Transactional Value Stream Mapping

By Chew Jian Chieh

What to do if you want to reduce cycle time?

1. Value Stream Map the Process AND identify the Process Wastes 2. Look for the bottleneck and remove the bottleneck 3. Look for wastes within the process and remove them 4. Look for manual steps and try to automate them
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Value Stream Map* the Process

Start
Document also the End to End Cycle Time. Note there is a difference between Cycle Time & Processing Time. Processing Time is the time taken to complete processing one job without wait time, interruptions etc. End to End Cycle Time or Cycle Time is the time it start for one job to move from start to end of a process. Total Cycle Time Total Processing Time = Total Wasted Time Indicate the Operating Hours of this process e.g., 8 am to 10 pm (Available Time) Indicate the Arrival Volumes e.g., Vol per day = 30 (Demand)

Process Step
Processing Time = FTE = Automated? = WIP(in tray) =

You can add more information about the process in the Process Step. Typical Info are Processing Time and Number of Full Time Equivalent (Staffing)

Process Step Decision

Indicate the flow time (if possible) Indicate if the flow is manual or automated
Processing Time = FTE = Automated? = WIP(in tray) =

Process Step
Processing Time = FTE = Automated? = WIP(in tray) =

*this is just a process map with more process related info

End

End
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Example of a Simple Value Stream Map

Step 1 Draw the Process Flow Step 2 Key in the Value Stream Metrics. Step 3 Compute the Takt Time 300 Credit Card Applications Operating Hours = 8 hours Takt Time = (8 x 60) min / 300 = 1.6 mins Step 4 Find out which step is the Bottleneck
Approved? Card Application

Credit Check & Evaluate Processing Time = 2 mins FTE = 1 Automated? = Semi WIP (in-tray) = 50 Send Rejection Letter Processing Time = 1 min FTE = 1 Automated? = Semi WIP (in-tray) = 0

No

Find the step which Processing Time / # of FTE is higher than Takt Time That step will be the bottleneck and it will likely have Work-inProgress stuck at the start of the Process Why is that? See the next few slides.

Yes
Service Activation Processing Time = 1 min FTE = 1 Automated? = Semi WIP (in-tray) = 0

End

End 4

From a Cycle Time Perspective, the ideal is Continuous Flow

Application Form

10 mins
Application Form

Every Ten Minutes One Job Arrives Into the Value Stream E.g.,

Every Ten Minutes One Job leaves the Value Stream

10 mins

10 mins
Application Form

10 mins

Inter Arrival Time = 10 mins

10 mins
Evaluate & Recommend PT = 10 minutes Approval PT = 10 minutes

10 mins
Service Activation PT = 10 minutes Print Credit Card PT = 10 minutes

From Start to End, this Value Stream will always take no more than 40 minutes
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How to achieve Continuous Flow in Transactional Processes?

This is an idealized scenario. No real process actually works like this. However, in order to understand continuous flow, try to understand this. Imagine if every 10 mins one job arrives. Imagine that the 1st step takes 10 mins to process the incoming job. That means, as the 1st job is exiting the 1st step, the 2nd job is arriving into the 1st step at exactly the same time. Hence, there is no wait time for the 2nd job. Now the 1st job would have entered into the 2nd Step and that would also take 10 mins to complete the processing AND SO ON. Hence, if you have such an idealized process, there will be no bottleneck and consequently, you can get continuous flow.

Why thrive towards Continuous Flow? 1. More Speed because in a Continuous Flow, no Work-In-Progress is ever kept Waiting. 2. Consistency Cycle Time from Order to Delivery is kept consistent and predictable because there is no excess WIP in the Value Stream to cause Lead Time to fluctuate or grow excessively 3. Less Cost There is no waste of Transportation and Excess Inventory hence the organization does not incur cost associated with the management of them
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But your process is not idealized. Not every step has the same processing time. How can we achieve continuous flow?
Every 6 mins, one job arrived Processing Time = 16 mins FTE =2

Question will this process step become a bottleneck? Answer So long as Processing Time / # of FTE is less than the inter arrival time of jobs, it will not become a bottleneck 16 / 2 = 8 mins > 6 Mins Hence, it will become a bottleneck Question How can we improve this process so that it ceases to be a bottleneck? a.Reduce the Processing Time to 12 mins or Less b.Increase the # of FTE by 1 (16/3 = 5.3 mins) c.Increase the interarrival time of jobs (generally out of your control)

Note on FTE FTE stands for Full Time Equivalent It represents how many staff are manning the process on a full time basis It is not the same as number of employee Say you employ 10 staff in your team. The team handles three processes. Your staff divide their time equally between these three processes during the available time. Hence, the FTE per process is NOT 10 but 10/3 = 3.333.
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How do I know what is the interarrival time of jobs for my process?

