Going lean

This publication was developed during the Lean Processing Programme (LEAP)
which ran from

I,

to

zooo

. The programme was sponsored by the Engineering
and Physical Science Research Council (Innovative Manufacturing Initiative)
and a network of UK automotive/steel supply chain rms: Corus, Thyssen Krupp
Automotive Body Products, TKA Chassis Camford, Tallent Engineering Ltd, GKN
Autostructures Ltd, Steel & Alloy Processing Ltd, LDV Ltd and Wagon Automotive
UK/USA. Corus was formed in October

I

by the merger of British Steel and
Koninklijke Hoogovens. We would like to thank all these organisations for their
generous support in both time and nances.
The Lean Processing Programme was designed to extend Lean Thinking into this
particular group of rms and their associated customer base. Over a three year
period it has sought to make radical and incremental change both within and
between the rms as well as at a network level. Specic improvements have been
made: better understanding of customer requirements, improved learning culture
in the rms, faster reaction time, improved delivery performance, reduced new
product time to market, better quality product, improved productivity and
increased business opportunities.
The programme was run by staff at the Lean Enterprise Research Centre at Cardiff
Business School together with project management support by Chris Butterworth
of Corus. We would like to thank the research team members, all of whom have
contributed to the production of this publication. We would particularly like to
acknowledge the assistance of John Bicheno, David Brunt and Nick Rich of LERC
and Paul Morris and Dale Williams of LEIG whose material directly contributed to
this publication. We would also like to recognise the assistance given by Sara Bragg,
Ann Esain, Matthias Holweg, Professor Daniel Jones, Shirlie Lovell and Donna
Samuel, as well as James Sullivan of Corus and the team at LEIG.

Professor Peter Hines & David Taylor

January

Published by:
Lean Enterprise Research Centre
Cardiff Business School
Aberconway Building
Colum Drive
Cardiff, UK
CF10 3EU
Peter Hines & David Taylor 2000
First Published 2000
A CIP catalogue record for this book can be obtained from the British Librar y.
ISBN: 0 9537982 0 8
Edited and designed by Text Matters www.textmatters.com

All rights reserved; no part of this publication may be reproduced, stored in a retrieval system, or transmitted in
any form or by any means, electronic, mechanical, photocopying, recording, or otherwise without the prior written
permission of the publishers. This book may not be lent, resold, hired out or otherwise disposed of by way of trade
in any form of binding or cover other than that in which it is published, without the prior consent of the publishers.
Contents

Going lean 3
The lean vision and the lean principles 4

The ve lean principles 4
Lean thinking 4

1

Understanding waste 9

Types of waste 9
The three types of activity 10

2

Setting the direction 13

1 Developing critical success factors 13
2 Reviewing or dening appropriate business measures 13
3 Targeting improvement for each business measure 14
4 Dening key business processes 15
5 Deciding which process needs to deliver against each target area 15
6 Understanding which process needs detailed mapping 16
Sum up 17

3

Understanding the big picture 21

Phase 1: Customer requirements 22
Phase 2: Information ows 22
Phase 3: Physical ows 22
Phase 4: Linking physical and information ows 23
Phase 5: Complete map 24

4

Detailed mapping 27

The detailed value stream mapping toolkit 27
Process activity mapping 27
Supply chain response matrix 31
Logistics pipeline map 33
Production variety funnel 33
Quality lter mapping 34
Demand amplication mapping 36
Value adding time prole 37

5

Getting suppliers and customers involved 43

Using the detailed mapping tools 43

6

Checking the plan ts the direction and ensuring buy-in 47

Assessing the projects 47
Catch-balling the change programme 48

Further sources of help 49

Research assistance 49
Educational assistance 49
Publications 49

Jargonbuster 50

Going lean

A guide to implementation

Throughout our work at the Lean Enterprise Research Centre, we are often asked
a number of searching questions about the application of Lean Thinking. Among
the most frequently asked are:

s

Where do I start?

s

Is there a road map that I can follow?

s

What does Lean Thinking involve?

s

Who will I have to involve?

s

Is it only applicable to the shop oor?

s

Is it only for manufacturing rms?
To help answer these questions we have developed this simple step by step intro-
ductory guide to going lean. It is designed to give you and your colleagues enough
information to:

s

see if going lean is for you

s

develop an outline plan and

s

point you in the direction of further sources of help.
We have designed this guide with plenty of space for you to write notes next to the
text, and have also included a jargon-buster at the back to explain the terms we use.
The chart below will help you through the guide as well as suggesting which type of
employee is likely to be involved in which stage of the process.
We hope you enjoy reading the guide and wish you good fortune on your lean
journey.
(

The lean vision and the lean principles

The characteristics of the lean company and the lean supply chain are described
clearly in the book

Lean Thinking Banish Waste and Create Wealth in Your
Corporation

by Jim Womack and Dan Jones. This book provides a vision of a
world transformed from mass production to lean enterprise. The authors highlight
the huge amounts of waste that occur in most organisations and show that a
systematic attack on waste, both within companies and along the supply chains,
can have tremendous benets to the short run protability and long term prospects
of companies and organisations.
Lean production methods were pioneered by Toyota in Japan.

Lean Thinking

distils the essence of the lean approach into ve key principles and shows how
the concepts can be extended beyond automotive production to any company or
organisation, in any sector, in any country.

The five lean principles

1

Specify

what does and does not create

value

from the customers perspective
and not from the perspective of individual rms, functions and departments

2

Identify

all the steps necessary to design, order and produce the product across
the

whole value stream

to highlight non value adding waste

3

Make those actions that create value

ow

without interruption, detours,
backows, waiting or scrap

4

Only make what is

pulled

by the customer.

5

Strive for

perfection

by continually removing successive layers of waste as they
are uncovered
These principles are fundamental to the elimination of waste. They are easy to
remember (although not always easy to achieve!) and should be the guide for
everyone in the organisation who becomes involved in the lean transformation.
If you are serious about going lean then the people in your organisation need to
read

Lean Thinking

at the outset. If they havent got enough time to do that they
havent got enough time for what follows!

Lean thinking

In order to go lean, you need to understand customers and what they value. To get
your company focused on these needs you must dene the value streams inside
your company (all the activities which are needed to provide a particular product
or service) and, later, the value streams in your wider supply chain as well. To
satisfy customers you will need to eliminate or at least reduce the wasteful activities
in your value streams that your customers would not wish to pay for.
Next you have to nd a way of setting the direction, xing targets and seeing whether
or not change is actually occurring. You need an internal (and later external) frame-
work to deliver

value

for your customers as well as a toolkit to make the change.
If you can do this effectively you wont need to benchmark competitors to set some
arbitrary and often incomparable target; perfection or the complete elimination of
waste should be your goal. Sounds good, but back to the real world if it is so easy
why doesnt everyone do it?
Sometimes we ask ourselves this question, and when we have gathered a few facts
about a company, we ask the companys managers. The answer they give is usually
something like yes, that makes a lot of sense, but we never saw it that way. The
difculty is that rms often cannot get into this virtuous circle of improvement.
This book is here to help.
Going lean



s

The lean vision and the lean principles

g
p

1 Understanding waste

The rationale behind going lean centres on waste removal both inside and
between companies. This is fundamental to a lean value stream. Improved
productivity leads to leaner operations, which in turn help to expose further
waste and quality problems in the system. The systematic attack on waste is also
a systematic assault on the factors underlying poor quality and fundamental
management problems.

The seven wastes
Types of waste

Seven wastes were identied by Shigeo Shingo as part of the Toyota Production
System. You can use the following chart to make a note of any of these wastes that
are present in your business.
Waste (muda)
Non value adding to product or service
Inappropriate
processing
4
Unneccessary
inventory
3
Defects
2
Over-
production
1
Unneccessary
motion
7
Waiting
6
Excessive
transportation
5

Waste Description Examples in your organisation

1

Overproduction Producing too much or too soon, resulting in poor ow
of information or goods and excess inventor y.

2

Defects Frequent errors in paper work, product quality
problems, or poor deliver y per formance.

3

Unnecessar y
inventor y
Excessive storage and delay of information or
products, resulting in excessive cost and poor
customer ser vice.

4

Inappropriate
processing
Going about work processes using the wrong set of
tools, procedures or systems, often when a simpler
approach may be more effective.

5

Excessive
transportation
Excessive movement of people, information or goods
resulting in wasted time, ef fort and cost.

6

Waiting Long periods of inactivity for people, information or
goods, resulting in poor ow and long lead times.

7

Unnecessar y
motion
Poor workplace organisation, resulting in poor
ergonomics, eg excessive bending or stretching
and frequently lost items.
Io

Going lean



s

Understanding waste

The three types of activity

When thinking about waste, it is useful to dene the three different types of activity
within your organisation:

1

Value adding activity

: those activities that, in the eyes of the nal customer,
make a product or service more valuable. Examples would include converting
iron ore (with other things!) into cars, or mending a broken down car on a
motorway. A value adding activity is simple to dene, just ask yourself if you as
a customer would be happy to pay for it!

