“No Problem is Problem”

I’m not sure to whom credit for that statement belongs.  I suspect it is one that originates in the Japanese culture, part of their corporate wisdom.  In the world of Lean, the statement has always been understood to mean, “the (apparent) absence of a problem IS a problem.”  

The statement implies that we float in a virtual sea of problems and to say there is “no problem” is to lie; or, to be more Politically Correct, that we’re sweeping our problems under the rug.

Further implied in the statement is that, if we sweep our problems under the rug, if we hide them from others, we diminish, at least by one, the number of minds working to eliminate the problem.  How can that be good?

There is another quotation often cited in Lean: “A defect is a treasure.”  I have always found this statement to further illuminate the meaning of the first.

When I first tried to wrap my mind around how a defect could be something I treasured, I came to the realization that, once discovered the defect could be targeted and its source eliminated; that, until it was discovered, the defect could repeat over and over.  

However, once recognized and the problem’s root cause identified, many minds could be employed to eradicate the source all together.  Hence, finding that defect led to the elimination of all such defects, making the discovery of the defect a treasure.

These seeming contradictions are plentiful in Lean.  I have grown to enjoy them.  They force me to ponder their meaning and that makes me stronger in my pursuit of continuous improvement: not only of processes, but of myself.

Let me come full circle, though.  Isn’t the hiding of a problem something common in US business (and in personal lives, as well)?  Whether we want to present the image that “I’ve got things under control;” or, whether we’re trying to convey the image of our business (or our lives) being a smooth surface with no ripples, either is a lie.

Problems are a part of life.  To deny their existence; or, to present the image that “we’ve got our problems under control,” is to misrepresent the truth.  

As we tell our kids, when you don’t deal with a problem right away, it has a tendency to fester and grow worse.  If that’s true, aren’t we better off to admit our problems and seek help?

And, as leaders, don’t we create healthier, happier work places when workers can admit to problems they’re having and request help without recrimination?  I think so.  How about you?  What do you think?

Fun With 5S - The Garage Game

 When I’m introducing 5S to a new audience, I like to get them comfortable with the concept.  I ask how many have a garage.  Usually about 2/3 of the audience will.  I then ask them to name the two most expensive things they own.  Their car is usually on that short list.  Then I ask: “Where do you park your car?”

This question always draws nervous laughter.  You see, most people store their 1st or 2nd most valuable possession in the driveway, outside the garage.  Why?  Because their garage is full of … well, stuff.

For those who didn’t have a garage, I ask them to think of a storage area: basement, attic, closet, shed or even rental unit.  Then I give everyone two sticky notes and have them write down two things that are in their storage area.

Virtual Garage

I collect the notes and put them inside an open square I’ve  drawn on the whiteboard.  I jam all those sticky notes into the virtual “garage.”  

As I put them in, I read them out to the audience.  That always draws laughs, as we’ll invariably get three lawnmowers or whacky things like baby buggies from empty nesters.

Then I create three additional areas on the board: Sell, Donate and Trash.

For the next 20 minutes we go item by item through the sticky notes.  I take them out of the garage and put as many as possible in the three new areas.  Then, we carefully put the items that we intend to go in the garage in the “right” place, based on the frequency of its use: refer to my post on Distance vs. Frequency Charts.

While I’m doing this, I make a point of explaining how valuable “donating” is.  For the individual, it creates a tax write off, and, if they’ve got a lot of … stuff, that can help offset some serious income.  It can be even more valuable for a company.  Don’t just think about the tax consequences of the donation.  Think about what you’re doing for your community and the “good will” you’re building for your company.

I once had a company donate 15 computers to a local school.  The school couldn't afford them, but now could set up a computer lab.  What a difference that made to their students!

It’s funny, when I use this tool, participants will often come up to me within a few days and tell me privately: “I went home and 5S’ed my garage,” or, “I went home and 5S’ed my kitchen.”  

People can connect with the Garage Game.  Try it and find out.

Distance vs. Frequency Chart

In a 5S Kaizen event, we eliminate as much from the work area as we can.  What remains, we locate as close to the Point of Use (POU) as possible.  

One of the tools we use to determine where to locate things is the Distance vs. Frequency Chart.   

We start by monitoring the tools used at the station in the course of performing that job.  Using a check sheet, we simply tick off each time that tool is used.  

Using a Spaghetti Diagram (discussed in a previous post), we record the distance the operator walks to get it.  

