Womack - Seeing the Whole - Mapping the Extended Value Stream

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PARTI: GETTINGSTARTED

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Choosingt a Leader and a Value Strearn Team We hope that you are experiencedwith facility-level mapping as describerl in Learning to Seeand have appointed value stream managersfor all of the value streamswithin your facilities.We are convinced that this is critical to gain the full benefit of mapping at the facility level. What's more, the knowledge of facility-level value stream managers will be invaluable for quickly drawing accuratemaps of the extended value srream. However,by their nature,extended maps crossfacilitiesand firms. Supposemanagersare in place for the segmentsof the stream within each facility. Who has the responsibility for directly managingthe total stream acrossfirms, to connect the maps and lead the improvement process?The reality in most caseswill be "no one". So there is a need for a new type of managerwho we will call the "Product Line Manager" (pLM).

The Product Line Manager This individual in the most downstreamfirm needs to be much more rhan a technician concernedwith one facility. Indeed, for optimal resultsthe Product Line Manager needs ::::,rr:::,r',rp:i.

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to be a businessmanager.This means"business"in the senseof taking responsibility for making money and growing market sharewith the product family in question.And it means "manager" in the senseof looking concretelyat the preciseactionsthat need to be taken all along the value stream to remove wasre and cost while improving quality and responsiveness. The most successfulfirms we have encounteredusing these techniques have Procluct Line Managerswho think about product marketing and engineeringas well as production and purchasing.With all the elementsof marketing,design,producrion,and supply chain under his or her oversight,this individual is in a unique position to judge the performance of the many functions touching the product. Indeed, as we will see in a moment, a continuing assessmentof functional performancealong with preciseprescriptionsfor improvement is one of the most important benefits of product line management. However, we do not usually recommend what is sometimescalled a "product team" structure in which all of the engineering,operarions,purchasing,and marketing employeessupporting the product are put on a dedicated team. Doing this causesa large amount of organizationaldisruption during the transition and this structure still does not addressthe behavior of upstreampartner firms. Whai's more, it is really not necessaryin most casesif the P[,M takes an energeticapproachto the job.

Perhapsche best known example of what we are talking about in the manufacturingworld today is the Chief Engineer for a car platform at Toyota (a job position also called the shusa).This individual is widely known by everyone in the company and takes responsibility for the successof the product in terms of return on investment and market share.Yet the Chief Engineer,like our proposedPLM, actually has no direct authority over marketing (which is done by a large marketing department),over engineering(which is done by the variousparts of the large engineeringdepartment),over production (which is done by the operationsdepartment),and over suppliers (who are managedby the purchasingdepartment,and the production controland logisticsdepartment.)Insteadthe Chief Engineer,working with a tiny group of assistants,is the one person who can "see the whole" and think about the necessarycontributions from every functional activity and every upstream firm to createand deliver a successfulproduct as judged by the end cusromer. The PLM in the most downstreamfirm will be even more effective if there are similar individuals in each of the upsrreamfirms so that for any product a quick evaluationcan be conducted by a small group composedof one PLM per firm. But this is not likely to be the case.Indeed, in today'sworld very few firms have true PLMs. (One of our concernsin preparingrhis breakthroughguide has been that the very managersmosr able ro benefit from it don't currently exist in many firms!) Thus to get started,someonefrom one of the functional areasin the most downstreamfirm will probably need ro take the lead and aim to achieve a breakthroughin consciousness. This individual probably will have little formal authority for overseeingrhe value stream and will therefore need to lead by example and by raising hopes about possiblejoint gains. We can't guaranteethat anyone anl.wherealong a value stream can succeedin raisingevery participant'sconsciousness to transformthe entire stream.We can guaranteethat anyone anywherecan raisethe important issuesand make construcrivechangea possibilitywhere ir was previously impossible ... if they have the courageto acr.

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To be successful,the mapping leader needs to be someonewho can gain the respect of upstreampartnersby conductinga rigorousand fair process.Logical candidatesare from purchasing,production control, logistics,operations,or a processimprovement function like quality or processengineering.Any of these can work. However, assigninga buyer from purchasingto be a mapping leader can lead to problems if upstream participantsbelieve that the real purpose of mapping will be to uncover 'Ihus waste at suppliers,followed by demands for immediate price reductions. a purchasingfunction will probablyneed to assignmapping leadershipto someone from its supplier development group if all participantsare to be convinced that the processis fair, balanced,and aimed at win-win-win outcomes. The value streamteam needs to include representativesof all the firms and facilities that shareownership and managementof the stream.Ideally, it would also include the relevant departmentswithin each firm - sales,operations,production control and logistics,purchasing,manufacturingengineering,informationmanagement,and product engineering.However, this can make the team too large to walk the value 'fhus streamtogether,which is often a critical learningexperience. we generally recommenda small team with a minimum of one representativeper company. The team can query the functions supporting the value stream as necessaryto fill in missing information.

The Wrong

Role for Consultants

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A n u n d e r s t a n d a b lien c l i n a t i o ni n a n y f i r m w i t h b u s y l i n e m a n a g e r s -and this surely includespracticallyall firms-is to delegatethe task of creatingvalue stream maps to outside consultantsor to internalstaff groups,typically in operationsplanning or process improvementdepartments.However,in our experiencethis is misguided.The findings of the consultantor staff expert are rarely credibleto the managerswho need to take action and the consciousnessraisingexperienceof walking the value stream together-discovering the waste and jointly agreeingto a crossfirm action plan-simply never happens.A beautifulreport is produced by the consultantor staff team-and in our experience the beauty and precisionof the maps is generallyinversely proportionalto their usefulness-but the findings are then fildd away and soon forgotten. Remember:Only managerstaking clear responsibilitycan fix the mess. So the same managersought to draw the maps.

