Todays’ corporate biosphere isn’t static, it is continuously evolving. In the race for being the best vendors to their clients, organizations are trying new ways (though old) to stay ahead. With Agile and Lean paving the way, the Value Stream is a powerful tool that can help teams in numerous ways. In this article we attempt to help you understand about value stream, its definition, benefits and how you can apply it in your work area.
A value stream is a set of events/actions needed to create a flow of value that can be realized by the customer and contains both value-added and non-value added activities. It contains all the steps from the start (of value creation) to the end (delivery to the client), where ‘Value’ is defined as the tangible or non-tangible benefit that the customer receives for return on investment.
As per Scaled Agile Framework, “Value Streams represent the series of steps that an organization uses to implement Solutions that provide a continuous flow of value to a customer.”
It is difficult to trace down the history of value stream mapping and to know when it was invented but there's a reference of value stream mapping in several processes of Toyota. The book ‘Learning To See’, co-authored by John Shook and Mike Rother and published by the Lean Enterprise Institute, too talked about the material and information flow extensively reachable and relevant outside of Toyota. Though Toyota never used the term ‘Value Stream’, they did invest a lot in creating flow across processes.
Over the last two decades, value stream mapping has evolved and refined its ways through the IT industry. The first introduction to the term “value stream” was done by the authors - James Womack, Daniel Jones, and Daniel Roos, in the book “The Machine That Changed the World”. In the present world, value stream mapping is linked with both Lean and Six Sigma methodologies as they highlight the removal of waste.
Value Stream helps in identifying each component in the flow by defining a visual that can represent the ‘Start – To – End’ pipeline delivering value to the customer. It helps to define the flow and its counterflow ensuring a complete safety net in deliverables. Value Streams are composed of stages where each stage has a set defined ‘value’ as a deliverable that gets accrued at the end. It is a great method to focus on the benefits that can be attained through efficient effort consumption. Value stream provides a great way of defining the ‘what’ and ‘how’ in delivering solutions to the end customers.
Types of Value Streams
While defining a value stream, it is important to understand the ‘value’ that is to be delivered. With a clear understanding of the deliverable, it gets easy to define a value stream around it. There is no set standard to create a value stream and it is unique to each organization.
There are two types of Value streams:
Value Stream KPIs(Key Performance Indicators) are the measurable actions to assess the performance of a value stream. It helps to check if the Value stream is working in the way it was projected. The KPIs differ for each value stream and serve the individual purpose for every stream. The KPIs form different parameters depending upon the type of value being delivered. Each Value stream defines its own set of KPIs to evaluate the constant venture.
With smaller organizations, it is easy to define the value streams as the complexity is quite low as compared to large setups. While defining value streams for larger organizations, everyone involved must understand the ‘why’ or ‘the customer’s need’. Identifying a Value Stream requires an understanding of the flow and how to optimize it for consistent better delivery. As per the scaled agile framework, there are certain steps to identify a value stream:
A Value Stream Map is an easy yet powerful visual tool that assists in visualizing the flow. It allows generating a comprehensive visualization of all end-to-end steps in the process. A value stream map shows all the significant phases required to deliver value from raw to finished goods. It is a Lean tool that uses flowcharts with boxes, arrows, and process flows to represent the system. It not only provides a real-time update on the flow but also helps in removing the waste and optimizing the flow.
For decades, Value Stream Mapping has been supporting industries to realize ‘value’ both ways. Let’s look at some of the points that make it a ‘go-getter’:
Creating your very own first value stream can be an exciting task that requires understanding on the value, the need, and the result. Every organization or individual has their way of doing it. Here, I will just lay out a basic format that can help with initial value stream creation:
Creating a Value Stream can be a simple task that includes:
Act on the plan you just created!
With all the processes and mapping in place, it is all the more important to measure the ROI. Metrics help in continuous improvement. Like for others, Value Stream Mapping(VSM) also has a set of metrics that can be used to identify bottlenecks and waste in the system.
Let us look at some of them:
In this article, we talked about value streams being the set of activities one needs to perform to deliver value to a customer. To sum up, value stream maps are an easy and efficient way to identify bottlenecks in any process flow. Being visual, they make it easy for everyone to understand and agree on the remediations. It is a significant tool for achieving continuous improvement with collaboration.
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