How do I maximise the value of my business?
Last month I wrote about how if you adopt Lean principles you can create huge improvements in productivity, customer service levels and employee satisfaction. This month I want to introduce a specific Lean technique that all businesses can benefit from Value Stream Mapping.
Every business carries out a set of activities that ultimately deliver something of value to their customers, ie that customers are willing to pay for. We do this by our ‘Value-Adding’ activities, which are things we are good at that and customers are willing to pay for.
Trouble is, in creating this value we also do masses of ‘non-value adding activity’ and it all costs money. If we can reduce the non-value-adding activity and maximise the value-adding activity, we improve productivity and do things quicker so we save money and potentially provide a better service.
So how do we know the difference between value-add and non-value-add? What can we do to improve the balance between them?
Value Stream Mapping
Value Stream Mapping (VSM) is one of the most powerful techniques to identify and measure Value and Non-Value in your business. VSM was originally developed by the automotive industry to drive efficiency improvements, but the principles are fundamental and can equally benefit any manufacturing or service business. VSM helps you see the things you didn’t know and see more clearly in context the things you already know. It highlights problems and opportunities and puts them in context, providing an excellent foundation for business improvement.
Step 1. Involve the team. It’s really important that you work closely with the team who collectively provide the goods or services and involve them in the project, so that rather than seeing the project as a threat, they see it as an opportunity to make things work better.
Step 2. Identify every activity currently needed to deliver a product or service to your customer. Typically, this can be anything from 30 to 100 activities. You record information, including duration, resource used, delay, travel etc, about every activity.
Step 3. Create a physical map of the whole process. This is best done as a large wall chart where everyone can see it and contribute to it.
Step 4. Clearly identify the elements that truly add value in your customers’ eyes and which elements do not add value.
Step 5. Calculate Lead Time, Value-Add Time, Non-Value-Add Time, do some calculations and get a massive shock at how much non-productive activity and time you have.
Step 6. Create a structured plan to reduce or eliminate non-value adding activity, using a quantitative method to assess the potential benefits and priorities of improvements so you get most benefit for the least cost and effort.
Step 7. Implementation. You need to drive the plan hard to make it happen, with the support of all your team.
Step 8. Measure your productivity as it improves and see lead-times shrink. It is important to create meaningful ‘measures of success’ and to monitor them to check that the project is achieving the desired results and to motivate people to do further improvements.
Teams find VSM projects especially rewarding to be involved in and employee morale improves as people’s jobs become more satisfying through improvements implemented, all of which is beneficial to the business.
For further information or advice, contact Nick on 07932 190802 or email firstname.lastname@example.org