2

Non value adding activity

: those activities that, in the eyes of the nal customer,
do not make a product or service more valuable and are not necessary even
under present circumstances. These activities are clearly waste and should
therefore be the target of immediate or short term removal. An example of non
value adding activity would be transferring a product from one sized container
to another so you can move it around your factory.

3

Necessary non value adding activity

: those activities that, in the eyes of the nal
customer, do not make a product or service more valuable but are necessary
unless the existing supply process is radically changed. Such waste is more
difcult to remove in the short term and should be a target for longer term or
radical change. An example would be: inspecting every product at the end of a
process because the process uses an old machine which is known to be unreliable.
In our past research at LERC we have developed a rough guide as to the proportions
of these three types of activity that we might expect to nd in a company before
any lean improvements:
In a

physical product environment



(manufacturing or logistics ow), the ratio
between the three for the total value stream time of a common (but not world
class) company is around:

s

% value adding activity

s

6o

% non value adding

s

% necessary but non value adding.
This does not sound too good until the same gures are seen in an

information
environment

(eg ofce, distribution or retail) where a common ratio of total value
stream time is:

s

I

% value adding

s

(

% non value adding

s

o

% necessary but non value adding.
These gures suggest that in most companies there is considerable scope for
reducing waste.
We talk about tting people with

muda

glasses once they are aware of the waste
they become increasingly able to see it. The trick then is to create a culture that
encourages them to eliminate waste once it has been identied.

Waste removal tip:

Alert staff to the Seven Wastes by running a short seminar to explain these wastes. Choose
groups of staff from the main areas of the business eg purchasing, production, distribution.
Ask staff to note down their views of the specic wastes that occur in their section of the
operation and to rank these wastes in terms of their relative impor tance. Ask for simple
suggestions as to what could be done to reduce waste. Then task the staf f, either individu-
ally or as a group, to change one thing each week that will reduce waste.

Service sector tip:

If we take the Toyota Production Systems denition of waste, many activities carried out
within a ser vice provider such as a bank, insurance rm or retailer add no value. However,
as many of these activities are useful, they might be referred to as ser vice value adding
even if strictly speaking they are reducing the (potential) cost to the customer rather than
adding value. They could, therefore, be included within the necessar y non value adding
categor y. The reason why they should not be included as value adding activity is that this
will direct attention away from their long term improvement or development.
I

2 Setting the direction

One of the main difculties we see when companies try to apply lean thinking is
a lack of direction, a lack of planning and a lack of adequate project sequencing.
Knowledge of particular tools and techniques is often not the problem. In many
cases lean initiatives are killed because of a lack of senior management forethought.
For success, senior managers should:

1

develop critical success factors,

2

review or dene appropriate business measures,

3

target improvement requirements over time for each business measure,

4

dene key business processes,

5

decide which process needs to deliver against each target area, and

6

understand which process needs detailed mapping.
These preliminary steps are sometimes referred to as policy deployment. We will
take you through them before setting the scene for the top level and subsequent
detailed mapping.

1 Developing critical
success factors

Establish the key forces impacting your business or wider value streams. Divide
them into categories, such as:

s

general business environment

s

industry specic

s

customer specic

s

company specic.
Brainstorm using a ip chart or Post-It notes, facilitated by a team leader.
Develop critical success factors against these key forces. Critical success factors
are a limited number of key areas where things must go right for the business to
succeed and ourish. They should be directly linked to, and inuenced by, the
specic factors impacting your company or value stream.
Examples are shown in the table below:

2 Reviewing or defining
appropriate business
measures

Most companies already have a set of top level (often nance-based) business
measures. However, these may not be aligned to the critical success factors. This is
very important as existing measures will drive aspirations and ultimately perform-
ance. You must check that they are compatible with what is critical in your business
environment. Our example business measures are shown in the following table.

Key force Examples of key specic factors Possible critical success factors

General business environment Recession Turnover growth
Industr y specic New competitors Maintain or grow market share
Customer specic Main customer in decline
High cost-down pressures
Severe quality improvement targets
New product requirement targets
Find new customers
Dramatically reduce costs
Dramatically improve quality
Develop new products
Company specic A demanding holding company Keep holding company happy
I(

Going lean



s

Setting the direction

This example shows a set of measures which will put you on the road to achieving
your critical success factors. Each measure should correlate with at least one
critical success factor, but it is to be expected that not every measure will correlate
with every critical success factor. Although the measures may not be the absolute
optimum set, they are good enough to pilot. It may be useful to review them,
perhaps at the end of the rst year.

3 Targeting improvement for
each business measure

Targeting the improvement rate you need is the next stage, one that many compa-
nies fail to undertake. Where companies do this they usually only set one target,
perhaps for six months time. However, for an effective lean conversion programme
a more realistic timescale is

to

years within a long term vision, with staged
targets for every

6

or

Iz

months. The table below shows examples of reasonable
targets for each measure. Again, the rst time you try this targeting exercise the
result will probably not be the optimum, but it will point you in the right direction.
You can adjust targets to suit your companys particular situation and they can be
improved on an annual basis.
The targets set a broad direction for the company over the next three years. What
we now need to work out is how are we going to achieve this. To achieve these
targets you must understand your key business processes.

Strategic level critical success factors

Turnover
growth
Improve
market share
Find new
customers
Reduce
costs
Improve
quality
Develop new
products
Keep holdings
company happy
K
e
y

b
u
s
i
n
e
s
s

m
e
a
s
u
r
e
s
Return on capital

maybe negative
(short term)
yes

Net cash

yes (shor t
term)
maybe

Stock turn

yes maybe

Overall equipment
effectiveness

yes yes maybe

Total cost reduction

yes yes yes yes maybe yes

Total turnover

yes maybe maybe maybe maybe

Market share

yes yes maybe maybe maybe

Sales to new
customers

yes yes yes maybe maybe

Product quality

yes maybe maybe maybe yes maybe maybe

New product sales

yes yes yes maybe maybe yes maybe

Now Target end
year 1
Target end
year 2
Target end
year 3
Target end
year 5 vision
M
e
a
s
u
r
e
s
Return on capital