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Once designated,the leaderand the team need to take a walk together along the value stream,draw the current statemap, and then ask, "Which stepscreatevalue?,Which stepsare waste?,Why is order flow so erratic?, Why is quality so erratic?,Why are deliveriesso erratic?,How can value be enhancedfor the end-customer?" Once the map is drawn so that the current state of an existing value stream is known precisely,it's time to createthe first of two "future state" maps that remove wasted stepswhile stabilizingprocessesand simplifying information flows. Future State 1 achievesthe luture state shown in Learning to Seewithin each facility touching the product. This means introducing continuous flow (as describedin Creating ContinwowsFlow) wherever possibleand instituting smooth, leveled pull between the areasof continuous flow. Future State 2 then introducessmooth, leveled pull with frequent replenishmentloops between every facility touching the product. In the process,most warehousesare eliminated, or converted to crossdock operations. An Ideal State may then co-locate at one site all of the activities required to proceedfrom raw materialsto finished goods,in the processeliminatingpractically all transportlinks and needs for information management. You may or may not find this particularsequence appropriatefor your own value streams.In particular,if you are mapping a new value stream for an entirely new product you will probably want to skip directly from the current (businessas-usual)state to an ideal state.We follow the three-step.sequence, beginning with Future State 1, in this breakthroughguide because we believethat this is likely to be the most typical approach.

PARTI: GETTINGSTARTED

Tvvo A

Final

Diagnostic

Benefits for

Functions

As teamsdraw their current statevalue streammaps,they are likely to make a surprising discovery.Most problems identified along the value srreamwill trace direcrly to the performanceof variousfunctions - information technology,production control, logistics, product engineering,operations,purchasing.What's more, weaknessesin functional performancediscoveredin the sample value streamwill almost certainly be present in every other value stream the firms touch. In our experience,the functions want to support the value stream for each product. But they have a hard time seeing the connection between their activities and the needs of the product. Thus an important benefit of the mapping process- in addition to a breakthrough in consciousness about the magnitude of waste and the enormousopportunities for improvement - can be to give much clearerguidance to each function about its role in supporting value streams.A real bonus can be achieuedif the improued functional performance can then be applied to all ualue stredms within the participating firms.

A

Diagnostic for Relations Betrrueen Firms As teams start mapping, they are likely to make yet another discovery.Today we all use languagestressingpartnershipand cooperationbetween firms sharingvalue srreams. However, mapping teams in most caseswill discoveran enormousgap between these high-level principles of collaborationand the day-to-dayreality down ar the level of each value stream.If the value stream map showswidespreadconfusion and counterproductive actionsbetween firms at the value stream level, it will be obvious that "partnership" at the top isn't translatinginto competitivenessat the bottom. Fortunately,value stream mapping provides a clear and consistentlanguagefor firms to start an intelligent conversationwith each other about the root causesof their shared cost, quality, reliability, responsiveness, and communicationsproblems.(Indeed, we believe a relentless,fine-grainedfocus on improving each value srream,rather than high-level agreementon principles, is what has given Toyota its edge in creating the world's leanestsupply base.)A real bonus can be achieuedif the practical lessonsof sbared ualue stream management can then be applied by each'firm to its relations with its other customers and swppliers.

The Current

State Map

With the basic principles of extended mapping in hand, it's time to accompanya value streamteam creating a map of the current state for a specific product family. This map will characterizethe value stream as it is today. We've chosento focus on a high-volumeautomotivecomponentoffered with a small number of options- a windshield wiper consistingof a blade holding the actualwiping edge and the arm attachingthe blade to the vehicle. This product is similar in complexity and variery to the steeringcolumn bracket used to illustrate Learning to See. We've decided to map only an intermediate portion of a total value srream,which runs its entirety from the end user (you in your car) at the downsrreamend to raw marerials(iron ore in the earth) at the upstream end. The portion we will map srartsat Alpha Morors, rhe final assemblerof the finished vehicle, toward the customer end of the value stream.We then proceedback up the streamthrough che facilitiesof Beta Wipers and Gamma Stamping to the shipping dock at Michigan Steel, a raw materialsservicecenter.The five-member team, from the four firms sharingthis portion of the value stream,will be led by the head of supplierdevelopmentin the purchasingdepartmentat Alpha Motors and includesrhe product line managerand the assemblyplant managerat Beta Wipers,the value streammanagerfor this product family at Gamma Stamping, and the salesmanagerat Michigan Steel.

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Material flow

PARTII: THE CURRENTSTATEMAP

11

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Steps

path

Before we start mapping, let's look at an exploded view of this product showing the parts going into the wiper and its fit-point on the end product. Note that we will only map the circled areain this initial map. This is to keep the map simple and to concentrateinitially on raisingeveryone'sconsciousness of the extended value stream.

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arm components

PARTII: THE CURRENTSTATEMAP

13

our windshield wiper comesin two specifications- high trim and standard (HT and sr) - and in two sizes- small and large (s and L) to fit two different vehicles (A and B). The right-hand and left-hand wipers are identical on the vehicles in this example.The trim levels differ only in the paint - a matte-black finish for the standardtrim vehiclesand a glossy-blackfinish for the high trim models.The designsfor the two models differ only in the size of rhe parrs,not in their number or basic design.This means that the wipers are inrerchangeablefrom a final assemblystandpoint becausethey use the same fit points and require the same installationtime. The wipers clearly form a product family becauseall of the actionsoccurringupstream- component assembly, painting, and stamping - are in the same processsequencein the same firms and use the same processingequipment with a few tool and fixture changes. with the product family clearly identified, the first step for the team is to "take a walk" along the entire length of the value srreamto be mapped, recordingthe facilitiesvisited, the transportlinks, every action performed on the product' all information managementactions,and the time required. we alwayssuggesrstarting at che customer end becausethe customeris the point - indeed, the only point - of these materialflows. No product should be advancingthat the customer doesn't wanr and nothing should be happeningthat rhe cusromerdoesn'rconsiderof value! For the wiper example, the list of actionson the product is shown in the following list. Note rhat we have numbered all of the steps (73) in the left hand margin of the list and comparedthese with value creating steps (8) in the first column on the right. We have also recordedthe total elapsedtime (total product cycle time) which sums the time required to conducr all of the srepson a product (44.3 days) and compared this time with the actualvalue crearingtime (54.7minures),which is the sum of only the value creating steps.