Putting the two together, we create the Distance vs. Frequency Chart.

Now, we get a picture of how we’re wasting time.  If we look at the tallest bar in the chart, we see that the operator walks five feet to get that particular tool; not all that far, but they do it 140 times a day.  

What did we learn?  By knowing how often we use something, and how far we travel to get it, we get a good idea of how to reorganize our workplace.

For the sake of argument, let’s presume that tool you’re walking to get is a three-hole punch.  You get up from your desk an average of 140 times each day to use that communal punch.  Does that make sense?

Now, before you move the hole punch closer to you, or purchase one for your desk, ask yourself: why am I punching holes in the first place?  Is there a smarter way to do this job?

Consider creating a file and folder on your computer or on a shared drive.  Save the same document (as PDF or Word document) in that file in such a way that it is searchable multiple ways: e.g. by date, by title, by client, etc.

The Distance vs. Frequency Chart illustrates, once again, that knowledge is power.  As soon as we know what’s happening we can take steps to remedy the problem.

Spaghetti Diagrams

What’s a spaghetti Diagram you ask?  It’s a really nifty tool that maps the movements of an individual operator during the making of one product.  

The map begins with a floor layout.  Then, each time the operator walks, you draw a line from where they started to where they end up.  See the “Before” diagram below.  REFERENCE: RM = Raw material; FG = Finished Goods.

The diagram below is a simple one.  For intricate assemblies, involving lots of movement, the lines cross so often that the result is something that looks like a plate of spaghetti; hence, the name.

Remember that Excess Movement is one of the original 7 Wastes.  In the “Before” diagram below, movement doesn’t seem to be much of a problem.  The operator only moves 81 feet to complete one product.  Not bad, right?

Now, look at the “After” diagram below.  By simply rearranging the same equipment, we’ve been able to reduce Excess Movement to 10 feet.  So what?

The time not spent walking is time spent making product.  Going back to the original premise that “Value is anything for which the customer will reimburse you,” there is no value in movement; it doesn’t make the product any more valuable.  

Premise #2: “Any cost not borne by your customer comes out of your profit.”  Hence, any reduction in  movement is a reduction in YOUR cost.

An example might help.  I once worked with a computer cabinet maker.  The sheetmetal components were large and scattered around the workstation.  A spaghetti diagram revealed that the operator walked over a quarter of a mile in the assembly of one cabinet.

Let’s do the math.  If a human walks at a rate of 3 MPH, then a quarter of a mile takes five minutes to walk.  Removing the walk time, by placing all the components within arms reach, this operator was able to assemble one more cabinet a day.  Not only did we remove cost, we increased productivity.  Oh, and the operator exerted less work in the making of the products.  Everyone won.

Dealing with "Monuments"

“What’s a monument?” you ask.  

Most organizations have large pieces of equipment that weigh tons, are often half submerged or above the roof, sometimes contain liquids (like plating chemicals), usually process in batch and would cost a bundle to move.  Those are monuments.

As we start to reorganize our Value Streams to create “pull,” we move smaller pieces of equipment closer together, usually within arms reach of each other.  Not so the monuments.  How then do we deal with them?

I can offer two suggestions.  I’d enjoy hearing how some of you have dealt with them.

Suggestion 1: Rearrange your smaller pieces of equipment around the monument.  Arrange them in such a way that the monument is in the correct process order.

Suggestion 2: Treat the monument as a “curtain” operation.

Rearranging is a great option if the monument only services one operation; or, if there is room to rearrange all the operations served in a way that has the equipment radiating out from the monument likes spokes in a wheel.  

Curtain Operations leave the monument in place and continue to move the work to and from it.  Using this method, one treats the monument as if it’s behind a curtain: a’ la The Wizard of Oz.  The product goes behind the curtain today and comes out tomorrow.  We break the Value Stream at the curtain.  The previous processes end at the curtain; subsequent processes resume when the product exits.

An example might help: A metalworking firm I worked with made the decision to get out of the plating business.  It was too expensive, not their core competence, and their equipment was outmoded.  Instead, they sent their work out to a local plater with the understanding that, what the plater picked up today, MUST be returned tomorrow, or financial consequences would ensue.

So, all the other process equipment was relocated into a ‘U’ close to the receiving dock.  The first half of the Value Stream would complete all its processes, then stage the product for pickup by the plater.  Meanwhile, the second half of the Value Stream finished what the plater delivered today.  In this example, there was a planned 24 hour gap between the first and second halves of the Value Stream.