2.4% 4.4% 6.4% 8.4% 12.4%

Net cash

(2.4m) (2.2m) (1.8m) (1.2m) 1.0m

Stock turn

8.3 12 16 26 46

Overall equipment effectiveness

43.4% 50.0% 60.0% 70.0% 85.0%

Total cost reduction

(4.5%) last year 5.0% 5% additional 5% additional 5% additional

Total turnover

10.4m 12m 16m 20m 35m

Market share

4.5% 5% 6% 8% 15%

Sales to new customers 6.0% 10% 15% 20% 25%
Product quality 8,300 ppm 4,000 ppm 1,000 ppm 400 ppm 50 ppm
New product sales 5.0% 5.0% 8.0% 13.0% 25.0%
S
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c
t
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o
n
Going lean s Setting the direction Ig
4 Defining key business
processes
A key business process can be dened as:
Patterns of interconnected value-adding relationships designed to meet business
goals and objectives.
All business processes have a series of inputs and a number of steps, tasks or
activities that convert these inputs into a number of outputs. They typically run
across several departments in a business (or businesses) and encourage and
support inter-departmental communication and co-operation throughout the
company or value stream.
In our use of the term process we are referring to a limited number of key activity
groups that you need to deliver value to the business or value stream. The fewer
you dene the easier they will be to manage. Remember that these processes are
not everything a company does, but they are the core activities it undertakes and
must get right.
Dont fall into the trap of dening Ioo+ business processes (as you would for
Business Process Reengineering). Brainstorm many, but settle on a few.
For a more detailed discussion of how to dene processes, refer to The Lean
Enterprise by Dimancescu et al.
Once you have agreed on between four and ten key processes make sure each have
a denition. This will prevent confusion later.
In our example this brainstorming has dened the following processes:
5 Deciding which process
needs to deliver against
each target area
To decide which key business process area is likely to give us the targeted improve-
ments, just ask if the business process is likely to yield benet to each target area if
improved. Record vrs, rnvur or No. Do not answer vrs unless there is a direct link.
You will then know where you need to focus your improvement activity.
We will now do this for our example:
Key business process Denition
1 Order fullment Taking orders, processing the orders, production planning, production, deliver y to
customer and payment management.
2 Sales acquisition Winning new business with new or existing clients.
3 Product lifecycle management Managing customer needs for new products, developing new products, introducing them
into the market and retiring old products.
4 Technology, plant and equipment
management
Developing, managing and maintaining operating equipment (including IT).
5 Human resource development Developing, managing and maintaining employees.
6 Strategy and policy deployment The strategic management of the company, focusing of change and managing critical
success factors.
7 Supplier integration Integrating suppliers into the other key business processes.
8 Continuous improvement Continuous radical or incremental improvement of all other processes.
I6 Going lean s Setting the direction
6 Understanding which
process needs detailed
mapping
We will explain how to map processes later on. First you have to decide which
process or processes need detailed mapping. You have already identied which
are likely to yield the greatest gains against the target areas; now identify which
categories these processes belong to. In our case example, we divide the different
processes into three categories:
s Processes focusing overall direction but not directly impacting on targets
strategic processes
s Processes directly impacting on targets core processes
s Processes indirectly impacting on targets support processes
In our example we have classied the processes as follows:
Strategy and policy deployment sets the direction and the ve core processes are
required to deliver the targeted results, aided by the two support processes. At this
point it is useful to estimate where the targeted improvements are likely to come
from within the core processes. To keep things simple at this point, just pick one
Key business processes
Order
fullment
Sales
acquisition
Product
lifecycle
manage-
ment
Technology,
plant and
equipment
management
Human
resource
develop-
ment
Strategy &
policy
deploy-
ment
Supplier
integration
Continuous
improve-
ment
M
e
a
s
u
r
e
s
Return on
capital
maybe yes maybe yes maybe maybe maybe yes
Net cash yes no maybe maybe maybe maybe yes yes
Stock turn yes maybe maybe maybe maybe maybe yes yes
Overall
equipment
effectiveness
maybe no no yes maybe maybe maybe yes
Total cost
reduction
maybe maybe yes yes maybe maybe yes yes
Total turnover maybe yes yes maybe maybe maybe maybe yes
Market share maybe yes yes maybe maybe maybe yes yes
Sales to new
customers
maybe yes maybe no maybe maybe maybe yes
Product quality yes no yes yes maybe maybe yes yes
New product
sales
maybe yes yes maybe maybe maybe maybe yes
Total 4 yes
6 maybe
0 no
5 yes
2 maybe
3 no
5 yes
4 maybe
1 no
4 yes
5 maybe
1 no
0 yes
10 maybe
0 no
0 yes
10 maybe
0 no
5 yes
5 maybe
0 no
10 yes
0 maybe
0 no
Strategic processes Core processes Support processes
Strategy and policy
deployment
Order fullment Human resource
development
Sales acquisition Continuous improvement
Product lifecycle
management
Technology, plant and
equipment management
Supplier integration
S
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Going lean s Setting the direction I)
time scale over which to target the required performance improvements. In this
case we will take the ve year horizon. Then estimate how much of the targeted
gains should come from each core process area.
Then decide in which order to map these processes. In many instances it is best
to start with the order fullment process as it is easy for everyone to understand
and is central to the operations of most companies and value streams. In other
cases, and depending on the relationship with key customers, the sales acquisition
process might be mapped rst. However, inexperienced mappers should not work
with a customer before piloting the approach internally.
In our example we would map:
s order fullment, then
s sales acquisition, then
s supplier integration, then
s product lifecycle management, and nally
s technology, plant and equipment management.
The following sections tell you how to go about mapping at the overview and
detailed levels.
Sum up For effective policy deployment, take the following steps:
s develop critical success factors,
s review or dene appropriate business measures,
s target improvement requirements over time for each business measure,
s dene key business processes,
s decide which process needs to deliver against each target area, and
s understand which processes need detailed mapping.
Up to this point this is essentially a senior management process, perhaps involving
line managers responsible for the key business processes.
Core processes
Total 5 year
targeted
improvement
Order fullment Sales acquisition Product lifecycle
management
Technology, plant
and equipment
management
Supplier
integration
M
e
a
s
u
r
e
s
Return on capital 10% 7% 3%
Net cash 3.4m 2.4m 1m
Stock turn 37.7 30 7.7
Overall equipment
effectiveness
41.6% 35% 6.6%
Total cost
reduction
25% 5% 10% 5% 5%
Total turnover 24.6m 10m 14.6m
Market share 10.5% 3% 7% 0.5%
Sales to new
customers
19% 19%
Product quality 8,250 ppm 1,250 ppm 2,000 ppm 2,000 ppm 3,000 ppm
New product sales 20% 10% 10%
zI
3 Understanding the big picture
Before starting detailed mapping of any core process it is useful to develop an
overview of the key features of that entire process. This will:
s help you visualise the ows,
s help you see where waste is,
s pull together the lean thinking principles,
s help you decide who should be in the implementation teams,
s show relationships between information and physical ows, and
s create buy-in from the senior team undertaking the big picture mapping
To do this at a macro level we use Big Picture Mapping, a tool borrowed from
Toyota. You can develop the big picture in ve easy phases. We have used a set of
generic icons to illustrate what happens within a process; you can copy these or
use your own. But dont forget to record what actually happens. Dont bring the
quality procedure manual into the workshop, it wont help. Map the reality of what
actually happens, rather than what is supposed to happen.
Focus on a specic value stream or a specic product or product family, purchased
by a specic customer or market segment. This avoids confusion over the different
routes or process adopted for different products or different customers. Other
value streams can be considered later to see if they differ signicantly from the one
studied. Choose a value stream that is important to the company, such as a key
product line to a key customer or segment.
When doing this mapping exercise with a senior/line management team try using
Post-It notes on a sheet of brown paper. This allows everyone to see what is going
on as well as participating in moving things around! You can always record the data
in a PowerPoint format later if you need to.
Big Picture Mapping Icons
Supplier I Q
Weekly
Schedule
3
hours
HONING
& WASH
45
hours
Bin Size=400
Target Rate=
120/hour
Variable Batch
Up-time 85%
3 Shifts
24 trays of 10
REWORK LOOPS

0.75 hours 1.5 hours
Supplier or
Customer
Information
Box
Timing Box Rework
Box
Inventory
Point
Quality Check
Point
Total Production Lead Time = 22.75 hrs
Value Adding Time [lower line] = 2.25 hrs
Work Station
with Timings
20 0.5
Information
Flow
Physical
Flow
Work Station
Process Box
Inter-Company
Physical Flow
zz Going lean s Understanding the big picture
Phase 1: Customer
requirements
Ask the following questions and record the answers in the top right hand corner of
the paper:
s What is the product family or families to be mapped?
s What is the customer demand or how many products are wanted and when?
s How many different parts are made?
s How many products are delivered at a time?
s How often are deliveries required?
s What packaging is required?
s How much stock does the customer hold?
s Any special information eg multiple delivery points, delivery windows?
Phase 2: Information flows Ask the following questions and record the answers from right to left along the top
of the paper:
s What sort of forecast and call-off information is supplied by the customer?
s Who (or which department) does this information go to in your rm?
s How long does it stay there before being processed?
s Who do they pass it to as it moves towards suppliers? (we will cover the internal
production planning in phase ( so leave that for now)
s What sort of forecast and call-off information do you give your suppliers?
s What order quantities do you specify?
Phase 3: Physical flows Ask the following questions and record the answers from left to right along the
bottom of the paper:
For inbound ows of raw material and/or key components
s What is your demand or how many products are wanted and when?
s How many different parts are required? (usually you would map the main or
constraint part)
s How many products are delivered at a time?
s How often do deliveries occur?
s What packaging is used?
s How long does it take to deliver?
s Any special information eg more than one supplier for a given part number?
In practice you may not be able
to get all of this information
immediately. Just record as
much as you can.
Phase 1: Record customer requirements
Customer
Variable
Quantity
2 days stock
x5 daily
shipments
Phase 2: Add information flows
Supplier
Box Size = 800
Customer
Schedule
Long Term
Forecast
Long Term
Forecast
Weekly
Schedule
20
hours
26
hours
3
hours
Daily
Expedites
Manufacture
Planning
Weekly Order
(Daily call-off)
Material
Planning
Customer
Variable
Quantity
2 days stock
x5 daily
shipments
U
n
d
e
r
s
t
a
n
d
i
n
g

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Going lean s Understanding the big picture z
For internal processes
s What are the key steps in your company?
s How long do they typically take? (we often record maximum and minimum
values here)
s At which points is inventory stored?
s At which points are there quality checks and what is the level of defects?
s Are there set rework loops?
s What is the cycle time at each point?
s How many products are made and moved in a batch at each point?
s What is the up-time of each operation?
s How much product is tested at each point?
s How many hours per day does each work station work?
s How many people work at each work station, is it variable?
s What is a typical changeover time at each work station?
s Where is inventory held and how much is there?
s What are the bottleneck points?
Phase 4: Linking physical
and information flows
Ask how are the information ows and physical ows are related and draw on
arrows to show the links.
s What sort of scheduling information is used?
s What sort of work instructions are produced?
s Where is the information and instruction sent from and to?
s What happens when there are problems in the physical ow?
If a group of senior and line
managers can record this
information accurately
without going to look then you
will already have a rnNncr uv
rnc1 company. If not, then you
will have learned what you
dont know and can join the
other .% of rms!
You should now have linked
the upper and lower parts of
the gure.