Ph y s ica l Total

A cti o n s

R e q uir ed

to Gr eate

a W indshield

Value Creating Steps

Steps

Total Time

Raw Materials Supplier: Michigan Steel, Dearborn Heights, Ml 1. Load coils for twice weekly direct ship

10m

Transport Link 1 2. Directship (truck),Tonawanda,NY (500 miles)

8h

Second-TierSupplier: Gamma Stamping, Tonawanda, New York 3 . U n l o a dc o i l s 4. Receive& create ticket 5. Store coils 6. Conveycoil to Stamping Press1 7 . M o u n t o n c o i l r o l l e ra n d f e e d p r e s s 8 . S t a m p i n i t i a l( f l a t )s h a p e 9. Accumulatestamped parts during run 10.Convey parts bin to storage 1 1 .S t o r e p a r t s 12.Convey parts in bin to Stamping Press#2 13. Load parts in magazine,auto feed to press 1 4 .S t a m pf i n a l ( c u r v e d )s h a p e 1 5 .A c c u m u l a t ep a r t sd u r i n g r u n 16. Convey parts to storagearea 17. Store parts 18. Convey parts to paint shop 19. Rackparts on moving conveyor,clean, d i p , p a i n t& b a k e 20. Remove parts,inspect,sort & accumulatein bin 21. Convey parts to storage 22. Store parts prior to shipment 23. Load parts for twice weekly direct ship Transport Link 2 24. Directship (truck)to Harlingen,TX (1500 First-I'ierSupplier Warehouse: First-lrer

Har,insen. rX T:tH,ffis, 26.Formallyreceive 27. Store Parts

10m 10m 14d 10m 5m 1s 4h 10m 48h 10m 10m 10s 4h 10m 48h 10m 130m

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Value Create Time

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W iper

10m 10m 48h 10m

PARTII: THE CURRENTSTATEMAP

15

Total

Steps

Value Creating Steps

Total Time

Transport Link 3 29. Directship (truck)to Reynosa,Mexico ( 1 0 0m i l e sw i t h q u e u e a t b o r d e rc h e c kp o i n t )

6h

First'lier Supplier Assembly Plant: Beta Wipers, Reynosa,Mexico 30. Formally receiveand move to storagearea 31. Store in receivingstoragearea 32. Conveyfrom storageareato first assemblystep 33. Store at first assemblystep 34. Insertfastenerclip and securewith pin 35. Accumulateparts in first assemblystep 36. Convey parts to second assemblystep 37. Store at second assemblystep 3 8 . C l a s pw i p e r b l a d ea s s e m b l yt o s u b a s s e m b l i e s 39. Accumulateparts in second assemblystep 40. Convey parts to third assemblystep 41. Store at third assemblystep 4 2 . I n s e r tw i p i n g e d g e i n b l a d ea s s e m b l y 43. Accumulateparts from third assemblystep 44. Convey parts to inspection,test & pack step 45. Store parts at inspection& test 46. Conductinspection,test & pack in protectivesleeve 47. Accumulateparts at pack 48. Convey parts to shipping dock 49. Store awaiting shipment 50. Load truck for daily direct ship

10m 48h 10m 8h 10s 4h 10m 8h 10s 4h 10m Bh 10s 4h 10m 8h 20s 4h 10m 12h 10m

Transport Link 4 5 1 . S h i p b y t r u c kt o H a r l i n g e nT, X ( 1 0 0m i l e sw i t h q u e u e a t b o r d e rc h e c kp o i n t )

6h

First-TierSupplier Cross-Dock: Beta Wipers, Harlingen,TX 5 2 . U n l o a dt r u c k 53. Cross-Dock 54. Store awaiting full truck 5 5 . R e l o a dt r u c k f o r d a i l y s h i p Transport Link 5 56. Ship via multi-pick-uproute (truck)El Paso,TX { 6 0 0m i l e s )

Value Create Time

10m 10m 12h 1Om l

96h

10s

10s

10s

Total

Value Greating Steps

Steps

Car Company Cross-Dock: Alpha Motors, El Paso,TX 5 7 . U n l o a dt r u c k 58. Cross-Dock 59. Store awaitingfull truck 6 0 . R e l o a dt r u c kf o r d a i l y d i r e c ts h i p

Total Time

Value Create Time

10m 10m 12h 10m

Transport Link 6 61. Directship to West Orange,NJ by truck ( 2 0 0 0m i l e s )

96h

Car Company's State Street Assembly Plant: Alpha Motors, West Orange, NJ 62. Formallyreceive 63. Conveyto storagearea 64. Store awaiting need 65. Conveyto kitting area 66. Transferto assemblybins 67. Store in assemblybins awaiting need 6 8 .A s s e m b l ew i p e r b l a d ei n h o l d e rt o a r m 69. Attach wiper arm with blade to vehicle 70, Line off vehicle and test 7 1 . S t o r ef i n i s h e dv e h i c l e s 72. Load train for daily direct ship

10m 10m 48h 10m 10m 2h 1m 1m 10m 12h 2h

Transport Link 7 7 3 . S h i p t o C l e v e l a n dD i s t r i b u t i o nC e n t e rb y t r a i n ( 5 0 0m i l e s )

1m 1m

12h

Summar1y of Physical Actions Total Steps

Time

Distance

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Value Greating

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53OO Miles overT TraneportLinke