Relying on outside suppliers in the middle of a process can be problematic, but problems are just opportunities disguised as  inconveniences.

For instance, in the plating example above, the metalworking firm soon found that the plater sometimes lost their parts in the tanks.  When that happened, the metalworker missed its delivery commitments.  How did they cope with that?  The metalworker created a cart for each type of part to be plated.  Each cart was designed to hold a specific number of parts.  That number matched what the metalworker needed to ship the following day and, yes, it was always the same amount.

The carts eliminated both guesswork and counting for both parties.

When the plater picked up the cart, they could tell at a glance if the cart was full.  Same with the metalworker when the plater dropped the cart off the following day.  The cart became a Poka-Yoke (mistake proofing) device.

Kamishibai (紙芝居) Boards

Kamishibai is another of those Japanese terms that doesn’t translate easily into English.  The concept is simple, but only recently duplicated in the Western World.  Why learn about it?  Because the Kamishibai board is a very powerful visual management tool.

A little history.  Originally Kamishibai were used by Japanese monks as moral storytelling tool.  Their use began around the 12th century.  The tool was comprised of a small wooden theater with a opening in its center.  A paper scroll was exposed, frame by frame, in this center opening, so that only one picture at a time was visible.  While the picture was exposed, the monk told a story.  The combination of picture and words conveyed the moral pith.

What is a Kamishibai Board?  Scroll forward a few centuries and we get a modern use of the tool.  The most simple explanation is that a Kamishibai board is that it is a visual tool used to tell the story of an area’s readiness. 

How does it work?  The board holds a series of pockets in which cards are placed.  Each card has an instruction on it, telling its reader, typically a manager, something they need to inspect.  Well written cards also contain instructions on what “good” looks like.

Finally, the card has colored sides: e.g. red and green.  If the area being inspected passes, the card is replaced in its pocket, green side facing out.  If the area fails, the card is replaced, red side facing out.  

Constant Vigilance  The focus of each card is chosen to examine area weak spots  where constant vigilance is required.

Not every card needs to be used every day.  They can be chosen at random or taken in sequence.  When the manager is finished, the board “tells a story” about the area’s readiness.  Area managers pay attention to the board and correct any deficiencies as quickly as possible.  The board keeps everyone on their toes and ensures constant vigilance.  

The use of Kamishibai boards is just one more way that Lean practitioners maintain focus on the things that are important.

Large Room Management (大部屋 Obeya)

A lot of Americans bridle at the use of Japanese terms to describe Lean things.  I feel very much the opposite.  Language springs from cultures and shared experiences.  So, when I use a Japanese word, it's because it describes something that isn't the same as terms we recognize.  Obeya (Oh-Bay-Ah) is such a term.  We think we know what it means, but do we?  Let's check.

Most in the Western world are familiar with the “War Room” concept.  Originally, it was a tent and later a room.  It was rimmed with maps and bulletins about the enemy.  It was a place where allies gathered to plan strategy and tactics against their common enemy. 

The War Room concept was later modified for business and became a room where those planning (and often executing) a project gathered to share updates.  Walls were covered with graphs, drawings and Gantt Charts, and participants were welcome to wander in and out between scheduled updates. 

Much like the War Room, the Asian Obeya or “Large Room” is a place for members of a team to gather, but there are some significant distinctions.

• Occupancy:  The “Large Room” (Obeya) isn’t just a place to meet.  In addition to meeting there, team members usually occupy the Large Room full-time.  This becomes where they work.
• Cross-Functional:  The team of occupants usually represent all the disciplines involved in the execution of a project.  To give you a sense of its use, the Obeya is used by companies like Toyota for the design and execution of a new car.  From concept to launch, members from all the disciplines involved move into the Large Room and take up residence.
• One Team:  Team members are encouraged to think of themselves as a single team.  While the details of what goes on within the Big Room may not be shared outside it; within it, everyone is encouraged to see their teammates as part of one large team.
• Wall Adornments:  Like a war room, the walls of the Large Room are covered with charts and reports, but far more.  It’s typical for disciplines within the larger team to have their own  wall space.  They frequently meet at their part of the wall and discuss their own tactics, advances made, and problems encountered.  Later, the same sub-team charts will be used to brief the larger team, not just the leaders: everyone.
• Surfacing Problem:  The surfacing of problems is welcomed at all times, but especially in the Large Room process.  With some Japanese companies, problems not only don’t get swept under the rug, everyone is encouraged to surface them.  In this frame of thinking, the identification of a problem leads to its solution.  The solution leads to advances, and often breakthroughs.  Hence, bringing a problem to light is seen as a very good thing.
• Collaboration:  Team members are encouraged to collaborate with members of other teams within the Large Room.  This often solves problems much faster than conventional stovepipe management, and speeds the entire process.  This collaboration is the primary reason for moving all the players into the Large Room.