In reality, no transactional process has a constant inter arrival time of jobs (i.e., every X mins, one job arrives) However, let s say for one day, your process has to complete processing X jobs (let s call this it s Demand) And let s say, your process operates for Y mins a day (let s call this available time) Then, you can say that practically, every Y / X mins, one job arrives. This Y / X or Avail Time / Demand is called the Takt Time. In order words, if you know the Takt Time of your process, you can identify the bottleneck of your process.
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Note on Available Time Available Time has nothing to do with the staffing level of the process It refers to the time the process is available for processing of jobs Hence, let s say we have two Mac Donalds. They are both opened 24 hours. The 1st Mac Donalds has 10 staff, and the 2nd has 20. Their available time is the same 24 hours. Staffing has nothing to do with it.

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Let s use an example that looks complicated like your own production process to convince you that this works
P/T = 25 mins FTE = 2 P/T = 5 mins FTE = 0.5

P/T = 15 mins FTE = 0.5 50% P/T = 5 mins FTE = 0.25 P/T = 2 mins FTE = 0.5

50%

P/T = 2 mins FTE = 0.5

P/T = 45 mins FTE = 3

Start

End So which step will be the bottleneck?

End
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Step 1 Compute the Takt Time

P/T = 25 mins FTE = 2 TT = 10 PT/FTE = P/T = 6 mins FTE = 0.5 TT = 10 PT/FTE =

Daily Demand = 60 Avail Time = 10 hrs Takt Time = 10 x 60 / 60 = 10 mins 50%

P/T = 2 mins FTE = 0.5 TT = ? PT/FTE =

P/T = 15 mins FTE = 3 TT = 10 PT/FTE =

50%
P/T = 2 mins FTE = 0.5 TT = ? PT/FTE = P/T = 45 mins FTE = 3 TT = ? PT/FTE =

P/T = 5 mins FTE = 1 TT = 10 PT/FTE =

Start

End

End
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Step 2 Look at the points where the flow is separated and compute the Takt Time for each new stream
P/T = 25 mins FTE = 2 TT = 10 PT/FTE = P/T = 6 mins FTE = 0.5 TT = 10 PT/FTE =

Daily Demand = 60 / 2 = 30 Avail Time = 10 hrs Takt Time = 10 x 60 /30 = 600 / 30 = 20 mins 50%
P/T = 2 mins FTE = 0.5 TT = 20 PT/FTE =

P/T = 15 mins FTE = 3 TT = 10 PT/FTE =

50%
P/T = 2 mins FTE = 0.5 TT = 20 PT/FTE = P/T = 45 mins FTE = 3 TT = 20 PT/FTE =

P/T = 5 mins FTE = 1 TT = 10 PT/FTE =

Start

End

End
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Step 3 Compute the PT/FTE for every step

P/T = 25 mins FTE = 2 TT = 10 PT/FTE = 12.5 P/T = 6 mins FTE = 0.5 TT = 10 PT/FTE =12 P/T = 2 mins FTE = 0.5 TT = 20 PT/FTE =4

P/T = 15 mins FTE = 3 TT = 10 PT/FTE = 5

50%

50%
P/T = 2 mins FTE = 0.5 TT = 20 PT/FTE = 4 P/T = 45 mins FTE = 3 TT = 20 PT/FTE = 15

P/T = 5 mins FTE = 1 TT = 10 PT/FTE = 5

Start

End

End
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The 1st process step where the PT/FTE is greater than the Takt Time will be the bottleneck. All subsequently steps where PT/FTE is greater than the Takt Time will in turn become bottlenecks when the bottleneck higher up in the flow becomes unclogged.

P/T = 25 mins FTE = 2 TT = 10 PT/FTE = 12.5

P/T = 6 mins FTE = 0.5 TT = 12 PT/FTE =10 P/T = 2 mins FTE = 0.5 TT = 20 PT/FTE =4

P/T = 15 mins FTE = 3 TT = 10 PT/FTE = 5

50%

50%
P/T = 2 mins FTE = 0.5 TT = 20 PT/FTE = 4 P/T = 45 mins FTE = 3 TT = 20 PT/FTE = 15

P/T = 5 mins FTE = 1 TT = 10 PT/FTE = 5

Start

End

End
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A simple and quick way to improve this process is to take staff from those steps that are have too much FTE (those in Green) and assign them to the bottlenecks

P/T = 25 mins FTE = 2 TT = 10 PT/FTE = 12.5

P/T = 6 mins FTE = 0.5 TT = 12 PT/FTE =10 P/T = 2 mins FTE = 0.5 TT = 20 PT/FTE =4

P/T = 15 mins FTE = 3 TT = 10 PT/FTE = 5

50%

50%
P/T = 2 mins FTE = 0.5 TT = 20 PT/FTE = 4 P/T = 45 mins FTE = 3 TT = 20 PT/FTE = 15

P/T = 5 mins FTE = 1 TT = 10 PT/FTE = 5

Start

End

End
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Generic Ways to remove a bottleneck? Reducing Processing Time to synchronize with Takt Time Simplification Automation Line Balancing Increase FTE Optimize the Staff allocation by identifying process steps that are over staffed and assigning those excess staff to bottlenecks Reduce the Demand (normally not possible)
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What is Line Balancing?