PARTII: THE CURRENTSTATEMAP

17

L e a rn i n g

to S e e V alue

As we write down the actions,the ability to distinguish value-creatingsrepsfrom currently necessarybut wasteful steps and value-creatingtime from currently necessarybut wasted time is critically important. The enormousgap between total time and value-creatingtime and between total actionsand value-creatingactions is the opportunity the value stream team must seize. Given the importanceof telling the difference between value and waste, it is not surprisingthat we often encounter readersand audienceswho are anxious about their ability to categorizeactionscorrectly.Actually, it is very simple. Put yourself in the position of the consumerand ask if you would pay less for the producr or be lesssatisfiedwith it if a given step and irs necessarytime were left out. In the caseof attachingthe wipers to the vehicle in the Alpha assemblyplant, the answeris clear.Consumersdo not expect to receive their vehicles with the wipers in the front seat,accompaniedby a polite note stating, "Some assemblyrequired". The final attachment step clearly createsvalue for the customer.So do the seven actionsof stampingthe metal arms,painting them, and sub-assembling them prior to attachment on the vehicle. By contrast,look at the many movementsof the product within each plant between processsteps,the long transportlinks between plants, the warehousingand crossdocking activities along the value stream,the numerous testing and inspection steps,and the repeatedpacking and unpacking of the product. Would you, as a consumer'be less satisfiedwith your vehicle if these currently necessaryactivities could somehow be left out? Of coursenor. And would you be happier if the car company could get you the model you want with the trim level you wanr quicker becausethese steps were left out? Of courseyou would. Indeed, the more these stepscausea delay in receiving exactly the product you want, the lessyou probably are willing to pay for it. Far from creatingvalue, these shipping, packing, inspecting, and warehousingactionsactually destroy it!

D r avvi n g

a U se fu l

Map

The long list of steps,categorizedby waste and value, is highly provocarivebecause it helps the team realizethe enormousopporrunity for savings.. What's more, rhe ratiosof value-creatingtime to total time (54.7 minutes out of 6S,792or 0.08%) and of value-creatingstepsto total steps(8 out of 73 or ll%) and the amount of transport distance(5300 miles) are quite typical for discretemanufacruredproducts in the world today.Our example is the norm, not the exception,and similar ratios are likely to emerge from any maps you draw.

18

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State

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However, for this information to be useful we need to simplify it and put it in a form managerscan act on. The best way to do this is to group and summarize the data by each of the facilities and transportlinks the product encounters.Again, the place ro starr is with the customer,at the most downstreamend of the map. In this case,the customer is the Alpha Motors Distribution Center, which interactswith car dealersto get end consumers the products they want. We'll representthis organizationwith a facility icon placed on rhe right side of the map. Underneath this icon we'll draw a databox recordingthe customer requirement for size and frequency of shipmenr. Note that this facility is a cross-dockingoperationwhere vehiclesare sorted and sent onward as quickly as possible to several regional storageareasacrossNorth America. From there they go to auto retailersand then into the hands of the customer.Thus our intermediate-viewmap stops considerablyshort of the total value stream map thar ir may be useful to draw at some point in the future.

PARTII: THE CURRENTSTATEMAP

19

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To get from raw materialsto the Alpha Distribution Center, the procluctflows through seven assembly,fabrication,warehousing,and cross-dockfacilities.These are: o Alpha Motors' State street Assembly Plant in west orange, New Jersey o Alpha Motors' Cross-Dock,for many componentsfrom many suppliers, in El Paso,'Ibxas o Beta Wipers' Cross-Dock,for parts sent from severalplanrs ro many customers, in Harlingen, Texas o Beta Wipers' ComponentAssemblyPlant in Reynosa,Mexico o Beta Wipers' PartsWarehousein Harlingen, Texas o Gamma stamping's stamping and Painting plant in Tonawanda, New york o Michigan Steel'sServiceCenter in Dearborn Heights, Michiean

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Map

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All Facilities

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El?aeo,TX

West Orange,NJ

We have createdtwo new facility icons not seen in Learning to See.One is a cross-dock icon for facilitieswhere productsare not stored but instead moved immediately from an incoming vehicle to an outbound shipping lane. The other is a warehouse icon for facilities where incoming goods are sorted and stored before shipment to their next point of use. (The iconsused in this workbook are displayedon the inside back coverand explainedin Appendix A.) You may want or need to createother icons,of course,in particularfor activitiesnot encounteredin our example.Just make sure that everyonc working on the extended map Llsesthe same icons.

PARTII: THE CURRENTSTATEMAP

21

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2Shifts 5Oavs E?E = 1 Dav Defects = 4OO ppm

You will soon discoverthat you can't successfullygather and summarizerhe informarion needed for improving the value stream without drawing detailed currenr state in-facility value stream maps for products as they move through manufacruringfacilities.This is why masteryof the material in Learning to Seeis a prerequisitefor macro-mapping. We've drawn current scatefacility-level maps for the three manufacturingfacilitiesalong this value stream- Gamma Stamping, Beta Wipers Assembly,and Alpha Motors Assembly -

in Appendix B of this workbook, and you'll want to append yorir facility-level maps ro your current state macro map as well. Note that the data box under each facility contains data on inventories (Raw Materials,Work-In-Progress,Finished Goods),rhe amount of productive time (the number of shifts per day and the number of working days per week), the frequency of the production cycle (showing how ofren every part is made, such as

Current State Map and Data Boxes

Shovving

All

Facilities /L-L-1

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Harlingen,TX

El?aso,TX

WeslOran6e,NJ RM50 h. wt?2h. FG14h. 2?hifts SDavs E?E=1Day Defects = 5P?^

"EPE = 1 Day" meaning "every part every day"), and the defect level (in parrs per million) as reported by the customer at the next downstreamfacility (or by the customer'sinspector at the point of shipment in the caseof the Alpha Morors Assembly Plant.) We have not drawn facility-levelmaps for the Alpha and Beta cross-docksand for the Beta partswarehouse.This is partly to keep the size of this guide manageableand alsobecausewe will endeavorto eliminate these facilities altogetheras we move through progressivefurure states.If your value streamswill require large distribution warehoutesin any imaginable future for example for serviceparts - or cross-docks,you should also draw maps of these facilitiesas a guide to improving their performance.Exactly which facilitiesmerit in-facility maps and in what detail will alwaysbe a matter of judgmenr, so be preparedto adjustyour approachas your experienceaccumulatesand you encounterdifferent siruations.