I’ve posted about Kaikaku in the past.  Different from Kaizen, with it’s narrow focus and tight time frame, a Kaikaku tackles an entire system at once.  Because of the huge scope, a Kaikaku takes weeks, and often months, to complete.  They are usually selected because they frequently lead to industry breakthroughs and may be part of the Hoshin Kanri process.

The Large Room Management style is frequently used to facilitate the Kaikaku process.

VSM Part #7 - Aftershock

I've had the good fortune to hear from some of my readers and noticed a few disturbing trends.  It appears that there may be one more post I need to write. Those of you who use Value Stream Maps as a matter of course, can ignore what follows, but those who hesitate to create one; or, who find yourselves all wound around the axel as you try to create or use it, you may want to read on.

I wrote this series because I find two recurring themes with VSMs:

Don't make the process too difficult

1. Practitioners make the process too difficult;
2. The wrong people try to use them.  

I hope that this series helps readers to change that.

One other trend I've noticed is that practitioners try to get too granular in the collection of data for their initial "Current State."  The result is that they make the process too complicated and get defeated before completing.  As an example: I've had a reader tell me that they try to average 30+ cycle times before they feel they have a good sample size for a process step.

Heck, until you've instituted Standard Work, that's way too much work for something that is, at best, a moving target.  Start with course measures.  Take two, maybe three samples to start, and get more detailed with each successive Kaizen.

At first, focus on the whole forest, not individual trees

Besides, initially, you're looking at the big picture: the health of the entire forest, not individual trees.  You want to know: How are we communicating inside & outside the organization?  How are we ordering material and how are we shipping finished goods?  How much inventory (WIP, Raw Materials & Finished Goods) do we have tied up?  What's our ratio of VA to NVA?  How many people are we employing to perform the work?  Are we pulling or pushing?  What's the state of maintenance, changeovers, quality, etc.?

Remember: the "Current State" VSM is just a baseline.  It will be the standard against which you'll judge future improvements.  Also recall the words of Taiichi Ohno, the putative Father of Lean:

That first VSM, the initial  "Current State," is just a quick "State of the Business" analysis.  Like a Hoshin Kanri, it's used to guide your transformation from there.


I hope this series has achieved two goals:

• You'll give the creation of a "Current State" VSM a shot.  Take your time.  Get it close, not precise.
• You'll ask yourself, what are we learning about our business and how will that help us transform into a better version of ourselves?

Feel free to contact me with your questions, comments or observations: robert@gettingtolean.com

Meanwhile, Get Lean, Stay Lean!

VSM Part #6B - Importance to Decision-Making ("If this, then that")

The VSM tells leaders* what is obstructing flow within the value stream.  Trust me, there’s always something, but suppose this is the first time they’re reviewing the VSM.  What are they looking for?