z( Going lean s Understanding the big picture
Phase 5: Complete map To complete the map, add a time line at the very bottom recording the production
lead time and value adding time. In the example we have only included the value
adding time as the production lead time was so variable, although you can estimate
an upper and lower limit.
You now have a complete big picture map. At this point some senior managers nd
it useful to brainstorm major issues, problems or opportunities. You can record
these simply by using different coloured Post It notes. At this point some groups
try to re-engineer the supply chain into a possible future state map. We, however,
prefer to collect more detailed information about the company by involving a
team of line managers and members of the workforce. A future state map can be
developed after this if necessary.
For a more complete description of the procedures for Big Picture Mapping we
suggest you refer to Learning to See value stream mapping to add value and
eliminate muda by Rother & Shook.


z)
4 Detailed mapping
Up to this point we have only involved the senior or line managers, and lean
change will not happen unless we involve the wider workforce. By this point the
senior team will have a pretty good idea of the direction and possible areas that
could be addressed. However, this information has not come from the doers in
the organisation. The bottom-up detailed mapping should, therefore, be done
by a team of doers, led by a senior or line manager who has participated in the
earlier activities.
There are two reasons for including those actually involved in the day to day
information and physical ows:
s They are the only people likely to know what is actually going on, and
s When you use the detailed maps to develop action plans, you will ensure bottom
up buy-in by developing bottom up plans from the wider team.
The detailed value stream
mapping toolkit
In our value stream mapping work we have used a large number of tools to ll in
the gaps left by big picture mapping. Here, we will summarise six of the most useful
tools. We have not invented all these tools. We have collected, modied or in some
cases developed approaches when we have found gaps in what was already available.
Which are the best tools to use?
Before starting detailed mapping, the table below refers you back to the earlier
discussion on wastes and provides an overview of which tool is good at detailing
each particular waste. We have simply recorded vrs, rnvur or No.
Process activity mapping This is the key tool for the detailed mapping of the order fullment process. It is an
engineering-derived approach that has traditionally only been used for the shop
oor of manufacturing companies. However, we use it more widely to identify lead
time and productivity opportunities for both physical product ows and informa-
tion ows, not only in the factory but also in other areas of the supply chain.
Process activity
mapping
Supply chain
response matrix
Production
variety funnel
Quality lter
mapping
Demand
amplication
mapping
Value analysis
time prole
Overproduction