PARTII: THE CURRENTSTATEMAP

| | I I I I

T h e Ou a l i ty

S cre e n

As we look at the data in the facility boxes,we nore a trenclworthy of further crarnination. At Alpha Motors Assembly the defect rate for wipers installed on rhe vehicle - def'ects discoveredby a representative from Alpha'sDistribution Division in a final inspectionjust prior to shipment is 5 per million. (SinceAlpha is assembling250,000vehiclesper year with two wipers per vchiclc, this means that two to three wipers per ycar arc rejccted at final inspection,usually for scratchesin the finish.) Yer when we look at defects emerging from Beta Wipers Assembly (asjudgcd by Alpha), we note that there are 400 def'ccrsper million and when we look at defects emcrging from (]amma Stamping (asjudged bv Beta) we note that there are 2000 defectivc parts per million. F'inally,when wc look at defccts arriving ar Gamma from N,lichiganSteel the figure soarsro 10,000pcr million. In brief, clualityis worseat every step up the value stream,a common phenomenonin practicallyevery industrytoday.This meansthat to achieve5 clefectsper million (approaching the Six Sigmalevel of 3.4 dcfectsper million), the prodr,rct is flowing through a scriesof qualitv screensin each facility,cach of which resultsin scrapand inspectioncost.The slope of this clualitygradient can surely bc reduced in firturc sraresanclit is importanr to nore carefully the current slope to aid our thinking on how to do this. We therefore recommend drawinga Quality Screen(asshown below) on the (lurrent Statemap. In this casewe have placedthe diagramin a convenientspot in the rowerright-handcorner.

O.rrality

Screen

ppm defects

2000

r500

1000

500

0 MICHIGAN TO GAMMA

24

GAMMA TO BETA

BETA TO ALPHA

ALPHATO ALPHAPC

Mapping

the Transport

Links

'fhe

next step, oncc the facilitv-level maps are drawn and the data have been summarized, in facility boxes,is to add the transportlinks between the facilities.Tb do this, you may need boat, train, and airplane icons,in addition to the truck icon frctmLearning to See. In this example,we will use the airplaneicon with a dotted line for shipmentsexpedited by air and a truck icon with the same stylc of dotted line fr-rrthose expedited by truck. Thc

numbersin the regularshippingicon (a truck or a train) show the fiequency of shipments (e.g.,"1 x day" : on€ shipmcnt per day) while the number in the expeditingicon shorvs the number of costlyexpeditedshipmentsin the past year (e.g.,"2 x year" : rwicc a year). With these data in hand, we are ready to complete the physicalflow portion of the map Lry drawing in the normal product flows between facilities, using broad arrows.Notc that thcse arc striped,"push" arrowsbecauscproductsare mclvingaheadat thc commandof a centralized informationsystemand not necessarilyin accordwith the immediateneedsof the next downstreamfacility.l.lnder eachof the transportlinks we recordthe distancein milcs, the shippingbatch sizc,and the percentageof defectivedelivericsas reportedbv thc cusromcr. As thcse flows are drarvn,the team shoLrldnotc one additionalpoint -

the trcnd in def'ectiveshipments:latc, early,or incorrect(the wrong product or in the wrong amount). As is alscltypical in most industriestoday,we note that the furthcr up the value streama facility is, the morc likely it is to make defectiveshipments.This situarionis analogousto the quality gradientand equallyworthy of improvementin future sraresbecauseever_v defectiveshipmcnt generatcscorrectioncostsdownstreamand perturbsthe schcdule.Fclr economyof spacewc have summarizedthis trend in the samebox as thc qLralitvdata on the Current Statemap, changingthe label to the "Quality and Delivery Screen".

O.ualitlz

and

Delirrerlz

lScreen

PPM DEFECTS 2000

% DEFECTIVE DELIVERIES

1500

10

1000

500

MICHIGAN TO GAMMA

GAMMA TO BETA

BETA TO ALPHA

ALPHA TO ALPHA PC PARTII: THE CURRENTSTATEMAP

The

"Bottom

Line"

Finally, we can draw a time-and-stepsline along the bottom of the map. Note that the first figure above each segment of this line is the total rime within each facilitv and along each transportlink, while the figure in parentheses ro the right is the value creating time. The first number below each segment of the line showsthe total actions(steps)taken on the product in each facility and transportlink, with the value creating actionsshown to the right in parentheses. Note that information needed for each facility is contained in the .,steps,, .,Time,, and summary boxes at the ends of the time-and-stepsrines on the indivicluar facility maps.

-2LzL-1 luichisansieetl Sewiceco. I I DearbornHeights, Ml I

SteelCoits I

_N-

:\

.

l- 2"1_

o

.

lweekl I

u---*-

t\

ra;L laf"a"lal

r1,l

t.\

oooo.or>

4-/14 Gamma

I

I P,, l-l

I

stampins I I

-2LzL-1

U-T

3t"w4#+

rrrrrrr+

Tonawanda,NY

Reynosa,Mexicot....

1 a

RM336h. wrP110h. FG4Ah.

l - ' FRM f 56 h. wt? 41h. FG12h

35hifts 5Davs E?E=3Davs

z5ntftq

SDavs

E?E=1Dav Defects = 4OO ppm

Defec.ts

=zoooppm

o.3d.

o.25d. 20.6d.(3131e.) 22(3)

ril|Drv+

4.6 d. (3o s.) 21(3)

r^ ' o ' . . ,

Gurrent state shovving all Facilities, Transport Defects & Delivery, and Time-and-Steps Line

Links,

zz't-21--1

1

//

qfil

/r

//

l xDay

| ,"flr,l&,", I Center I I

Cleveland, OH

-1

,rooio^v 640^

| | | | | |

4265r 214Hr 32oB 2135r rc7Hr

| I I I I I

WeetOrange,NJ RM50 h. wt?2h. 2xYear

FGIAh

2Shitrs SDavs E?E = lDav Defects = Sppm

4.Od.

o.5d. 4

1

4.Od.

o.5d. 4

1

o.5d. 2.Od. (12os.)

