quickly, cost effectively and with ingenuity. A brilliant mind that is always a pleasure to work with." James R.

Joe Dager is President of Business901, a progressive company providing direction in areas such as Lean Marketing, Product Marketing, Product Launches and Re-Launches.

Business901 provides and implements marketing, project and performance planning methodologies in small businesses. The simplicity of a single flexible model will create clarity for your staff and as a result better execution. My goal is to allow you spend your time on the need versus the plan.

An example of how we may work: Business901 could start with a consulting style utilizing an individual from your organization or a virtual assistance that is well versed in our principles. We have capabilities to plug virtually any marketing function into your process immediately. As proficiencies develop, Business901 moves into a coach’s role supporting the process as needed. The goal of implementing a system is that the processes will become a habit and not an event. Part of your marketing strategy is to learn and implement these tools.

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