maybe maybe no maybe maybe yes
Waiting yes yes maybe no maybe maybe
Excessive
transportation
yes no no no no maybe
Inappropriate
processing
yes no maybe maybe no maybe
Unnecessary
inventory
maybe yes maybe no yes maybe
Unnecessary motions yes maybe no no no no
Defects maybe no no yes no maybe
z8 Going lean s Detailed mapping
The idea is to map out every step of activity that occurs throughout the order
fullment process. In the example above this has been done for the shop oor of a
pin factory with an illustrative plan of the ow. But remember: there may be more
waste in the information ow than on the shop oor, so map the information ows
as well as the physical product ow.
Before looking at the method in detail, work through the following completed
example of a process activity map for a simple activity with which we are all
familiar lling a car with petrol.
Step 1: Fill in the main body of chart as shown (everything except flows):
Starting with a trigger point (or start of process) record all activities, areas where
they occur, distances moved, time taken, number of people involved in each step
and any relevant comments. Then sum the columns for distance, time and people.
Key
q Operation
Transport
s Inspection
w Storage
Pin manufacturing (before improvement)
Step Flow Machine/
tool
Distance
(metres)
Time
(minutes)
People Chart symbol
q s w
1 Cut and chamfer pins q Cutter 60 1
2 Transportation Crane 20 5 2
3 Measure length inspect
chamfering
s Calipers 10 2
4 Set aside w Bag 70 2
5 Transportation Crane 10 3 2
6 Polish exterior sur face q Polisher 15 1
7 Transportation Crane 20 5 2
8 Measure outer diameter s Calipers 5 2
9 Transportation Crane 20 5 2
10 Inspect pin inser tion into
socket
s 10 2
11 Transportation Crane 15 4 2
12 Set aside w 10 2
13 Storage w 50
Total
13
steps
85
metres
252
minutes 22
2 times 5 times 3 times 3 times
75 min 22 min 25 min 130 min
cutter polisher
inspection
table
inspection
table
store
room Plan flow diagram
insertion
inspection
table
s
s q
q
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Going lean s Detailed mapping zp
It is surprising how complex even apparently simple tasks actually are.
Step 2: Assign flows
There are four types of ows:
s Operation = O
s Transport = T
s Inspection = I
s Delay (or storage) = D
As a guide assume that:
s operations are value adding steps that you are willing to pay for, or a set rule
eg shut guard before starting machine
s transports are where there is movement around the plant or between sites but
you would prefer to avoid paying for this
s inspections are checks of the quality or quantity of product or information
s delay (or storage) is where a product or information is waiting and there is
no activity.
# Activity Flow Area Distance
(metres)
Time
(minutes)
People Comments
Trigger Arrive at garage Roadside 0.00 0.00 0 Arrive at 08:30
1 Queue to enter forecourt Roadside 0.00 0.75 1 Early morning congestion,
(usually none)
2 Drive to free pump Forecourt 25.00 0.20 1
3 Queue for pump to become free Forecourt 0.00 5.00 1 Cars parked at pump whilst
paying (usually none)
4 Drive to free pump Forecourt 3.00 0.10 1
5 Open car door and exit car Forecourt 0.50 0.10 1
6 Walk to petrol cap on car Forecourt 2.00 0.10 1
7 Unlock petrol cap on car Forecourt 0.00 1.00 1 Cap is faulty and regularly
gives problems
8 Walk to petrol pump nozzle Forecourt 1.50 0.10 1
9 Retract nozzle Forecourt 0.00 0.10 1
10 Walk to petrol cap on car Forecourt 1.50 0.10 1
11 Insert nozzle into petrol tank Forecourt 0.00 0.10 1
12 Dispense petrol into tank Forecourt 0.00 3.00 1 50 litre tank, always ll to top
13 Round up value to nearest 1 Forecourt 0.00 0.50 1
14 Retract nozzle from petrol tank Forecourt 0.00 0.10 1
15 Walk to petrol pump Forecourt 1.50 0.10 1
16 Replace nozzle Forecourt 0.00 0.10 1
17 Close car door and lock car Forecourt 0.00 0.10 1 Rule I have set myself
18 Walk to shop Shop 35.00 0.50 1
19 Queue for cashier Shop 0.00 3.00 1 Two people in queue
20 Hand petrol card to cashier Shop 0.00 0.10 2 Collecting air miles!
21 Hand payment card to cashier Shop 0.00 0.10 2 Payment by card to manage
nances more easily
22 Cashier swipes petrol card Shop 0.00 0.10 1
23 Cashier swipes payment card Shop 0.00 0.10 1
24 Cashier hands payment slip Shop 0.00 0.30 1
25 Check slip Shop 0.00 0.20 1 Past errors at this garage
26 Sign slip Shop 0.00 0.10 1
27 Hand slip back to cashier Shop 0.00 0.10 2
28 Cashier returns cards and receipt Shop 0.00 0.20 2 Hand them back in one go
29 Return to car Forecourt 35.00 0.50 1
Total 105
metres
16.85
minutes
33
people
o Going lean s Detailed mapping
Note: when mapping information ows you may nd it useful to add another
category:
s Communications this refers to movement or transmission of information.
It may involve a time and a distance, for example if people carry documents
around the plant, or it may involve no time or distance if data is transmitted
electronically.
Now go back to page z and assign ows to the petrol station example by complet-
ing Column . A model answer is shown on the left, but remember there are no hard
and fast right answers. It is the debate and discussion that is most important.
Step 3: Analyse
You will notice in this example that most of the activities involved transport,
inspection or delay. This is normal, as surprisingly there is often not much going
on that you would really want to pay for.
Now use the data for analysis and action planning. You can do this by identifying
the major problems or concerns, understanding the causes of these concerns and
developing possible countermeasures.
Clearly there are a large number of other things that you could do. However, if you
could address just the few areas suggested in the table above then you could prob-
ably cut the distance moved, time and number of people and steps by about 8o%.
Why not see how the countermeasures work? Redraw the process activity map
with these changes.
Petrol
station
answers
1 = D
2 = T
3 = D
4 = T
5 = T
6 = T
7 = T
8 = T
9 = T
10 = T
11 = T
12 = O
13 = I
14 = T
15 = T
16 = T
17 = T
18 = T
19 = D
20 = T
21 = T
22 = I
23 = I
24 = T
25 = I
26 = I
27 = T
28 = T
29 = T
operation
transport
inspection
delay
3
4.1
1
8.75
operation 1
transport
inspection
delay
20
5
3
Total time for each activity (minutes)
Number of activity types
Concern Cause Countermeasure
Queue for pump position Not enough pumps available Provide more pumps or spread peak
usage throughout day
Long time to dispense petrol Small nozzle Larger nozzle, but may be safety risk
Many small transpor t steps to ll car Filling procedure not customer friendly Make customer friendly by redesign to car
and/or forecourt
Many small transpor t steps and delay
steps to pay
Paying procedure not customer friendly as
garage wants to get you into the shop to
buy other goods
Credit card payment system at pump
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Going lean s Detailed mapping I
Mapping your order fulfilment process
In your own order fullment process you will have a number of different steps or
stages. These may be natural breaks by department or they may be due to different
physical locations. Split your process into these natural stages and map the process
step by step. Only by seeing the whole can you prioritise which part of the process
to attack rst. Here is a real example of a process activity map of an order fullment
process for a plastic moulding company.
Bearing in mind that value adding operations are the only part your customer
might want to pay for, there is certainly a lot of waste to tackle!
Supply chain response
matrix
This is a mapping technique used to evaluate the inventory and lead times incurred
by a supply chain in maintaining a given level of customer service. It is used to
identify large sectors of time and inventory and allows the manager to assess the
need to hold stocks within the context of short lead-time replenishments. Any
improvement, or decrease, in the level of inventory or time compression in these
Process activity mapping order fullment process example (time in minutes)
Process activity Operation Transport Inspection Delay
Customer forecast processing 0.0 2.1 0.0 7200.0
Production planning 3.7 51.9 12.0 1035.4
Material planning/purchasing 3.3 38.0 18.0 8192.1
Stock replenishment process 0.1 1.5 5.0 8.0
Goods receiving/inspection 0.1 19.2 10.5 158.2
Raw material store 0.1 30.5 0.0 15162.0
Moulding shop store & dr ying 240.0 38.3 9.5 1549.0
Moulding/packing 15.1 602.6 3.1 15921.4
Stock transfer 2.0 13.1 1.0 14502.1
Finished goods despatch 0.1 176.6 0.0 7317.0
Tool room 5.0 20.0 15.0 150.0
Invoicing 1.0 5.0 20.0 480.0
Inspection activities 15.0 31.7 46.1 74.1
285.5 1030.5 140.2 71749.3
0.39% 1.41% 0.19% 98.01%
Tips:
1 Always record where the activity is occurring, when it is occurring and who is involved.
2 When mapping information ows: attach yourself to an order or forecast at the point it
enters the company and follow it through all stages of order processing and production
scheduling
3 When mapping material ows: attach yourself to a product at the star t of your process
and follow it through to the point of despatch to the customer
4 The level of detail required will depend on what you need the data for. If it is time com-
pression and you want to reduce a lead time from 4 weeks to 1 week, recording to the
nearest second is not ver y useful. However, if you want to reduce time in a par ticular
production cell then minutes will probably be appropriate. Record very small time
periods as 0.1 minutes.
5 Dont get your units mixed up: never mix metres and kilometres or minutes with hours
or days.
6 Check that nothing unusual is happening; nd out what usually happens, but dont be
fooled if you are continually being told its usually much better than this.
7 When analysing the data always star t with the steps with the longest distances, longest
times and most people involved. These are likely to yield the greatest gain.
z Going lean s Detailed mapping
areas of the supply chain will release savings or simplify the management of the
entire chain. The objective of this mapping is to improve, or maintain, the service
level of the entire chain but with fewer costs.
The map
The vertical axis represents the cumulative inventory held at each stage of the
supply chain. In this simple case, there is a supplier, a customer warehouse and
a retail store. The total amount of cumulative inventory is (6 days with the ware-
house accounting for o days of this total. The horizontal axis represents the
cumulative lead-time to plan and move the products through the chain. In the
example, this totals z6. days, with z days needed by the supplier to make the
product and send it to the customer warehouse. In total, there is ,z. days worth
of stock and movement time which may yield a customer service level of Ioo%.
The larger blocks in the diagram are therefore investigated for savings.
26.5 days lead-time
46 days
stock
Retail store
(or average of all stores)
Retail warehouse
Transit to warehouse
Transit to store
Product supplier
20
10
10 20 30
30
40
Method
Create a simple xv chart and for each stage of the supply chain calculate the
amount of inventory that is stored at the point and the lead time required to plan,
produce and move the materials to the next operation. Note the cumulative
amount of time and inventory.
Analyse the chart for lengthy delays (long horizontal lines within and between
the elements of the chain) and high amounts of inventory storage (long vertical
lines within each element of the chain). Investigate the reasons for these delays
and inventory patterns, and then look for potential solutions to eliminate these
costs or streamline the supply chain.
Tips
1 Ensure that the units of measurement for both the horizontal axis and ver tical axis are
the same and have equal spacing.
2 Often inventor y holdings or lead times can be variable, so take averages.
3 Investigators should attempt to break down lead times into their basic elements (plan-
ning and production) so those improvement projects can be targeted with greater effect.
4 It is impor tant to analyse the ver y small inventor y levels (often in transit) with ver y short
transit times as this suggests that quick deliver y may not need to be suppor ted by high
inventor y levels.
Always look for the greatest improvements rst rather than targeting many small
improvements.
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Going lean s Detailed mapping
Logistics pipeline map This is a complement to the supply chain response matrix. It shows the accumula-
tion of process time on the horizontal axis and of inventory levels on the vertical
axis. It shows exactly where inventory and time accumulate within each organisa-
tion. It highlights the greatest opportunities to compress process time and reduce
inventory. The pipeline map is particularly useful for identifying the duplications
of inventories that often occur on either side of corporate or functional boundaries.
The example here is a pipeline map of the internal operations of a steel processing
company.
Production variety funnel This is a visual mapping technique that plots the number of product variants at
each stage of the manufacturing process. This technique is used to identify the
point at which a generic product becomes either increasingly or totally customer
specic. The risks of holding specic stock is that it will not sell and the company
will be left holding inventory costs. The map also provides some insights into
possible factory inventory policies, in terms of combining the exibility of the
plant with short lead time.
0
20
40
60
80
100
120
20 40 60 80 100 120
Delays during goods in
(20 mins)
Goods in procedures
Move coil to blanker
Blanking Guillotine Move to despatch Despatch
Hours of
inventory
Process time in minutes
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Summary
Total operating time = 9 minutes
Total transport time = 106 minutes
Total inspection time = 3 minutes
Total storage time = 192 hours (11 days)
Total delay time = 63 hours
Note:
vertical axis in hours
horizontal axis in minutes
Fermentation
Mash
mixing
Conditioning
Can
filling
Packaging
trays
Pallets
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Process path
60
15
15
5
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3
3
0
60
( Going lean s Detailed mapping
To illustrate the use of this technique, brewing companies often produce a high
gravity % beer during the initial process of fermentation. This mother brew is
not sold at this alcohol content but is cut during the conditioning process into
many different products through a process of lowering the alcohol content, say
to a % brew, a (.z% brew and a % brew. These products are then packed into
different can volumes (such as oo ml and other volumes) before being placed
into a tray. The tray itself is used to pack the cans into z( single cans, z packs of
Iz cans, 6 packs of ( cans, ( packs of 6 cans as well as promotional packages. This
means the single product entering the process has multiple points at which that
single product divides.
This technique also generates a series of questions relating to the logical reasons
for product diversity and the need to maintain such complexity for the supply
chain. The map also suggests the logical point at which buffer stocks may be held
prior to customisation. The technique is useful when analysing the ability to post-
pone the manufacturing process rather than maintaining stocks of production
output at each stage of the production process. The point at which the product
variety rises (expands) rapidly is of key concern and it is the buffer (prior to this
point) that creates exibility from the production system. In short, with favourable
manufacturing and demand characteristics, this buffer point can be used to create
high levels of customer service without incurring the penalty costs of stock holding
further downstream. The map also provides useful data for potential product and
inventory rationalisation.
Quality filter mapping The quality lter mapping approach is a new tool designed to identify quality
problems in the order fullment process or the wider supply chain. The map
shows where three different types of quality defects occur in the value stream:
1 Product defects: defects in physical goods that are not caught by in-line or end-
of-line inspection and are therefore passed on to customers. In a few cases we
have found faulty product that was detected but still passed to customers; this
would also fall in this category.
2 Scrap defects: defects that have been caught by in-line or end-of-line inspection.
The in-line inspection methods will vary and can consist of traditional product
inspection, statistical process control or through poke yoke devices.
Method
1 Take a piece of graph paper and create the horizontal (process path) axis and
vertical (number of products) axis.
2 Select each product, or generic family group of products, and identify the
process path through the manufacturing facility. The key item of the bill of
materials is likely to be one which follows the entire length of the production
sequence. Examples of these products would include water (the primary
element of soft drink manufacturing), yarn or bre for textiles, or the body
in white element of vehicle assembly.
3 At each stage of the conversion process, identify the number of products that
are created. As each process is analysed, plot the nal number of outputs
produced from each stage on the chart.
Tips
1 Select the component to be mapped carefully. It must be an element that is integral and
signicant to the nished product, not a screw or piece of packaging.
2 Look for subtle changes in the product at each stage of the process, for example the
colour matching, piercing holes in the product, and any other activity which changes the
component into a new product.
3 Accuracy is always impor tant and therefore it does pay to cross-reference the numbers
of outputs, at each stage of the conversion process, with the bill of materials code for
that product. The collection of these codes is impor tant when secondar y analyses are
undertaken to nd out the actual stock levels of each identied output.
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Going lean s Detailed mapping g
3 Service defects: problems given to a customer that are not directly related to
the goods themselves, but due to the accompanying level of service. The most
important of these service defects is inappropriate delivery (late or early). Others
include incorrect paperwork or documentation, incorrect packaging or labelling,
incorrect quantity and incorrect invoicing.
The approach integrates quality and logistics performance measures. It is designed
to establish both internal and external quality levels as well as levels of customer
service.
Method
1 Map the three types of defect along the various stages of the value stream,
using a parts per million (PPM) scale. If appropriate, plot with a logarithmic
scale. Usually the data used to collate the graph is already being collected by
the company or companies involved.
2 The example represents an automotive value stream, stretching from distribu-
tor (or car dealer) back through the car assembler, rst, second and third tier
suppliers and back to raw material producers.
3 In this case the quality lter map directs attention to:
s the generally high level of scrap (and wasted cost) at the lower component
manufacturer tiers,
s the relatively high level of product defects at the car assembler,
s the high levels of service defects at distributor and lower components
tiers, and
s the generally poor performance on all measures of raw material producers.
4 If the tool is being used inside a company, use individual departments or work
areas instead of different companies as in the above example. In that case,
record product defects where they are passed on to an internal customer or the
next department. Service defects would similarly refer to non-product defects
passed on to internal customers. Scrap defects would simply refer to any scrap
within each particular work area or department.
Tips
You may nd that data is not presently being collected by the rm or rms involved. If you
have time, star t recording the data yourself or set up a scheme to do this. If this is not pos-
sible, the resulting graph may have some gaps. However, this result is illuminating in itself.
It shows that little or no attention is being placed on the quality and ser vice area and that
improvements in these areas are very likely to be needed. Without the data though,
improvement is almost impossible.
Defect rate (PPM)
Scrap defects
Product defects
Service defects
(paperwork, delivery etc)
10,000
1,000
1,000,000
100
100,000
10
1
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6 Going lean s Detailed mapping
Demand amplification
mapping
This is a graph of quantity against time, showing the batch sizes of a product
at various stages of the production process. This may be plotted both within a
company and along a supply chain. It can also be used to show inventory holdings
at various stages along a supply chain through time. A snapshot of one months
data is often adequate, although a four to six month period gives a clearer picture.
An important result of the demand amplication map is to show the bullwhip or
Forrester effect, where demand changes amplify the further one gets away from
the original demand source. The map is also useful to examine scheduling and
batch sizing policies, and inventory decisions. The chart below shows the demand
amplication effect for a well-known chocolate bar.
Use this map to:
1 see the extent of amplication as orders are passed upstream. The greater the
amplication, the more difcult it is to encourage ow. The ideal, of course, is
that all stages of production work at the customers rate of demand, bringing
uninterrupted ow.
2 gain an insight into detailed batch sizing and scheduling policies, looking at
both quantity and timing. The reasons for excessive batches or lack of synchro-
nisation may then be explored.
3 check inventory decisions. Inventory is the buffer between demand and supply;
inventories should be low if there is synchronisation between demand and supply.
Time
Volume
Manufacturer's
forecast of sales
Manufacturer's
production plan
Consumer demand
Retail orders to
Manufacturer's
chocolate Demand amplification map