1. CT > TT.  The number one obstruction to flow is any Cycle Time that is greater than Takt Time.  You'll want to correct that post haste.
2. Large amounts of Inventory.  Inventory is one of the original seven wastes.  The more you have, the more of your money is tied up and the slower your cash flows.  Reduce inventory as much as possible and still be able to meet your customer's demand.  Notice: I didn't say reduce to zero.
3. High Defects.  Defects are also a waste.  Defects automatically engender additional cost.  Defects must be winnowed down to zero.  Yes, zero.
4. Low Uptime.  Low uptime speaks to undependable equipment and that will adversely affect your ability to consistently meet customer demand.  Equipment should be available 100% of the time it s needed.
5. Low Available Time (AT).  Recall that Available Time is the numerator in the calculation for TT.  The less AT you have, the faster you need to make products to meet customer demand.  Excessive speed can lead to defects; so, you want to increase AT whenever possible.
6. High Changeover time (CO).  As we all know, CO time has a direct and inverse impact on Inventory: i.e. the longer the CO time, the higher the Inventory.  You'll want to be ruthless in driving CO time as low as possible.
7. Large supplier deliveries, especially if made infrequently.   This is a signal that you aren’t using Kanbans or some other JIT methodology.  The result is excess inventory.  See #2 above.  Drive supplier delivery size and frequency to the best mix of small size and high frequency.
8. Large, infrequent deliveries to the customer.  This condition leads the customer to have excess money tied up in inventory (they have to warehouse what you ship until consumed), but it also means you have to warehouse it before you ship.  The consequence is that, unless you’ve made provisions to be paid for work in progress, you have your money tied up while you wait to ship.  Drive delivery size and frequency to the best mix of small size and high frequency (taking into account transportation costs).
9. Unrealistic forecasts are useless.  An annual, or rolling six month forecast has value as it conveys trends, but you want data on which you can hang your hat.  Work with suppliers and customers to develop reports that give "actionable data."
10. MRP & Scheduling need to be addressed.  MRP systems should be used, almost exclusively, to develop material forecasts and costs.  If used to schedule your operation, choose only a few "pacemaker" operations (one is preferable) to schedule.

Once you know where flow is obstructed and what those obstructions are, you can plan your Lean events.  Typically, these are Kaizen events.  What events will you plan?  Here's a list you'll want to review.

• For CT > TT you’ll generally choose a Standard Work event.  
• Since inventory is generally directly proportional to changeover time, you’ll want to conduct a SMED event to reduce CO time.  You may also want to implement Kanbans or supermarkets while you're at it.  
• High defects are frequently the result of variation (executing the process differently from time to time), so you’ll want to conduct either a Standard Work or Total Quality Control event.  Since poorly maintained equipment can also lead to defects, you'll need to use your judgement whether you'll need to conduct a Total Productive Maintenance event.
• Low uptime is generally indicative of poor maintenance practices and should lead to a Total Productive Maintenance event.
• Low available time can result from a number of concerns, but its remedy should begin with Standard work. 
  
  Once you've completed a Standard Work event, the sum of CTs divided by TT for the operation gives a great indicator of the number of workers needed.  REMEMBER: you can't have fractions of workers, but you can flex workers or hire part-time help.  You'll also want to reduce that fraction to zero in that operation's next Kaizen event.
• As discussed above, high Changeover Time is addressed by a SMED event.
• Large supplier deliveries point to a number of concerns:
• Inability of supplier to deliver on time
• Inability of supplier to deliver reliable quality
• Wild fluctuations in customer orders (Acme’s +/- 50% variation is a good example)
• Excessive transportation costs

The first two and last item need to be addressed by your procurement group.  The third needs to be addressed by the sales organization.

• Large customer deliveries are often the result of customers not being able to trust your delivery or quality (or their own forecasts).  You need to address these first, then work a new schedule with your customer.
• Unrealistic forecasts (on your part) probably need to be addressed using a Kaikaku.  This isn’t a week-long event.  More likely, it will take weeks or months.  It will have representatives from all the internal stakeholders and, if you’re smart, will include representatives from both your customer and supplier(s).  This event will take time to identify the root cause(s) of your inability to forecast more realistically and then develop reliable solutions.
• MRP & Scheduling should be de-coupled, as much as possible, from your day-to-day operations.  Use your MRP system to schedule and track incoming raw materials and customer orders.  Identify the "pacemaker" operation(s) that can "pull" product to them and, if you use your MRP system in production, schedule only those operations.  The "pacemaker" is where you'll indicate what version of your product you want, and in what frequency.  Once the "pacemaker" is scheduled, it cascades a "pull" signal back upstream causing the production of the indicated product.  This results in both "flow" and "pull."

I welcome your insights and feedback.  You can contact me at: robert@gettingtolean.com

* In my last post, I explained why only the most senior leader or the Value Stream Manager should use the VSM to make improvements.  

VSM Part #6A - Importance to Decision-Making (Who, What & How Often?)

To this point, we’ve examined the mechanics of the Value Stream Map (VSM).  We’ve looked at the the flow of the process, at the data boxes, at the flow of communication and the overall assessment of value adding vs. non-value adding.

All of this has been to reach the point that leaders can make informed decisions about how to use their limited Lean assets to improve flow.

There are two key points I’d like to make before addressing those decisions.

