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Source: Business-improvement.eu
Lean: Value adding organization
Lean in the Dutch hospital VU Medical Centre How to make a Future State Value Stream Map
Value Stream Mapping as breakthrough strategy

By Dr Jaap van Ede, editor-in-chief business-improvement.eu, 12-01-20151

Lean manufacturing is often presented as an improvement strategy in which employees improve business processes themselves, in small successive steps (Kaizen). However, for real breakthroughs you also need a strategic vision, to which the improvement work can be directed. For that, you need to make a so-called future state value stream map (FSVSM), for each family of products or services that your company delivers. During a workshop, organized by the University of Groningen in the Netherlands, professor Dirk van Goubergen expounded his recipe to make a good FSVSM.

Ideally, every value stream starts with the raw materials and ends with the consumer. In practice only companies with a lot of experience, like for example truck manufacturer Scania, are ready for such a broad scope. Less advanced players usually start less ambitious, for example with one department. That way, visible results are attained quicker. The risk of local (sub)optimization is then seen as unavoidable. This is no problem, as long as a local approach is only applied temporarily. 

What is Lean?, asks Dirk van Goubergen at the beginning of his workshop1 value stream mapping. He is both consultant (at Van Goubergen P&M Productivity Improvement) and professor operations design at the University of Gent in Belgium.

Besides me there are about twenty other people in the room of the Hampshire Hotel in the city of Groningen in the Netherlands. Half of the workshop participants is from industry, the other half works in healthcare.

‘Lean is creating flow! Lean is maximizing the value for the customer!’, some people respond to Goubergen’s question.

Gearing to one another

‘Not precise enough’, says Van Goubergen. ‘The core of Lean is gearing all value-creating activities to one another. The good thing Toyota did, was that they combined all existing logistic principles to do just that, even in the case when multiple product variants have to be made. In my opinion their most fundamental contribution is the concept of value streams. Products are divided in families, and then a “streaming” logistic design is developed for each family. This logistic design includes the supply chain and the distribution of the products.’ 

Plan A and B
Next, all the work processes that have an impact on security, quality, productivity and/or cost efficiency are standardized. ‘This is plan A. It will also be your starting point for continuous improvement.'

However, you also need a plan B. 'That second plan encompasses what you will do when the flow in the factory is disturbed. Ideally, it is a self-healing system, which can recover without the intervention of a manager. Therefore it is of crucial importance that the flow towards the customer, thus also causes of stagnation, is visible for everyone right-away.’

A health care manager agrees: ‘In a Toyota factory I had more insight in the way the processes went than in my own clinic!´

Lean in the Dutch VU Medical Centre Lean in the Dutch hospital VU Medical Centre. Improvement options are discussed in front of an improvement board.

The Lean principles below, as summarized by Van Goubergen, are fairly well known:

  1. Create flow by connecting all value-adding activities
  2. Implement standard work
  3. Make the flow visible
  4. Implement standard actions for when the flow stagnates
  5. Continue to improve.

Often, creating pull is added, which means customer driven-production. However, that is already implicitly part of the five principles above. Producing something that no-one has ordered does not add value!

When you want a real breakthrough, and this is what Van Goubergen is aiming at, then you need to develop an improved process design first. Only after that principles like standardization and creating visibility become useful!

Mapping the current value stream and designing a future value stream should be done for each product family. ‘Such a family can consist of product variants, but it could also be a group of patients to be treated in a hospital. In the latter case it is no problem if the clinical pictures of the patients are different, as long as their treatment consists of the same steps.’

In the beginning the scope of a value stream can be restricted. For example to one factory or even one single department. However, ultimately the value stream should begin with the raw materials and end with the receipt of the products or services by the customers. Improving a value stream is a repetitive process. Therefore the scope can be easily broadened with every cycle.

Standard symbols
When drawing a value stream, it is recommended to use the standard symbols as defined by the Lean Enterprise Institute (LEI) in the US. This prevents confusion. A production step is for example represented by a rectangle, and stocks are drawn as a triangle. ‘When there is only one piece of product as stock or no stock at all between two production steps, those steps are combined and represented by one rectangle.’

As a rule, in the beginning the amount of intermediate stock is however very high. Van Goubergen hands out a piece of paper of A4-size, with the current value stream of a fictional company on it. The throughput time of the product family represented by the value stream is one month, while the processing time per individual product is only a couple of minutes!  

Lean production at Scania
Lean production at Scania. The value streams as defined by this truck manufacturer span multiple production sites (source: Scania Imagebank) 

‘How do you to improve this?’, Van Goubergen asks.  A few of the reactions from the audience: ‘Reduce the changeover times! Shorten the cycle time of the bottleneck process! Only allow a pile of stock in front of this bottleneck!’. A lot of those ideas can be traced to the Theory of Constraints of Eli Goldratt.  I add the suggestion to ask a student to simulate the value stream on a computer. After that a better one could be designed by making adjustments. After all, the workshop is organized by a university.

The final result of our brainstorm: A lot of improvement points without any focus. This is the result you get when you apply Lean from bottom up without any direction, I understand a bit later!