Method
1 Identify the stages at which data will be collected. The rst stage will usually
be actual demands made by the customer. Subsequent stages are at major
production stages or cells. Look out for inventory storage and record data at
and after each inventory location.
2 Identify the products or parts to be studied. If you have already collected data
for other maps, use the same part. Otherwise select a representative part.
3 Decide on the time horizon for data collection. The period should include a
minimum of three batches at the longest manufacturing cycle. For instance, if
fortnightly batches are made at a press stage, but assembly takes place every two
days, then record data for three press batches over a time horizon of four weeks.
4 Decide on the period for analysis. This should be a typical period. Avoid rush
and quiet periods, if possible. You may be constrained by the companys
record keeping system.
5 Collect data on batch sizes and inventories. Take care on this: be aware that a
batch may take more than one day to produce. Inventory data may or may not
be available, but it can be derived from batch sizes as long as just one accurate
snapshot of inventory can be made.
6 Plot the data on a graph.
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Going lean s Detailed mapping )
Value adding time profile The value adding time prole plots the accumulation of both value adding and
non value adding costs against time. It is an excellent tool for looking at time
compression or mapping out where money is being wasted.
The difference between the total cost line and the value adding line represents
the cost of the wastes. The area under the total cost line represents the amount of
money tied up in a unit of inventory. Differences between various types of waste
can be easily seen. Plateaux represent storage and delay wastes, and sharp increases
in the distance between the value adding line and the total cost line represent
waste due to non value adding operations.
Analysis
The demand amplication map is a very powerful tool for looking at scheduling
and inventory policies and decisions. Rather than asking schedulers how they
make up schedules (and getting a theoretical answer!), the map allows discussion
around what actually happens, and how it can be improved.
Distinguish between amplication due to changeovers and amplication due
to inventory or safety stock policies. Changeovers lead to batching, but are the
batch sizes appropriate? Look at this in relation to available capacity. Examine
amplication due to inventory policies by asking what the policies are, if any.
Look for variation in batch sizes. What is the consistency of the ratio of batch size
to customer demand? Then ask about batch sizing policies. Look out for the
temptation to overproduce whilst the set-up is in place.
Look out for regularity of batches. A lean operation should be attempting not
only to run products as frequently as possible, but as regularly as possible say
the same day each week.
Tips
1 Make sure you use appropriate units of measurement. For instance, if you are producing
plastic moulding with a shot (raw material) weight of 50g then measure raw material
purchases so that 50g is equal to 1 unit.
2 In some rms it is possible to collect data from more than a dozen points, but be selec-
tive, three or four well chosen points will give you 99% of the information with far less
work and analysis time.
8 Going lean s Detailed mapping
As you can see from the example certain activities such as storage are not value
adding but they do contribute to cost. In contrast, activities like blanking or press-
ing do add value. However, they add value at a lower rate than they add to costs.
This is because they incur non value adding costs such as set-up or scrap costs. You
can easily see the seriousness of these costs compared to the costs of non value
adding tasks such as storage.
Where a prole is drawn along a complete supply chain, the relative importance
of issues along the chain becomes very clear. For instance, storage delays may
be shown up as the dominant problem in one segment, and rework in another.
A Pareto analysis can then be drawn to show these problems.
Method
The value adding time prole is a very useful tool, especially for justifying projects
back to the senior managers. Compared to the other tools, it is also harder to map
out. We suggest you leave it to last to see whether you really need it! We have
added some example data to the left and on the following pages to illustrate the
method.
1 Begin by collecting process activity chart data but in addition to the activity
description, ow type and times, you will need the number of operators
involved (if any), the machine type, inventory, and space occupied. Also note
the length of the working day for that particular operation (the number of
shifts and the shift length).
2 Obtain the unit costs, per minute, of all the resources used, including an
estimate of the costs of oor space.
3 Obtain the unit cost of the material used in making the part, and the costs
of all subsequently added components.
4 Obtain an estimate of the inventory holding cost per minute, expressed in
percentage terms. This should include capital, storage, and insurance. In
annual terms this will probably be at least zo%, but converted to the rate per
working minute this will be a small gure.
5 Set up the data on a spreadsheet. For practical purposes this is essential, since
any revisions result in all subsequent step costs having to be recalculated.
6 A typical set of spreadsheet columns is: step number, step description, step
category, time, inventory, space used, machine used, number of people, step
cost, cumulative value added cost, cumulative total cost. You can add extra
columns for costs and times by category.
7 Calculate unit component costs for each step. Each step will add to the total
cost, but not necessarily to the value adding cost. To do this, multiply the step
time by the cost of all the resources used. Most operations involve both
human operator costs and machine costs. Storage and delay do not usually
involve people costs.
8 Where there is storage or delay, calculate the cost of holding one unit of the
part for the storage or delay period. Multiply the holding cost rate per minute
by the accumulated total cost of the product up to this point.
9 Where there is machine processing or a value adding operation involved, base
the cost on the number of units that are processed together during that step.
This is usually one unit but may be more where, for instance, two pressings
are made simultaneously.
10 Where there is transport involved, base the cost on the number of units that
are moved together (ie divide the step cost by the move quantity).
11 To calculate the costs of space used, divide the unit cost of space ( per
minute per square metre x space used x time) by the number of units
involved, typically one in the case of a machine and the batch size in the
case of storage and delay.
Value adding time profile.
Required base cost data 1
Raw materials
Cost per unit of
nished product
(pence)
100
Facilities space cost
Rent pa 50000
Rates pa 30000
Light/heat pa 10000
Total cost pa 90000
Total m
2
10000
Cost/m
2
9
Cost/m
2
pence 900
Cost/m
2
/min
(pence)
0.002068
Fork lift truck
Depreciation pa 10000
Maintenance pa 1000
Driver pa 16000
Total FLT cost pa 27000
Total FLT cost/min
(pence)
6.21
Plant No.
Depreciation pa 1000
Maintenance pa 250
Direct labour pa 12000
Floor space pa 50
Total cost pa 13300
Total cost pa
(pence)
1330000
% Plant utilisation 70
Effective mins pa 304584
Cost/effective min
(pence) of plant no.
4.37
% Stock holding cost
% Opportunity cost
of capital pa
20
% Insurance pa 3
% Damage pa 3
% Obsolescence pa 4
% Total pa 30
% Cost/min 6.89E-05
Other direct labour
Cost/min pence 3.68
D
e
t
a
i
l
e
d