1

11(2) Ouality

and

Delivery

Screen

.PPM DEFECTS defeds

2000

70 OEFECTIVE DELIVERIES

1500

10

1000

t ,r,',r?*'

s00

0 MICHIGAN TO GAMMA

GAMMA TO BETA

BETA TO ALPHA

ALPHATO AIPHA PC

M a p pi n g

th e

l n fo rma ti on

Flow

The tcam has now completcd mapping the physicalflow of the product but the valuc srream map is onlv half done. This is for the simple reasonthat if no clrstomcrsignalsa demand for products from upstream,then nothing will flow. Or at least nothing shor-rldflow! We thereforc need to go back to the upper right corner of our map and draw the flow of order and prroductioninformarion going back from rhe customcr. Howevcr, as we do this we nccd to warn you that mapping the information flow is the 'l'he hardestpart of the task. salcs,productioncontrol,and operationsgroupswithin most companiestend to communicatepoorly and a managerwho fLrllytrnderstandsrhe infrrrmation managementmethods of all thrcc groups is a rarity.Whcn you add the complexity of going acrossseveralcompaniesand through sales,productioncontrol,and operationsdeparrmenrs within eachcompany,it's not surprisingthat very feu, line managersseem to have useful knowledge of how infclrmationis managedon a macro-scalc. Cliven this rcality, vou shor"rldstart where ordersenter the sysremand follou' the ordcr flor,v fiom department to department and from information managementsystem to infbrmation managementsystem,first through the most downstreamfirm and then upstream through the supplierfirms. Bc sure to use a pencil as you skctch informationflows and kccp an eraserhandy! What's more, if you can, requcstthesedata aheadof your visit becausemany facilitiesand IT departmcntsdo not have them readilv at hand. To actuallydraw the informationportion of the extendcd map wc will need an additional icon for production control, which we have drawn in the shapeof a compurer rerminal.The first of these is for Alpha N,IotorsSalesOrder Bank. At this point orders are aggregatedand placed in inventory (shown by order queue icons along the information flows). Thcv are held trntil the weekly salesplanningmeeting that decidesthc specificarionof thc orders that should be relcasedinto the system,given orders in hand from dcalers.These ordcrs are then releasedupstream to the following firms and departments: o Alpha l\{otors HeadquartersProduction Control o Alpha N,fotorsAssembly Plant ProdLrctionControl o Alpha NlotorsAssembly Plant Ntlarerials Control o Beta Wipers Headcluarters ProductionControl . Bcta Wipers AssemblyPlant ProductionControl o Gamma StampingHeadquartersProductionControl r (iamma StampingPlant ProductionControl o Ntlichigan Steel ServiceProductionControl

2A

In almostall manufacturingcompanies,the salesand prclrlucticln control departmencsactually send a seriesof forecasts,schedules,and productionreleasesback upstream.For example, in the car industry a rhree-month forecasr,a one-month rolling schedule,a weekly fixed schedule,and a daily shipping releasemight be typical.For our purposes,the impolant informationis the weeklv fixed scheduleand the daily shippingreleasebecauserhese actually trigger production in facilities and shipmenrsbetween facilities.These arc the information flows wc will capture on this map. If we follow the weekly schcduleand write down the infrrrmationmanagemcntstepsand the time involvcd, as we did earlicr with physical actionspcrformed on the producr, we note the following alongthe longestpath. Information Manage the

Actions Currently Value Strearn

Required

to

Steps

Delays*

Production at Alpha Motors 1. Dealer Ordersqueue in the SalesOrder Bank

10 Davs

2. Tiansmit weekly ordersfrom Alpha SalesOrder Bank 3. Queue at Alpha HeadquartersProduction(lontrol

14 davs

4. Releasevl'eeklyproduction requiremcnts to Alpha plant 5. Queue at Alpha Plant ProductionControl 6. Releaseof daily productionsequence

6 davs

Production at Beta Wipers 7. Tiansmit weekly orders fiom Alpha HQ to Beta He B. Queue at Beta HQ ProductionControl

6 davs

9. Ttansmit weekly production requirementsto Bera plant 10. Queue at Bera Plant ProductionC

1,3"l.'

2135T r c Zn r

| |

'txDay

f 1"-L

z+ur I

32oD

'\

WeetOrange,NJ Harlingen,fX

RM50h wt?2h.

aaaaaaaaaloaaaaaaaaaaaaaaa

2xYear

FG14h. 2Shifts

5 Days EPE = 1 Day DefecI.s = 5ppm

o.5d. 4

1

o.5 d.

4.O d.

4.Od.

o.5 d. 4

1

2.8 d, (12Oe.)

1

11(2) Ouality

MICHIGAN TO GAMMA

and

Delivery

GAMMA TO BETA

Screen

BETA TO ALPHA

ALPHA TO ALPHA PC

I I I

Demand Amplification For the pasr year,Alpha Motors sales order Bank has senr very stable weekly orderscalling for 960 vehicles per day, five working days per week to Alpha's HeadquartersProductionControl. And HQ ProductionConrrol has releasecl level weekly buckets of orders to Alpha's Assembly Plant Production Control and to Beta HeadquartersProduction Control. The actualbuild still variesfrom the schedule- due to pulling vehicles out of sequenceto correct defects or becauseof problems in the paint booth or due ro a lack of parts. However, by adjusting the scheduleand working overrime at the end of each shift as necessary,rhe output of Alpha Morors Assembly varies by only about SVofrom the 960 units planned for each day and all vehiclesbuilt are shipped on the daily train to the Alpha Distribution Cenrer.