• First, the VSM is a leadership tool.  While everyone is encouraged to read and understand it, VSMs are not intended to be used by others in the organization.  Why?  Because only senior leaders (or the Value Stream Manager) control the Lean Assets (discussed below) needed to improve the value stream.
• Second, Value Stream Analysis (VSA) needs to be performed from the customer backwards.  Remember: the VSM is a tool used to identify obstructions to flow and then remove them.  Not all obstructions will impact the customer equally when removed.  So, the order in which we remove them is from the customer back to the supplier.

Removing Obstacles to Flow 

This last bullet (above) may not seem intuitive, so let me use an example:  Picture a value stream in which Takt Time (TT) = 22 seconds.  Cycle Time (CT) at operation #2 is 45 seconds; more than twice TT.  Meanwhile, CT on operation #5 also exceeds TT, but only by 15 seconds.  Some might want to attack the larger problem (operation #2) first, but let’s examine what would happen.

Hypothetically, we’d conduct a Kaizen event to get CT at operation #2 down to TT or less. But ask yourself, how much faster will product flow to the customer?  It will flow at the pace of the slowest operation closest to the customer, in this case, operation #5.  Why?  Because we didn’t remove that obstacle.  So, all the product we can now push through operation #2 will just jam up between operations 2 & 5.

If, however, we get the CT at operation #5 to TT first, it will start draining the lake of inventory in front of it.

Then, when we remove the obstruction at operation #2, product will flow at TT all the way to the customer.  So, with rare exception, correct problems closest to the customer first, then work your way back to the supplier, one operation at a time.

REMEMBER: The goal isn’t just to get Value Stream flow down to TT or less, but to do it in such a way that value is pulled from each successive operation.

As I said above, VSMs are a leadership tool.  In the event that your organization hasn’t been structured into individual value streams, with their own Value Stream Managers, the senior leaders at the site should be the ones reviewing the VSM.  This review is most often referred to as a Value Stream Analysis, or VSA.

Reviewers, which include the senior leader and their staff (or the VS Mgr and their staff), should analyze the VSM no less frequently than monthly.  Obviously, if there is a VS Mgr, he or she should be reviewing the VSM as a tool of constant feedback. 

What’s magical about a monthly review?  In a Lean organization, a month is a long period of time and during that period at least one Kaizen event should occur.  Every time you conduct a Kaizen event, you change one or more dynamics in the VSM; hence, the cause for review.

What are Lean Assets?  When I refer to “Lean Assets,” I’m referring to some or all of the following: 

• Your Continuous Improvement (CI) Manager* and any staff under his or her direction;
• Any process or equipment that will need to be taken offline so as to conduct an event;
• Any product you’ll need to build ahead so you can shut the process or machine down for the event, including any overtime you’ll have to approve to build that product;
• The team that will be assembled to conduct the event and perform any follow-on activities.

So, in this post we’ve examined Who uses the VSM, What they are looking for and How Often they will conduct their reviews.  In the next post, we’ll examine how leaders will use the VSM to allocate their Lean assets. 

*NOTE:  The title for the senior Lean person is immaterial.  What is important is that you have one and that they report directly to the senior person at the site.  Even when you have VS Managers, an overarching Lean leader (CI Manager) is critical and becomes a key resource to the VS Managers.

Value Stream Map - Part 5: Value Add vs. Non-Value Add

One of the critical features of a Value Stream Map (VSM) is the sawtooth chart at the bottom of the map.  Many overlook this chart, as it seems superfluous when you’re first constructing the VSM, but it’s has two key uses:

1. The sawtooth gives you an immediate sense of how much of your customer’s time is spent waiting, rather than performing things for which they’re paying you.
2. It becomes a standard against which to judge future progress, what we call a "baseline."  

Let me take a quick sidebar.  I hope it's clear that YOU pay for all Waste (Non-Value Adding, or NVA Activities).  You might say, "It's just wait time and I'm not really adding labor or anything to my work, so what's the cost?"  The answer is that you are prematurely paying for all material and labor already invested in this product.  Since you aren't prepared to work on the product, you have your $$$ sitting in queue.  You are also delaying your own reimbursement.  

The longer you take to make a product, the longer you have your capital tied up and the longer your cash flow.  And then there's the cost of capital, the difference between what you are making while your product/service is being worked on (nothing), and what you could make if you invested that money.  Finally, there's the opportunity cost: the cost of losing opportunities you could have undertaken had your process not been clogged with things you aren't even working on.