1. Plot the processing time for every process step Each Process Step is separated into its Work Elements. E.g., Update Records = Boot Up System (WE1) + Key in the Record (WE2) + Save the Record (WE3) 2. Draw the line that represents the Takt Time 3. Identify the Bottleneck Step 4. If possible shift Work Elements from one process step to another so that the entire line is balanced

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Thinking about Waste A simple way of thinking about improving cycle time finding and eliminating waste. So the task is two fold: We must know how to find waste We must know how to reduce or eliminate waste What is Waste? Anything other than the absolute minimum of material, machines, and manpower required to add value to the product. Everything that is not value-added is waste
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Value and Non Value Added Activities

Whether an activity is value adding depends on how the customer sees it
Typically, over 80%

Value Added Activities

Necessary but Non Value Added Activities that do not add value from customers perspective but is required by the business
Does this activity:

Non Value Added Activities that do not add value from customers perspective and is not willing to pay for

What is it?

Activities core to the product or service that the customer wants

How to see it?

Is the Product or Service Transformed by this activity? Does it add a feature, function or form to the product or service that the customer is willing to pay for?

1. 2. 3. 4.

Reduce Financial Risk? Comply with some regulation? Comply with some internal control? Does anything bad happen if we remove this step?

1. 2. 3.

Does this activity create a known type of waste? Is the customer willing to pay for it? Is it rework or corrective action?

Action Mode

Increase the Quality of this Step

Try to separate this activity from the main flow so that the customer is not impact by the time it consumes

Reduce and ultimately eliminate it

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How much Waste in Process?

Application Application Form Application Form Application Form Form Out Box Application for Credit Card = 10 mins Application Application Form Application Form Application Form Form In Box Wait in In Box = 60 mins Transport = 20 mins Application Application Form Application Form Application Form Form Out Box Approval = 2 mins Wait in Out Box = 60 mins Transport = 20 mins Sorting and Wait in Mail Room = 180 mins Application Application Form Application Form Application Form Form Out Box Batch Mailing To Customer = 30 mins Sorting and Wait in Mail Room = 180 mins Transport = 20 mins Wait in Out Box = 60 mins Print Card = 10 mins Card Activation = 3 mins Transport = 20 mins Sorting and Wait in Mail Room = 180 mins Wait for Collection = 60 mins Transport to Mail Room = Sorting and Wait in 20 mins Mail Room = 180 mins Transport = 20 mins Application Application Form Application Form Application Form Form In Box Wait in In Box = 60 mins

Application Application Form Application Form Application Form Form Out Box Transport = 20 mins Wait in Out Box = 60 mins Credit Check 10 mins Application Application Form Application Form Application Form Form In Box Wait in In Box = 60 mins

Two Days Later

Customer Gets Card Spoilage = 5%

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Which Activity is Value added?

Application Application Form Application Form Application Form Form Out Box Application for Credit Card = 10 mins Application Application Form Application Form Application Form Form In Box Wait in In Box = 60 mins Transport = 20 mins Application Application Form Application Form Application Form Form Out Box Approval = 2 mins Wait in Out Box = 60 mins Transport = 20 mins Sorting and Wait in Mail Room = 180 mins Application Application Form Application Form Application Form Form Out Box Batch Mailing To Customer = 30 mins Sorting and Wait in Mail Room = 180 mins Transport = 20 mins Wait in Out Box = 60 mins Print Card = 10 mins Card Activation = 3 mins Transport = 20 mins Sorting and Wait in Mail Room = 180 mins Wait for Collection = 60 mins Transport to Mail Room = Sorting and Wait in 20 mins Mail Room = 180 mins Transport = 20 mins Application Application Form Application Form Application Form Form In Box Wait in In Box = 60 mins

Application Application Form Application Form Application Form Form Out Box Transport = 20 mins Wait in Out Box = 60 mins Credit Check 10 mins Application Application Form Application Form Application Form Form In Box Wait in In Box = 60 mins

Two Days Later

Customer Gets Card Spoilage = 5%

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% Value Added Time

Total Time = 4225 Minutes* Value Adding Time = 23 Minutes % Value Adding = 0.5% Waste = 99.5%

One Business Reaction

When we stepped back and evaluated our processes to determine what steps created customer value, we were shocked to discover that almost 99% of our work adds no value for customers. In fact we were so demoralized by this finding that we consider adjusting this criteria VP of a Bank

*Actually it is more because we have not even counted the time lost after the work day has ended
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Production Wastes
7 Types of Waste + 2
Defects Waiting Over Processing Unnecessary Motion Inventory Unnecessary Transportation Over Production

Service Examples
Errors and Rework Work not meeting Requirements Missing Info Job waiting in In-Box, Out-Box Equipment Downtime Waiting for Info, Approval etc Unnecessary Steps Multiple Handoffs Walking Searching for Files

Manufacturing Examples
Scrap, Defects

Equipment Downtime Waiting due to Batch Processing Processing Step that adds any feature that the customer does not value

Walking to get parts

Excessive Backlog / WIP

Excessive Raw Material, WIP and Finished Goods that has not been sold yet

Routing around the office

Routing around the Factory

This does not really happen in Service Environments

Producing more than what is require to meet demand

Abilities

Not using a staff to his or her full potential

Not using a staff to his or her full potential

Customers Time

Queues, Asked to redo a task due to rework

Delays due to Stock-out

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