Dernand

Arnplification

for Arpha

Motors

wipers/day 2800

amplification ot +l-

2600

4Oo/"

2400

3OVo

2OVo

2200

10o/o

2000 1920

OVo

1800 -1Oo/"

1600 '20o/o

1400 -30o/o

1200 -40o/"

1000 March

15

ALPHA PRODUCTION

20

25

ALPHA ORDERSTO BETA

30

Similarly,the mix of models (A versusB) variesby only about 5% daily as does the mix of wipers (StandardTiim with flat paint versusHigh Tiim with glossypaint.) On average,Model A accountsfor two thirds of production and Model B one third while StandardThim wipers accountfor two thirds of demand and High Tiim the remainder.Thus production and shipments are fairly stable ar rhe cusromer(rieht) end of our map. Yet, as we plot the production and order/releasedataback upstream,we nore that the amplitude of changesin both production and releasesincreasesmarkedly from facility to facility. Minor variationsin production at Alpha Motors Assembly become much larger by the time we reach Beta Wiper's assemblyplant, as shown below.

Dernanel

Arnplification

-nclrrding

Beta

Wipers

wipers/day

amplification ol +l-

2800

4OVo

2600 30Vo

2400 I I

2200

,,,

,

I I

l, 1t

1800 t

ll

1t I

I I

1600

1Oo/o

I I

I

I

2000 1920

2OYo

, , ,

0o/o

?J' tl

I I

tl

'- - 'l--,'

I

i;{

l, ll ll l,

I I

, ,

I

I

'1Oo/o

I

t

1400

-20o/"

I I

t

-30%

1200

-4OYo

1000 March

10

15

25

30

ALPHA PRODUCTION

ALPHA ORDERSTO BETA

BETA PRODUCTION

BETA ORDERSTO GAMMA

PARTII: THE CURRENTSTATEMAP

35

Bv the time we reachGamma Stamping,the variationsarc very large.Indeed, Gamrna Stamping'sreleasesto Nlichigan Steel varicd by nearly 40% in the month prior to thc arriyal of the mapping team.This infbrmationfor Gamma Stampingcompletesthe Demancj Amplification Screenlbr our current state.as shown below. 'lb

make this verv common phenomenonclearer,we've summarizeclthe maximum perccnrage

changein dailv productionand dailv releasesover rhe past month for each facility and alignecl them in a simplified Demand Amplification chart as shown at right. We've placed this chart in a box in the upper left cornerof our Current State map, as shown on the ncxr page spread.

Dernancl

Arnplification

screen

in Grrrrent

state

wipers/day

amplification oI +l-

2800

40o/o

2600 2400 2200 2000 1920

t

ivi ti"

1800

il-z

\

r i 'i r .'t ri .j r'tt'

j

:'r

-1Oo/o

:tt

1400

t. : i

-40o/o

10

ALPHAPRODUCTION BETAPRODUCTION GAMMA PRODUCTION

'Ib

ALPHAORDERS TO BETA BETAORDERS TO GAMMA GAMMA ORDERS TO MICHIGANSTEEL

deal r'viththc erraticorder flow, Beta,Gamma,and NlichiganSteel must either maintain

extra production capacityor carry large stocksof finished goods in inventory or disappoinr downstreamcustomersa significant fraction of the time. Becausefailing to ship on tirne to meet customcrneedsis an unacceptablcalternativefor suppliersin thc auto industryand bccauscextra tooling can be very expensivc,most firms in this industrv includine Beta.

36

Sirnplified

% variation

Dernand

Demand

GAMMA ORDER

Arnplification

Screen

Amplification

GAMMA PRODUCTION

BETA ORDER

BETA PRODUCTION

ALPHA

ALPHA

ORDER

PRODUCTION

Gamma,and N'IichiganStecl,carryextra inventrlricsro protectthe customcr.T'he cost implicationsof demand amplificationare therefcrre apparentin the amount of errra inventoriesin the value stream. Whv doesthis growingvariationexist?For the simple reasonsthat productionproblemsoccur in cvery plant (even the lcanest!),transportproblemsoccuron evcry link, feedbackon crlrrcnr conditionsand amountsof product on hand is nevcr completelyaccurate,and largeminimum productionand shipmentquantitiescausevcry small changesin the amountsnecded downstreamto producemuch largerchangesin the amountsrequcstedand producedupstrcam. To take the u'orst-caseexample, if one wiper is discovcredto be defective at thc asser-r-rblv plant and the re-orderamount is just on thc cdge of one new;rallet (containing320 r,ripcrs in our example)che re-orderwill jump to 2 pallets- or a total of 6,10wipers- even though only onc additionalwiper is needcd.And this phenomenoncan be repeatedseveralmore times as the order flows back upstream,creating a wave. The reasonthis wavc grows largcr as we move upstreamis becauseof the numbcr of schedulingpoints (B) and the length of the delays(totaling .58days) before infcrrmationis acted upon. Each system recalculatesits schedulebascdon its own (not very accurate)forccastsand on information from cusromcrs that is alreadyup to a week old. This is the familiarand dreaded"F orresrerliffect" documentedby Jay Forrestcrat MIT in the 1960s. The irregularitiesin the systcm are tlrther exaggeratedby the misalignmentof what the official schcdulingand releasingsystem(in the ccntralizedcompurers)are sayingand what the individualsin shippingand receivingjobs are seeingand doing.Then, as misalignments grow,confidencein the formal systemdeclincsand more and more of thc actualscheduling and rclcasingmay be done manually despitc the largeinvestmentsin informationtcchnologv.

PARTII: THE CURRENTSTATEMAP

Demand

GAMMA ORDER

Amplification

GAMMA PROOUCTION

BETA ORDER

BETA PRODUCTION

ALPHA ORDER

ALPHA PRODUCTION

I ",",*I

-

| ?roduction I

Controt

I f--

I

MRp-l

I lf{

|

6 daya

Cleveland, OH

Fuffalo. NY

I wTkryI

1 V

(anffi

l-t ^,1

lY2n?:"7:"1;'"*" r-]

DearbornHeights, Ml

-,- : -rt\ -;c"ltt-] :

i

\

3. . '.