m
a
p
p
i
n
g
Going lean s Detailed mapping p
Developing the Value adding time profile from the process activity map
Required base cost data 2
Raw material cost per unit Facilities space cost /
metre
2
/min
FLT cost including driver /
minute
Plant cost including direct
labour /minute
Stock holding cost /minute
as %
100 pence 0.0021 pence 6.21 pence 4.37 pence 6.89E-05%
Required base time data
Weeks pa Shifts per week Hours per shift Hours per week Max minutes per week Max minutes pa
49 18.5 8 148 880 435120
VATP spreadsheet (see page 38 and above for required base data)
Raw
material
cost
Unload
truck
Store raw materials (for
1 day space used 1
metre
2
)
Move to
operation 1
Process at
operation 1
Store
nished
product
Pack &
despatch
Flow type Transport Store Transport Operation Store Operation
Distance (metres) 10 50
Duration (minutes) 1 1440 3 10 1440 10
People (no.) 1 1 2 1
Value added ops 1
Non value added ops 1 1
Fork lift truck cost 6.21 18.63
Space cost 3.02 3.02
Inventory cost 0.00 9.93 18.02
Operation cost 0.00 43.70 10.00
Total step cost 6.21 12.95 18.63 43.70 21.04 10.00
Cumulative value added 100.00 100.00 100.00 100.00 143.70 143.70 153.70
Cumulative total cost 100.00 106.21 119.16 137.79 181.49 202.53 212.53
Cumulative time 0 1 1441 1444 1454 2894 2904
Time (hours)
Pence
Cumulative
total cost
Cumulative VA
VATP chart from above sample data
0 24 48
50
100
150
200
250
Going lean s Detailed mapping (o
For more details on the application of each of the mapping tools described
in this section and other mapping tools, see The Lean Tool Box by John Bicheno.
Tips
1 The ser vice variant of this tool helps you to understand where service value is added,
and where service wastes such as delays and lack of responsiveness occur, as well
as the more general types of waste such as inspection, rework or warranty problems,
and inventor y. In many ser vice environments there is little value added (in the engi-
neering sense). So instead of recording total costs and value adding costs, tr y plot-
ting total costs, ser vice value adding (necessar y but non value adding tasks) and
value added costs.
2 Base unit costs (cost per minute) on the length of the working day, not 24 hours,
unless full shifts are being worked.
3 In the case of storage and delay times, which may run across non working weekends
and nights, the recorded times should exclude these non-working periods. This
ensures that the costs are correct, but cumulative times shown on the value added
time prole may appear misleading unless it made clear that times are working times
only.
4 Add the costs of raw materials at the star t of the time prole. Unless you have data
which show other wise, assume these costs are all value added. Add the costs of all
bought in or sub components added at the point at which they are actually added.
This will result in steps in the prole.
5 Since the operation times are typically ver y much less than the times for storage and
delay, a typical value adding time prole will show apparent vertical jumps in cost at
operation stages. This is to be expected.
6 If you have set up the calculation on a spreadsheet, you can easily evaluate the
potential savings due to (a) cutting delay and storage time and (b) cutting inventor y
levels.
(
5 Getting suppliers and
customers involved
Every organisation requires inputs to convert materials and information into
products and services that are attractive to customers. Traditionally, businesses
sought to control the supply chain through vertical integration (ownership) but
more recently this trend has reversed and companies now engage in a high level
of outsourcing.
It is, therefore, highly benecial to extend the order fullment mapping to customers
and suppliers as we have done in some of our examples. However, care and diplo-
macy are needed when involving people outside your own organisation. In general
the methods are the same but with a wider team involvement.
When mapping with external companies bear in mind that there are likely to be
two types of waste (or opportunities):
Supply chain co-ordination, which looks at inefciencies and wastes between
companies. This type of co-ordination would involve areas such as working to
common quality standards, using the same paperwork system, shared transport
and employing inter-company communication methods such as EDI.
Supply chain development, which looks at inefciencies inside certain companies
within the supply chain. This type of development would include the dissemina-
tion of customer strategies, so that suppliers could plan their processes more
effectively, as well as one rm or rms offering specic assistance to other rms
in areas such as factory layout, set-up time reduction and the operation of internal
kanban systems.
Using the detailed mapping
tools
Select the most appropriate and rewarding tools to use when conducting the
detailed analysis. It is important to use maps that highlight the problems and
opportunities both within the individual rms and in the linkages and relation-
ships between rms along the supply chain.
Our experience suggests that the following are the best tools to use at the outset.
A process activity map of the selected key parts through each factory and the
information systems that trigger the procurement or replenishment activities. You
can then discuss the nature and performance of the activities that comprise the
relationship between the companies using real evidence. Then you can seek ways
of improving the supply chain in order to improve the system.
The demand amplication map is essential as it exposes the uctuations in demand
that impact on the supply chain to create unlevelled and interrupted schedules.
Here the mapping team will reveal mismatches in order quantities and the real
impact of poor inventory control routines.
The quality lter map will provide valuable data relating to the type of defects
present, and where in the supply chain these tend to occur. These data can then
be used to ask for modications to the processing activities of the rm(s) involved.
The data also highlight the need to assure perfect quality of supply before modi-
cations of the inventory system can take place.
At a later point, when improvement activities have been undertaken with the
supply chain, the supply chain response matrix and production variety funnel
can be used to highlight areas of low hanging fruit and short term gains. The
value adding time prole can also be used. As a detailed level of cost data sharing
is required this tool is often not appropriate until relationships between rms
have developed.
Going lean s Getting suppliers and customers involved ((
The table summarises the benets of tools suitable for use in the wider supply chain.
Tool Benet
Process activity
mapping
This is a useful tool for highlighting the low hanging fruit and for
prompting why? questions.
Demand amplication
mapping
This and the process activity mapping technique are the most pow-
er ful techniques. The demand amplication char t shows why inven-
tory exists and highlights the problems of inventor y and batch size
policies adopted by either the customer or supplier.
Quality lter mapping This technique is useful in identifying the nature of quality losses to
the supplier and customer. It can highlight problems with purchase
specications and tolerance. This technique does focus the shor t
term improvements of both companies where quality losses exist.
Supply chain
response mapping
Logistics pipeline
mapping
This is an essential technique and demonstrates the amount of
inventor y held by both organisations. The char t also highlights the
areas of the supply chain where products are stagnant or delayed.
The map is also good for demonstrating the progress made from
one year to the next.
Production variety
funnel
This technique can be used to highlight the diversication of a
single element of raw material through the supplier and customer
processes. It is useful in determining oppor tunities for postpone-
ment ie the amount and extent of last minute conguration that
can take place. It can also be used to highlight bottleneck areas
of design.
Value adding time
prole
The costs and wastes associated with production are necessar y in
order to justify any improvement effort, but often there is little that
either the integration team or supplier can do about customer costs,
although there may be oppor tunities for insourcing to suppliers.
()
6 Checking the plan fits the direction
and ensuring buy-in
Once the detailed maps are complete, go back to the original target setting exercise.
At this point the team will have gathered a great deal of information. They will then
need to turn this into a workable plan over a sensible time frame. In other words, are
the means for improvement (projects and resources) going to meet the set targets?
Set up teams for the various implementation projects, for each business process.
However, to illustrate the method, we will again just focus on the order fullment
process.
Assessing the projects The mapping team, consulting other process experts if necessary, must assess how
much each of the projects is likely to contribute towards the key business measures.
Using the case example we rst encountered in Setting the direction, this has been
done for potential projects within the order fullment area:
Order fullment target and means
Target end
year 5 vision
Project A:
5S
Project B:
Visual
management
Project C: Pull Project D:
Small lot
production
Project E:
Standard work
Total
projection
K
e
y