Where do the data come from?

Let’s examine the chart above in greater detail. An example of this detailed exam is on the left.

The value on top of each tooth is the amount of inventory ahead of that operation.  As discussed in a previous post, Inventory is measured in units of time.  This value is a rough gauge of how long the customer waits before you perform your next operation for them.

The value on the bottom of each tooth is the cycle time (CT) to perform that operation for one item.  See the example to the left.  It says that your customer waits nine days for you to perform 25 seconds of value adding on the first part in this lot.

NOTE:  Some would have you post the value of the cumulative CT to process the whole lot, and not just one piece.  That will create problems later, when we perform a CT vs. TT comparison.  That comparison is critical, since it informs us whether we can meet customer demand  It's also used in calculating the number of employees needed to meet customer demand.  As a result, I put individual CT in this space.

Finally, at the far right side of the sawtooth (pictured on your left) you can see a rectangle with two boxes within it.  These boxes contain the sum of all the Inventory and Cycle Times respectively.  This ratio gives us a rough idea of our Value Add vs. Non-Value Add for the value stream.  That ratio is important for the reasons stated above.

In the example at the top of the page, the sum of Inventory time is 13 days.  The sum of Cycle Time is 63 seconds.  From here on, this becomes a math problem.  First, we need to convert everything to common units of measure.  13 days x 24 hours/day x 3,600 seconds/hour = 1,123,200 seconds.  Since waiting is a form of waste, we can accurately say that this time is NVA.

63 seconds / 1,123,200 seconds = .00005608974….  We then multiply that value times 100, to calculate the percent of total wait time that is spent working on the client’s product.  The resultant value is .00560897%.  In short, this organization works on their client’s product less than one percent of the time they make that client wait.  The message?  We have lots of room for improvement!  

This value now becomes part of our data baseline.  Every time we improve the flow of this value stream we should also be diminishing the amount of wait time.  As a consequence, the percent of Value Adding time should constantly increase.  Because we baselined, we can tell if we're improving.

As Taiichi Ohno stated: "Where there is not standard, there can be no Kaizen."  If you don't know where you started, you can't tell if you're changing for the better.

Next up: the value of the VSM in decision-making.

Value Stream Map - Part 4: Material Flow

Remember, a Value Stream Map should be communicating to you and  to your organization.  So far we’ve examined how the flow chart and data boxes communicate.  Now we’re going to examine how the supply and delivery icons communicate.

On the top left are the supply icons.  They tell us who the major suppliers are.  In the case of Acme Fire Suppression, Inc., the two major suppliers supply the steel blanks for use in the Upset operation and the chemicals used in the Auto Fill operation.

We know from my earlier description of the process that there are other supplies used in the process, e.g. the paint, the inert gas, the spray nozzles, cardboard overpack and boxes.  None of those made it onto this VSM.  The reason is mostly because they’re commodities, and easily available.  We just want to look at the high $ items, or the items that could potentially shut us down if they weren’t delivered in a timely fashion.

So, looking at the steel blanks, what do we see?  Well, at the top we see that we’re getting two different types of blanks: the 5 pound and the 10 pound.  We can see they come from the same supplier (normally the name of the supplier would be in the factory symbol).  Finally, we can see that we get shipments of 14,000, 5# blanks and 8,500, 10# blanks.

Next we see that the steel blank supplier delivers twice a week.  And, we see that we keep a 20 day inventory of their blanks at all times.  One should logically ask why we’d inventory 20 days worth of these blanks when they have the potential to deliver twice weekly.  Good question.

Next let’s look at the chemical supplier.  They are shipping 35 super sacks of the chemicals a month (each super sack weighs 1,000 pounds).  The same chemical is used in both the 5# & 10# extinguishers.  Meanwhile, Acme keeps a 25 day inventory of the chemical.  

Now let’s look at the delivery side of the VSM.  From this diagram we see that Acme ships out of their warehouse once a month.  Each shipment contains 40,000 5# extinguishers and 24,000 10 # extinguishers.

Again, this is all just data at this point, but it’s also something we call Actionable Information.  By that we mean that we have enough information to actually make decisions and formulate action plans.

Case in point: why would Acme only ship once a month and keep a 30-day inventory of fire extinguishers?  Doesn’t that violate at least one of the 7 wastes?  Armed with that information, what actions might that lead Acme to make?