'fonawanda,NY

..,.

C

t l w e e k ll t ' . . T-U 2a\

I- 6.-l--

\

r lr,flX,li,"l < ts ,zl Control I

f2"-1---'

'...

6 days

\

MRp-l

19)'\'

+.+J

x Tonawanda,NY

Reynosa,Mexico

RM336h. wt?110h. FG40h.

RM56 h. wt? 41h.

SShrtbs SDays E?E=3Davs Defecte

=2oooppm

EClCU

25hifts SDavs E?E=1 Dav Defects = 4OO ppm

o.3 d. 20.6d.(3131s.)

22(3)

3a

4.6 d. (3O s.) 21(3)

W I |

Shipdarch =6?allets

@

Final Gurrent

Map

State

Showing

Plymouth,Ml

Demand

Arnplification

ll'{ r 10 dayt

{-'N,l 14daye

6irmingham,Ml

i 4

EI

-4-4-1

I ,,Jl?,1,i, I center I I

Cleveland,OH

1

/f

ar6ot-6oto-o" 640^ |

a| 9etaWivers I I Croes-Oock I

Trr)

' -=*-l

t

l----,-+

|

I

-l

-t

J

El?aso,TX

n-s\t-->

Year

|

zooo"rA

@ | = 6?alteto I

@,"-J4

4.O d.

4

21zgr I

roznr I

I

I-T*-L:'t.'\. \ l.i'v l.l I

1

'

.rr,*o^t

zl -z*

o.5d.

|

l-lJ---] --

rl;-l lJ'v l.t

Harlingen,TX

i"f:i II |i 32ob

// //

TIME WestOrange,NJ 44.3 day

RM 50 h. wl?2h. FGIAh

31.Oday:

2Shifte

SOaya E?E = 1 Dav Defecl,s = Sppm

13.3 dayt

o.5 d.

4.O d.

o.5 d. 4

1

32b1 sec 54.7min

2.8 d. (12Oe.)

1

11(2) Ouality ' PPM DEF6CTS

and

Delivery

Scrgon

| 10,000

defeds

2000

7o DEFECTIVE DELIVERIES

1500

10

1000

ttr?*- t

500 o MICHIGAN TO GAMMA

GAMMA TO BETA

BETA TO ALPHA

ALPHATO ALPHAPC

The

Limits

of Our Map As thc team finishesrecordingthese product and information flows, it seemssensibleto conclude the Current State map at this scopeof mapping. The map does not go all the rvay downstreamto the customertaking dcliveryof a car at the dealershipand it doesnot go all the way upstreamto the steelmill, much lessto ore in the ground.Mapping theseaciditional stepswould doubtlessprovide additionalinsights,but to do so would require largeamounts of time and expenseto examine organizationswhose behaviorthe team has little prospectof changing right now. Yet cven within this scope,the map coversa considerablepgrtion of a lengthy and complex value streamand uncoverssomevery provocativepcrfclrmancefeatures.

What We See When We See the Whole With regardto physical flows we note that 421.3days and 73 acrionson thc product are nceded to achieve3,281seconds(54.7minutes)of value crearioninvolving only cight actions.This meansthat 99.9992%of the elapsedtime and 89% of rhe roralacrigns, while currently unavoidable,are of no value to the customcr.

we can expressthese findings in terms of lead times and invenrory rurns:

Gamma

CurrentState

20.6

+

LEADTIME(in days) Beta + Alpha : In-plant* 4.6 2.8 31.0 + Tiansporr = 13.3

Total 44.3days

INVENTORY TURNS(annually)** 1149805 *lncludesthreedaysspentin warehousesand cross-docks. **Notethatfacilities with simple,frequentactivities (e.g.,assembly operations) will havehigher turnsthanfacilities with manybatchoperations, and individual facilities will havehigherturns thanthe entirevaluestream.

With regardto qLralityand delivery reliability,we nore that end-of-the-valuesrreamindicators of both measuresare very good (5 ppm and lVa defecdveshipmentsto the customer)br-rtthis is achieved through a sericsof screenswith significantcosrsand delays. With regardto information about customer clemand,\\,e note rhat ordcr information is acted upon up to 17 times and storedfor up to 58 daysin queues.What is morc, six inclividualsin receivingand shippingdirectly intervenein mediatingorclerflows within an expensive, tcchnicallysophisticatedinformationmanagementsysremrhat on its face is totallv ar,rtomated. Evcn with this intervention- and in somecases probablybecauseof it - demancl amplification,with compcnsaringinventoriesto protcct customers,increasessteadilvto a very high level as onc looks back up the value stream.

40

State

Grrrrent

Srrrnrn

ary'

Gurrent State Total Lead Tme

Value Percentageof Time ( v a l u ec r e a t i n gt i m e t o t o t a lt i m e )

Value Percentageof Steps (valuecreating steps to total steos)

Inventory Turns

Ouality Screen (defectsat the downstream end over defectsat the upstream end)

Delivery Screen (% defectiveshipments at the downstream over o/"defective s h i p m e n t sa t u p s t r e a me n d )

Demand Amplification Index ( % c h a n g ei n d e m a n d a t d o w n s t r e a m e n d o v e r % c h a n g ei n d e m a n d a t u p s t r e a me n d )

Product Travel Distance (miles)

44.3 days

o.oB% 11%

5 400 B 7

5300

Finally,we must note a suddenlyobviouspoint about the performanceof the manv departmcntsand firms touching the physicalproduct on its 44-dayjourney and order information on its 5B-dayjourney: However effective the variousfunctions -

operations, productioncontrol, logistics,manufacturingengineering,quality, and purchasing- may be in achievingtheir own objectives,they are not at all effective in supportingthis product on are common to all its path to the customer.What's more, becausethe processesinv