b
u
s
i
n
e
s
s

m
e
a
s
u
r
e
s
Return on
capital
Net cash 2.4m 0.5m 0.2m 1m 0.5m 0.1m 2.3m
Stock turn 30 3 3 10 10 4 30
Overall
equipment
effectiveness
Total cost
reduction
5% 1% 1% 3% 2% 7.0%
Total turnover
Market share
Sales to new
customers
Product quality 1,250 ppm 1,000 ppm 500 ppm 200 ppm 200 ppm 200 ppm 2,100 ppm
New product
sales
Timing Year 1 Year 1 Year 1&2 Year 2 Year 2&3
Human
resource
2 FTE* 0.5 FTE* 3 FTE* 2 FTE* 2 FTE* 9.5 man
years
Capital
resource
5K 2K 20K 10K 20K 57K
*FTE = full-time equivalent staf f
Going lean s Checking the plan fits the direction and ensuring buy-in (8
At this point we also need to ask a few questions:
s Are all the projects likely to deliver?
s Are the projects within each process correctly sequenced?
s Are the project hand-overs within and between process areas sensible?
s Do we believe the gures?
s Is there any double counting?
s Do we think it is going to work?
s Can we afford the time and cost?
s Are there too many projects at any one time wanting the same people?
s Are there enough project team leaders?
s Are there enough project team members?
s Are there bottleneck people and/or skills areas?
s Are we happy to accept any short-falls?
s Will they be made up by other process teams?
s Is the plan so far off that it needs reworking?
Catch-balling the change
programme
This checking process will help identify potential problems and irregularities.
What we have been doing is starting a catch-ball process or feedback from the
order fullment process team to the senior management team. This process has
been about making sure the plan is sensible, realistic and will take the business in
the direction that the senior managers have set. It has also showed us where some
failings exist and where we will encounter capital, project or human bottlenecks.
The catch-ball process may go through a number of iterations before the optimum
plan is agreed. We have found the more experienced the senior management team
are at guiding the process, the less iterations will be necessary. But we have never
seen anyone get it completely right rst time round, including ourselves at the
research centre!
A lean transformation will take time and commitment to achieve, but it will be
worth the effort. Adopting this planning process described here and implementing
its results will give you and your organisation a chance to go lean.
Good luck in your lean journey!
(p
Further sources of help
Research assistance At LERC we have a number of ongoing research programmes in both the manufac-
turing and the service environment, either on a group or individual basis. If you
would like to discuss your specic requirement please contact:
Professor Peter Hines, Co-Director
Lean Enterprise Research Centre
Aberconway Building
Colum Drive, Cardiff, crIo ru, ux
e-mail: [email protected] or visit: www.cf.ac.uk/uwc/carbs/lerc
Educational assistance A range of educational courses are run at LERC including: MBA in Supply
Chain Management; MSc in Lean Operations; the Automotive Retail Management
Programme and a number of tailored short and specialist courses. For further
information please contact:
Claire Gardner, Education Manager
Lean Enterprise Research Centre
Aberconway Building
Colum Drive, Cardiff, crIo ru, ux
e-mail: [email protected] or visit: www.cf.ac.uk/uwc/carbs/lerc
Publications Companion books to this publication:
Peter Hines, John Bicheno & Nick Rich, End to End Lean (Portland, Oregon,
Productivity Press, zooo)
A more in-depth text on how to apply lean thinking.
David Taylor and David Brunt (eds), Manufacturing operations and supply chain
management the lean approach (International Thompson Business Press, zooo)
A case book detailing the application of lean thinking within the LEAP programme
Other useful texts:
John Bicheno, The Lean Toolbox, znd edn (Buckingham, Picsie Books, zooo)
Available from Picsie Books: tel. +(( (o)Iz8o 8Ioz or visit:
www.axiom.co.uk/picsie/
Dan Dimancescu, Peter Hines & Nick Rich, The Lean Enterprise: Designing &
Managing Strategic Processes for Customer Winning Performance (New York,
Amacon, I,)
Peter Hines, Richard Lamming, Daniel Jones, Paul Cousins & Nick Rich (eds),
Value Stream Management: strategy and excellence in the supply chain (Harlow,
Financial Times Prenctice Hall, zooo)
Mike Rother & John Shook, Learning to See (Brookline, Mass, The Lean Enterprise
Institute, I8)
Direct e-mail to: [email protected] or visit: www.lean.org
James Womack & Daniel Jones, Lean Thinking: Banish Waste and Create Wealth in
your Corporation (New York, Simon & Schuster, I6)
Available from most booksellers
James Womack, Daniel Jones and Daniel Roos, The Machine that Changed the
World (New York, Rawson Associates, I6)
Available from most booksellers
go
Jargonbuster
Big picture mapping A specic visual approach designed to display at a high level
a major part or whole Lean enterprise.
BPR Business process re-engineering, where minute activity sets are dened as
processes and improvement generally takes the form of a complete redesign.
Catch-balling The feedback and agreement process for plans with Policy
deployment.
Core processes Those central processes that directly deliver results against
targets. See also Key business processes, Strategic processes and Support processes.
Critical success factors Those key external or internal elements that a business
needs to focus on for success, such as market growth or employee involvement.
Current state map A visual method of succinctly recording the key aspects of the
current structure and processes in the whole or any part of a supply chain. See
Big picture mapping.
Flow All activities being undertaken within the Lean enterprise at an even rate
without delays, interruptions or other batching.
Future state map A vision of a lean system which is used as the guide for the
change process.
Hoshin Kanri See Policy deployment.
Key business process Patterns of interconnected value-adding relationships
designed to meet business goals and objectives, or the main cross-functional
activities required in a business for success. See also Strategic processes, Core
processes and Support processes.
Lean A consumer focused approach to the provision of effective solutions involving
the consumption of a minimum of resources.
Lean enterprise The extended supply chain responsible for effectively satisfying
consumer requirements using a minimum of resources.
Lean thinking The process by which individuals can understand the need for,
create and implement a Lean enterprise.
Mapping The use of a appropriate tools and technique to analyse the current
situation in any process.
Muda The Japanese term for Waste. Any activity which consumes resources but
adds no value.
Necessary non value adding Non value adding activities which are necessary
under the present operating system or equipment. They are likely to be difcult
to remove in the short term but may be possible to eliminate in the medium
term by changing equipment or processes.
Non value adding Those activities within a company or supply chain that do not
directly contribute to satisfying end consumers requirements. Useful to think of
these as activities which consumers would not be happy to pay for.
Overall equipment effectiveness A composite measure of the ability of a machine
or process to carry out value adding activity.
OEE = % time machine available % of maximum output achieved % perfect
output.
It measures the degree to which machines are adding value by not being waste-
fully employed due to planned or unplanned downtime or in producing defects.
Going lean s Jargonbuster gI
Overall supply chain effectiveness A composite measure of supply chain
performance.
OSCE = % orders delivered on time % Order completeness % On time delivery.
Pareto analysis Sometimes referred to as the 8o : zo rule. The tendency in many
business situations for a small number of factors to account for a large propor-
tion of events. For example 8o% of total sales volume might be attributable to
zo% of customers and to zo% of the product range. In terms of quality, 8o% of
defects might be attributable to zo% of causes. The zo% is sometimes referred
to as The vital few.
Perfection The complete elimination of muda so that all activities along a value
stream create value.
Poke-yoke A mistake-proong device or procedure to prevent a defect during
order intake or manufacturing.
Policy deployment A strategic decision making tool that focuses resources on the
critical initiatives necessary to accomplish the Critical success factors of the rm.
The term usually also encompasses the cascading of this by Key business process
together with the control, measurement and feedback of results. Also known as
Hoshin Kanri.
Pull All activities being undertaken within the Lean enterprise according to and at
the rate of the actual demand requirements of the end consumer.
Seven wastes A framework of seven types of activity that do not add value, originally
dened by the Toyota company.
Strategic processes Those processes that help focus overall direction but do not
directly impact on targets. See also Key business processes, Core processes and
Support processes.
Support processes Those processes only indirectly impacting on targets but
providing support to the Core Processes that do. See also Key business processes,
Strategic processes and Core processes.
Uptime The % of time that a machine is available for productive work.
Value adding Those activities within a company or supply chain that directly
contribute to satisfying end consumers, or those activities consumers would
be happy to pay for.
Value stream The specic activities within a supply chain required to design, order
and provide a specic product or service.
Value stream mapping The process of charting out or visually displaying a Value
stream so that improvement activity can be effectively planned. See Mapping.
Waste All those activities that occur within a company or wider supply chain that
do not add to the value of a product or service supplied to a nal consumer.
Sometimes called Muda. See also Seven wastes.
gz
Notes