‘Creating a  future state value stream map goes a lot better and is much more simple when you apply a step-by-step plan’, states Van Goubergen. ‘The basis of my recipe stems from the book Learning to See of Mike Rother and John Shook. I broadened my recipe during my practical application of it.’

A good value stream flows as quietly and continuously as a river in the lowland. However, the value stream we see on the paper that lies in front of us resembles more the chaos people undergo when they visit an amusement park: long waiting times, lots of useless walking, and only a few minutes valuable time when they experience an attraction!

Therefore, our first step is to calculate the takt time of the value stream. This is the production rate that is just sufficient to meet the demand.

Next, a fundamental choice has to be made! ‘Ideally, you choose built-to-ship as logistic model. This means that every product is built and shipped, after a customer has placed an order for that specific product. Sometimes this is however not possible. One example: your throughput time is longer than the time your customers are willing to wait. In that case, the built-to-supermarket model is selected. This means that there will be a fixed amount of each type of finished product as stock. That amount will be replenished when the corresponding type of product is bought by and shipped to a customer.’

One Piece Flow
After the built-to-ship or built-to-supermarket model is chosen, the next step is gearing the production steps as close to one another as possible. This is done for each pair of production steps that exchange materials. ‘Whenever possible you connect a pair of production steps with a One Piece Flow or OPF. In that case one piece of product is processed each time by each step, and there is no more stock between the two steps then one piece.  That way, the two steps in essence form one new production cell.’

A OPF makes a production chain very sensitive to disturbances and capacity losses are unavoidable when the processing times vary. Therefore I make the following remark: ‘Stressing that a OPF is the holy grail, will be food for criticasters of Lean. They will for example say that two people will not wash the dishes in a OPF. It would be a pity if that would incite people to throw up all Lean principles, after which they will continue to produce in large batches.’

‘OPF should be seen as an aspiration’, responds Van Goubergen. ‘When making a future value stream your goal should be ambitious, otherwise you will not get breakthrough results. In some cases it will indeed turn out that a OPF is impossible. This will for example be the case if there are changeover times, instable production cells or when a machine is a shared resource. The point I want to make that if you do not apply a OPF, you should at least determine why not, or why not yet.'

Lean assembly at Toyota
Lean assembly at Toyota (source: Toyota)

When the creation of a OPF fails, the second choice should be examined. This implies the placement of a buffer between the two production steps, of a fixed maximum length. Within this buffer the sequence of the production orders remains intact. This means that it is a first in, first out (FIFO) pipeline.

‘Sometimes even that is not possible, this can for example be the case behind an inflexible shared resource machine that has to supply many value streams. Only then a buffer controlled by Kanban-cards is chosen.'

Kanban as last option

Lean is not simply applying Kanban everywhere in the production chain, although many people think so. ‘On the contrary, Kanban should be seen as the last option. Why? Because it creates intermediate stock for each type of product, which can be left for a very long time.’

In the end, every pair of links in the chain is connected by a OPF, a FIFO pipeline or by stock of which the amount is controlled with Kanban-cards. ‘Then the next step is to choose one link as your pacemaker. This link can be compared with the stroke man in a rowing boat, because it sets the pace at which all the other links in the chain will produce. The pacemaker is also the only link who receives the production planning, all the other links follow automatically.’    

As pacemaker the point is chosen after which the products ‘stream’ directly to the customer, be it via One Piece Flow and/or via FIFO-pipelines. There is no Kanban-control allowed behind the pacemaker. After the pacemaker is determined, the production planning for this production step is leveled. This protects the flow in the factory from too high variations in demand. The whole set of possible products is made cyclically and in a fixed mix, only the amounts to be made for each product differ. The repetition time is chosen as small as possible, because this makes both the throughput time and the work in progress (and also the total amount of stock) smaller.’

In addition, a pitch size is selected, named after the pitcher in a baseball game. ‘The pitch is the amount of production orders that is released each time, this is also the amount of work of which it is immediately visible if it is completed on time. This is comparable with a bus that arrives timely at a station or not.   

This completes our future state value stream map!

Van Goubergen made an adjusted version of his a step-by-step plan for the development of future value streams for services. A typical application is the redesign of a value stream which runs through an office or through a hospital.

Van Goubergens’ approach to make future state value stream maps is logical and interesting. However, a few questions arise. As stressed by Van Goubergen, each value stream should be re-evaluated after each change of the takt time. Today the demand is extremely volatile so this will happen an awful lot! More about this subject can be found on our site-section Quick Response Manufacturing.

‘Toyota solved the problem of demand fluctuations in part, by reserving two hours of production per factory each day. In quiet periods those two hours are used for maintenance, and in busy periods they use the reserved capacity to produce longer. And when there is a large change in demand, the assembly line is balanced again.’

Finally, one question remains: What to do if not only the demand varies, but also the product mix? If you know the answer, please share it with us, for example by posting on our forum!

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1) We attended the workshop of Dirk van Goubergen in the spring of 2012

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